EXHIBIT 10.6
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT is
dated and effective as of October 29, 2004 (this "First Amendment"), by and
among CARRIZO OIL & GAS, INC., a Texas corporation (the "Borrower"), CCBM, INC.,
a Delaware corporation (the "Guarantor"), and HIBERNIA NATIONAL BANK, a national
banking association, individually as a Lender and as Administrative Agent, and
UNION BANK OF CALIFORNIA, N.A., a national banking association, individually as
a Lender and as Co-Agent.
RECITALS:
1. The Borrower, the Guarantor, the Agent, and the Lenders have heretofore
entered into that certain Second Amended and Restated Credit Agreement dated as
of September 30, 2004 (the "Agreement"), pursuant to which the Lenders
established in favor of Borrower a Line of Credit as more fully described
therein.
2. All Loans by the Lenders to the Borrower are guaranteed by the
Guarantor.
3. The parties desire to amend the Agreement as set forth herein.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants hereinafter set forth and intending to be legally bound hereby, do
hereby amend and supplement the Agreement as follows:
A. Defined Terms. Capitalized terms used herein which are defined in the
Agreement are used herein with such defined meanings, as said definitions may be
amended and/or supplemented by this First Amendment.
B. Revision to Defined Terms.
1. The definition of the term "Secured Subordinated Debt" in Section 1.1 of
the Agreement is hereby deleted and restated as follows:
"Secured Subordinated Debt" shall mean indebtedness of the Borrower
(and any Subsidiary of Borrower that is a Guarantor) outside of the
Line of Credit, issued for total net proceeds not to exceed
$28,000,000.00, which indebtedness may bear stated cash interest
expense of up to 12% per annum (prior to default); provided that (i)
the documents governing the issuance thereof are entered into on or
before December 31, 2004 (provided that additional notes may be issued
thereunder prior to October 29, 2006), (ii) if such indebtedness is
secured by a mortgage lien on the Mortgaged Properties, such lien
shall be subordinate and inferior to
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the Agent's mortgage lien on the Mortgaged Properties, and (iii) the
Required Lenders have reviewed and approved the documents governing
said issuance.
2. The following new definitions are hereby added to Section 1.1 of the
Agreement:
"First Amendment" shall mean that certain First Amendment to Second
Amended and Restated Credit Agreement dated as of October 29, 2004, by
and among the Borrower, the Guarantor, the Agent, and the Lenders.
"Interest Expense" means, for any period, total interest expense
(including that portion attributable to capital lease obligations in
accordance with GAAP and capitalized interest) of the Borrower and its
Subsidiaries (other than Unrestricted Subsidiaries) on a consolidated
basis with respect to all outstanding Obligations of the Borrower and
its Subsidiaries (other than Unrestricted Subsidiaries) to the extent
the promissory notes, leases or other instruments or agreements
evidencing such Obligations require the payment of such interest in
cash during such period.
"Secured Subordinated Note Purchase Agreement" means the Note Purchase
Agreement dated as of October 29, 2004 among the Borrower, the
Purchasers (as defined therein) and PCRL Investments, L.P., as
Collateral Agent, as amended, modified or restated from time to time.
"Tangible Net Worth" means, with respect to any Person, the total
assets of such Person (other than with respect to the Borrower, its
Unrestricted Subsidiaries), on a consolidated basis, exclusive of (a)
those assets classified as intangible, including, without limitation,
goodwill, patents, trademarks, trade names, copyrights, franchises and
deferred charges, (b) treasury stock and minority interests in any
Person, (c) cash set apart and held in sinking or other analogous
funds established for the purpose of redemption or other retirement of
capital stock, (d) to the extent not already deducted from total
assets, allowances for depreciation, depletion, obsolescence and/or
amortization of properties, uncollectible accounts, and contingent but
probable liabilities as to which an amount can be established, (e)
deferred taxes and (f) all assets arising from advances to officers,
former officers or sales representatives of such Person or any of its
Subsidiaries (other than with respect to the Borrower, its
Unrestricted Subsidiaries) made outside the ordinary course of
business; less total liabilities of such Person and its Subsidiaries
(other than with respect to the Borrower, its Unrestricted
Subsidiaries), on a consolidated basis,
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all of the above being determined in accordance with GAAP and, with
respect to the Borrower, excluding the effect of any cumulative
after-tax amounts of ceiling test write-downs (not to exceed an
aggregate of $30 million) incurred subsequent to December 31, 2001
pursuant to Rule 4.10 of Regulation S-X promulgated by the Commission.
C. Revised Schedule 11.1. Schedule 11.1 as attached to the Agreement is
hereby deleted in its entirety and replaced with the Schedule 11.1 attached to
this First Amendment.
D. Restatement of Section 11.21. Section 11.21 of the Agreement is hereby
deleted in its entirety and restated as follows:
Section 11.21. Security Agreement. The Security Agreement constitutes
a first priority security interest affecting one hundred percent
(100%) of the issued and outstanding stock of the Guarantor, and there
are no other Encumbrances affecting the said stock except as permitted
by Section 13.4(r).
E. Restatement of Section 12.8(d). Section 12.8(d) of the Agreement is
hereby deleted in its entirety and restated as follows:
(d) Minimum Shareholder's Equity. The Borrower shall maintain at all
times a minimum shareholder's equity of not less than $100,000,000.00,
plus (i) 100% of all common and preferred equity contributed by
shareholders of Borrower subsequent to June 30, 2004, plus (ii) 50% of
all positive earnings occurring subsequent to June 30, 2004, plus
(iii) 180 days after Borrower's issuance of any of the Secured
Subordinated Debt, an amount equal to 50% of the net proceeds from the
issuance of any Secured Subordinated Debt; provided, however, the
minimum shareholder's equity on and after April 30, 2005 shall be not
less than $112,500,000.00. For purposes of this covenant, the
calculation of Borrower's "shareholder's equity" will exclude the
effects, if any, of ceiling test write-downs pursuant to Regulation
SX4.10 of the Securities and Exchange Commission.
F. Addition of New Affirmative Covenants. Article XII of the Agreement is
hereby amended and supplemented to include the following new affirmative
covenants as Section 12.8 (e) and Section 12.18, respectively:
(e) EBITA to Interest Expense Ratio. The Borrower shall maintain as of
the last day of each fiscal quarter a ratio of EBITDA for the four
fiscal quarter period ending on such day to Interest Expense for such
period of at least 2.60 to 1.0.
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Section 12.18. Additional Mortgaged Properties. (a) The Borrower
agrees to execute and deliver from time to time such documents as are
reasonably requested by the Agent to provide that at least 90% of the
net present value of the proved oil and gas reserves owned by the
Borrower and each Guarantor, taken as a whole, are Mortgaged
Properties, excluding Borrower's interests in the Camp Hill Field in
East Texas.
(b) In the event the Tangible Net Worth of any Guarantor (calculated
with respect to CCBM without including the capital stock of Pinnacle
so long as Pinnacle is not a Subsidiary of the Borrower) exceeds 3% or
more of the Tangible Net Worth of the Borrower and its Subsidiaries,
on a consolidated basis, the Borrower shall cause such Guarantor to
execute and deliver to Agent, for the benefit of each Lender,
Mortgages in form and substance reasonably acceptable to the Agent
together with such other assignments, conveyances, amendments,
agreements and other writings (each duly authorized and executed) as
Agent shall reasonably deem necessary or appropriate to grant,
evidence and perfect the Encumbrances in the assets and properties of
such Guarantor (provided in no event shall the capital stock of
Pinnacle be pledged so long as Pinnacle is not a Subsidiary).
G. Restatement of Section 13.4(r). Section 13.4(r) of the Agreement is
hereby deleted in its entirety and restated as follows:
(r) Encumbrances affecting all or part of the Collateral that secure
Secured Subordinated Debt and other indebtedness referred to in
Section 13.5(l) and such other obligations and liabilities related
thereto, in each case, that is subject to, and permitted to be secured
by, a written subordination agreement executed by the Agent on behalf
of the Lenders.
H. Restatement of Section 13.5(l). Section 13.5(l) of the Agreement is
hereby deleted in its entirety and restated as follows:
(l) Subject to the provisions of Sections 10.2 and 13.4(r), the
indebtedness evidenced by the Secured Subordinated Debt, capitalized
interest thereon, and indebtedness arising under hedging agreements
between the Borrower and any holder of such debt or any affiliate
thereof, and guarantees executed by any Subsidiary of Borrower
guaranteeing payment thereof.
I. Restatement of Section 13.7. Section 13.7 of the Agreement is hereby
deleted in its entirety and restated as follows:
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Section 13.7. Other Agreements. Except as set forth in Schedule 11.1,
the Borrower will not enter into any agreement containing any
provision which would be violated or breached by the performance of
its obligations hereunder or under any instrument or document
delivered or to be delivered by it hereunder or in connection
herewith; provided that the Borrower may agree to the redemption or
repurchase of its securities upon a change of control or dissolution,
winding-up or liquidation of, or the merger or sale of substantially
all the assets of, the Borrower (provided that nothing in this Section
13.7 shall permit any action otherwise prohibited by Sections 13.1 and
13.2 hereof).
J. Restatement of Section 13.11. Section 13.11 of the Agreement is hereby
deleted in its entirety and restated as follows:
Section 13.11. Payments on Secured Subordinated Debt. Subject to the
terms and conditions of the subordination agreement referenced in
Section 10.2 above, the Borrower agrees that the only scheduled
payments on the Secured Subordinated Debt due prior to the later of
the stated Facility A Termination Date and the stated Facility B
Termination Date will be scheduled interest payments on promissory
notes evidencing Secured Subordinated Debt. In addition, the Borrower
agrees to the extent it has the discretion to do so, to make said
interest payments by the issuance of debt or equity securities to the
maximum extent permitted by the documents evidencing the Secured
Subordinated Debt; provided, however, (i) during such time as the
Borrower is permitted to make all or any portion of said interest
payments by the issuance of debt, any remaining portion of such
interest payments may be paid in cash and (ii) the Borrower shall have
no obligation to issue common stock in respect of any payment under
the Secured Subordinated Note Purchase Agreement to the extent such
issuance would require the Borrower to issue common stock below the
Floor Price (as defined in the Secured Subordinated Note Purchase
Agreement) for that payment.
K. Consent by Lenders to Secured Subordinated Debt. Subject to the terms
and conditions of that certain Subordination Agreement of even date herewith by
and among the Agent, PCRL Investments L.P. (as Subordinate Debt Agent and
Purchaser), and Borrower, the Lenders do hereby permit the Secured Subordinated
Debt to be issued, and the liens contemplated thereby to be granted by Borrower
pursuant to the Secured Subordinated Note Purchase Agreement, and the execution
of the guarantees contemplated thereby, and authorize, ratify and confirm the
Agent's execution of the foregoing Subordination Agreement on behalf of the
Lenders.
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L. Confirmation of Related Documents. It is the intention of the parties
that all of the liens, privileges, priorities, and equities existing and to
exist under and in accordance with the terms of the Related Documents are hereby
renewed, extended, and carried forward as security for the Indebtedness. In
addition, the Guarantor hereby confirms its guaranty of the Indebtedness, which
guaranty is evidenced by that certain Commercial Guaranty dated September 30,
2004 by Guarantor in favor of Agent.
M. Representations; No Default. On and as of the date of this First
Amendment, and after giving effect to this First Amendment, the Borrower and the
Guarantor confirm, reaffirm, and restate the representations and warranties set
forth in the Agreement and the Loan Documents; provided, that each reference to
the Agreement herein shall be deemed to include the Agreement as amended by this
First Amendment.
N. Payment of Expenses. The Borrower agrees to pay or reimburse the Lender
for all legal fees and expenses of counsel to the Agent in connection with (i)
the transactions contemplated by this First Amendment and (ii) a review of the
documentation for the Secured Subordinated Debt and preparation of the required
subordination agreement.
O. Amendments. The Agreement and this First Amendment are credit or loan
agreements as described in LA. R.S. 6:ss.1121, et seq. There are no oral
agreements between the Agent and Lenders and the Borrower and/or Guarantor. The
Agreement, as amended by this First Amendment, and the other Loan Documents set
forth the entire agreement of the parties with respect to the subject matter
hereof and supersede all prior written and oral understandings between the
Borrower, the Guarantor, the Agent, and the Lenders, with respect to the matters
herein and therein set forth. The Agreement, as amended by this First Amendment,
cannot be modified or amended except by a writing signed and delivered by the
Borrower, the Guarantor, the Agent and the Lenders.
P. Waiver of Defenses. In consideration of the Lenders' execution of this
First Amendment, the Borrower and Guarantor do hereby irrevocably waive any and
all claims and/or defenses to payment on any indebtedness arising under the
Agreement and owed by any of them to the Lender that may exist as of the date of
execution of this First Amendment.
Q. Governing Law: Counterparts. The First Amendment shall be governed by
and construed in accordance with the laws of the State of Louisiana. This First
Amendment may be executed in any number of counterparts, all of which
counterparts, when taken together, shall constitute one and the same instrument.
R. Continued Effect. Except as expressly modified herein, the Agreement
shall continue in full force and effect. The Agreement as amended herein is
hereby ratified and confirmed by the parties hereto.
S. Reliance on Corporate Resolutions. The Borrower and the Guarantor hereby
certify to the Lenders that the resolutions delivered in connection with the
Agreement remain in effect, and that Paul F. Boling is authorized to execute
this First Amendment on behalf of Borrower and Guarantor.
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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be executed and delivered as of the date hereinabove provided by the authorized
officers each hereunto duly authorized.
Borrower:
CARRIZO OIL & GAS, INC.
a Texas corporation
By: /s/ Paul F. Boling
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Name: Paul F. Boling
Title: Vice President and
Chief Financial Officer
Guarantor:
CCBM, INC.
a Delaware corporation
By: /s/ Paul F. Boling
------------------
Name: Paul F. Boling
Title: Vice President and
Chief Financial Officer
Agent:
HIBERNIA NATIONAL BANK, as Agent
By: /s/ David R. Reid
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Name: David R. Reid
Title: Senior Vice President
Lenders:
HIBERNIA NATIONAL BANK
By: /s/ David R. Reid
-----------------
Name: David R. Reid
Title: Senior Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Damien Meiburger
--------------------
Name: Damien Meiburger
Title: Senior Vice President
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Schedule 11.1
Although the Borrower is not required by the documents evidencing the
Secured Subordinated Debt to issue Capital Stock in payment of the Secured
Subordinated Debt, pursuant to such documents it has the option to do so. Under
certain circumstances the Borrower is required to repurchase such Capital Stock.
Such repurchase would violate Section 13.3 of the Agreement.