EXHIBIT 10.4

 
EXECUTION COPY

THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT

THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT is dated
and effective as of July 21, 2005 (this "Third 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, as amended by First Amendment thereto dated as of October
29, 2004, and as further amended by Second Amendment dated as of April 27, 2005
(as so amended, 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 Third Amendment.

B. Revision to Defined Terms.

1. The definitions for the terms “Consolidated Current Assets”, “Consolidated
Current Liabilities”, “EBITDA”, “Facility A Borrowing Base Amount”, “Interest
Expense”, “Quarterly Reduction”, and “Tangible Net Worth” appearing in Section
1.1 of the Agreement are hereby deleted and restated as follows:

"Consolidated Current Assets" shall mean the total of the Borrower’s
consolidated current assets (excluding assets of
 

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Unrestricted Subsidiaries), including the amounts available for borrowing under
the Facility A Borrowing Base Amount and the Facility B Borrowing Base Amount,
determined in accordance with GAAP. Current assets will not include non-cash
assets, if any, arising from the marking to market of Hedging Agreements
pursuant to SFAS No. 133 and related pronouncements.
 
"Consolidated Current Liabilities" shall mean the total of the Borrower's
consolidated current liabilities (excluding liabilities of Unrestricted
Subsidiaries), excluding outstanding principal amounts due under the
Commitments, determined in accordance with GAAP. Current liabilities will not
include (i) the non-cash obligations, if any, arising from the marking to market
of Hedging Agreements pursuant to SFAS No. 133 and related pronouncements, (ii)
outstanding principal amounts due under the Line of Credit, and (iii) the
non-cash effects, if any, of the non-cash stock option re-pricing accrual.

“EBITDA” shall mean the Borrower’s consolidated earnings determined in
accordance with GAAP (excluding earnings of Unrestricted Subsidiaries) before
interest expense, income taxes, depreciation, amortization, depletion, oil and
gas asset impairment write downs, lease impairment expense, gains and losses
from the sale of capital assets, and other non-cash charges. EBITDA shall not
include non-cash effects of (i) the early extinguishment of long-term debt, (ii)
CCBM, Inc.’s equity investment in Pinnacle, and (iii) stock option re-pricing
expense.

"Facility A Borrowing Base Amount" shall mean the amount available to Borrower
at any time based upon the valuation of the Mortgaged Properties, projected oil
and gas prices, underwriting factors, and any other factors deemed relevant by
the Required Lenders in their sole and complete discretion, all as evaluated and
determined by the Required Lenders in their sole and complete discretion on a
quarterly basis on October 1, January 1, April 1, and July 1. In addition, the
Required Lenders, in their sole and complete discretion, may conduct one
unscheduled Facility A Borrowing Base Amount redetermination subsequent to each
quarterly redetermination, and the Borrower, at its option may request (and the
Required Lenders shall promptly thereafter perform) one Facility A Borrowing
Base Amount redetermination after each scheduled quarterly redetermination by
the Required Lenders. The Facility A Borrowing Base Amount also is subject to
mandatory Quarterly Reductions. The Required Lenders are not obligated under any
circumstances to establish the Facility A Borrowing Base Amount based solely on
oil and gas valuation data
 

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for the Mortgaged Properties. The Facility A Borrowing Base Amount as of the
Third Amendment Effective Date is $10,000,000.00. All of the foregoing
determinations and valuations shall be in accordance with the Lenders’ normal
practices and standards for oil and gas loans as may exist at the particular
time of determination and valuation. The Facility A Borrowing Base Amount shall
never exceed $75,000,000.00, and the sum of the Facility A Borrowing Base Amount
and the Facility B Borrowing Base Amount shall never exceed $100,000,000.00.

“Interest Expense” shall mean, for any period, total interest expense (including
that portion attributable to capital lease obligations in accordance with GAAP
and capitalized interest), net of interest income, 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 Non-Recourse Indebtedness and Obligations of 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.

“Quarterly Reduction” shall mean each quarterly reduction, if any, to the
Facility A Borrowing Base Amount on the first day of each October, January,
April and July based upon Lenders’ redetermination of the Facility A Borrowing
Base Amount. All such determinations and valuations shall be in accordance with
the Lenders’ normal practices and standards for oil and gas loans as may exist
at the particular time of determination and valuation. The Quarterly Reduction
will be $0.00 on October 1, 2005. Thereafter, the Lenders will establish the
Quarterly Reduction in connection with each redetermination of the Facility A
Borrowing Base Amount.

“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

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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, 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 pursuant to Rule 4.10 of Regulation S-X promulgated by the
Securities and Exchange Commission and any balance sheet impact arising from the
early extinguishment of long-term debt.

2. The following new definitions are hereby added to Section 1.1 of the
Agreement:

“Intercreditor Agreement” shall mean the Intercreditor Agreement dated as of
July 21, 2005 among Borrower, the Guarantor, the Agent, as First Lien Collateral
Agent, and Credit Suisse, as Second Lien Collateral Agent, as amended, modified
or restated from time to time.

“Second Lien Credit Agreement” shall mean the Second Lien Credit Agreement dated
as of July 21, 2005 among Borrower, the Lenders party thereto, and Credit
Suisse, as Administrative Agent and Collateral Agent, as amended, modified or
restated from time to time.

“Secured Second Lien Debt” shall mean the term loan indebtedness of the Borrower
in an aggregate principal amount not to exceed $150,000,000.00 arising under the
Second Lien Credit Agreement; provided that (i) if such indebtedness is secured
by a mortgage lien on the Mortgaged Properties, such lien shall be subordinate
and inferior to the Agent’s mortgage lien on the Mortgaged Properties, and (ii)
the Required Lenders have reviewed and approved the documents evidencing such
indebtedness, the Intercreditor Agreement, and the collateral therefor.

“Third Amendment” shall mean that certain Third Amendment to Second Amended and
Restated Credit Agreement dated as of July 21, 2005, by and among the Borrower,
the Guarantor, the Agent, and the Lenders.

“Third Amendment Effective Date” shall mean July 21, 2005.

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3. The following definitions appearing in Section 1.1 of the Agreement are
hereby deleted: “Memorandum”, “Securities Purchase Agreement”, “Secured
Subordinated Debt”, “Secured Subordinated Note Purchase Agreement”, and
“Subordinated Promissory Notes”.

C. Restatement of Section 6.4. Section 6.4 of the Agreement is hereby deleted in
its entirety and restated as follows:

Section 6.4. Engineering Fee. The Borrower shall pay to each Lender a fee of
$2,500.00 for each determination of the Facility A Borrowing Base Amount. The
Borrower hereby authorizes the Agent to debit its account maintained with
Hibernia for collection of said fee.

D. Deletion of Section 11.20. Section 11.20 of the Agreement is hereby deleted
in its entirety.

E. Deletion of Section 11.22. Section 11.22 of the Agreement is hereby deleted
in its entirety.

F. Restatement of Section 12.1(g). Part (g) of Section 12.1 of the Agreement is
hereby deleted in its entirety and restated as follows:

(g) as soon as available and in any event by September 15, December 15, March
15, and June 15 of each year, an internally prepared engineering report dated as
of the preceding September 1, December 1, March 1, and June 1, respectively,
covering oil and gas properties included or to be included in any Borrowing Base
Amount, in form and content reasonably satisfactory to the Required Lenders, and

G. Restatement of Section 12.8(b). Part (b) of Section 12.8 of the Agreement is
hereby deleted in its entirety and restated as follows:

(b) Maximum Total Net Recourse Debt to EBITDA Ratio. The Borrower shall maintain
as of the last day of each fiscal quarter ending during the period commencing on
June 30, 2005 and continuing through June 30, 2006 a ratio of Total Net Recourse
Debt to EBITDA of not more than 3.50 to 1.0, calculated on a rolling four
quarters basis. Commencing July 1, 2006 and continuing through September 30,
2006, the Borrower shall maintain as of the last day of each fiscal quarter a
ratio of Total Net Recourse Debt to EBITDA of not more than 3.50 to 1.0,
calculated on a rolling four quarters basis; provided that if the ratio of Total
Net Recourse Debt to EBITDA is greater than 3.25 to 1.0, but less

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than or equal to 3.50 to 1.0 as of such day, no additional Loans can be made
until the next succeeding date as of which such ratio is calculated and the
Borrower is in compliance with such ratio. Commencing October 1, 2006 and
continuing through December 31, 2006, the Borrower shall maintain as of the last
day of each fiscal quarter a ratio of Total Net Recourse Debt to EBITDA of not
more than 3.25 to 1.0, calculated on a rolling four quarters basis; provided
that if the ratio of Total Net Recourse Debt to EBITDA is greater than 3.00 to
1.0, but less than or equal to 3.25 to 1.0 as of such day, no additional Loans
can be made until the next succeeding date as of which such ratio is calculated
and the Borrower is in compliance with such ratio. Commencing on January 1, 2007
and thereafter, the Borrower shall maintain as of the last day of each fiscal
quarter a ratio of Total Net Recourse Debt to EBITDA of not more than 3.00 to
1.0, calculated on a rolling four quarters basis. For purposes of this covenant,
EBITDA shall not include the net revenue attributable to assets pledged to
secure Non-Recourse Indebtedness. The term “Total Net Recourse Debt” shall mean,
on any date of determination, the Borrower’s consolidated Debt excluding
Non-Recourse Indebtedness and cash and cash equivalents and Debt of an
Unrestricted Subsidiary on such date, less the amount of unrestricted cash and
cash equivalents on hand at the Borrower and the Guarantors.

H. Restatement of Section 12.8(c). Part (c) of Section 12.8 of the Agreement is
hereby deleted in its entirety and restated as follows:

Minimum Quarterly Debt Service Coverage Ratio. The Borrower shall maintain at
the end of each quarter a Debt service coverage ratio (excluding Non-Recourse
Indebtedness and Debt of Unrestricted Subsidiaries) of not less than 1.25 to
1.0. For purposes of this covenant, the non-cash effects, if any, of Hedging
Agreements pursuant to SFAS 133 will not be included, nor will the effect, if
any, of ceiling test write-downs pursuant to Regulation SX4.10 of the Securities
and Exchange Commission be included. Debt service coverage shall be calculated
based on GAAP as follows: the ratio of (a) the difference of (i) EBITDA for the
quarter just ended (excluding EBITDA related to assets pledged to secure
Non-Recourse Indebtedness), minus (ii) permitted cash dividends paid during the
quarter just ended, divided by (b) the sum of (i) required principal paid in
cash and interest expense (to the extent required to be paid in cash) on Debt
(including the Indebtedness) during the quarter just ended, plus (ii) the
positive difference, if any of (x) principal paid in cash and interest expense
on Non-Recourse Indebtedness during the quarter just ended,

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minus (y) positive EBITDA related to assets pledged to secure Non-Recourse
Indebtedness during the quarter just ended.

I. Restatement of Section 12.8(d). Part (d) of Section 12.8 of the Agreement is
hereby deleted in its entirety and restated as follows:

(d) Minimum Shareholder’s Equity. The Borrower shall maintain as of the last day
of each fiscal quarter a minimum shareholder’s equity of not less than:
 
Commencing on the Third Amendment Effective Date: $115,000,000.00 plus (i) 100%
of all common and preferred equity contributed by shareholders of Borrower
subsequent to March 31, 2005, plus (ii) 50% of all positive earnings occurring
subsequent to March 31, 2005. 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 and any balance sheet impact arising from the early extinguishment of
long-term debt and stock option re-pricing expense.
 
J. Restatement of Section 12.8(e). Part (e) of Section 12.8 of the Agreement is
hereby deleted in its entirety and restated as follows:

(e) EBITDA to Interest Expense Ratio. The Borrower shall maintain (i) as of the
last day of each fiscal quarter ending on or before September 30, 2006, a ratio
of EBITDA for the four fiscal quarter period ending on such day to Interest
Expense for such period of at least 2.75 to 1.0, and (ii) as of the last day of
each fiscal quarter thereafter, a ratio of EBITDA for the four fiscal quarter
period ending on such day to Interest Expense for such period of at least 3.00
to 1.0.

K. Restatement of Section 12.15. Section 12.15 of the Agreement is hereby
deleted in its entirety and restated as follows:
 
Section 12.15. Insurance. The Borrower shall maintain in effect all insurance
required by this Agreement and the Collateral Documents, and the Borrower agrees
to comply with the requirements of Section 11.6 above. The Borrower agrees to
provide the Agent with certificates or binders evidencing such insurance
coverage on an annual basis, and, if requested by the Agent, the Borrower
further agrees to promptly furnish the Agent with copies of all renewal notices
and copies of receipts for paid premiums. The Borrower shall provide the Agent
with certificates or binders evidencing insurance coverage pursuant to all
renewal or replacement policies of insurance no later than the fifteenth (15th)
 

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day before any such existing policy or policies should expire (or, in the event
such certificates or binders are unavailable to the Borrower on such day, within
one Business Day of receipt of such certificates or binders by the Borrower).
 
L. Restatement of Section 12.18(a). Part (a) of Section 12.18 of the Agreement
is hereby deleted in its entirety and restated as follows:

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.

M. Addition of New Affirmative Covenant. Article XII of the Agreement is hereby
amended and supplemented to include the following new affirmative covenant as
Section 12.19:

Section 12.19. Third Amendment Post Closing Requirement. The Borrower covenants
and agrees to deliver to the Agent (i) within sixty (60) days after Third
Amendment Effective Date, mortgages, security agreements and/or deeds of trust
as may be necessary 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, and (ii) within ninety (90) days after the
Third Amendment Effective Date, title opinion(s) from counsel to Borrower (or
other title information reasonably acceptable to the Agent) covering the proved
oil and gas reserves encumbered by the mortgages, security agreements and/or
deeds of trust described in clause (i) above.

N. 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 (i) Secured
Second Lien Debt and other indebtedness referred to in Section 13.5(l) and such
other obligations and liabilities related thereto, and (ii) all other Second
Lien Obligations (as defined in the Intercreditor Agreement); provided that such
Encumbrances shall be contractually junior to the Encumbrances created by the
Collateral Documents on the terms set forth in the Intercreditor Agreement or on
terms otherwise reasonably satisfactory to the Agent.
 
O. Deletion of Section 13.5(e). Section 13.5(e) of the Agreement is hereby
deleted in its entirety.

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P. Restatement of Section 13.5(l). Part (l) of Section 13.5 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 Second Lien Debt, 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.
 

Q. Restatement of Section 13.6(b). Part (b) of Section 13.6 of the Agreement is
hereby deleted in its entirety and restated as follows:

(b) Investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, one of the two
highest credit ratings obtainable from Standard & Poor’s Ratings Service or from
Moody’s Investors Service, Inc.;
 
R. Restatement of Section 13.6(f). Part (f) of Section 13.6 of the Agreement is
hereby deleted in its entirety and restated as follows:

(f) Loans or advances to employees in an aggregate amount for all employees of
the Borrower and the Subsidiaries not in excess of $750,000 at any one time
outstanding.

S. Restatement of Section 13.10. Section 13.10 of the Agreement is hereby
deleted in its entirety and restated as follows:

Section 13.10. Commodity Transactions. The Borrower shall not enter into any
speculative commodity transactions of any type or Hedging Agreement relating to
the sale of aggregate Hydrocarbons production in excess of eighty-five percent
(85%) of the total volume of such production projected in the most recent
independent engineering report delivered to the Agent pursuant to Section
12.1(e) or as projected in the most recent internally prepared engineering
report delivered to the Agent pursuant to Section 12.1(g), whichever is more
recent, to come from the Borrower's proved developed reserves during the term of
such Hedging Agreement (it being understood and agreed that for purposes of
determining compliance with such 85% cap, the Borrower may in good faith take
into account the pro forma effect on such projected production of new wells that
are not included in

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the most recently delivered engineering report and may enter into Hedging
Agreements affecting such new wells subject to compliance with such 85% cap).
Notwithstanding the foregoing, the maximum duration of any permitted Hedging
Agreement shall not exceed forty-eight (48) months; provided that, with respect
to any Hedging Agreement with a duration in excess of 24 months, no more than
50% of the amount of the projected production to come from proved developed
producing reserves may be subject to hedging arrangements pursuant to such
Hedging Agreement during the period from and including the twenty-fifth month of
such Hedging Agreement to and including the forty-eighth month of such Hedging
Agreement.

T. Deletion 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 Second Lien Debt. Until such time as the
Indebtedness arising under this Agreement is paid in full and the Lenders have
no further obligation to the Borrower under this Agreement, and further subject
to the terms and conditions of the Intercreditor Agreement, the Borrower agrees
not to make any optional prepayments on the Secured Second Lien Debt, without
first obtaining the prior written consent of the Required Lenders.

U. Deletion of Section 13.12. Section 13.12 of the Agreement is hereby deleted
in its entirety.
 
V. Restatement of Section 14.1(e). Part (e) of the Section 14.1 of the Agreement
is hereby deleted in its entirety and restated as follows:

(e) Default in Favor of Third Parties. Should the Borrower or the Guarantor (i)
fail to pay Debt having a principal amount in excess of $1,000,000.00 in the
aggregate (other than the amounts referred to in Section 14.1(a)), or any
interest or premium thereon, when due (or, if permitted by the terms of the
relevant document, within any applicable grace period), whether such Debt shall
become due by scheduled maturity, by required prepayment, by acceleration, by
demand or otherwise; or (ii) fail to perform any term, covenant or condition on
its part to be performed under any agreement or instrument evidencing, securing
or relating to Debt having a principal amount in excess of $1,000,000.00 in the
aggregate, when required to be performed, and such failure shall continue after
the applicable grace period, if any, specified in such agreement or instrument,
if the effect of such failure is to

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accelerate, or to permit the holder or holders of such Debt to accelerate, the
maturity of such Debt.

W. Revision to Section 14.1. The first sentence of the paragraph following part
(h) of Section 14.1 of the Agreement is hereby deleted and restated as follows:

Upon the occurrence of an Event of Default, the Line of Credit Loan Commitment
will, at the option of the Lenders, either terminate or be suspended (including
any obligation to make any further Facility Loans), and, at the Lenders' option,
the Notes and all Indebtedness of the Borrower will become immediately due and
payable, except that in the case of type described in the "Insolvency"
subsection above, such acceleration shall be automatic and not optional.

X. References to Secured Subordinated Debt. As of the Third Amendment Effective
Date, all references in the Agreement (as amended by this Third Amendment) to
“Secured Subordinated Debt” shall be deemed references to “Secured Second Lien
Debt.”

Y. Consent by Lenders to Secured Second Lien Debt. Subject to the terms and
conditions of the Intercreditor Agreement, the Lenders do hereby permit (i) the
Secured Second Lien Debt to be extended, (ii) the Borrower to grant the liens
contemplated by the Second Lien Credit Agreement and the Loan Documents (as
defined in the Second Lien Credit Agreement), and (iii) the execution of the
guarantees contemplated by the Second Lien Credit Agreement. In addition, the
Lenders authorize, ratify and confirm the Agent’s execution of the Intercreditor
Agreement on behalf of the Lenders.

Z. 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.

AA. Representations; No Default. On and as of the date of this Third Amendment,
and after giving effect to this Third Amendment, the Borrower and the Guarantor
confirm, reaffirm, and restate the representations and warranties set forth in
the Agreement and the Loan Documents, except to the extent that such
representations and warranties relate solely to a specified date; provided, that
each reference to the Agreement herein shall be deemed to include the Agreement
as amended by this Third Amendment.

BB. Payment of Expenses. The Borrower agrees to pay or reimburse the Lender for
all reasonable legal fees and expenses of counsel to the Agent in connection
with the transactions contemplated by this Third Amendment.

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CC. Amendments. The Agreement and this Third Amendment are credit or loan
agreements as described in LA. R.S. 6:§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 Third 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 Third Amendment,
cannot be modified or amended except by a writing signed and delivered by the
Borrower, the Guarantor, the Agent and the Lenders.

DD. Waiver of Defenses. In consideration of the Lenders’ execution of this Third
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 Third Amendment.

EE. Governing Law: Counterparts. The Third Amendment shall be governed by and
construed in accordance with the laws of the State of Louisiana. This Third
Amendment may be executed in any number of counterparts, all of which
counterparts, when taken together, shall constitute one and the same instrument.

FF. 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.

GG. 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 Third Amendment on behalf of Borrower and Guarantor.

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IN WITNESS WHEREOF, the parties hereto have caused this Third 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 
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 
Name: David R. Reid
Title: Senior Vice President

Lenders:

HIBERNIA NATIONAL BANK

By: /s/ John Castellano 
Name: John Castellano
Title: Senior Vice President

UNION BANK OF CALIFORNIA, N.A.

By: /s/ Scott Myatt 
Name: Scott Myatt
Title: Assistant Vice President