EXHIBIT 10.7
EXECUTION VERSION
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SECOND AMENDMENT TO SECURITIES PURCHASE AGREEMENT
This Second Amendment to Securities Purchase Agreement (this "Second
Amendment") is entered into as of the 29th day of October, 2004, by and among
Carrizo Oil & Gas, Inc., a Texas corporation (the "Company") and the Investors
listed on the signature pages hereto (each an "Investor" and collectively, the
"Investors").
W I T N E S S E T H:
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WHEREAS, the Company and the initial investors thereunder entered into that
certain Securities Purchase Agreement dated as of December 15, 1999, as amended
by that certain First Amendment dated as of June 7, 2004 (as amended, the
"Securities Purchase Agreement"; unless otherwise defined herein, all terms used
herein with their initial letter capitalized shall have the meaning given such
terms in the Securities Purchase Agreement); and
WHEREAS, the Company has requested that the Investors amend the Securities
Purchase Agreement and waive the right to an additional financial covenant
arising pursuant to Section 8.13(c) of the Securities Purchase Agreement as a
result of the addition of an EBITDA to Interest Expense Ratio covenant to
Section 12.8(e) of the Senior Credit Agreement; and
WHEREAS, subject to the terms and conditions set forth herein, the
Investors have agreed to the Company's requests.
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed, the
Company and the Investors hereby agree as follows:
SECTION 1. Amendments. In reliance on the representations, warranties,
covenants and agreements contained in this Second Amendment, the Securities
Purchase Agreement shall be amended effective as of the date hereof in the
manner provided in this Section 1.
1.1 Amended Definitions. (a) The definition of "Applicable Prepayment
Premium" in Section 1.1 of the Securities Purchase Agreement shall be and it
hereby is amended and restated in its entirety to read as follows:
"Applicable Prepayment Premium" means, at any date of determination in
connection with a prepayment of the Notes in accordance with Sections 3.5
and 3.6 hereof during any period set forth below, an amount equal to the
amount set forth below opposite such period:
Prepayment Rate During the Period % of Principal Being Paid
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June 1, 2004 to and including the
fifth anniversary of the Closing Date 3%
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At anytime after the fifth anniversary of the
Closing Date to and including the eighth
anniversary of the Closing Date 1%
At anytime after the eighth anniversary
of the Closing Date 0%
(b) Subparagraph (a) of the definition of "Senior Indebtedness" in
Section1.1 of the Securities Purchase Agreement shall be and it hereby is
amended in its entirety to read as follows:
(a) all "Indebtedness" as defined in the Senior Credit Agreement, now
existing or hereinafter created;
1.2 Additional Definitions. Section 1.1 of the Securities Purchase
Agreement shall be and it hereby is amended by adding the following definitions
in proper alphabetical order:
"Applicable Period" as defined in Section 12.15.
"Disclosure Notice" as defined in Section 12.15.
"Registrable Securities" as defined in the Secured Note Purchase
Agreement.
"Secured Note Purchase Agreement" means that certain Note Purchase
Agreement dated as of October 29, 2004, by and among the Company, the
Secured Noteholders, and PCRL Investments L.P., as collateral agent for the
Secured Noteholders, as such agreement may be amended, restated,
refinanced, replaced, supplemented or modified from time to time.
"Secured Notes" means the 10% Senior Subordinated Secured Notes due
December 15, 2008 issued by the Company to the Secured Noteholders pursuant
to the terms of the Secured Note Purchase Agreement, as such notes, may be
amended, restated, supplemented or modified from time to time.
"Secured Noteholders" means the holders from time to time of the
Secured Notes issued pursuant to the Secured Note Purchase Agreement.
"Senior Secured Indebtedness" means the "Indebtedness" as defined in
the Secured Note Purchase Agreement.
"Trading Day" as defined in the Secured Note Purchase Agreement.
1.3 Indebtedness.
(a) Subparagraph (k) of Section 8.1 of the Securities Purchase Agreement
shall be and it hereby is amended by deleting "and" at the end of such
subparagraph.
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(b) Subparagraph (l) of Section 8.1 of the Securities Purchase Agreement
shall be and it hereby is amended by deleting "." at the end of such
subparagraph and inserting ";" in lieu thereof.
(c) Subparagraph (m) of Section 8.1 of the Securities Purchase Agreement
shall be and it hereby is amended by deleting "." at the end of such
subparagraph and inserting "; and" in lieu thereof.
(d) Section 8.1 of the Securities Purchase Agreement is hereby amended by
adding the following subparagraph at the end of such section:
(m) The Senior Secured Indebtedness.
1.4 Liens.
(a) Subparagraph (p) of Section 8.2 of the Securities Purchase Agreement
shall be and it hereby is amended by deleting "and" at the end of such
subparagraph.
(b) Subparagraph (q) of Section 8.2 of the Securities Purchase Agreement
shall be and it hereby is amended by deleting "." at the end of such
subparagraph and inserting ";" in lieu thereof.
(c) Subparagraph (r) of Section 8.2 of the Securities Purchase Agreement
shall be and it hereby is amended by deleting "." at the end of such
subparagraph and inserting "; and" in lieu thereof.
(d) Section 8.2 of the Securities Purchase Agreement is hereby amended by
adding the following subparagraph at the end of such section:
(m) Liens securing the Senior Secured Indebtedness.
1.5 Repurchase of Common Stock.
Section 8.5(a) of the Securities Purchase Agreement shall be and it
hereby is amended by adding the following subsection at the end thereof:
and (vi) the Company may repurchase its common stock as contemplated
by Section 2(c) of the Registration Rights Agreement (as defined in the
Secured Note Purchase Agreement).
1.6 Restrictions on Ability of Subsidiaries to Make or Repay Intercompany
Loans.
Section 8.5(b)(ii) of the Securities Purchase Agreement shall be and
it hereby is amended by adding the following provision after the phrase
"permitted Secured Indebtedness)":
and Section 7.6 of the Secured Note Purchase Agreement
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1.7 Confidentiality. Section 12.15 of the Securities Purchase Agreement
shall be and it hereby is amended by adding the following at the end of such
section:
(a) For the purposes of this Section 12.15, "Confidential Information"
means information delivered to any Investor by or on behalf of the Company
or any Subsidiary in connection with the transactions contemplated by or
otherwise pursuant to this Agreement and the other Note Documents
(including, without limitation, any information regarding the transactions
contemplated by the Secured Note Purchase Agreement provided prior to
October 29, 2004) that is identified as confidential or should reasonably
be known to be confidential, provided that such term does not include
information that (i) was publicly known or otherwise known to such Investor
prior to the time of such disclosure, (ii) subsequently becomes publicly
known through no act or omission by any Investor or any Person acting on
its behalf, or (iii) otherwise becomes known to any Investor other than
through disclosure by the Company or any Subsidiary.
(b) Subject to Section 12.15(e), each Investor will maintain the
confidentiality of such Confidential Information in accordance with
procedures adopted by such Investor in good faith to protect confidential
information of third parties delivered to such Investor, provided that such
Investor may deliver or disclose Confidential Information to the following
Persons as to whom the Investor remains responsible for their maintenance
of confidentiality to the extent required herein (other than the Persons
described in clauses (iii), (vi) and (vii)), (i) its directors, officers,
employees, agents, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by
the Notes), (ii) its financial advisors and other professional advisors who
are made aware of the confidential nature of such information, (iii) any
other holder of Notes, (iv) any eligible Person to which any Investor sells
or offers to sell Notes or any part thereof or any participation therein
(if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section
12.15), (v) any Person from which such Investor offers to purchase any
security of the Company (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of
this Section 12.15), (vi) any federal or state regulatory authority having
jurisdiction over such Investor, (vii) the National Association of
Insurance Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about its
investment portfolio, or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with
any law, rule, regulation or order applicable to such Investor, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which such Investor is a party or (z) if an Event of Default
has occurred and is continuing, to the extent such Investor may reasonably
determine such delivery and disclosure to be necessary or appropriate in
the enforcement or for the protection of the rights and remedies under the
Notes and this Agreement.
(c) Each Investor, by its acceptance of Notes, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section
12.15 as though it were a party to this Agreement. On reasonable request by
the Company in connection with the delivery to any Investor of information
required to be delivered to such Investor under
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this Agreement or requested by such Investor (other than an Investor that
is a party to this Agreement or its nominee) such Investor will enter into
an agreement with the Company embodying the provisions of this Section
12.15.
(d) Notwithstanding anything to the contrary herein or in any other
Note Document and unless otherwise requested by written notice of an
Investor to the Company, the Company shall have no obligation to deliver
any Confidential Information to any Investor.
(e) If at any time after the Closing Date:
(i) any Confidential Information not disclosed to such Investor
prior to October 29, 2004 that is material and non-public regarding
the Company or any of its Subsidiaries is delivered to an Investor by
or on behalf of the Company or any Subsidiary in connection with the
transactions contemplated by or otherwise pursuant to this Agreement
prior to delivery of the written notice specified in Section 12.15(d);
(ii) at such time (A) such Investor, together with its
Affiliates, is the holder of Registrable Securities (as defined in the
Secured Note Purchase Agreement) representing five one-hundredths of
one percent (0.05%) or more of the outstanding Common Stock of the
Company; or (B) the Issue Date related to any Significant Stock
Payment Notice (as defined in the Secured Note Purchase Agreement)
issued to such Investor or any of its Affiliates has not occurred; and
(iii) such Investor delivers written notice to the Company
indicating that an Applicable Period has begun (a "Disclosure
Notice"),
then as of the end of the Applicable Period set forth in such
Disclosure Notice (or such earlier date as the Company shall have
complied with clause (x) of this Section 12.15(e)(iii)) (unless such
Confidential Information is no longer material, or is no longer
Confidential Information):
(x) the Company shall be obligated to disclose such
Confidential Information in a manner compliant with Regulation FD
of the Exchange Act and in sufficient detail such that such
Investor shall not be restricted from trading the securities of
the Company under the U.S. or any state securities laws due to
its knowledge of such Confidential Information;
(y) the obligations to keep such Confidential Information
confidential and not trade while in possession of such
information of such Investor under Section 12.15(b) shall
terminate; and
(z) to the extent the Company shall not have complied with
clause (x) of this Section 12.15(e)(iii) prior to the end of the
Applicable Period, such Investor, without liability, risk or
obligation to the Company or any of its Subsidiaries, may
(following consultation with the Company, to the extent possible)
disclose such Confidential Information in a manner
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compliant with Regulation FD of the Exchange Act but only in such
detail such that such Investor shall not be restricted from
trading the securities of the Company under the U.S. or any state
securities laws due to its knowledge of such Confidential
Information.
(f) For purposes of this Section 12.15, "Applicable Period"
means, as of the date any Investors receives Confidential
Information prior to delivery of the written notice specified in
Section 12.15(d) with respect to such Confidential Information,
the period specified in the table below opposite the percentage
ownership of the outstanding shares of Common Stock of the
Company represented by the aggregate number of Registrable
Securities issued to such Investor and its Affiliates during the
period of thirty (30) consecutive Trading Days immediately
preceding but excluding such date plus the aggregate number of
shares of Registrable Securities to be issued pursuant to any
Significant Stock Payment Notice then in effect:
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Percentage Ownership Applicable Period
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More than 0.05% but less than or Twelve (12) Trading Days
equal to .75%
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More than .75% but less than or Five (5) Trading Days
equal to 1.5%
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More than 1.5% Three (3) Trading Days
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The Trading Days included in any Applicable Period during
which any Investor is not permitted to sell Registrable
Securities shall be included in the determination of whether an
"Event" has occurred as such term is defined in and to the extent
provided by the Registration Rights Agreement (as defined in the
Secured Notes Purchase Agreement) and to the extent such Trading
Days include Trading Days that would otherwise be included in any
Measurement Period (as defined in the Secured Notes Purchase
Agreement), such Trading Days shall be excluded for such
Measurement Period as if such Trading Days were not Trading Days
(it being understood that such Measurement Period shall be
extended so that the Measurement Period is the full applicable
period of Trading Days), and the date for any payment relating to
such Measurement Period shall be extended for the number of days
equal to the Trading Days excluded from the Measurement Period.
SECTION 2. Waiver. Effective as of the date hereof, upon satisfaction of
the conditions precedent set forth in Section 4.4 hereof, and in reliance upon
the representations and warranties of the Company set forth in the Securities
Purchase Agreement and in this Second Amendment, and notwithstanding anything to
the contrary contained in the Securities Purchase Agreement (including pursuant
to Section 8.13(c) of the Securities Purchase Agreement), the Investors hereby
waive their right to an additional financial covenant to the Securities Purchase
Agreement arising pursuant to Section 8.13(c) as a result of the addition of an
EBITDA to Interest Expense Ratio to Section 12.8(e) of the Senior Credit
Agreement. Nothing contained herein shall obligate any Investor to grant any
additional or future waiver of the obligations to comply with Section
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8.13(c) of the Securities Purchase Agreement or any other provision thereof or
any other Note Document.
SECTION 3. Representations and Warranties. In order to induce the Investors
to enter into this Second Amendment, the Company hereby represents and warrants
to the Investors that upon the effectiveness of this Second Amendment:
(a) each representation and warranty of the Company contained in the
Securities Purchase Agreement is true and correct in all material respects
as of the date hereof (except to the extent that any such representation
and warranty is expressly made as of a particular date, in which event such
representation and warranty was true and correct as of such date);
(b) neither a Default nor an Event of Default has occurred which is
continuing; and
(c) the Company does not have any defenses to payment, counterclaims
or rights of set-off with respect to any of its obligations pursuant to the
Securities Purchase Agreement on the date hereof.
SECTION 4. Miscellaneous.
4.1 Reaffirmation. The terms and provisions set forth in this Second
Amendment shall modify and supersede all inconsistent terms and provisions of
the Securities Purchase Agreement and shall not be deemed to be a consent to the
modification or waiver of any other term or condition of the Securities Purchase
Agreement. Except as expressly modified and superseded by this Second Amendment,
the terms and provisions of the Securities Purchase Agreement are ratified and
confirmed and shall continue in full force and effect.
4.2 Parties in Interest. All of the terms and provisions of this Second
Amendment shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
4.3 Expenses. The Company hereby agrees to pay on demand all reasonable
fees and expenses of counsel to the Investors incurred by the Investors in
connection with the preparation, negotiation and execution of this Second
Amendment and all related documents.
4.4 Effectiveness. This Second Amendment shall become effective upon
satisfaction of each of the conditions precedent set forth in this Section 4.4.
A. The Company and the Investors shall have executed and delivered
this Second Amendment.
B. No Default or Event of Default shall exist.
C. The Investors shall have received a copy of a duly executed
amendment to the Senior Credit Agreement in form and substance acceptable to the
Investors.
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4.5 Counterparts. This Second Amendment may be executed in counterparts,
and all parties need not execute the same counterpart; however, no party shall
be bound by this Second Amendment until this Second Amendment has been executed
by the Company and the Investors at which time this Second Amendment shall be
binding on, enforceable against and inure to the benefit of the Company and the
Investors. Facsimiles shall be effective as originals.
4.6 COMPLETE AGREEMENT. THE SECURITIES PURCHASE AGREEMENT, AS AMENDED, AND
THE OTHER DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
4.7 Headings. The headings, captions and arrangements used in this Second
Amendment are, unless specified otherwise, for convenience only and shall not be
deemed to limit, amplify or modify the terms of this Second Amendment, nor
affect the meaning thereof.
4.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT
TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER IN THE STATE OF NEW
YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF
ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
[Signature pages follow]
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IN WITNESS WHEREOF, this Second Amendment has been duly executed by the
parties set forth below as of the date first written above.
CARRIZO OIL & GAS, INC.
By: /s/ PAUL F. BOLING
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Name: Paul F. Boling
Title: Vice President and Chief Financial Officer
INVESTORS:
STEELHEAD INVESTMENTS LTD.
By: HBK Investments L.P.
Title: Investment Advisor
By: /s/ WILLIAM E. ROSE
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Name: William E. Rose
Title: Authorized Signatory