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EXHIBIT 99.1
STOCK AND WARRANT PURCHASE AGREEMENT
among
CARRIZO OIL & GAS, INC.,
ENRON NORTH AMERICA CORP.,
SUNDANCE ASSETS, L.P.
and
JOINT ENERGY DEVELOPMENT
INVESTMENTS II LIMITED PARTNERSHIP
dated
December 1, 1999
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TABLE OF CONTENTS
ARTICLE I. Definitions...................................................................................1
1.1 Definitions...................................................................................1
ARTICLE II. Sale and Purchase of Shares and Warrants; Closing.............................................2
2.1 Sale and Purchase of Shares and Repurchased Warrants..........................................2
2.2 Closing.......................................................................................3
2.3 Delivery......................................................................................3
2.4 Payment.......................................................................................3
2.5 Amendment of Retained Warrants................................................................3
2.6 Other Closing Matters.........................................................................5
ARTICLE III. Representations and Warranties of Issuer......................................................6
3.1 Corporate Existence...........................................................................6
3.2 Power and Authorization.......................................................................6
3.3 Binding Obligations...........................................................................6
3.4 No Violation..................................................................................6
3.5 Consents......................................................................................6
ARTICLE IV. Representations and Warranties of Sellers.....................................................7
4.1 Corporate; Partnership Existence..............................................................7
4.2 Power and Authorization.......................................................................7
4.3 Binding Obligations...........................................................................7
4.4 No Violation..................................................................................8
4.5 Consents......................................................................................8
4.6 Title to Shares and Warrants..................................................................8
ARTICLE V. Closing Conditions ......................................................................8
5.1 Conditions to Obligation of Sellers...........................................................8
5.2 Conditions to Obligation of Issuer............................................................9
ARTICLE VI. Other Provisions.............................................................................10
6.1 Other Action.................................................................................10
6.2 Survival; Failure to Close...................................................................10
ARTICLE VII. Indemnification..............................................................................10
7.1 ........................................................................................... 10
ARTICLE VIII. Miscellaneous................................................................................10
8.1 Amendments; Waivers..........................................................................10
8.2 Successors and Assigns.......................................................................10
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8.3 Severability.................................................................................10
8.4 Descriptive Headings.........................................................................11
8.5 Governing Law................................................................................11
8.6 Entire Agreement.............................................................................11
8.7 Execution in Counterparts....................................................................11
8.8 Further Cooperation..........................................................................11
8.9 Notices......................................................................................11
8.10 No Waiver; Remedies Cumulative...............................................................11
8.11 [Intentionally Left Blank]...................................................................12
8.12 Dispute Resolution...........................................................................12
EXHIBITS
A Opinion of Baker & Botts, L.L.P
B Commitment Letter
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STOCK AND WARRANT PURCHASE AGREEMENT
This STOCK AND WARRANT PURCHASE AGREEMENT (this "Agreement") is made as
of December 1, 1999, by and between Carrizo Oil & Gas, Inc., a Texas corporation
("Issuer"), and Enron North America Corp., a Delaware corporation ("ENA"),
formerly known as Enron Capital & Trade Resources Corp., Sundance Assets, L.P.,
a Delaware limited partnership ("Sundance") and Joint Energy Development
Investments II Limited Partnership, a Delaware limited partnership ("JEDI II").
JEDI II and the Applicable Enron Entity (as defined below) are hereinafter
individually referred to as a "Seller" and collectively as "Sellers". ENA,
Sundance and JEDI II are sometimes referred to herein as "the Enron Parties."
RECITALS
The Enron Parties desire to sell to Purchaser and Purchaser desires to
repurchase, subject to the terms and conditions set forth herein, all the
outstanding shares of Preferred Stock (as herein defined) owned by them and the
Repurchased Warrants (as defined herein) in consideration for the sum of
$12,000,000 and the amendment of the terms of the Retained Warrants (as defined
herein).
AGREEMENTS
In consideration of the recitals and the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINITIONS. In addition to the capitalized terms defined elsewhere
in this Agreement, the following capitalized terms shall have the following
respective meanings when used in this Agreement. Any capitalized term used, but
not defined herein shall have the meaning given to it in the Original Agreement
unless the context requires otherwise.
"APPLICABLE ENRON ENTITY" shall mean either or both of
Sundance and ENA, to be determined in each case prior to Closing.
"BOARD OF DIRECTORS" shall mean the Board of Directors of
Issuer or any committee thereof duly authorized to act on behalf of the
Board of Directors.
"CLAIMS" shall have the meaning assigned to such term in
Section 8.1.
"CLOSING" shall have the meaning assigned to such term in
Section 2.2.
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"CLOSING DATE" shall have the meaning assigned to such term in
Section 2.2.
"COMMON STOCK" shall mean the common stock, par value $.01 per
share, of Issuer.
"LIEN" shall mean, with respect to any Person, any mortgage,
deed of trust, lien, security interest, pledge, lease, conditional sale
contract, claim, charge, easement, right of way, assessment,
restriction and other encumbrance of any kind.
"ORIGINAL AGREEMENT" shall mean the Stock Purchase
Agreement dated as of January 8, 1998 among the Issuer, Enron Capital &
Trade Resources Corp. and Joint Energy Development Investments II
Limited Partnership.
"PREFERRED STOCK" shall mean the 9% Series A Preferred Stock,
par value $0.01, having the relative rights, preferences, privileges
and limitations set forth in the Statement of Resolution.
"REPURCHASED WARRANTS" shall mean all Warrants other than the
Retained Warrants.
"RETAINED WARRANTS" shall mean the Warrants to purchase
187,500 shares of Common Stock, to be retained by the Applicable Enron
Entity, and the Warrants to purchase 62,500 shares of Common Stock, to
be retained by JEDI II, in each case in accordance with Section 2.5.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SHARES" shall mean all the shares of Preferred Stock owned by
the Sellers.
"STATEMENT OF RESOLUTION" shall mean the Statement of
Resolution relating to the Preferred Stock dated January 8, 1998 as
filed with the Secretary of State of the State of Texas.
"WARRANTS" shall mean the warrants which are exercisable into
1,000,000 shares of Common Stock issued in connection with the Original
Agreement.
ARTICLE II.
SALE AND PURCHASE OF SHARES AND WARRANTS; CLOSING
2.1 SALE AND PURCHASE OF SHARES AND REPURCHASED WARRANTS.
(a) Subject to the satisfaction of the terms and conditions
herein set forth and in reliance upon the respective representations,
warranties, and covenants of the parties set forth herein or in any
document delivered pursuant hereto, at the Closing Sellers agree to
sell,
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assign and deliver to Issuer, and Issuer agrees to purchase from
Sellers all of the Enron Parties' right, title and interest in, to and
in respect of the Shares and the Repurchased Warrants.
(b) Either or both of the Shares and Warrants (or any portion
of such Shares and Warrants) owned as of the date hereof by Sundance
may be transferred to ENA prior to the Closing Date (as defined below).
2.2 CLOSING. The closing of the sale and purchase of the Shares
and the Repurchased Warrants (the "Closing") will occur at 9:30 a.m. on the
Closing Date (as defined below) at the offices of Baker & Botts, L.L.P., 910
Louisiana, Houston, Texas 77002. The "Closing Date" shall mean the Business Day
immediately following the date on which all the conditions to the obligations of
each party hereto to consummate the transactions under this Agreement shall have
been satisfied or waived in writing by such party.
2.3 DELIVERY. Delivery of the Shares and the Repurchased Warrants
pursuant to this Agreement shall be made at the Closing by Sellers delivering
against payment therefor and delivery of certificates representing the Retained
Warrants as provided below, (a) certificates from the Applicable Enron Entity
representing an aggregate of 87,448.75 Shares and (b) certificates from JEDI II
representing an aggregate of 262,346.17 Shares and delivery of Warrant
Certificates representing the Warrants.
2.4 PAYMENT. Payment in the amount of $12,000,000 for the Shares
and Repurchased Warrants shall be made by a wire transfer of $3 million to the
Applicable Enron Entity (divided between Sundance and ENA as they shall request)
and a wire transfer of $9 million to JEDI II, both in immediately available
funds to an account of each at a commercial bank, which accounts shall have been
designated by them prior to the Closing Date.
2.5 AMENDMENT OF RETAINED WARRANTS. Additionally, at the Closing,
Issuer and the Sellers will amend
(a) both of the Retained Warrants by (i) replacing the
existing definitions of "Exercise Price" with the following:
"Exercise Price" means an amount, per share, equal to $4.00.
The Exercise Price shall be subject to adjustment, as forth in
Section 4.
and (ii) adding as a new final sentence to Section 4(b) of each
Retained Warrant:
Notwithstanding anything to the contrary contained herein, no
adjustments shall be made under this paragraph in connection
with any private placement of securities or exercise of
warrants issued in such private placement, to the extent that
a portion of the proceeds
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thereof are used by the Company to fund the payment under the
Stock Purchase Agreement among the Company, Sundance Assets,
L.P., Joint Energy Development Investments II Limited
Partnership and Enron North America Corp. dated December 1,
1999.
(b) the Retained Warrant to be issued to the Applicable Enron
Entity by replacing the existing definitions of "JEDI II Warrant" and
"Warrant Shares" with the following:
"JEDI II Warrant" means the Warrant issued to Joint
Energy Development Investments II Limited Partnership on the Date of
Issuance which originally upon exercise entitled the holder thereof to
purchase from the Company 750,000 shares of Common Stock and which
following amendment of such Warrant in December 1999 entitled the
holder to purchase from the Company 187,500 shares of Common Stock.
"Warrant Shares" means the shares of Common Stock (or
amount of other property) equal to the number of shares of Common
Stock, as adjusted from time to time pursuant to the terms hereof,
which would be received upon the exercise of all or any portion of this
Warrant, which, at the Date of Issuance, was equal to 250,000 shares of
Common Stock and which following amendment of this Warrant in December
1999, was equal to 62,500 shares of Common Stock.
(c) the Retained Warrant to be issued to JEDI II by replacing
the existing definitions of "ECT Warrant" and "Warrant Shares" with the
following:
"ECT Warrant" means the Warrant issued to Enron
Capital & Trade Resources Corp. on the Date of Issuance which
originally upon exercise entitled the holder thereof to purchase from
the Company 250,000 shares of Common Stock and which following
amendment of such Warrant in December 1999 entitled the holder to
purchase from the Company 62,500 shares of Common Stock.
"Warrant Shares" means the shares of Common Stock (or
amount of other property) equal to the number of shares of Common
Stock, as adjusted from time to time pursuant to the terms hereof,
which would be received upon the exercise of all or any portion of this
Warrant, which, at the Date of Issuance, was equal to 750,000 shares of
Common Stock and which following amendment of this Warrant in December
1999, was equal to 187,500 shares of Common Stock.
Issuer shall issue new certificates representing the Retained Warrants as
amended in accordance with this Agreement.
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2.6 OTHER CLOSING MATTERS.
(a) Effective upon the Closing, all agreements between Issuer,
on the one hand, and the Enron Parties, on the other hand, shall
terminate, including, without limitation, the Basic Documents (as
defined in the Original Agreement) (collectively, subject to the
following proviso, the "Terminated Agreements"); provided that (i)
Section 8.3, Section 8.5, Section 9.1 (as amended below), Section
9.3(b), (c) and (d) and Section 10.12 of the Original Agreement shall
expressly survive such termination and (ii) the foregoing shall not
terminate this Agreement, the Retained Warrants or the Confidentiality
Agreement between ENA and Issuer dated as of June 8, 1999 (the "1999
Confidentiality Agreement"). Effective upon the Closing, the Enron
Parties hereby release Issuer and its current and former officers,
directors, employees, shareholders and agents and Issuer hereby
releases the Enron Parties and their current and former officers,
directors, employees, shareholders and agents from any obligation,
liability or claim arising out of, in connection with or otherwise in
respect of the Terminated Agreements or in respect of the Enron
Parties' investment or securities holdings in the Issuer (INCLUDING ANY
ACT OR FAILURE TO ACT THAT CONSTITUTES ORDINARY OR GROSS NEGLIGENCE OR
RECKLESS OR WILLFUL, WANTON MISCONDUCT).
(b) Section 9.1 shall be replaced by the following:
ISSUER INDEMNIFICATION. Issuer agrees to indemnify, defend,
and hold harmless Purchasers and each Affiliate of either of the Purchasers (a
"Purchasers' Indemnified Person") from, against, and in respect of any and all
claims, demands, losses, reasonable costs and expenses, obligations,
liabilities, damages, recoveries, and deficiencies, including interest,
penalties and reasonable attorneys' fees (collectively, "Claims") but only to
the extent such Claims are based on Claims against such Purchasers' Indemnified
Persons by third parties not affiliated with the Purchasers (as used in this
Article IX, "Third Party Claims"), that such Purchasers' Indemnified Party shall
incur or suffer, which arise, result from, or relate to (a) any breach of, or
failure by Issuer to perform, any of its representations, warranties, covenants,
or agreements in this Agreement or in any schedule, certificate, exhibit, or
other instrument furnished or to be furnished by Issuer in connection with the
transactions contemplated by this Agreement, or in the Charter of Issuer or (b)
any claims of any applicable Governmental Authority or other Person arising
under any Governmental Requirement applicable to the Issuer (including without
limitation any Environmental Law or regulation under ERISA). WITHOUT LIMITATION,
THE FOREGOING INDEMNITY SHALL APPLY TO EACH PURCHASER INDEMNIFIED PERSON WITH
RESPECT TO LOSSES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE
CONCURRENT OR COMPARATIVE NEGLIGENCE OR THE STRICT LIABILITY OF SUCH PURCHASER
INDEMNIFIED PERSON; PROVIDED, HOWEVER, NO PURCHASER INDEMNIFIED PARTY SHALL BE
INDEMNIFIED FOR ITS OWN NEGLIGENCE OR WILFUL MISCONDUCT.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF ISSUER
Issuer represents and warrants to Sellers as follows:
3.1 CORPORATE EXISTENCE. Issuer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Texas.
3.2 POWER AND AUTHORIZATION. Issuer has all requisite power and
authority to execute, deliver, and perform this Agreement, and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions to be performed by Issuer have been
duly and validly authorized by all necessary action on the part of the Board of
Directors, and no other corporate proceedings are necessary to authorize the
execution, delivery and performance of this Agreement by Issuer.
3.3 BINDING OBLIGATIONS. This Agreement when executed and delivered
by Issuer, shall constitute a legal, valid and binding obligation of Issuer
enforceable in accordance with its terms, except insofar as the enforceability
thereof may be limited (i) by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (ii) by general principles of equity and public policy (regardless
of whether considered at law or in equity).
3.4 NO VIOLATION. The execution and delivery by Issuer of this
Agreement, and the consummation of the transactions contemplated hereby, will
not, upon receipt of the consents of its lenders (a) conflict with or result in
a breach of any provision of the Charter or bylaws of Issuer, (b) result in any
default or in any material modification of the terms of any material instrument
or agreement of Issuer, or (c) violate any Governmental Requirement applicable
to Issuer.
3.5 CONSENTS. All consents, approvals, qualifications, orders or
authorizations of, or filings with, any Governmental Authority, and all consents
under any material contracts, agreements, or instruments by which Issuer is
bound or to which it is subject, and required in connection with Issuer's valid
execution, delivery, or performance of this Agreement, and the consummation of
the transactions contemplated hereby, has been obtained or made, other than the
consent of Compass Bank.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF SELLERS
ENA, Sundance and JEDI II, as applicable, represent and warrant to
Issuer as follows (each Enron Party's representations and warranties are being
made as to that Enron Party only and not the other):
4.1 CORPORATE; PARTNERSHIP EXISTENCE.
(a) ENA is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) JEDI II and Sundance are limited partnerships duly formed
and validly existing under the laws of the State of Delaware.
4.2 POWER AND AUTHORIZATION.
(a) ENA has all requisite power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. All action on the part of ENA requisite for the
due execution, delivery and performance of this Agreement has been duly
and effectively taken. The execution and delivery of and the
consummation of the transactions to be performed by ENA hereunder has
been duly and validly authorized by all necessary action on the part of
the board of directors of ENA hereunder, and no other corporate
proceedings are necessary to authorize the execution and delivery by
ENA.
(b) JEDI II and Sundance have all requisite power and
authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby. All action on the part
of JEDI II and Sundance requisite for the due execution, delivery and
performance of this Agreement has been duly and effectively taken. The
execution and delivery of this Agreement and the consummation of the
transactions to be performed by JEDI II and Sundance hereunder have
been duly and validly authorized by all necessary action on the part of
JEDI II and Sundance, their respective partners and any shareholder of
or partner in any of their respective partners, and no other
partnership or corporate proceedings, as the case may be, are necessary
to authorize the execution and delivery by JEDI II or Sundance of this
Agreement.
4.3 BINDING OBLIGATIONS. This Agreement when executed and delivered by
it, shall constitute legal, valid and binding obligations of each Enron Party
enforceable in accordance with its terms, except insofar as the enforceability
thereof may be limited (i) by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and (ii) by general principles of equity (regardless of whether
considered at law or in equity).
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4.4 NO VIOLATION. The execution and delivery by each Enron Party of
this Agreement and the consummation of the transactions contemplated hereby will
not (a) conflict with or result in a breach of any provision of the Charter or
bylaws or other organizational document of any Enron Party, (b) result in any
default or in any material modification of the terms of any material instrument
or agreement of any Enron Party, or (c) violate any Governmental Requirement
applicable to any Enron Party.
4.5 CONSENTS. All consents, approvals, qualifications, orders or
authorizations of, or filings with, any Governmental Authority, and all consents
under any material contracts, agreements, or instruments by which any Enron
Party is bound or to which it is subject, and required in connection with such
Enron Party's valid execution, delivery, or performance of this Agreement, and
the consummation of the transactions contemplated hereby, has been obtained or
made.
4.6 TITLE TO SHARES AND WARRANTS. As of the date of this Agreement
each Enron Party owns beneficially and of record the number of Shares and
Warrants set forth on Schedule I attached hereto, free and clear of all Liens.
At Closing, JEDI II and the Applicable Enron Entity will own beneficially and of
record the number of Shares and Warrants set forth on Schedule I attached hereto
free and clear of all Liens. ENA has transferred and assigned to Sundance all of
its right, title and interest in, to and in respect of the Shares and Warrants
purchased by ENA under the Original Agreement. Prior to Closing, Sundance may
transfer and assign to ENA, all or a portion of its rights, title and interest
in, to and in respect of the Shares and/or Warrants previously transferred from
ENA to Sundance. The Shares and the Warrants constitute all of the equity
securities of Issuer owned by each of the Enron Parties, and except as described
herein such Shares and Warrants are not subject to any agreements or
understandings with respect to the transfer of any of the Shares or Warrants
other than those with the Issuer. No Enron Party has granted to any third party
any option, right of first refusal or other rights with respect to the Shares or
the Warrants except as described herein. Sundance has full legal right to sell,
assign and transfer the Shares and Repurchased Warrants to ENA. Each Seller has
full legal right to sell, assign and transfer the Shares and Repurchased
Warrants owned by it to Issuer and will, upon delivery of certificates
representing such Shares and Repurchased Warrants to Issuer pursuant to the
terms hereof, transfer to Issuer title to such Shares and Repurchased Warrants,
free and clear of any Liens.
ARTICLE V.
CLOSING CONDITIONS
5.1 CONDITIONS TO OBLIGATION OF SELLERS. The obligation of Sellers to
consummate the transactions contemplated hereby is subject to satisfaction of
the following conditions at the time of Closing:
(a) the representations and warranties contained in Article
III, shall be accurate in all respects, as of the time of Closing on
the Closing Date (provided that this provision
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shall not require the text of any representation that refers to a
specific date to be changed with respect to such reference);
(b) no action, suit or proceeding shall be pending before any
Governmental Authority wherein an unfavorable injunction, judgment,
order, decree, ruling, charge, penalty or onerous condition would
prevent consummation of any of the transactions contemplated by this
Agreement, and no such injunction, judgment, order, decree, ruling,
charge; penalty or onerous condition shall be in effect;
(c) all material notices, consents and approvals required for
the consummation of the transactions contemplated hereby shall have
been given or obtained;
(d) the Enron Parties shall have received an opinion of Baker
& Botts, L.L.P, dated as of the Closing Date in substantially the form
attached as Exhibit A;
(e) the Company shall have made payment for all outstanding
legal fees owed by it to any Enron Party.
5.2 CONDITIONS TO OBLIGATION OF ISSUER. The obligations of Issuer to
consummate the transactions contemplated hereby are subject to satisfaction of
the following conditions:
(a) the representations and warranties contained in Article IV
shall be accurate in all respects as of the time of Closing on the
Closing Date (provided that this provision shall not require the text
of any representation that refers to a specific date to be changed with
respect to such reference);
(b) no action, suit, or proceeding shall be pending before any
Governmental Authority wherein an unfavorable injunction, judgment,
order, decree, ruling, charge, penalty or onerous condition would
prevent consummation of any of the transactions contemplated by this
Agreement and no such injunction, judgment, order, decree, ruling,
charge, penalty or onerous condition shall be in effect;
(c) all material notices, consents and approvals required for
the consummation of the transactions contemplated hereby shall have
been given or obtained, including, without limitation, the consent of
Compass Bank;
(d) Issuer shall have completed the financing contemplated by
the draft of commitment letter attached hereto as Exhibit B or shall
have otherwise obtained funds in an amount at least equal to the amount
contemplated by such commitment letter in either case, pursuant to
definitive agreements that are satisfactory to Issuer in its sole
discretion.
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ARTICLE VI.
OTHER PROVISIONS
6.1 OTHER ACTION. Each of the parties shall use its reasonable best
efforts to cause the Closing Date to occur as soon as is reasonably practicable.
6.2 SURVIVAL; FAILURE TO CLOSE. All representations, warranties,
indemnities, and covenants contained herein or made in writing by any party in
connection herewith will survive the execution and delivery of this Agreement.
Notwithstanding anything herein to the contrary, if the Closing has not occurred
on or before December 15, 1999, then either party may terminate its obligations
under this Agreement by written notice to the other; provided, that no party may
terminate this Agreement if Closing has failed to occur because such party (or
any Affiliate thereof) willfully or negligently fail to perform or observe its
material agreements and covenants hereunder.
ARTICLE VII.
INDEMNIFICATION
7.1 The scope and the procedure for indemnification for any Claims
arising out of a breach of this Agreement shall be as specified in Article IX of
the Original Agreement as originally executed (notwithstanding the fact that
portions of Article IX of the Original Agreement have been amended or terminated
hereby) with the Enron Parties having the correlative rights and obligations of
the Purchasers under the Original Agreement.
ARTICLE VIII.
MISCELLANEOUS
8.1 AMENDMENTS; WAIVERS. No amendment or waiver of any provision of
this Agreement, nor consent to any departure by Issuer or the Enron Parties
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Enron Parties and Issuer in the case of amendments, and the
Enron Parties or Issuer, as the case may be, in the case of waivers.
8.2 SUCCESSORS AND ASSIGNS. All of the respective rights, obligations
and interests of the parties hereto shall be binding upon and inure to the
benefit of the respective successors of the parties hereto. This Agreement and
the rights and obligations of each party thereunder shall not be assigned
without the prior written consent of the other party.
8.3 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
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of this Agreement unless the consummation of the transaction contemplated hereby
is materially and adversely affected thereby.
8.4 DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience of reference only and do not constitute a part of
and shall not be utilized in interpreting this Agreement.
8.5 GOVERNING LAW. This Agreement shall be deemed a contract and
instrument made under the laws of the State of Texas and shall be construed and
enforced in accordance with and governed by the laws of the State of Texas,
without regard to principles of conflicts of law.
8.6 ENTIRE AGREEMENT. This Agreement (together with the Retained
Warrants and the provisions of the Original Agreement which survive termination
of the Terminated Agreements pursuant to Section 2.6) and the 1999
Confidentiality Agreement to the extent not amended hereby constitute the entire
agreement among Issuer and the Enron Parties concerning the matters referred to
herein and therein, and supersede all prior agreements and understandings among
Issuer and the Enron Parties relating to the subject matter hereof and thereof.
There are no unwritten oral agreements between or among the parties.
8.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, and such counterparts together shall constitute one
instrument.
8.8 FURTHER COOPERATION. At any time and from time to time, and at
its own expense, each party shall promptly execute and deliver all such
documents and instruments, and do all such acts and things, as the other may
reasonably request in order to further effect the purposes of this Agreement.
8.9 NOTICES. All notices, requests, and other communications to any
party hereunder shall be in writing (including telecopy) and shall be given to
such party at its address or telecopy number set forth on the signature pages
hereof or such other address or telecopy number as such party may hereafter
specify by notice to the other parties.
8.10 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part
of a party in exercising any right or remedy under this Agreement and no course
of dealing among Issuer and either of the Sellers shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy under
this Agreement preclude any other or further exercise thereof or the exercise of
any other right or remedy under this Agreement. The rights and remedies
expressly provided are cumulative and not exclusive of any rights or remedies
that a party would otherwise have. No notice to or demand on a party not
otherwise required by this Agreement or shall entitle that party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of that Party to any other or further action in any
circumstances without notice or demand.
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8.11 [Intentionally Left Blank]
8.12 DISPUTE RESOLUTION. (a) Any controversy, dispute or claim
arising out of or relating to this Agreement, or the transactions contemplated
thereby shall be resolved in accordance with Section 10.12 of the Original
Agreement, with the Enron Parties having the correlative rights and obligations
of the Purchasers under such provision.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
CARRIZO OIL & GAS, INC.
By: /s/ S.P. JOHNSON IV
---------------------------------------------
Name: S.P. Johnson IV
Title: President/CEO
Address for Notice:
14811 St. Mary's Lane, Suite 148
Houston, Texas 77079
Attention: S.P. Johnson IV
Telecopy: 281-496-0884
with a copy to:
Baker & Botts, L.L.P.
3000 One Shell Plaza
Houston, TX 77002
Attn: Gene Oshman, Esq.
Telecopy: 713-229-1522
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ENRON NORTH AMERICA CORP.
By: /s/ JOHN S. HOPLEY
---------------------------------------------
Name: John S. Hopley
Title: Vice President
Address for Notice:
Enron North America Corp.
Attn:
1400 Smith Street
Houston, Texas 77002
Phone: (713) 853-1939
Fax: (713) 646-4039 or (713) 646-4946
JOINT ENERGY DEVELOPMENT INVESTMENTS II
LIMITED PARTNERSHIP
By: ENRON CAPITAL MANAGEMENT II
LIMITED PARTNERSHIP,
its sole general partner
By: ENRON CAPITAL II CORP., its sole general
partner
By: /s/ RAYMOND M. BOWEN
-----------------------------------
Name: Raymond M. Bowen
Title: Vice President
Address for Notice:
1400 Smith Street
Houston, Texas 77002
Attn: Donna W. Lowry
Phone: 713/853-1939
Fax: 713/646-4029 or 713/646-4946
14
18
SUNDANCE ASSETS, L.P.
By: PONDEROSA ASSETS, L.P., its General
Partner
By: ENRON PONDEROSA
MANAGEMENT HOLDINGS, INC.,
its General Partner
By: /s/ RAYMOND M. BOWEN
-------------------------------
Name: Raymond M. Bowen
Title: Vice President
Address:
Sundance Assets, L.P.
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19899
Attention: Corporate Trust Administration
With a copy to:
Ponderosa Assets, L.P.
c/o Enron Ponderosa Management Holdings, Inc.
1400 Smith Street
Houston, Texas 77002
15
19
Schedule 1
Current Ownership Shares Warrants
----------------- ------ --------
Sundance 87,448.75 250,000
JEDI II 262,346.17 750,000
ENA 0 0
Closing Date Ownership Shares Warrants
---------------------- ------ --------
Applicable Enron Entity 87,448.75 250,000
JEDI II 262,346.17 750,000
16
20
Exhibit A
December __, 1999
Enron North America Corp.
Joint Energy Development
Investments II Limited Partnership
Sundance Assets, L.P.
1400 Smith Street
Houston, Texas 77002
Ladies and Gentlemen:
This opinion is being furnished to you at the request of
Carrizo Oil & Gas, Inc., a Texas corporation (the "Company"), pursuant to
Section 5.1(c) of the Stock and Warrant Purchase Agreement dated as of December
__, 1999 (the "Purchase Agreement" among the Company, Enron North America
Corp., a Delaware corporation ("ENA"), and Joint Energy Development Investments
II Limited Partnership, a Delaware limited partnership ("JEDI II"), and Sundance
Assets, L.P. a Delaware limited partnership ("Sundance") providing among other
things (i) the purchase by Carrizo of 349,794.92 of the outstanding shares of 9%
Series A Preferred Stock of the Company, (ii) the repurchase of warrants to
purchase 750,000 shares of the common stock, par value $.01 per share, of the
Company (the "Common Stock"), and (iii) the amendment of warrants to purchase
250,000 shares of Common Stock (the "Retained Warrants"). The terms of the
Retained Warrants are set forth in Warrant Certificates (the "Amended Warrant
Certificates") to be issued to each of the Applicable Enron Entity and JEDI II.
The Purchase Agreement and the Amended Warrant Certificates are referred to
herein as the "Agreements."
We have examined the originals, or copies certified or
otherwise identified, of the Company's Amended and Restated Articles of
Incorporation (the "Charter") and the Company's Amended and Restated Bylaws (the
"Bylaws"), each as amended to date, corporate records of the Company,
certificates of public officials and of representatives of the Company, statutes
and other instruments and documents as a basis for the opinions hereinafter
expressed. In giving such opinions, we have relied upon certificates of officers
of the Company with respect to the accuracy of the factual matters contained in
such certificates. In making our examination, we have assumed that all
signatures on documents examined by us are genuine, all documents submitted to
us as originals are authentic and all documents submitted to us as certified or
photostatic copies conformed with the originals of such documents, and have
assumed the truth and accuracy of all representations
17
21
Enron North America Corp. December __, 1999
Joint Energy Development
Investments II Limited Partnership
Sundance Assets, L.P.
and warranties of each party and that each party will comply with all of their
respective agreements, but have conducted no independent investigation with
respect to the foregoing.
On the basis of the foregoing, and subject to the limitations
and qualifications hereinafter set forth, we are of the opinion that
(capitalized terms used but not defined herein shall have the meaning assigned
to such terms in the Purchase Agreement):
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Texas.
2. The Company has all requisite corporate power and authority
to issue the Amended Warrant Certificates. The execution and delivery
of the Amended Warrant Certificates have been duly and validly
authorized by all necessary action on the part of the Board of
Directors, and no other corporate proceedings are necessary to
authorize the execution and delivery of the Amended Warrant
Certificates by the Company.
3. Each of the Amended Warrant Certificates when executed and
delivered, shall constitute a legal, valid and binding obligation of
the Company enforceable in accordance with its terms, except insofar as
the enforceability thereof may be limited (i) by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and (ii) by general
principles of equity and public policy (regardless of whether
considered at law or in equity).
4. There have been reserved for issuance, out of the
authorized and unissued shares of the Company's Common Stock, a number
of shares sufficient to provide for the exercise of the rights of
purchase represented by the Amended Warrant Certificates, and such
shares, when issued upon receipt of payment therefor or upon a net
exercise in accordance with the terms of the Amended Warrant
Certificates, will be duly authorized, validly issued, fully paid and
nonassessable.
18
22
Enron North America Corp. December __, 1999
Joint Energy Development
Investments II Limited Partnership
Sundance Assets, L.P.
5. The execution and delivery of the Agreements, and the
consummation of the transactions contemplated thereby will not to our
knowledge, after due inquiry, violate any Governmental Requirement of
the United States or the State of Texas applicable to the Company;
which conflict, breach, violation, default or creation of a lien would,
singularly or in the aggregate, be reasonably expected to have a
Material Adverse Effect.
6. All consents, approvals, qualifications, orders or
authorizations of, or filings with, any Governmental Authority of the
United States or the State of Texas, required in connection with the
Company's valid execution, delivery, or performance of the Agreements,
and the consummation by the Company of the transactions contemplated
thereby (other than such consents, approvals, qualifications,
authorizations or filings not customarily obtained at the time of
entering into agreements like the Agreements, but instead, customarily
undertaken at an appropriate later date for future transactions), has,
to our knowledge, after due inquiry been obtained or made.
We express no opinion with respect to the legality, validity,
binding nature or enforceability of any provisions of the Agreements (i)
purporting to release or exculpate any party from liability for the acts or
omissions of such party proximately causing damages or injuries as result of
such party's negligence, willful misconduct or strict liability, or purporting
to impose a duty upon any party to indemnify, or make contribution to, any other
party when any claimed damages or liability result from the negligence, strict
liability, willful misconduct of, or the violation of federal or state
securities or anti-fraud laws by, the party seeking such indemnity or
contribution, (ii) relating to waivers of rights or precluding any party from
asserting claims or defenses or for obtaining certain rights or remedies, (iii)
requiring the resolution of any controversies, disputes or claims by arbitration
or by reference to a third-party expert, (iv) restricting access to courts or to
legal or equitable remedies or affecting the jurisdiction or venue of courts or
(v) relating to the severability of invalid terms, the reformation of contracts
and similar provisions.
Whenever our opinion is based on circumstances "known to us
after due inquiry" or "to our knowledge after due inquiry," we have relied on
certificates of officers (after the discussion of the contents thereof with such
officers) of the Company or certificates of others as to the existence or
nonexistence of the circumstances upon which such opinion is predicted. We have
no reason to believe, however, that any such certificate is untrue or inaccurate
in any material respect.
In the foregoing opinions, phrases such as "to our knowledge,"
"known to us" and those with equivalent wording refer to the conscious awareness
of information by the lawyers of this
19
23
Enron North America Corp. December __, 1999
Joint Energy Development
Investments II Limited Partnership
Sundance Assets, L.P.
firm who have prepared this opinion, signed this opinion or been actively
involved in assisting and advising the Company in connection with the execution
and delivery of the Agreements.
The foregoing opinions are limited in all respects to the laws
of the State of Texas and applicable federal law, in each case as in effect on
the date hereof. The opinions expressed herein are for your benefit and may be
relied upon only by you and may not be given or described to any other person
without our prior written consent. The opinions given are strictly limited to
the matters stated herein and no implied opinions are to be inferred from
anything stated herein, and without limiting the generality of the foregoing we
express no opinion with respect to any bankruptcy or creditors rights laws or
any federal or state securities or antifraud law, rule or regulation except as
otherwise specifically stated herein.
Very truly yours,
20
24
EXHIBIT 2
[DRAFT 11/30/99]
November __, 1999
Carrizo Oil & Gas, Inc.
14811 St. Mary's Lane, Suite 148
Houston, Texas 77079
Attention: Chip Johnson
Carrizo Oil & Gas, Inc.
$30,000,000 Investment
Gentlemen:
You have advised Chase Capital Partners (together with one or more of
its affiliated investment funds, "CCP") that Carrizo Oil & Gas, Inc. (the
"Company") intends to purchase (the "Redemption") from Enron Corp. and its
affiliates (collectively, "Enron"), pursuant to a definitive purchase agreement
with Enron (the "Enron Purchase Agreement") with respect to the Redemption with
terms and conditions satisfactory to CCP, all of the Company's outstanding 9%
Series A Preferred Stock, par value $0.01 per share (liquidation amount of
approximately $34,000,000) and warrants to purchase 750,000 shares of the
Company's common stock (collectively, the "Enron Equity"), which to your
knowledge represents all of the securities of the Company held by Enron other
than warrants to purchase 250,000 shares of the Company's common stock which
will be retained by Enron (and the terms of which will be amended), for an
aggregate redemption price of up to $12,000,000 in cash. In connection
therewith, the Company intends to issue (a) $22,000,000 aggregate principal
amount of its senior subordinated notes (the "Notes"), together with warrants to
purchase common stock (the "Common Stock") of the Company (the "Warrants") and
(b) aggregate consideration of $8,000,000 in Common Stock.
CCP is pleased to advise you of its commitment to purchase up to
$22,000,000 aggregate principal amount of the Notes, the Warrants and up to
$8,000,000 of the Common Stock (collectively, the "Investment"), upon the terms
and subject to the conditions set forth or referred to in this letter
("Commitment Letter") and in the Term Sheet (the "Term Sheet") annexed hereto;
provided, however that the foregoing amounts will be reduced to the extent of
the investment by the non-management directors as described herein and in the
Term Sheet.
You agree promptly to prepare and provide to CCP all information
reasonably requested by CCP with respect to the Company, the Redemption and the
other transactions contemplated hereby, including all financial information and
projections (the "Projections"). You hereby represent and covenant that (a) all
information other than the Projections (the "Information") that has been or will
be made available to CCP by or on behalf of you or any of
25
your authorized representatives, when taken as a whole, is or will be, when
furnished, complete and correct in all material respects and does not or will
not, when furnished, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements are made and (b) the Projections that have been or will be made
available to CCP by or on behalf of you or any of your authorized
representatives have been or will be prepared in good faith based upon
assumptions that are reasonable at the time made and at the time the related
Projections are made available to CCP. You agree that if at any time from and
including the date hereof until the closing of the Investment, any of the
representations in the preceding sentence would be incorrect, then you will
promptly supplement the Information and the Projections so that such
representations will be correct. You agree that CCP will be entitled to use and
rely primarily on the Information and the Projections without responsibility for
independent verification thereof.
As consideration for CCP's commitment hereunder, you agree to pay to
CCP, conditioned upon the closing, a fee (the "Closing Fee") in an amount equal
to one and one-half percent (1 1/2%) of the aggregate amount of CCP's portion of
the total Investment. The Closing Fee shall be payable on the Closing Date,
shall be paid in immediately available funds and, once paid, shall not be
refundable under any circumstances. The Closing Fee shall be in addition to
reimbursement of the reasonable out-of-pocket fees and expenses of CCP.
CCP's commitment hereunder is subject to (a) CCP's not having
discovered or otherwise becoming aware of information not previously disclosed
to CCP that CCP believes to be materially inconsistent with its understanding,
based on information provided to CCP prior to the date hereof, of the business,
operations, properties, assets, liabilities, prospects or financial condition of
Company, (b) there not having occurred any event, condition or circumstance that
has had or is reasonably likely to have a material adverse effect on the
business, operations, properties, assets, liabilities, prospects or financial
condition of Company, (c) there not having occurred and being continuing a
material disruption of or material adverse change in financial, banking or
capital market conditions, (d) the negotiation, execution and delivery of
definitive documentation with respect to the Investment reasonably satisfactory
to CCP and its counsel, (e) the closing of the Redemption on the terms set forth
in the Enron Purchase Agreement and or other terms satisfactory to CCP
simultaneously with the closing of the Investment, (f) the negotiation,
execution and delivery of an amendment to your credit facility with Compass Bank
or a new credit facility with Shell Capital on terms reasonably satisfactory to
CCP, (g) evidence reasonbly satisfactory to CCP that the transactions
contemplated by the Investment do not require shareholder approval under NASDAQ
rules and are not in violation of NASDAQ's voting rights policy and (h) the
other conditions set forth or referred to herein and in the Term Sheet. In
addition to the foregoing, certain non-management directors of the Company will
be required to purchase at least 10% of the total amount of the Investment as a
condition to closing. The terms and conditions of CCP's commitment hereunder and
of the Investment are not limited to the terms and conditions set forth herein
or in the Term Sheet. Those matters that are not covered by or made clear under
the provisions hereof or of the Term Sheet are subject to the reasonable
approval and reasonable agreement of CCP and you.
By executing this Commitment Letter, you agree (a) to indemnify and
hold harmless CCP, its affiliates and their respective officers, partners,
directors, managers,
2
26
employees, affiliates, agents and controlling persons from and against any and
all losses, claims, damages, liabilities and expenses, joint or several, to
which any such persons may become subject arising out of or in connection with
this Commitment Letter, the Term Sheet, the Redemption, the Investment or any
related transaction or any claim, litigation, investigation or proceeding
relating to any of the foregoing, regardless of whether any of such indemnified
parties is a party thereto, and to reimburse each of such indemnified parties
upon demand for any reasonable legal or other expenses incurred in connection
with investigating or defending any of the foregoing, provided that the
foregoing indemnity will not, as to any indemnified party, apply to losses,
claims, damages, liabilities or related expenses to the extent they are found in
a final judgment of a court to have resulted from the willful misconduct or
gross negligence of such indemnified party, and (b) to reimburse CCP and its
affiliates on demand for all reasonable out-of-pocket expenses (including but
not limited to expenses of CCP's due diligence investigation, consultants' fees,
syndication expenses, travel expenses and reasonable fees, disbursements and
other charges of counsel), in each case incurred in connection with the
Commitment Letter, the Term Sheet, the Redemption, the Investment and any
related documentation (whether or not the transactions contemplated hereby are
consummated) and the administration, enforcement, amendment, modification or
waiver thereof; provided, that CCP shall notify you when out-of pocket expenses
(other than fees, disbursements and other charges of counsel) exceeds $20,000.
Notwithstanding any other provision of this Commitment Letter, no indemnified
person shall be liable for any indirect or consequential damages in connection
with its activities related to the Investment.
In consideration of the substantial expenditure of time, effort and
expense to be undertaken by CCP immediately upon the execution and delivery of
this Commitment Letter, you hereby undertake and agree that in the absence of
CCP's prior written consent, for the period from the date hereof until December
15, 1999 (the "Termination Date"), you will not, nor will you permit any of your
affiliates (or authorize or permit any of their respective representatives) to
take, directly or indirectly, any action to initiate, assist, solicit, receive,
negotiate, encourage or accept any offer or inquiry from any person to (a)
provide any debt or equity financing other than financings under your credit
agreement, arrangements relating to certain oil and gas financings and other
financings of the type not described herein (a "Financing") or purchase all or
substantially all of the assets or capital stock of the Company (whether through
a purchase of stock, merger, asset sale or related transaction) (a "Sale of the
Company"), (b) reach any agreement or understanding (whether or not such
agreement or understanding is absolute, revocable, contingent or conditional)
for, or otherwise attempt to consummate, any Financing or Sale of the Company or
(c) furnish or cause to be furnished any information with respect to the Company
or any of its affiliates to any person (other than as contemplated by this
Commitment Letter) who you, or any of your representatives, know or have reason
to believe is in the process of considering any Financing or Sale of the
Company, except in each case, solely with respect to a Sale of the Company, to
the extent that the foregoing restrictions are inconsistent with the exercise of
the fiduciary duties of your officers or directors. The obligations under this
paragraph shall terminate and be of no further force and effect in the event
that this Commitment Letter is terminated by CCP in accordance with its terms.
This Commitment Letter is delivered to you on the understanding that
neither the existence of this Commitment Letter or the Term Sheet nor any of
their terms or substance shall be disclosed, directly or indirectly, except (a)
as may be compelled to be disclosed in a judicial
3
27
or administrative proceeding or as otherwise required by law, (b) on a
confidential and "need-to-know" basis, to your officers, directors, employees,
agents and advisors who are directly involved in the consideration of this
matter, (c) on a confidential basis to Nasdaq and its agents and (d) on a
confidential basis to Enron and its advisors and agents in connection with the
Redemption.
You acknowledge that CCP and its affiliates may be providing debt
financing, equity capital or other services (including financial advisory
services) to other companies in respect of which you may have conflicting
interests regarding the transactions described herein and otherwise. CCP will
not use confidential information obtained from you by virtue of the transactions
contemplated by this Commitment Letter or its other relationships with you in
connection with the performance by CCP or any of its affiliates of services for
other companies, and CCP will not furnish any such information to other
companies. You also acknowledge that CCP and its affiliates have no obligation
to use in connection with the transactions contemplated by this Commitment
Letter, or to furnish to you, confidential information obtained by CCP or any of
its affiliates from other companies.
This Commitment Letter and CCP's commitment hereunder shall not be
assignable by you without the prior written consent of CCP, and any attempted
assignment without such consent shall be void. This Commitment Letter and CCP's
commitment hereunder may be assigned in whole or in part by CCP to its
affiliates or other financial institutions acceptable to CCP and reasonably
acceptable to you. This Commitment Letter may not be amended or any provision
hereof waived or modified except by an instrument in writing signed by CCP and
you. This Commitment Letter may be executed in any number of counterparts, each
of which shall be an original and all of which, when taken together, shall
constitute one agreement. Delivery of an executed counterpart of a signature
page of this Commitment Letter by facsimile transmission shall be effective as
delivery of a manually executed counterpart of this Commitment Letter. This
Commitment Letter is intended to be solely for the benefit of the parties hereto
and is not intended to confer any benefits upon, or create any rights in favor
of, any person other than the parties hereto. This Commitment Letter shall be
governed by, and construed in accordance with, the laws of the State of New
York.
Please indicate your acceptance of the terms hereof and of the Term
Sheet by signing in the appropriate space below and returning to CCP the
enclosed duplicate originals (or facsimiles) of this Commitment Letter not later
than 5:00 p.m., New York City time, on December 3, 1999. CCP's commitment
hereunder will expire at such time in the event that CCP has not received such
executed duplicate originals (or facsimiles) in accordance with the immediately
preceding sentence. In the event that the closing in respect of the Investment
does not occur on or before the Termination Date, then this Commitment Letter
and CCP's commitment hereunder shall automatically terminate unless CCP shall,
in its discretion, agree to an extension. The compensation, reimbursement,
indemnification and confidentiality provisions contained herein shall remain in
full force and effect regardless of whether definitive documentation for the
Investment shall be executed and delivered and notwithstanding the termination
of this Commitment Letter or CCP's commitment hereunder.
CCP is pleased to have been given the opportunity to assist you in
connection with this transaction and we look forward to working with you to
complete this transaction.
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28
Very truly yours,
CHASE CAPITAL PARTNERS
By:______________________________
Name:
Title:
Accepted and agreed to as of
the date first above written:
CARRIZO OIL & GAS, INC.
By:________________________________
Name:
Title:
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29
CARRIZO OIL & GAS, INC.
$22,000,000 SENIOR SUBORDINATED NOTES WITH WARRANTS AND
$8,000,000 COMMON STOCK INVESTMENT
TERM SHEET
SENIOR SUBORDINATED NOTES
ISSUER: Carrizo Oil & Gas, Inc. (the "Issuer").
HOLDERS: Affiliates of Chase Capital Partners
(collectively, "CCP"), certain non-management
directors of the Issuer (as described under
"Conditions Precedent" below) and, at the
option of CCP, other investors acceptable to
CCP and reasonably acceptable to the Issuer.
ISSUE: Senior Subordinated Notes (the "Notes") with
warrants to purchase 15.4% of the Issuer's
fully-diluted common stock.
PRINCIPAL AMOUNT: $22,000,000.
ISSUE PRICE: Par.
CLOSING DATE: To be no later than December 15, 1999.
CLOSING FEE: Payable in accordance with the Commitment
Letter to which this Term Sheet is attached.
SECURITY: The Notes will be unsecured.
RANKING: The Notes will be subordinated obligations of
the Issuer ranking junior in right of payment
to all Senior Indebtedness (to be defined) of
the Issuer and senior in right of payment to
all existing and future subordinated
indebtedness of the Issuer.
USE OF PROCEEDS: The proceeds of the Notes shall be used to
retire all of the Issuer's 9% Series A
Preferred Stock, par value $0.01 (liquidation
amount of approximately $34,000,000) and
warrants to purchase 750,000 shares of the
Issuer's common stock held by affiliates of
Enron Corp. collectively, "Enron"), which to
the Issuer's knowledge represents all of the
securities of the Issuer held by Enron other
than warrants to purchase up to 250,000 shares
of the Issuer's common stock which Enron will
retain (and the terms of which will be
amended), at an aggregate redemption price
equal to $12,000,000 in cash, to fund the
Issuer's ongoing drilling program, to fund
working capital and for general corporate
purposes.
30
COUPON: The Notes will bear interest at a fixed rate
of 9% per annum, payable quarterly in arrears,
calculated on the basis of a 360-day year.
Until the fifth anniversary of the Closing
Date, interest on the Notes may, at the option
of the Issuer, be paid in cash, or may accrue
and be added to the principal amount of the
Notes, in each case, pro rata among the Notes,
provided, however, that at least 40% of each
such interest payment shall be paid in cash.
On and after the fifth anniversary of the
Closing Date, all interest on the Notes shall
be payable in cash. During the existence of
any event of default under the definitive Note
documentation, the interest rate will be 2.0%
p.a. above the stated coupon rate.
MATURITY DATE: The eighth anniversary of the Closing Date.
REDEMPTION PROVISIONS: MANDATORY:
The Notes shall be amortized in one annual
installment on the Maturity Date.
Upon the occurrence of a change of control (to
be defined, but to include a substantial asset
sale, merger and liquidation as well as other
customary change of control events), each
holder of the Notes may require the Issuer to
redeem the Notes at the applicable Optional
Redemption Price.
OPTIONAL:
The Notes may be prepaid in whole or in part,
at any time upon 30 days' notice, at the
following premium (expressed as a percentage
of the principal amount prepaid), plus accrued
and unpaid interest (the "Optional Redemption
Price"):
Year 1 109%
Year 2 107%
Year 3 105%
Year 4 104%
Year 5 103%
Year 6 102%
Year 7 101%
Thereafter 100%
Any offer to redeem or repurchase any Notes
shall be made to all holders of the Notes on
the same terms and conditions and any
redemption or repurchase shall be made on a
pro rata basis among the holders of the
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31
Notes.
DOCUMENTATION: The issuance of the Notes and the related
warrants will be subject to the negotiation,
execution and delivery of definitive
documentation reasonably acceptable to all
parties, including warrant agreement,
shareholders' agreement and registration
rights agreement, and shall contain
representations, warranties, covenants and
events of default customary for a transaction
of this type and other terms deemed
appropriate by CCP (including but not limited
to those specified herein).
CONDITIONS PRECEDENT: Customary for a financing of this type,
including but not limited to (i) reasonably
satisfactory documentation, (ii) due
authorization, (iii) absence of default, (iv)
truth and accuracy of representations and
warranties, (v) requisite authorizations,
approvals and consents; (vi) satisfactory
legal opinions and (vii) satisfactory evidence
that the issuance of the Notes, Warrants and
Common Stock does not require shareholder
approval under NASDAQ rules and is not in
violation of NASDAQ's voting rights policy. In
addition to the foregoing, certain
non-management directors of the Issuer will be
required to purchase, on a pro rata basis, at
least 10% of the total amount of the Notes,
Warrants and Common Stock as a condition to
closing.
REPRESENTATIONS AND
WARRANTIES: Customary for a financing of this type.
AFFIRMATIVE COVENANTS: Customary for a financing of this type.
FINANCIAL COVENANTS: Customary for a financing of this type.
INFORMATION RIGHTS: Customary for a financing of this type,
subject to third-party confidentiality
provisions and attorney-client privilege
exceptions. The holders of the Notes will
agree to maintain the confidentiality of all
non-public information received from the
Issuer, subject to customary exceptions.
NEGATIVE COVENANTS: Customary for a financing of this type and to
be consistent with the Senior Facilities. The
definitive Note documentation will contain
certain restrictions on modifications to the
Senior Facilities without the prior written
consent of the holders of the Notes.
EVENTS OF DEFAULT: Customary for a financing of this
type, which will include: nonpayment of
principal; nonpayment of interest, fees or
other amounts after a grace period to be
agreed upon; material inaccuracy of
representations and warranties; violation of
covenants (subject to grace periods to be
agreed upon); cross-acceleration; bankruptcy
events; and material judgments.
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32
Upon the occurrence of an event of default,
the holders of a majority of the aggregate
principal amount of the Notes then outstanding
may, at their option, by written notice to the
Issuer, declare all the Notes due and payable.
The Notes shall become automatically
accelerated in the case of any bankruptcy
event of default of the Issuer.
EXPENSES AND The Issuer shall pay (a) all reasonable
INDEMNIFICATION: out-of-pocket expenses of CCP and its
affiliates associated with the provision of
the Notes and the preparation, negotiation,
execution and delivery of the definitive Note
documentation, whether or not the transaction
closes, and any amendment or waiver with
respect thereto (including the reasonable
fees, disbursements and other charges of
counsel) and (b) all reasonable out-of-pocket
expenses of the holders of the Notes
(including fees, disbursements and other
charges of counsel) in connection with the
enforcement of the Notes.
TRANSFER RESTRICTIONS: The Notes shall be freely transferable,
subject only to compliance with applicable
securities law; provided, however that no
Notes shall be transferred to a competitor of
the Issuer.
GOVERNING LAW: State of New York.
4
33
WARRANTS
ISSUER: Carrizo Oil & Gas, Inc. (the "Issuer").
WARRANTS: Warrants to purchase 15.4% of the
fully-diluted common stock of the
Issuer (the "Warrant Stock").
EXERCISE PERIOD: Exercisable at any time prior to the
eighth anniversary of the Closing Date.
PURCHASE PRICE: The Warrants will be issued in conjunction
with the Notes for no additional
consideration and will be detachable.
EXERCISE PRICE: $2.20 per share.
PAYMENT OF EXERCISE PRICE: Cash or surrender of Warrants equal to the
Exercise Price.
METHOD OF EXERCISE: Full or partial.
LIQUIDITY OPPORTUNITY: From and after the fifth anniversary of
the Closing Date and for so long as CCP owns
at least 15% of the Issuer's fully-diluted
common equity and CCP has not been given a
liquidity opportunity (to be defined, but to
include (i) a sale of the Issuer which
includes the sale of CCP's equity or (ii) the
Issuer reaching a specified minimum public
float), then CCP shall have the right to
appoint two additional members to the Issuer's
Board of Directors and the Issuer will
increase the size of its Board of Directors to
provide for such additional Board members.
TAG-ALONG RIGHTS: Each holder of Warrants or Warrant Stock that
is a Significant Holder shall have the right
to participate in any sale of common stock by
any principal shareholders to any third party
(other than (i) sales to other principal
shareholders with a value of less than $3
million, (ii) sales in the public market or
(iii) sales pursuant to the exercise of
registration rights), such participation to be
pro rata with such shareholders. A
"Significant Holder" is a holder of Warrants,
Warrant Stock or Common Stock representing not
less than 10% of the Issuer's fully-diluted
common equity.
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PREEMPTIVE RIGHTS: Each holder of Warrants or Warrant Stock that
is a Significant Holder will be entitled to
participate pro rata (assuming exercise of all
Warrants) as purchasers in private equity
offerings by the Issuer (including
appreciation rights and other securities or
rights having equity features).
ANTI-DILUTION PROVISIONS: Customary weighted-average anti-dilution
provisions. The Issuer will not be permitted
to enter into any transaction that would
result in an adjustment under the antidilution
provisions that would cause Warrants to become
exercisable for at least 2,075,000 shares at a
price less than $1.77 unless the Issuer has
previously obtained shareholder approval for
the issuance of the Warrants. The Issuer will
submit the issuance of the Warrants as a
matter to be approved by the shareholders at
the Issuer's next shareholders meeting and the
principal shareholders and CCP will agree in
the shareholders agreement to vote to approve
such issuance.
INFORMATION RIGHTS: The holders of the Warrants or Warrant Stock
will be entitled to receive the same
information as holders of the Notes. The
holders of the Warrants and Warrant Stock will
agree to maintain the confidentiality of all
non-public information received from the
Issuer, subject to customary exceptions.
REGISTRATION RIGHTS: The holders of Warrants, Warrant Stock and/or
Common Stock will have the following
registration rights:
(i) Three demand registrations at any time,
and
(ii) Unlimited piggyback rights.
The Issuer will pay the expenses of the
holders of Warrant Stock in all demand and
piggyback registrations (including the
fees and expenses of one counsel for such
holders, but excluding underwriting discounts
and selling commissions).
The Issuer will not grant other registration
rights inconsistent with the rights of the
holders of Warrants, Warrant Stock and Common
Stock.
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If any other holder or group of holders of the
Issuer's equity exercises a demand
registration right and the holders of
Warrants, Warrant Stock and/or Common Stock,
promptly after receiving notice of such
exercise, exercise one of their demand
registration rights, then all such holders
shall be entitled to include shares in such
registration on a pro rata basis with priority
over any holder entitled to piggyback
registration rights with respect to such
demand registration. Any existing registration
rights granted by the Issuer shall be amended
to give effect to the foregoing arrangement.
The Issuer, its principal shareholders
(including the holders of the Warrant Stock
and the Common Stock) and the holders of
Warrants will agree to customary holdback
restrictions with respect to any offering
which includes common stock issued upon
exercise of the Warrants.
DOCUMENTATION: The terms with respect to the Warrants will be
set forth in definitive documentation
reasonably acceptable to all parties and
containing other terms and provisions
customary for a transaction of this type,
including a shareholders agreement among the
holders of the Warrants and the Common Stock,
the Issuer and the principal shareholders.
TRANSFERABILITY: The Warrants shall be freely transferable in
whole or in part to accredited investors,
subject only to compliance with applicable
securities laws; provided, however that no
Warrants shall be transferred to a competitor
of the Issuer.
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COMMON STOCK
ISSUER: Carrizo Oil & Gas, Inc. (the "Issuer").
TYPE OF SECURITY: Common Stock, par value $0.01 per share (the
"Common Stock").
NUMBER OF SHARES: 3,636,364 shares.
PURCHASE PRICE: $2.20 per share.
CLOSING FEE: Payable in accordance with the Commitment
Letter to which this Term Sheet is attached.
LIQUIDITY OPPORTUNITY: From and after the fifth anniversary of the
Closing Date and for so long as CCP owns at
least 15% of the Issuer's fully-diluted common
equity and CCP has not been given a liquidity
opportunity (to be defined, but to include (i)
a sale of the Issuer which includes the sale
of CCP's equity or (ii) the Issuer reaching a
specified minimum public float), then CCP
shall have the right to appoint two additional
members to the Issuer's Board of Directors and
the Issuer will increase the size of its Board
of Directors to provide for such additional
Board members.
TAG-ALONG RIGHTS: Each holder of Common Stock that is a
Significant Holder shall have the right to
participate in any sale of common stock by any
principal shareholders to any third party
(other than (i) sales to other principal
shareholders with a value of less than $3
million, (ii) sales in the public market or
(iii) sales pursuant to the exercise of
registration rights), such participation to be
pro rata with such shareholders.
PREEMPTIVE RIGHTS: Each holder of Common Stock that is a
Significant Holder will be entitled to
participate pro rata as purchasers in private
equity offerings by the Issuer (including
appreciation rights and other securities or
rights having equity features).
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BOARD REPRESENTATION: For so long as CCP owns at least 15% of the
Issuer's fully-diluted equity, CCP will have
the right to appoint 2 members to the Issuer's
Board of Directors. For so long as CCP owns at
least 7 1/2% but less than 15% of the Issuer's
fully-diluted equity, CCP will have the right
to appoint 1 member to the Issuer's Board of
Directors. The Issuer will increase the size
of its Board of Directors from 5 to 7 to
provide for the Board members to be appointed
by CCP.
INFORMATION RIGHTS: The holders of the Common Stock will be
entitled to receive the same information as
holders of the Notes. The holders of the
Common Stock will agree to maintain the
confidentiality of all non-public information
received from the Issuer, subject to customary
exceptions.
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REGISTRATION RIGHTS: The holders of the Common Stock, Warrants
and/or Warrant Stock will have the following
registration rights:
(i) Three demand registrations at any time,
and
(ii) Unlimited piggyback rights.
The Issuer will pay the expenses of the
holders of Common Stock in all demand and
piggyback registrations (including the fees
and expenses of one counsel for such holders,
but excluding underwriting discounts and
selling commissions).
The Issuer will not grant other registration
rights inconsistent with the rights of the
holders of Common Stock, Warrants and Warrant
Stock.
If any other holder or group of holders of the
Issuer's equity exercises a demand
registration right and the holders of
Warrants, Warrant Stock and/or Common Stock,
promptly after receiving notice of such
exercise, exercise one of their demand
registration rights, then all such holders
shall be entitled to include shares in such
registration on a pro rata basis with priority
over any holder entitled to piggyback
registration rights with respect to such
demand registration. Any existing registration
rights granted by the Issuer shall be amended
to give effect to the foregoing arrangement.
The Issuer, its principal shareholders
(including the holders of the Warrant Stock
and the Common Stock) and the holders of
Warrants will agree to customary holdback
restrictions with respect to any offering
which includes any Common Stock.
DOCUMENTATION: The terms with respect to the purchase of the
Common Stock will be set forth in definitive
documentation reasonably acceptable to all
parties and containing other terms and
provisions customary for a transaction of this
type, including a shareholders agreement among
the holders of the Common Stock and the
Warrants, the Issuer and the principal
shareholders.
TRANSFERABILITY: The Common Stock shall be freely transferable
in whole or in part, subject only to
compliance with applicable securities laws;
provided, however that no Common Stock shall
be transferred to a competitor of the Issuer.
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