Exhibit 10.1
 
EXECUTION COPY
 

AMENDMENT NO. 1 AND AGREEMENT dated as of December 19, 2006 (this “Amendment”),
to the Second Lien Credit Agreement dated as of July 21, 2005 (the “Credit
Agreement”), among CARRIZO OIL & GAS, INC. (the “Borrower”), CCBM, INC.
(“CCBM”), CCLR, INC. (“CLLR”), the Lenders (as defined therein) and CREDIT
SUISSE, as administrative agent (in such capacity, the “Administrative Agent”)
and as collateral agent (in such capacity, the “Collateral Agent”) for the
Lenders.
 
A.  Pursuant to the Credit Agreement, the Lenders have extended credit to the
Borrower.
 
B.  The Borrower has requested that the existing Lenders or other persons that
will thereby become lenders (collectively, the “Additional Lenders”) make
Additional Term Loans (as defined below) to the Borrower on the Additional Term
Loan Closing Date (as defined below), in an aggregate principal amount of
$75,000,000, subject to the terms and conditions set forth herein.
 
C.  The Borrower has further requested certain amendments to the Credit
Agreement as set forth herein.
 
D.  The proceeds of the Additional Term Loans will be used by the Borrower for
general corporate purposes of the Borrower.
 
E.  The Additional Lenders are willing to make the Additional Term Loans and the
Lenders are willing to agree to such amendments, in each case on the terms and
subject to the conditions set forth herein.
 
F.  Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Credit Agreement.
 
Accordingly, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto agree as follows:
 
SECTION 1.   Defined Terms. As used in this Amendment, the following terms shall
have the meanings set forth below:
 
“Additional Term Loan Commitment” shall mean, with respect to each Additional
Lender, the commitment of such Additional Lender to make Additional Term Loans
on the Additional Term Loan Closing Date as set forth on Schedule I hereto. The
aggregate amount of Additional Term Loan Commitments is $75,000,000.
 
“Additional Term Loans” shall mean the term loans made by the Additional Lenders
to the Borrower pursuant to Section 2(a) hereof, the terms and
 

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provisions of which shall be identical to the existing Loans (as such terms are
modified pursuant to this Amendment).
 
SECTION 2.   Additional Term Loans. (a) Subject to the terms and conditions set
forth herein and relying upon the representations and warranties set forth
herein and in the other Loan Documents, each Additional Lender agrees, severally
and not jointly, to make an Additional Term Loan to the Borrower on the
Additional Term Loan Closing Date in a principal amount not to exceed its
Additional Term Loan Commitment. Amounts paid or prepaid in respect of
Additional Term Loans may not be reborrowed.
 
(b)   The Additional Term Loan Commitments shall automatically terminate upon
the earlier to occur of (a) the making of the Additional Term Loans on the
Additional Term Loan Closing Date and (b) 5:00 p.m., New York City time, on
January 15, 2007.
 
(c)   Unless the context shall otherwise require, the term “Loans” as used in
the Credit Agreement shall include the Additional Term Loans, and the term
“Lenders” as used herein and in the Credit Agreement shall include each person
that has an Additional Term Loan Commitment or that has made an Additional Term
Loan (other than any such person that has ceased to be a party to the Credit
Agreement pursuant to an Assignment and Acceptance).
 
SECTION 3.   Amendments. (a) The definition of the term “Applicable Percentage”
set forth in Section 1.01 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
 
““Applicable Percentage” shall mean, for any day, (a) with respect to any
Eurodollar Loan, 4.75%, or (b) with respect to any ABR Loan, 3.75%.”
 
(b)   The definition of the term “Permitted Disposition” set forth in Section
1.01 of the Credit Agreement is hereby amended by deleting the word “and”
preceding clause (g) and adding after clause (g) the following:
 
“and (h) of equity interests which the Borrower or any Guarantor holds in
Pinnacle”.
 
(c)   Effective upon the making of the Additional Term Loans on the Additional
Term Loan Closing Date, the table appearing in Section 2.11 (Repayment of
Borrowings) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
 
“Repayment Date
 
Amount
 
December 31, 2006
$375,000
March 31, 2007
$562,500
June 30, 2007
$562,500
September 30, 2007
$562,500
December 31, 2007
$562,500

 
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 “Repayment Date
Amount
 
March 31, 2008
$562,500
June 30, 2008
$562,500
September 30, 2008
$562,500
December 31, 2008
$562,500
March 31, 2009
$562,500
June 30, 2009
$562,500
September 30, 2009
$562,500
December 31, 2009
$562,500
March 31, 2010
$562,500
June 30, 2010
$562,500
Maturity Date
$214,875,000
   

(d)   Section 2.12(c) of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
 
“Optional prepayments of Loans at any time during the applicable periods set
forth in this Section 2.12(c) shall be accompanied by a payment of a prepayment
fee in an amount (expressed as a percentage of the principal amount of the Loans
to be repaid) equal to (i) 1.50%, if such prepayment occurs prior to the date
that is two years after the Closing Date or (ii) 0.50%, if such prepayment
occurs after the date that is two years after the Closing Date, but on or prior
to the date that is three years after the Closing Date.”.
 
(e)   Section 5.01(c)(iii)(x)(A) of the Credit Agreement is hereby amended by
adding after the words “Section 6.02(a)” appearing therein the following:
 
“(other than assignments of customary overrides, royalties, working interests in
exchange for a commitment of the transferee to bear a disproportionate share of
the costs attributable to the oil and gas properties to which such interests
relate, and similar ordinary course transactions and Dispositions or series of
related Dispositions of Proved Reserves with a fair market value not in excess
of $1,000,000)”.
 
(f)   Section 5.01(c)(iii)(y)(A) of the Credit Agreement is hereby amended by
adding after the words “Section 6.02(b)” appearing therein the following:
 
“(other than (I) assignments of customary overrides, royalties, working
interests in exchange for a commitment of the transferee to bear a
disproportionate share of the costs attributable to the oil and gas properties
to which such interests relate and similar ordinary course transactions and
Dispositions or series of related Dispositions of property and assets with a
fair market value not in excess of $1,000,000 and (II) Permitted Dispositions)”.
 
(g)   Section 5.01(c)(iii)(y)(B) of the Credit Agreement is hereby amended by
adding after the words “Section 6.02(b)” appearing therein the following:
 
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“(it being understood and agreed that the Borrower is not required under this
clause (iii)(y)(B) to certify as to assets acquired during the applicable period
in the ordinary course of business, but that only such assets (if any)
satisfying the requirements of Section 6.02(b)(ii)(2) as to which such
certification is made will be netted from the basket amounts set forth in
Section 6.02(b) as contemplated by such Section)”.
 
(h)   Section 5.01(f) of the Credit Agreement is hereby amended by deleting the
following:
 
“and containing pricing assumptions consistent with the definition of the term
“PV-10 Value””.
 
(i)   Section 5.07(b) of the Credit Agreement is hereby amended by replacing
clause (i) thereof in its entirety with the following:
 
“(i) 3.75 to 1.00 in the case of periods ending on December 31, 2006 through and
including December 31, 2007 and”.
 
(j)   Section 5.07(c) of the Credit Agreement is hereby amended by replacing
clause (i) thereof in its entirety with the following:
 
“1.50 to 1.00 in the case of the last day of any fiscal quarter ending on or
before December 31, 2007 and”.
 
(k)   Section 5.07(d) of the Credit Agreement is hereby amended by replacing
clause (i) thereof in its entirety with the following:
 
“2.75 to 1.00 in the case of the last day of any fiscal quarter ending on or
before December 31, 2007 and”.
 
(l)   Section 5.09(b) of the Credit Agreement is hereby amended by deleting the
words “The Borrower shall, each year, at the time of delivery of the annual
financial statements with respect to the preceding fiscal year pursuant to
Section 5.01(a),” appearing at the beginning of such clause and replacing them
with the following:
 
“If requested by the Administrative Agent in writing, the Borrower shall
reasonably promptly after such request”.
 
(m)   Section 5.12 of the Credit Agreement is hereby amended by adding to the
beginning of the second sentence the following:
 
“If requested by the Administrative Agent in writing,”.
 
(n)   Sections 6.02(a) and (b) of the Credit Agreement are hereby amended by
adding after the words “in any fiscal year” contained in subclauses (x) the
following:
 
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“(with, subject to the aggregate limitation set forth in the immediately
succeeding clause (y), any such amount not used in any fiscal year being carried
forward to any subsequent fiscal year)”.
 
(o)   Section 6.06 of the Credit Agreement is hereby amended by deleting the
“and” at the end of clause (k) and adding clauses (m) and (n) as follows:
 
“(m) Investments, loans or advances or acquisitions the consideration for which
consists solely of common equity interests of the Borrower, or made out of the
net cash proceeds of a substantially contemporaneous issuance of common equity
interests of the Borrower; and
 
(n) Equity interests in Pinnacle held by the Borrower or any Guarantor as of the
effective date of Amendment No. 1 and Agreement dated as of December 19, 2006,
to this Agreement.”.
 
(p)   Section 6.06(e) of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
 
“Loans by the Borrower or a Guarantor to the Guarantors or capital contributions
or investments by the Borrower or a Guarantor in any Guarantor; provided,
however, the following loans, investments or capital contributions are excluded
from this part (e): loans, investments or capital contributions by the Borrower
or a Guarantor to any Guarantor, if such Guarantor uses the proceeds of such
loan, contribution or investment to invest in Pinnacle or any other entity in
which the Borrower or such Guarantor owns an equity interest (other than a
Guarantor);”.
 
(q)   Section 6.06(j) of the Credit Agreement is hereby amended by changing the
reference in the proviso thereto to “$1,000,000” to “$5,000,000”.
 
(r)   Section 6.06(l) of the Credit Agreement is hereby amended by changing the
reference in clause (i) thereof to “$2,000,000” to “$5,000,000”.
 
(s)   Section 7.01(b) of the Credit Agreement is hereby amended and restated in
its entirety to read as follows:
 
“Default Under This Agreement. Should the Borrower violate or fail to comply
fully with any of the terms and conditions of, or default under (i) any
covenant, condition or agreement contained in Section 5.03(a)(ii) (with respect
to the maintenance of the Borrower’s existence only), Section 5.02, 5.07 or
Article VI or (ii) any other covenant, condition or agreement (other than those
referred to in clause (a) of this Section 7.01) and such default is not cured
within 30 days after notice thereof from the Administrative Agent or any Lender
to the Borrower; provided, however, that the cure period available for a default
in the obligation to maintain insurance coverages required hereby shall be
10 days.”.
 
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SECTION 4.   Other Agreements. The Required Lenders hereby waive until April 2,
2007 compliance by the Borrower with Section 5.14(a) of the Credit Agreement.
 
SECTION 5.   Representations and Warranties. To induce the other parties hereto
to enter into this Amendment, the Borrower represents and warrants to the
Administrative Agent, the Collateral Agent and each of the Lenders that, as of
the Amendment Effective Date (as defined below):
 
(a)   This Amendment has been duly authorized, executed and delivered by the
Borrower and each Guarantor and the Credit Agreement, as amended hereby,
constitutes a legal, valid and binding obligation of the Borrower and each
Guarantor and this Amendment constitutes a legal, valid and binding obligation
of the Borrower and each Guarantor.
 
(b)   The representations and warranties set forth in Article IV of the Credit
Agreement, after giving effect to this Amendment, are true and correct in all
material respects on and as of the Amendment Effective Date with the same effect
as though made on and as of the Amendment Effective Date, except to the extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties were true and correct in all
material respects as of such earlier date); provided that (i) the reference in
the last sentence of Section 4.02 of the Credit Agreement to “December 31, 2004”
shall be deemed to refer to “December 31, 2005”, (ii) each reference to
Schedule 4.03 in Section 4.03 of the Credit Agreement (other than the first such
reference) shall be deemed to be a reference to the most recent Reserve Report
delivered pursuant to Section 5.01(e) or (g) of the Credit Agreement and
(iii) Section 4.12 of the Credit Agreement shall be deemed to read in its
entirety “Intentionally Omitted”.
 
(c)   No Default or Event of Default has occurred and is continuing.
 
SECTION 6.   Effectiveness. (a) This Amendment shall become effective as of the
date first set forth above on the date (the “Amendment Effective Date”) on which
the Administrative Agent (or its counsel) shall have received counterparts of
this Amendment that, when taken together, bear the signatures of the Borrower,
each Guarantor, the Administrative Agent and the Requisite Lenders. As used
herein, the term “Requisite Lenders” shall mean each Lender, including each
Additional Lender.
 
(b)   The obligations of the Lenders with Additional Term Loan Commitments to
make Additional Term Loans are subject to the satisfaction of each of the
following conditions (the date on which such conditions are satisfied, the
“Additional Term Loan Closing Date”):
 
(i)    The Borrower and each Guarantor that is to be a party thereto shall have
executed and delivered to the Administrative Agent this Amendment, modifications
or supplements to the Mortgages reflecting the making of the Additional Term
Loans as reasonably requested by the Collateral Agent and all other documents
required by this Amendment or the Credit Agreement (including a promissory note
that complies with the requirements of Section
 
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2.04(e) in favor of each Additional Lender that has requested a promissory
note), all in form and substance and in such number of counterparts as may be
required by the Administrative Agent;
 
(ii)  The representations, warranties, and covenants of the Borrower as set
forth in the Credit Agreement, or in any Related Document furnished to the
Administrative Agent and/or any Lender in connection therewith, shall be and
remain true and correct as of such date (except to the extent specifically
limited to a specified date);
 
(iii)  The Administrative Agent shall have received favorable legal opinions of
(i) counsel to the Borrower and the Guarantors covering the transactions
contemplated by this Amendment and (ii) special Louisiana counsel to the
Administrative Agent and Collateral Agent covering the enforceability and
recordability of the modifications or supplements to the Mortgages relating to
properties in Louisiana reflecting the making of the Additional Term Loans as
reasonably requested by the Collateral Agent, in each case, in form, scope and
substance satisfactory to the Administrative Agent;
 
(iv)  The Administrative Agent shall have received certified resolutions of the
Borrower and each Guarantor authorizing the execution of all documents and
instruments contemplated by this Amendment;
 
(v)  The Administrative Agent shall have received all fees, charges and expenses
which are due and payable as specified in this Amendment, the Credit Agreement
and any other Loan Documents to be entered into on or prior to the Additional
Term Loan Closing Date, including, to the extent invoiced, reimbursement or
payment of all out-of-pocket expenses required to be reimbursed or paid by the
Borrower hereunder, under any Related Document to be entered into on or prior to
the Additional Term Loan Closing Date or under any engagement or fee letter
between the Borrower and the Administrative Agent (or any of its affiliates)
relating to the credit facilities contemplated hereby;
 
(vi)  No Default or Event of Default shall exist or shall result from the making
of an Additional Term Loan;
 
(vii)   The Administrative Agent shall have received the articles of
incorporation and bylaws, as amended, of each of the Borrower and each Guarantor
((x) in the case of such articles of incorporation, certified as of a recent
date by the Secretary of State of the state of its organization and together
with a certificate as to the good standing of each of the Borrower and each
Guarantor as of a recent date, from such Secretary of State and (y) in the case
of such bylaws, certified by the Secretary or Assistant Secretary of the
Borrower and such Guarantor and together with such incumbency certificates as
the Administrative Agent shall reasonably request), and the Administrative
 
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Agent’s counsel shall have reviewed the foregoing documents and shall be
satisfied with the validity, due authorization and enforceability thereof and of
all Related Documents and with all other legal matters incident to this
Agreement, the Borrowings and extensions of credit hereunder and the Related
Documents;
 
(vii)  The Administrative Agent shall have received evidence acceptable to it
and its counsel that the security interests created pursuant to the Collateral
Documents shall continue to have a first priority position, subject only to
Permitted Encumbrances and the Intercreditor Agreement;
 
(ix)  The Borrower shall have complied with the procedures set forth in the
Credit Agreement for the making of Loans, including delivery to the
Administrative Agent of a notice of Borrowing as required by Section 2.03 (with
the reference to the Closing Date in the first sentence thereof deemed to be a
reference to the Additional Term Loan Closing Date);
 
(x)  There shall have occurred no Material Adverse Effect since December 31,
2005;
 
(xi)  The Additional Lenders shall be reasonably satisfied with their review
prior to the date hereof of all environmental matters related to the Borrower
and the Mortgaged Properties;
 
(xii)  To the extent requested by Administrative Agent and required by the Loan
Documents, the Borrower shall have executed and delivered to the Administrative
Agent blank form letters in lieu of division orders, in form and substance
satisfactory to the Administrative Agent;
 
(xiii)  The Administrative Agent shall have received a copy of the most recent
reports required to be delivered pursuant to Sections 5.01(e), (f) and (g) of
the Credit Agreement, and the substance of such reports shall be satisfactory to
the Additional Lenders;
 
(xiv)  The Administrative Agent shall have received a certificate, dated the
date hereof and signed by the chief financial officer of the Borrower,
confirming compliance with the conditions precedent set forth in clauses (ii)
and (vi) above;
 
(xv)  The Administrative Agent shall have received evidence acceptable to the
Administrative Agent and its counsel that the Revolving Credit Agreement has
been amended pursuant to an amendment in form and substance reasonably
satisfactory to the Administrative Agent that, among other things, permits the
Borrower to incur the indebtedness represented by the Additional Term Loans;
 
(xvi)  The Additional Lenders shall have received, to the extent requested, all
documentation and other information required by regulatory
 
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authorities under applicable “know your customer” and anti-money laundering
rules and regulations, including the USA Patriot Act; and
 
(xvii)  The Collateral Agent shall have received a certificate, dated the
Additional Term Loan Closing Date and signed by an officer of the Borrower,
certifying that, except as set forth on any schedule attached thereto, the
information set forth on the Perfection Certificate is complete, correct and
accurate as of the Additional Term Loan Closing Date.
 
SECTION 7.   Effect of Amendment. Except as expressly set forth herein, this
Amendment shall not by implication or otherwise limit, impair, constitute a
waiver of, or otherwise affect the rights and remedies of the Lenders, the
Collateral Agent or the Administrative Agent under the Credit Agreement or any
other Loan Document, and shall not alter, modify, amend or in any way affect any
of the terms, conditions, obligations, covenants or agreements contained in the
Credit Agreement or any other Loan Document, all of which are ratified and
affirmed in all respects and shall continue in full force and effect. Nothing
herein shall be deemed to entitle any Loan Party to a consent to, or a waiver,
amendment, modification or other change of, any of the terms, conditions,
obligations, covenants or agreements contained in the Credit Agreement or any
other Loan Document in similar or different circumstances. This Amendment shall
apply and be effective only with respect to the provisions of the Credit
Agreement specifically referred to herein. After the date hereof, any reference
to the Credit Agreement shall mean the Credit Agreement, as modified hereby.
This Amendment shall constitute a “Loan Document” for all purposes of the Credit
Agreement and the other Loan Documents.
 
SECTION 8.   Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same contract. Delivery
of an executed counterpart of a signature page of this Amendment by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart hereof.
 
SECTION 9.   Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
 
SECTION 10.   Headings. The headings of this Amendment are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
 
SECTION 11.   Expenses. The Borrower agrees to reimburse the Administrative
Agent for all reasonable out-of-pocket expenses incurred in connection with this
Amendment, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore LLP, counsel for the Administrative Agent.
 
SECTION 12.  Acknowledgment of Guarantors. Each of the Guarantors hereby
acknowledges receipt and notice of, and consents to the terms of, this
Amendment, and
 
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affirms and confirms its guarantee of the Indebtedness and, if applicable, the
pledge of and/or grant of a security interest in its assets as Collateral to
secure the Indebtedness, all as provided in the Collateral Documents, and
acknowledges and agrees that such guarantee, pledge and/or grant of security
interest continue in full force and effect in respect of, and to secure, the
Indebtedness under the Credit Agreement, as amended hereby, and the other Loan
Documents and that such Indebtedness shall include all obligations in respect of
the Additional Term Loans.
 
[Remainder of page intentionally left blank]
 
 
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective authorized officers as of the day and year first
above written.
 

       
CARRIZO OIL & GAS, INC.,
 
   
   
   
By  
 
/s/ Paul F. Boling
 
Name: Paul F. Boling
 
Title: Vice President and Chief Financial Officer

 

       
CCBM, INC.,
 
   
   
    By  
 
/s/ Paul F. Boling
 
Name: Paul F. Boling
 
Title: Vice President and Chief Financial Officer

 
 

       
CLLR, INC.,
 
   
   
    By   

/s/ Paul F. Boling
 
Name: Paul F. Boling
 
Title: Vice President and Chief Financial Officer

 

       
CREDIT SUISSE, CAYMAN ISLANDS BRANCH, individually, and as Administrative Agent
and Collateral Agent,
 
   
   
    By   
 
/s/ James Morgan
 
Name: James Morgan
 
Title: Managing Director
   
By   
 
/s/ Nupur Kumar
   Name: Nupur Kumar    Title: Associate

 
 

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SIGNATURE PAGE TO
AMENDMENT NO. 1 AND AGREEMENT
TO CARRIZO OIL & GAS, INC.
SECOND LIEN CREDIT AGREEMENT
 

Name of Lender:______________________________________
 

       
By
      
Name:
 
Title:
       
 By
 
 
   Name:    Title:

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SCHEDULE I
 

LENDERS AND ADDITIONAL TERM LOAN COMMITMENT
 
Additional Lender
Additional Term
Loan Commitment
   
Alexandra Investment Management
500,000.00
Angelo Gordon Arb
2,750,000.00
Bank of America Prop
4,250,000.00
Basso
2,250,000.00
Blackrock / Merrill Lynch Asset Management
750,000.00
LaSalle / Boldwater CBNA Loan Funding
-
Cedarview Capital
1,250,000.00
Credit Suisse
2,450,000.00
CSAM/Credit Suisse Asset Management
1,250,000.00
CSFB International
-
Deephaven Capital Management
7,500,000.00
DMD Special Situations, LLC
2,000,000.00
Goldentree Management
1,000,000.00
Goldman Sachs Special Situations
1,750,000.00
GSO
5,250,000.00
Halcyon
1,000,000.00
Highland Capital
3,250,000.00
K Street Capital
1,750,000.00
Kayne Anderson Capital
7,250,000.00
MJX Asset Management
1,750,000.00
MSD Captial
4,250,000.00
Nationwide Mutual
500,000.00
Par IV Capital Management LLC
6,000,000.00
Post Advisory
350,000.00
Trilogy Capital, LLC
1,250,000.00
Whippoorwill
14,700,000.00
   
Total
$75,000,000.00
   

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