Exhibit 10.2
FIRST AMENDMENT TO CREDIT AGREEMENT, CONSENT AND
WAIVER
FIRST
AMENDMENT TO CREDIT AGREEMENT, CONSENT AND WAIVER
(hereinafter referred to as the “ Amendment ”)
executed to be effective as of December 19, 2006, by and among
CARRIZO OIL & GAS, INC., a Texas corporation (“
Borrower ”), certain subsidiaries of Borrower, as
Guarantors (in such capacity, “ Guarantors ”),
the LENDERS party hereto (the Lenders”) and JPMORGAN CHASE
BANK, N.A., as Administrative Agent (in its such capacity, “
Administrative Agent ”). Unless the context otherwise
expressly defined herein, capitalized terms used but not defined in
this Amendment have the meanings assigned to such terms in the
Credit Agreement (as defined below).
WITNESSETH:
WHEREAS, Borrower, Guarantors, Administrative
Agent and Lenders have entered unto that certain Credit Agreement,
dated as of May 25, 2006, (as amended, supplemented or otherwise
modified from time to time, the “ Credit Agreement
”); and
WHEREAS, Borrower has requested that
Administrative Agent and Lenders amend the Credit Agreement to,
among other things, (i) permit the incurrence of additional
Indebtedness under the Second Lien Facility, (ii) modify the
Leverage Ratio, and (iii) redetermine the Borrowing Base and
Conforming Borrowing Base; and
WHEREAS, Administrative Agent and Lenders have
agreed to do so on the terms and conditions hereinafter set
forth;
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, Borrower, Administrative Agent
and Lenders, hereby agree as follows:
SECTION 1.
Amendments to Credit Agreement. Subject to the
satisfaction or waiver in writing of each condition precedent set
forth in Section 3 of this Amendment, and in reliance
on the representations, warranties, covenants and agreements
contained in this Amendment, the Credit Agreement shall be amended
in the manner provided in this Section 1 .
1.1
Additional Definitions. The following definition
shall be and hereby is added to Section 1.01 :
“ First
Amendment Effective Date ” means December 19,
2006.
1.2
Amended Definition. The following definition in
Section 1.01 of the Credit Agreement shall be and
hereby is amended in its entirety to read as follows:
“ Change
in Control ” shall be deemed to have occurred if (a) any
“person” or “group” (within the meaning of
Rule 13d-5 of the Securities Exchange Act of 1934 as in effect on
the date hereof) other than the Permitted Investors shall own,
directly or indirectly, beneficially or of record, shares
representing more than fifty percent (50%) of the aggregate
ordinary voting power represented by the issued and outstanding
capital stock of the Borrower, (b) a majority of
the seats (other than vacant seats) on the
board of directors of the Borrower shall at any time be occupied by
persons who were neither (i) nominated by the board of directors of
the Borrower nor (ii) appointed by directors so nominated, or (c)
any change in control (or similar event, however denominated) with
respect to the Borrower shall occur under (and not be waived in
accordance with) and as defined in the Second Lien Credit Agreement
or any indenture or other loan or credit agreement or any other
debt instrument evidencing any Material Indebtedness to which the
Borrower is a party.
1.3
Borrowing Base Adjustments.
Section 3.05 of the Credit Agreement shall be and
hereby is amended in its entirety to read as follows:
(a)
In the event the Redetermination of the Borrowing Base is not
made on or prior to May 1, 2007 as a result of the Borrower failing
to comply with the requirements of this Article III
with respect to such Redetermination on the dates required without
giving effect to any grace or cure period provided in
Article IX with respect to any such failure, the
Borrowing Base shall be reduced by $1,690,000 on May 1, 2007
and on the first date of each month thereafter (the “
Monthly Reduction ”) until the Borrowing Base is
otherwise redetermined pursuant to this Article III
.
(b)
In the event the outstanding principal balance of the
Indebtedness under the Second Lien Facility exceeds $225,000,000 at
any time after the First Amendment Effective Date, the Borrowing
Base then in effect shall be reduced by $1.00 for every $4.00 of
such additional Indebtedness as of the date such additional
Indebtedness is incurred.
1.4
Investment and Holding Company Status.
Section 4.08 of the Credit Agreement shall be and
hereby is amended in its entirety to read as follows:
Investment
Company Status. Neither the Borrower nor any Restricted
Subsidiary is an “investment company” as defined in, or
subject to regulation under, the Investment Company Act of
1940.
1.5
Financial Statements; Other Information.
Section 6.01(f) of the Credit Agreement shall be and
hereby is amended in its entirety to read as follows:
(f)
together with the Reserve Reports required under
clause (e) above, (i) a report, in reasonable detail,
setting forth the Swap Agreements then in effect, the notional
volumes of and prices for, on a monthly basis and in the aggregate,
the Crude Oil and Natural Gas for each such Swap Agreement and the
term of each such Swap Agreement; (ii) if requested by
Administrative Agent in writing, a true and correct schedule of the
Mortgaged Properties, (iii) if requested by Administrative Agent in
writing, the percentage of the Engineered Value of the Borrowing
Base that the Mortgaged Properties represent and (iv) a description
of the additional Oil and Gas Interests, if any, to be mortgaged by
the Credit Parties to comply with Section 6.09 and the
Engineered Value thereof;
1.6
Maintenance of Properties; Insurance.
Section 6.05 of the Credit Agreement shall be and
hereby is amended in its entirety to read as follows:
Maintenance of
Properties; Insurance. The Borrower will, and will cause each
Restricted Subsidiary and use commercially reasonable efforts to
cause each operator of Borrowing Base Properties to, keep and
maintain all property material to the conduct of its business in
good working order and condition, ordinary wear and tear excepted.
The Borrower shall maintain in effect all insurance required by
this Agreement and the Collateral Documents, and the Borrower
agrees to comply with the representations and warranties set forth
in Section 4.16 . Upon the written request of the
Administrative Agent, the Borrower agrees to (a) promptly
provide the Administrative Agent with certificates or binders
evidencing such insurance coverage on an annual basis, (b) promptly
furnish the Administrative Agent with copies of all renewal notices
and copies of receipts for paid premiums, and (c) promptly provide
the Administrative Agent with certificates or binders evidencing
insurance coverage pursuant to all renewal or replacement policies
of insurance.
1.7
Mortgages. Section 6.09 of the
Credit Agreement shall be and hereby is amended in its entirety to
read as follows:
Mortgages
. No later than April 2, 2007, and from time to time as requested
by the Administrative Agent and in any event to the extent required
under the Intercreditor Agreement, the Borrower will, and will
cause each Guarantor to, execute and deliver to the Administrative
Agent, for the benefit of the Secured Parties, Mortgages in form
and substance reasonably acceptable to the Administrative Agent
together with such other assignments, conveyances, amendments,
agreements and other writings, including, without limitation, UCC-1
financing statements (each duly authorized and executed, as
applicable) as the Administrative Agent shall reasonably deem
necessary or appropriate to grant, evidence and perfect a valid
first priority Lien, subject only to Permitted Liens, in (a) not
less than eighty percent (80%) of the Engineered Value of all
Borrowing Base Properties (excluding any Oil and Gas Interests in
the area known as the Camp Hill Field in Anderson County, Texas)
and (b) not less than eighty percent (80%) of the Engineered Value
of the Borrower’s and each Guarantor’s Oil and Gas
Interests in the area known as the Camp Hill Field in Anderson
County, Texas.
1.8
Title Data. Section 6.10 of the
Credit Agreement shall be and hereby is amended in its entirety to
read as follows:
Title Data
. As soon as available and in any event no later than April 2,
2007, the Borrower will, and will cause each Guarantor to, deliver
to the Administrative Agent such opinions of counsel and other
evidence of title as the Administrative Agent shall deem reasonably
necessary or appropriate to verify (i) such Credit Party’s
title to not less than seventy-five percent (75%) of the Engineered
Value of the Borrowing Base Properties (excluding any Oil and Gas
Interests in the area known as the Camp Hill Field in Anderson
County, Texas), (ii) such Credit Party’s title to not less
than fifty percent (50%) of the Engineered Value of the Oil and Gas
Interests in the area known as the Camp Hill Field in Anderson
County, Texas and (iii) the validity, perfection and priority of
the Liens created by the Mortgages and such other matters regarding
the Mortgages as Administrative Agent shall reasonably request. The
Borrower will, and will cause each Guarantor to, use commercially
reasonable efforts to deliver to the Administrative Agent, or its
counsel on or before April 2, 2007, reasonably satisfactory
evidence demonstrating that the Borrower or such Guarantor, as the
case may be, has performed all of the title curative actions
described on Schedule 6.10. To the extent any such title
curative
action is not performed on or before April
2, 2007, the Administrative Agent may, in its reasonable
discretion, reduce the Borrowing Base to account for such failure
to perform such title curative action and such reduction shall be
restored upon the performance of suc
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