Document:

exh101.htm

    EXHIBIT
10.1

     

    
      NINTH
AMENDMENT TO CREDIT AGREEMENT

       

      NINTH AMENDMENT TO CREDIT AGREEMENT
(this “Amendment”) dated as
of April 30, 2009, 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
GUARANTY BANK, as administrative agent for the Lenders (in such capacity, the
“Administrative
Agent”).  Unless 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,
the Administrative Agent and certain Lenders have entered into that certain
Credit Agreement, dated as of May 25, 2006 (as the same has been and may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, the “Credit
Agreement”); and

       

       

      WHEREAS, Borrower has
requested that the Administrative Agent and the Lenders (a) increase the
Borrowing Base and (b) amend the Credit Agreement (i) to increase the Aggregate
Commitment, and (ii) for certain other purposes as provided herein;
and

       

      WHEREAS, the Administrative
Agent and the Lenders have agreed to (a) increase the Borrowing Base and (b)
amend the Credit Agreement as provided herein, in each case, upon the terms and
conditions set forth herein.

       

      NOW, THEREFORE, for and in
consideration of the mutual covenants and agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and confessed, the parties hereto 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 4 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 definitions shall be and they
hereby are added to Section 1.01 of the
Credit Agreement in appropriate alphabetical order:

       

      “Ninth Amendment Effective
Date” means April 30, 2009.

       

      1.2 Amended
Definition.  The following definition in Section 1.01 of
the Credit Agreement shall be and it hereby is amended in its entirety to read
as follows:

       

      “Aggregate Commitment”
means, as of the Ninth Amendment Effective Date, $255,000,000 and thereafter as
such amount may be reduced or increased from time to time pursuant to Section
2.02 and Section 2.02A and as a result of changes in the Borrowing Base;
provided that such amount shall not at any time exceed the lesser of (i) the
Maximum Facility Amount and (ii) the Borrowing Base then in effect.  If at any time
the Borrowing Base is reduced below the Aggregate

       

      
        
          
          

        

        
          Ninth
Amendment to Credit Agreement - Page 1

          
            

          

        

        
          
          

        

      

       

      
        Commitment,
the Aggregate Commitment shall be reduced automatically to the amount of the
Borrowing Base in effect at such time.

         

        1.3 Reserve Report; Proposed Borrowing
Base.  Section 3.01 of
the Credit Agreement shall be and it hereby is amended in its entirety to read
as follows:

         

        Section
3.01.  Reserve
Report; Proposed Borrowing Base.  During the period from the
Ninth Amendment Effective Date until the first Redetermination after the Ninth
Amendment Effective Date, the Borrowing Base shall be
$290,000,000.  As soon as available and in any event by February 28
and August 31 of each year, beginning August 31, 2009, the Borrower shall
deliver to the Administrative Agent and each Lender a Reserve Report, prepared
as of the immediately preceding December 31 and June 30, respectively, in form
and substance reasonably satisfactory to the Administrative Agent and prepared
by an Approved Petroleum Engineer (or, in the case of any Reserve Report other
than the Reserve Report due on February 28 of each year, by petroleum engineers
employed by the Borrower or its Subsidiaries or an Approved Petroleum Engineer)
together with such other information, reports and data concerning the value of
the Borrowing Base Properties as the Administrative Agent shall deem reasonably
necessary to determine the value of such Borrowing Base
Properties.  Simultaneously with the delivery to the Administrative
Agent and the Lenders of each Reserve Report, the Borrower shall submit to the
Administrative Agent and each Lender the Borrower’s requested amount of the
Borrowing Base as of the next Redetermination Date.  Promptly after
the receipt by the Administrative Agent of such Reserve Report and Borrower’s
requested amount for the Borrowing Base, the Administrative Agent shall submit
to the Lenders a recommended amount of the Borrowing Base and, with respect to
any Redetermination prior to the Conforming Date, the Conforming Borrowing Base
as of the next Redetermination Date; provided that no Redetermination of the
Conforming Borrowing Base shall be required on or after the Conforming
Date.

         

        1.4 Capitalization.  Section 4.13 of the
Credit Agreement shall be and it hereby is amended by deleting the phrase
“Seventh Amendment Effective Date” located therein and substituting in lieu
thereof the phrase “Ninth Amendment Effective Date”.

         

        1.5 Restricted
Subsidiaries.  Section 6.13 of the
Credit Agreement shall be and it hereby is amended by deleting the phrase
“Seventh Amendment Effective Date” located in clause (a) therein and
substituting in lieu thereof the phrase “Ninth Amendment Effective
Date”.

         

        1.6 Waivers;
Amendments.  Clause (b) of Section 11.02(b) of the Credit
Agreement shall be and it hereby is amended in its entirety to read as
follows:

         

        (b)           Neither
this Agreement nor any provision hereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the
Credit Parties and the Required Lenders or by the Credit Parties and the
Administrative Agent with the consent of the Required Lenders; provided that no such
agreement shall (1) increase the Borrowing Base or, at any

         

        
          
            
            

          

          
            Ninth
Amendment to Credit Agreement - Page 2

            
              

            

          

          
            
            

          

        

         

        
          time
prior to the Conforming Date, the Conforming Borrowing Base without the written
consent of each Lender, (2) increase the Applicable Percentage or Commitment of
any Lender without the written consent of such Lender, (3) increase the Maximum
Facility Amount without the written consent of each Lender, (4) reduce the
principal amount of any Loan or LC Disbursement or reduce the specified rate of
interest thereon, or reduce any fees payable hereunder, without the written
consent of each Lender affected thereby, (5) decrease the Monthly Reduction
without the written consent of each Lender, (6) postpone the scheduled date of
payment of the principal amount of any Loan or LC Disbursement, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any of the
Commitments, without the written consent of each Lender affected thereby, (7)
change Section 2.17(b) or Section 2.17(c) in a manner that would alter the pro
rata sharing of payments required thereby, without the written consent of each
Lender, (8) except in connection with any sales, transfers, leases or other
Dispositions permitted in Section 7.04, release any Credit Party from its
obligations under the Loan Documents or release any of the Collateral, or (9)
change any of the provisions of this Section or the definition of “Required
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the written consent of
each Lender; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent or the Issuing Bank hereunder without the prior written
consent of the Administrative Agent or the Issuing Bank, as the case may
be.  Notwithstanding anything to the contrary herein, no Defaulting
Lender shall have any right to approve or disapprove any amendment, waiver or
consent hereunder, except that the Commitment of such Lender may not be
increased or extended without the consent of such Lender.

           

          1.7 Amendment to
Schedules.  Schedule 2.01 and
Schedule 4.13
to the Credit Agreement shall be and they hereby are amended in their respective
entireties and replaced with Schedule 2.01 and
Schedule 4.13
attached hereto.

           

          SECTION
2. Redetermined Borrowing
Base.  This Amendment shall constitute notice of the
Redetermination of the Borrowing Base pursuant to Section 3.06 of
the Credit Agreement, and the Administrative Agent, the Lenders and the Borrower
hereby acknowledge that, effective as of Ninth Amendment Effective Date, the
Borrowing Base is $290,000,000 and the Monthly Reduction is $0.00.

           

          SECTION 3. Reallocation and Increase
of Commitments.  The Lenders have agreed among themselves to
reallocate their respective Applicable Percentages of the Aggregate Commitment,
and to, among other things, allow certain financial institutions to increase
their respective Commitments under the Credit Agreement (each, an “Increasing
Lender”).  The Administrative Agent and the Borrower hereby
consent to such reallocation and to the increase of each Increasing Lender’s
Commitment.  On the Ninth Amendment Effective Date and after giving
effect to such reallocation and increase of the Aggregate Commitment, the
Commitment and

           

          
            
              
              

            

            
              Ninth
Amendment to Credit Agreement - Page 3

              
                

              

            

            
              
              

            

          

           

          Applicable
Percentage of each Lender shall be as set forth on Schedule 2.01 to this
Amendment.  Each Lender hereby consents to the Applicable Percentages
and Commitments set forth on Schedule 2.01 to this
Amendment.  Any reallocation among the Lenders shall be deemed to have
been consummated pursuant to the terms of the Assignment and Assumption attached
as Exhibit A to the
Credit Agreement as if such Lenders had executed an Assignment and Assumption
with respect to such reallocation.  The Borrower and the
Administrative Agent hereby consent to such reallocation.  To the
extent requested by any Lender in accordance with Section 2.15 of the
Credit Agreement, the Borrower shall pay to such Lender, within the time period
prescribed by Section
2.15 of the Credit Agreement, any amounts required to be paid by the
Borrower under Section
2.15 of the Credit Agreement in the event the payment of any principal of
any Eurodollar Loan or the conversion of any Eurodollar Loan other than on the
last day of an Interest Period applicable thereto is required in connection with
the reallocation contemplated by this Section
3.

          
             

            SECTION
4. Conditions.  The
amendments to the Credit Agreement contained in Section 1 of this
Amendment, the Redetermination of the Borrowing Base contained in Section 2 of this
Amendment, and the reallocation and increase of Commitments contained in Section 3 of this
Amendment shall become effective upon the satisfaction of each of the conditions
set forth in this Section 4.

             

            4.1 Execution and
Delivery.  Each Credit Party, the Lenders, and the
Administrative Agent shall have executed and delivered this
Amendment.

             

            4.2 No Default.  No
Default shall have occurred and be continuing or shall result from the
effectiveness of this Amendment.

             

            4.3 Fees.  Borrower
shall have paid to the Administrative Agent all fees due and payable under the
Fee Letter at the time this Amendment becomes effective.

             

            4.4 Authorization and Good
Standing.  The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good standing of
each Credit Party, the authorization of this Amendment and any other legal
matters relating to the Credit Parties or this Amendment, all in form and
substance reasonably satisfactory to the Administrative Agent and its
counsel.

             

            4.5 Other
Documents.  The Administrative Agent shall have received such
other instruments and documents incidental and appropriate to the transaction
provided for herein as the Administrative Agent or its special counsel may
reasonably request prior to the date hereof, and all such documents shall be in
form and substance reasonably satisfactory to the Administrative
Agent.

             

            SECTION
5. Representations and Warranties of
Credit Parties.  To induce the Lenders to enter into this
Amendment, each Credit Party hereby represents and warrants to the Lenders as
follows:

             

            5.1 Reaffirmation of Representations
and Warranties/Further Assurances.  After giving effect to the
amendments herein, each representation and warranty of such Credit
Party

             

            
              
                
                

              

              
                Ninth
Amendment to Credit Agreement - Page 4

                
                  

                

              

              
                
                

              

            

             

            
              contained
in the Credit Agreement or in any of the other Loan Documents is true and
correct in all material respects as of the date hereof (except to the extent
such representations and warranties specifically refer to an earlier date, in
which case such representations and warranties shall be true and correct in all
material respects as of such earlier date and taking into account any amendments
to the schedules or exhibits as a result of any disclosures made in writing by
such Credit Party to the Administrative Agent after the Effective Date and
approved by the Administrative Agent and the Required Lenders in
writing).

               

              5.2 Corporate Authority; No
Conflicts.  The execution, delivery and performance by such
Credit Party (to the extent a party hereto or thereto) of this Amendment and all
documents, instruments and agreements contemplated herein are within such Credit
Party’s corporate or other organizational powers, have been duly authorized by
all necessary action, require no action by or in respect of, or filing with, any
court or agency of government and do not violate or constitute a default under
any provision of any applicable law or other agreements binding upon such Credit
Party or result in the creation or imposition of any Lien upon any of the assets
of such Credit Party except for Permitted Liens and otherwise as permitted in
the Credit Agreement.

               

              5.3 Enforceability.  This
Amendment has been duly executed and delivered by each Credit Party and
constitutes the valid and binding obligation of such Credit Party enforceable in
accordance with its terms, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditor’s rights
generally, and (ii) the availability of equitable remedies may be limited
by equitable principles of general application.

               

              5.4 No Default.  As of
the date hereof, both before and immediately after giving effect to this
Amendment, no Default or Event of Default has occurred and is
continuing.

               

              SECTION
6. Miscellaneous.

               

              6.1 Reaffirmation of Loan Documents and
Liens.  Any and all of the terms and provisions of the Credit
Agreement and the Loan Documents shall, except as amended and modified hereby,
remain in full force and effect and are hereby in all respects ratified and
confirmed by each Credit Party.  Each Credit Party hereby agrees that
nothing contained in this Amendment shall in any manner affect or impair the
liabilities, duties and obligations of such Credit Party under the Credit
Agreement and the other Loan Documents or the Liens securing the payment and
performance thereof.

               

              6.2 Parties in
Interest.  All of the terms and provisions of this Amendment
shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns.

               

              6.3 Legal
Expenses.  Each Credit Party hereby agrees to pay all
reasonable fees and expenses of special counsel to the Administrative Agent
incurred by the Administrative Agent in connection with the preparation,
negotiation and execution of this Amendment and all related
documents.

               

              6.4 Further
Assurances.  Each Credit Party covenants and agrees from time
to time, as and when requested by the Administrative Agent or the Lenders, to
execute and deliver or cause to be executed or delivered, all such documents,
instruments and agreements and to take or

               

              
                
                  
                  

                

                
                  Ninth
Amendment to Credit Agreement - Page 5

                  
                    

                  

                

                
                  
                  

                

              

               

              
                cause to
be taken such further or other action as Administrative Agent or the Lenders, as
the case may be, may reasonably deem necessary or desirable in order to carry
out the intent and purposes of this Amendment.

                 

                6.5 Counterparts.  This
Amendment may be executed in one or more 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 instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document.  Delivery of
photocopies of the signature pages to this Amendment by facsimile or electronic
mail shall be effective as delivery of manually executed counterparts of this
Amendment.

                 

                6.6 Headings.  The
headings, captions and arrangements used in this Amendment are, unless specified
otherwise, for convenience only and shall not be deemed to limit, amplify or
modify the terms of this Amendment, nor affect the meaning thereof.

                 

                6.7 Governing Law.  This
Amendment shall be construed in accordance with and governed by the law of the
State of Texas.

                 

                6.8 Complete
Agreement.  THIS AMENDMENT, THE CREDIT AGREEMENT, AND THE OTHER
LOAN 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 AMONG THE
PARTIES.

                 

                 

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                    Ninth
Amendment to Credit Agreement - Page 6

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                
                  IN WITNESS WHEREOF, the
parties have caused this Amendment to be duly executed by their respective
authorized officers to be effective as of the date first above
written.

                   

                  BORROWER:

                   

                  CARRIZO
OIL & GAS, INC.

                   

                  

                   

                  By:     
/s/Paul F. Boling

                  Name: Paul
F. Boling

                  Title:   
Vice President and Chief Financial Officer

                   

                  
                    
                      Ninth
Amendment to Credit Agreement

                      Signature
Page

                      
                      

                    

                    
                      
                      

                      
                        

                      

                    

                    
                      
                      

                    

                  

                

              

            

          

        

      

    

     

    
      

       

      GUARANTORS:

       

      CCBM,
INC.

       

      

       

      By:     
/s/Paul F. Boling

      Name: Paul
F. Boling

      Title:  
Vice President

       

      

       

      CLLR,
INC.

       

      

       

      By:     
/s/Paul F. Boling

      Name: Paul
F. Boling

      Title: Vice
President

       

      

       

      HONDO
PIPELINE, INC.

       

      

       

      By: 
/s/Paul F. Boling

      Name: Paul
F. Boling

      Title: Vice
President

       

      

       

      CARRIZO
(MARCELLUS) LLC

       

       

       

      By: 
/s/Paul F. Boling

      Name: Paul
F. Boling

      Title: Vice
President

       

      

       

      CARRIZO
MARCELLUS HOLDING INC.

       

      

       

      By:  
/s/Paul F. Boling

      Name: 
Paul F. Boling

      Title:   Vice
President

       

      
        
          Ninth
Amendment to Credit Agreement

          Signature
Page

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        

         

        CHAMA
PIPELINE HOLDING LLC

        

        

        
          By:  
/s/Paul F. Boling

          Name: 
Paul F. Boling

          Title:   Vice
President

        

        

         

        PECOS
PIPELINE LLC

        

        

        
          By:  
/s/Paul F. Boling

          Name: 
Paul F. Boling

          Title:   Vice
President

        

        

        
          
            Ninth
Amendment to Credit Agreement

            Signature
Page

            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    
      

       

      ADMINISTRATIVE
AGENT:

       

      GUARANTY BANK, as
Administrative Agent 

      and as a
Lender

       

       

      

      By:      /s/Kelly L. Elmore III

      Name: Kelly
L. Elmore III

      Title: Senior
Vice President

       

       

       

      
        
          Ninth
Amendment to Credit Agreement

          Signature
Page

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

        

         

        ROYAL BANK OF
CANADA,

        as a
Co-Agent and as a Lender

         

         

         

        
          By:           /s/ Don J.
McKinnerney

          Name:      Don
J. McKinnerney

          Title:         Authorized
Signatory

           

        

         

        
          
            Ninth
Amendment to Credit Agreement

            Signature
Page

            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    
      
        CAPITAL ONE,
N.A.,

        as
a Co-Agent and as a Lender

         

         

         

        
          By:        /s/ Paul D.
Hein

          Name:   Paul
D. Hein

          Title:      Vice
President

        

         

         

        
          
            Ninth
Amendment to Credit Agreement

            Signature
Page

            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

    

     

    
      UNION BANK, N.A. (F/K/A UNION
BANK

      OF
CALIFORNIA, N.A.)

      as a
Co-Agent and as a Lender

       

      

       

      
        By:       /s/ Damien
Meiburger

        Name: 
Damien Meiburger

        Title:    
Senior Vice President

      

       

      
        
          Ninth
Amendment to Credit Agreement

          Signature
Page

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

        
          U.S. BANK NATIONAL
ASSOCIATION,

        

        as a
Co-Agent and as a Lender

         

        
          

           

          By:       /s/ Justin M.
Alexander

          Name: 
Justin M. Alexander 

          Title:    
Vice President

        

         

      

      
        
          Ninth
Amendment to Credit Agreement

          Signature
Page

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
       

       

       

      CREDIT SUISSE, CAYMAN ISLANDS 

      BRANCH,

      as
a Lender

    

    
      

       

      By:       /s/ Vanessa
Gomez

      Name: 
Vanessa Gomez

      Title:    
Director

      

      

      By:       /s/ Nupur
Kumar

      Name: 
Nupur Kumar

      Title:     Vice
President

    

    
      
         

      

    

    
       

      
        
          Ninth
Amendment to Credit Agreement

          Signature
Page

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
         

      

    

      

      
        
          
            FORTIS CAPITAL
CORP.,

          
as
a Lender

      

       

      

       

      
        

         

        By:       /s/ Michele
Jones

        Name: 
Michele Jones

        Title:     Director

         

        By:       /s/ Ilene
Fowler

        Name:  Ilene
Fowler

        Title:     Director

      

       

      
        
          Ninth
Amendment to Credit Agreement

          Signature
Pageexh102.htm

    EXHIBIT
10.2

     

    
      INCENTIVE
PLAN

       

      OF

       

      CARRIZO
OIL & GAS, INC.

       

      (As
Amended and Restated Effective April 30, 2009)

       

      1. Plan. This Incentive Plan of
Carrizo Oil & Gas, Inc. (the “Plan”) was adopted by Carrizo Oil & Gas,
Inc. to reward certain corporate officers and key employees of Carrizo Oil &
Gas, Inc. and certain independent consultants by enabling them to acquire shares
of common stock of Carrizo Oil & Gas, Inc.

       

      2. Objectives. This Plan is
designed to attract and retain key employees of the Company and its Subsidiaries
(as hereinafter defined), to attract and retain qualified directors of the
Company, to attract and retain consultants and other independent contractors, to
encourage the sense of proprietorship of such employees, directors and
independent contractors and to stimulate the active interest of such persons in
the development and financial success of the Company and its Subsidiaries. These
objectives are to be accomplished by making Awards (as hereinafter defined)
under this Plan and thereby providing Participants (as hereinafter defined) with
a proprietary interest in the growth and performance of the Company and its
Subsidiaries.

       

      3. Definitions. As used herein,
the terms set forth below shall have the following respective
meanings:

       

      “Annual
Director Award Date” means, for each year, the first business day following the
date on which the annual meeting of stockholders of the Company is held in such
year.

       

      “Authorized
Officer” means the Chairman of the Board or the Chief Executive Officer of the
Company (or any other senior officer of the Company to whom either of them shall
delegate the authority to execute any Award Agreement).

       

      “Award”
means an Employee Award, a Director Award or an Independent Contractor
Award.

       

      “Award
Agreement” means any Employee Award Agreement, Director Award Agreement or
Independent Contractor Award Agreement.

       

      “Board”
means the Board of Directors of the Company.

       

      “Cash
Award” means an award denominated in cash.

       

      “Change
in Control” is defined in Attachment A.

       

      “Code”
means the Internal Revenue Code of 1986, as amended from time to
time.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        “Committee”
means (i) the Compensation Committee of the Board or (ii) such other committee
of the Board as is designated by the Board to administer the Plan or (iii) to
the extent contemplated hereby, the Board.

         

        “Common
Stock” means the Common Stock, par value $.01 per share, of the
Company.

         

        “Company”
means Carrizo Oil & Gas, Inc., a Texas corporation.

         

        “Director”
means an individual serving as a member of the Board.

         

        “Director
Award” means the grant of a Director Option or Director Restricted
Stock.

         

        “Director
Award Agreement” means a written agreement between the Company and a Participant
who is a Nonemployee Director setting forth the terms, conditions and
limitations applicable to a Director Award.

         

        “Director
Restricted Stock” means Restricted Stock granted to Nonemployee Directors
pursuant to Section 9 hereof.

         

        “Disability”
means, with respect to a Nonemployee Director, the inability to perform the
duties of a Director for a continuous period of more than three months by reason
of any medically determinable physical or mental impairment.

         

        “Dividend
Equivalents” means, with respect to shares of Restricted Stock that are to be
issued at the end of the Restriction Period, an amount equal to all dividends
and other distributions (or the economic equivalent thereof) that are payable to
stockholders of record during the Restriction Period on a like number of shares
of Common Stock.

         

        “Employee”
means an employee of the Company or any of its Subsidiaries and an individual
who has agreed to become an Employee of the Company or any of its Subsidiaries
and is expected to become such an Employee within the following six
months.

         

        “Employee
Award” means the grant of any Option, SAR, Stock Award, Cash Award or
Performance Award, whether granted singly, in combination or in tandem, to a
Participant who is an Employee pursuant to such applicable terms, conditions and
limitations as the Committee may establish in order to fulfill the objectives of
the Plan.

         

        “Employee
Award Agreement” means a written agreement between the Company and a Participant
who is an Employee setting forth the terms, conditions and limitations
applicable to an Employee Award.

         

        “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time.

         

        “Fair
Market Value” of a share of Common Stock means, as of a particular date, (i) if
shares of Common Stock are listed or quoted on a national securities exchange
(including

         

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

        
           

          the
Nasdaq Global Select Market), the mean between the highest and lowest sales
price per share of Common Stock on the consolidated transaction reporting system
for the principal national securities exchange on which shares of Common Stock
are listed or quoted on that date, or, if there shall have been no such sale so
reported on that date, on the last preceding date on which such a sale was so
reported, (ii) if the Common Stock is not so listed or quoted, the mean between
the closing bid and asked price on that date, or, if there are no quotations
available for such date, on the last preceding date on which such quotations
shall be available, as reported by the Nasdaq Stock Market, or, if not reported
by the Nasdaq Stock Market, by the National Quotation Bureau Incorporated or
(iii) if shares of Common Stock are not publicly traded, the most recent value
determined by an independent appraiser appointed by the Company for such
purpose.

           

          “Incentive
Option” means an Option that is intended to comply with the requirements set
forth in Section 422 of the Code.

           

          “Independent
Contractor” means a person providing services to the Company or any of its
Subsidiaries, including an Employee or Nonemployee Director.

           

          “Independent
Contractor Award” means the grant of any Nonqualified Stock Option, SAR, Stock
Award, Cash Award or Performance Award, whether granted singly, in combination
or in tandem, to a Participant who is an Independent Contractor pursuant to such
applicable terms, conditions and limitations as the Committee may establish in
order to fulfill the objectives of the Plan.

           

          “Independent
Contractor Award Agreement” means a written agreement between the Company and a
Participant who is an Independent Contractor setting forth the terms, conditions
and limitations applicable to an Independent Contractor Award.

           

          “Nonemployee
Director” has the meaning set forth in Section 4(b) hereof.

           

          “Nonqualified
Stock Option” means an Option that is not an Incentive Option.

           

          “Option”
means a right to purchase a specified number of shares of Common Stock at a
specified price.

           

          “Participant”
means an Employee, Director or Independent Contractor to whom an Award has been
made under this Plan.

           

          “Performance
Award” means an award made pursuant to this Plan to a Participant who is an
Employee or Independent Contractor who is subject to the attainment of one or
more Performance Goals.

           

          “Performance
Goal” means a standard established by the Committee, to determine in whole or in
part whether a Performance Award shall be earned.

           

          “Restricted
Stock” means any Common Stock that is restricted or subject to forfeiture
provisions.

           

          
            
              
              

            

            
              3

              
                

              

            

            
              
              

            

          

        

         

        
          “Restriction
Period” means a period of time beginning as of the date upon which an Award of
Restricted Stock is made pursuant to this Plan and ending as of the date upon
which the Common Stock subject to such Award is no longer restricted or subject
to forfeiture provisions.

           

          “Rule
16b-3” means Rule 16b-3 promulgated under the Exchange Act, or any successor
rule.

           

          “SAR”
means a right to receive a payment, in cash or Common Stock, equal to the excess
of the Fair Market Value or other specified valuation of a specified number of
shares of Common Stock on the date the right is exercised over a specified
strike price, in each case, as determined by the Committee.

           

          “Stock
Award” means an award in the form of shares of Common Stock or units denominated
in shares of Common Stock.

           

          “Subsidiary”
means (i) in the case of a corporation, any corporation of which the Company
directly or indirectly owns shares representing more than 50% of the combined
voting power of the shares of all classes or series of capital stock of such
corporation which have the right to vote generally on matters submitted to a
vote of the stockholders of such corporation and (ii) in the case of a
partnership or other business entity not organized as a corporation, any such
business entity of which the Company directly or indirectly owns more than 50%
of the voting, capital or profits interests (whether in the form of partnership
interests, membership interests or otherwise).

           

          4. Eligibility.

           

          (a) Employees.  Key
Employees eligible for Employee Awards under this Plan are those who hold
positions of responsibility and whose performance, in the judgment of the
Committee, can have a significant effect on the success of the Company and its
Subsidiaries.

           

          (b) Directors.  Directors
eligible for Director Awards under this Plan are those who are not employees of
the Company or any of its Subsidiaries (“Nonemployee Directors”).

           

          (c) Independent
Contractors.  Independent Contractors eligible for Independent
Contractor Awards under this Plan are those Independent Contractors providing
services to, or who will provide services to, the Company or any of its
Subsidiaries.

           

          5. Common Stock Available for
Awards.  Subject to the provisions of Section 15 hereof, there
shall be available for Awards under this Plan granted wholly or partly in Common
Stock (including rights or options that may be exercised for or settled in
Common Stock) an aggregate of 4,395,000 shares of Common Stock (the “Maximum
Share Limit”), all of which shall be available for Incentive Options. Each Stock
Award (including Stock Awards granted as Restricted Stock or Performance Awards)
granted under this Plan shall be counted against the Maximum Share Limit as 1.35
shares of Common Stock. The number of shares of Common

           

          
            
              
              

            

            
              4

              
                

              

            

            
              
              

            

          

           

          
            Stock
that are the subject of Awards under this Plan, that are forfeited or
terminated, expire unexercised, are settled in cash in lieu of Common Stock or
are exchanged for Awards that do not involve Common Stock, shall again
immediately become available for additional Awards hereunder. Notwithstanding
the foregoing, the following shares of Common Stock may not again be made
available for issuance as Awards under this Plan: (i) shares of Common Stock not
issued or delivered as a result of the net settlement of an outstanding SAR or
Option, (ii) shares of Common Stock used to pay the exercise price or
withholding taxes related to an outstanding Award, or (iii) shares of Common
Stock repurchased on the open market with the proceeds of the option exercise
price. The Board and the appropriate officers of the Company shall from time to
time take whatever actions are necessary to file any required documents with
governmental authorities, stock exchanges and transaction reporting systems to
ensure that shares of Common Stock are available for issuance pursuant to
Awards.

             

            6. Administration.

             

            (a) This Plan
shall be administered by the Committee. To the extent required in order for
Employee Awards to be exempt from Section 16 of the Exchange Act by virtue of
the provisions of Rule 16b-3, (i) the Committee shall consist of at least two
members of the Board who meet the requirements of the definition of
“non-employee director” set forth in Rule 16b-3(b)(3)(i) promulgated under the
Exchange Act or (ii) Awards may be granted by, and the Plan may be administered
by, the Board.

             

            (b)
Subject to the provisions hereof, the Committee shall have full and exclusive
power and authority to administer this Plan and to take all actions that are
specifically contemplated hereby or are necessary or appropriate in connection
with the administration hereof. The Committee shall also have full and exclusive
power to interpret this Plan and to adopt such rules, regulations and guidelines
for carrying out this Plan as it may deem necessary or proper, all of which
powers shall be exercised in the best interests of the Company and in keeping
with the objectives of this Plan. The Committee may, in its discretion, provide
for the extension of the exercisability of an Award, accelerate the vesting or
exercisability of an Award, eliminate or make less restrictive any restrictions
contained in an Award, waive any restriction or other provision of this Plan or
an Award or otherwise amend or modify an Award in any manner that is either (i)
not adverse to the Participant to whom such Award was granted or (ii) consented
to by such Participant. Notwithstanding the foregoing, except in connection with
a transaction involving the Company or its capitalization (as provided in
Section 15), the terms of outstanding awards may not be amended to reduce the
exercise price of outstanding Options or SARs or cancel, exchange, substitute,
buyout or surrender outstanding Options or SARs in exchange for cash, other
awards or Options or SARs with an exercise price that is less than the exercise
price of the original Options or SARs without approval of the shareholders of
the Company. The Committee may make an award to an individual who it expects to
become an Employee of the Company or any of its Subsidiaries within the next six
months, with such award being subject to the individual's actually becoming an
Employee within such time period, and subject to such other terms and conditions
as may be established by the Committee. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in this Plan or in any Award
in the manner and to the extent the Committee deems necessary or
desirable

          

           

          
            
              
              

            

            
              5

              
                

              

            

            
              
              

            

          

        

      

    

     

    
      to
further the Plan purposes. Any decision of the Committee in the interpretation
and administration of this Plan shall lie within its sole and absolute
discretion and shall be final, conclusive and binding on all parties
concerned.

       

      (c) No member
of the Committee or officer of the Company to whom the Committee has delegated
authority in accordance with the provisions of Section 7 of this Plan shall be
liable for anything done or omitted to be done by him or her, by any member of
the Committee or by any officer of the Company in connection with the
performance of any duties under this Plan, except for his or her own willful
misconduct or as expressly provided by statute.

       

      7. Delegation of
Authority.  The Committee may delegate to the Chief Executive
Officer and to other senior officers of the Company its duties under this Plan
pursuant to such conditions or limitations as the Committee may establish,
except that the Committee may not delegate to any person the authority to grant
Awards to, or take other action with respect to, Participants who are subject to
Section 16 of the Exchange Act.

       

      8. Employee and Independent Contractor
Awards.

       

      (a) The
Committee shall determine the type or types of Employee Awards to be made under
this Plan and shall designate from time to time the Employees who are to be the
recipients of such Awards. Independent Contractor Awards shall be subject to the
same terms and restrictions as are set forth herein with respect to Employee
Awards (including, without limitation, restrictions on term, exercise price and
per person limitations), and subject to such restrictions, the Committee shall
have the sole responsibility and authority to determine the type or types of
Independent Contractor Awards to be made under this Plan and may make any such
Awards as could be made to an Employee, other than Incentive Options. The term
of an Employee Award shall not exceed ten years from the date of grant. Each
Employee Award may be embodied in an Employee Award Agreement, which shall
contain such terms, conditions and limitations as shall be determined by the
Committee in its sole discretion and shall be signed by the Participant to whom
the Employee Award is made and by an Authorized Officer for and on behalf of the
Company. Employee Awards may consist of those listed in this Section 8(a) and
may be granted singly, in combination or in tandem. Employee Awards may also be
made in combination or in tandem with, in replacement of, or as alternatives to,
grants or rights under this Plan or any other employee plan of the Company or
any of its Subsidiaries, including the plan of any acquired entity. An Employee
Award may provide for the grant or issuance of additional, replacement or
alternative Employee Awards upon the occurrence of specified events, including
the exercise of the original Employee Award granted to a Participant.
Notwithstanding the foregoing, except in connection with a transaction involving
the Company or its capitalization (as provided in Section 15), the terms of
outstanding awards may not be amended to reduce the exercise price of
outstanding Options or SARs or cancel, exchange, substitute, buyout or surrender
outstanding Options or SARs in exchange for cash, other awards or Options or
SARs with an exercise price that is less than the exercise price of the original
Options or SARs without approval of the shareholders of the Company. All or part
of an Employee Award may be subject to conditions established by the Committee,
which may include, but are

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

    

     

    
      not
limited to, continuous service with the Company and its Subsidiaries,
achievement of specific business objectives, increases in specified indices,
attainment of specified growth rates and other comparable measurements of
performance. Upon the termination of employment by a Participant who is an
Employee, any unexercised, deferred, unvested or unpaid Employee Awards shall be
treated as set forth in the applicable Employee Award Agreement.

       

      (i) Stock Option.  An
Employee Award may be in the form of an Option. An Option awarded pursuant to
this Plan may consist of an Incentive Option or a Nonqualified Option. The price
at which shares of Common Stock may be purchased upon the exercise of an
Incentive Option shall be not less than the Fair Market Value of the Common
Stock on the date of grant. The price at which shares of Common Stock may be
purchased upon the exercise of a Nonqualified Option shall be not less than the
Fair Market Value of the Common Stock on the date of grant. Subject to the
foregoing provisions, the terms, conditions and limitations applicable to any
Options awarded pursuant to this Plan, including the term of any Options and the
date or dates upon which they become exercisable, shall be determined by the
Committee.

       

      (ii) Stock Appreciation
Right.  An Employee Award may be in the form of a SAR. The
strike price for a SAR shall be not less than the Fair Market Value of the
Common Stock on the date on which the SAR is granted. The terms, conditions and
limitations applicable to any SARs awarded pursuant to this Plan, including the
term of any SARs and the date or dates upon which they become exercisable, shall
be determined by the Committee.

       

      (iii) Stock Award.  An
Employee Award may be in the form of a Stock Award. The terms, conditions and
limitations applicable to any Stock Awards granted pursuant to this Plan shall
be determined by the Committee.

       

      (iv) Cash Award.  An
Employee Award may be in the form of a Cash Award. The terms, conditions and
limitations applicable to any Cash Awards granted pursuant to this Plan shall be
determined by the Committee.

       

      (v)Performance
Award.  Without limiting the type or number of Employee Awards
that may be made under the other provisions of this Plan, an Employee Award may
be in the form of a Performance Award.  A Performance Award shall be
paid, vested or otherwise deliverable solely on account of the attainment of one
or more pre-established, objective Performance Goals established by the
Committee prior to the earlier to occur of (x) 90 days after the commencement of
the period of service to which the Performance Goal relates and (y) the lapse of
25% of the period of service (as scheduled in good faith at the time the goal is
established), and in any event while the outcome is substantially uncertain. A
Performance Goal is objective if a third party having knowledge of the relevant
facts could determine whether the goal is met. Such a Performance Goal may be
based on one or more business criteria that apply to the individual, one or more
business units of the Company, or the Company as a whole, and may

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

    

    
      include
one or more of the following and need not be the same for each
Participant:

       

      
        	
                ·  

              	
                revenue
      and income measures (which include revenue, gross margin, income from
      operations, net income, net sales and earnings per
  share);

              

      

       

      
        	
                ·  

              	
                expense
      measures (which include costs of goods sold, operating expenses, selling,
      general and administrative expenses and overhead
  costs);

              

      

       

      
        	
                ·  

              	
                operating
      measures (which include production volumes, margin, oil & gas
      production, drilling results, reservoir production replacement, reserve
      additions and other reserve measures, finding costs, development costs and
      productivity);

              

      

       

      
        	
                ·  

              	
                cash
      flow measures (which include net cash flow from operating activities and
      working capital);

              

      

       

      
        	
                ·  

              	
                liquidity
      measures (which include earnings before or after the effect of certain
      items such as interest, taxes, depreciation and amortization, and free
      cash flow);

              

      

       

      
        	
                ·  

              	
                leverage
      measures (which include debt-to-equity ratio and net
  debt);

              

      

       

      
        	
                ·  

              	
                market
      measures (which include stock price, total shareholder return and market
      capitalization measures);

              

      

       

      
        	
                ·  

              	
                return
      measures (which include return on equity, return on assets and return on
      invested capital);

              

      

       

      
        	
                ·  

              	
                corporate
      value measures (which include compliance, safety, environmental and
      personnel matters); and

              

      

       

      
        	
                ·  

              	
                other
      measures such as those relating to acquisitions or
      dispositions.

              

      

       

      Unless otherwise stated, such a
Performance Goal need not be based upon an increase or positive result under a
particular business criterion and could include, for example, maintaining the
status quo or limiting economic losses (measured, in each case, by reference to
specific business criteria). In interpreting Plan provisions applicable to
Performance Goals and Performance Awards, it is the intent of the Plan to
conform with the standards of Section 162(m) of the Code and Treasury Regulation
§ 1.162-27(e)(2)(i), and the Committee in establishing such goals and
interpreting the Plan shall be guided by such provisions. Prior to the payment
of any compensation based on the achievement of Performance Goals, the Committee
must certify in writing that applicable Performance Goals and any of the
material terms thereof were, in fact, satisfied. Subject to the foregoing
provisions, the terms, conditions and limitations applicable to any

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      
         

        Performance
Awards made pursuant to this Plan shall be determined by the
Committee.

         

        (b) Notwithstanding
anything to the contrary contained in this Plan, the following limitations shall
apply to any Employee Awards made hereunder:

         

        (i) no
Participant may be granted, during any one-year period, Employee Awards
consisting of Options or SARs that are exercisable for more than 375,000 shares
of Common Stock;

         

        (ii) no
Participant may be granted, during any one-year period, Stock Awards covering or
relating to more than 250,000 shares of Common Stock (the limitation set forth
in this clause (ii), together with the limitation set forth in clause (i) above,
being hereinafter collectively referred to as the “Stock Based Awards
Limitations”); and

         

        (iii) no
Participant may be granted Employee Awards consisting of cash or in any other
form permitted under this Plan (other than Employee Awards consisting of Options
or SARs or otherwise consisting of shares of Common Stock or units denominated
in such shares) in respect of any one-year period having a value determined on
the date of grant in excess of $5,000,000.

         

        9. Director
Awards.  Each Nonemployee Director of the Company shall be
granted Director Awards in accordance with this Section 9 and subject to the
applicable terms, conditions and limitations set forth in this Plan and the
applicable Director Award Agreement.  Notwithstanding anything to the
contrary contained herein, Director Awards shall not be made in any year in
which a sufficient number of shares of Common Stock are not available to make
such Awards under this Plan.

         

        (a) Director
Options.  On the date of a Nonemployee Director’s first
appointment or election to the Board of Directors and on or after each Annual
Director Award Date, the Board or the Committee may, in its discretion, grant
such Nonemployee Director one or more Director Options that provides for the
purchase of such number of shares of Common Stock as the Board or the Committee
may determine in its discretion, subject to the limitation that such Awards may
not exceed the number of shares of Common Stock then available for award under
this Plan.

         

        Each
Director Option shall, unless otherwise provided in the specific Award granted,
have a term of ten years from the date of grant, notwithstanding any earlier
termination of the status of the holder as a Nonemployee
Director.  The purchase price of each share of Common Stock subject to
a Director Option shall be equal to the Fair Market Value of the Common Stock on
the date of grant.  Upon a Change in Control, all Director Options
shall immediately vest.  All Director Options held by a Nonemployee
Director shall vest upon such Director’s death.  All unvested Director
Options shall be forfeited if the Nonemployee Director resigns as a Director
without the consent of a majority of the other Directors.

         

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

      

       

      
        Any Award of Director Options shall be
embodied in a Director Award Agreement, which shall contain the terms,
conditions and limitations of the Award, including without limitation those set
forth above, and shall be signed by the Participant to whom the Director Options
are granted and by an Authorized Officer for and on behalf of the
Company.  Without limiting the generality of any other provision
hereof, Director Options in addition to those provided for in the first two
paragraphs of this Section 9(a) may be granted by the Board or the Committee to
a Nonemployee Director who serves as chairman or a member of the Audit,
Compensation or Nominating committees of the Board; provided that each such
non-chairman member of any such committee to whom a Director Option is to be
granted is deemed by the Committee to be “independent” for purposes of the rules
of The Nasdaq Stock Market, Inc.

         

        (b) Director Restricted
Stock.  On the date of a Nonemployee Director’s first
appointment or election to the Board of Directors and on or after each Annual
Director Award Date, the Board or the Committee may, in its discretion, grant
such Nonemployee Director one or more Awards of Restricted Stock for such number
of shares of Restricted Stock as the Board or the Committee may determine in its
discretion, subject to the limitation that such Awards may not exceed the number
of shares of Common Stock then available for award under this Plan.

         

        Upon a Change in Control, all shares of
Director Restricted Stock shall immediately vest.  All unvested
Restricted Stock held by a Nonemployee Director shall vest upon such Director’s
death.  All unvested shares of Director Restricted Stock shall be
forfeited if the Nonemployee Director resigns as a Director without the consent
of a majority of the other Directors.

         

        Any Award of Director Restricted Stock
shall be embodied in a Director Award Agreement, which shall contain the terms,
conditions and limitations of the Award, including without limitation those set
forth above, and shall be signed by the Participant to whom the Director
Restricted Stock is granted and by an Authorized Officer for and on behalf of
the Company.  Without limiting the generality of any other provision
hereof, Awards of Restricted Stock in addition to those provided for in the
first paragraph of this Section 9(b) may be granted by the Board or the
Committee to a Nonemployee Director who serves as chairman or a member of the
Audit, Compensation or Nominating committees of the Board; provided that each
such non-chairman member of any such committee to whom an Award of Restricted
Stock is to be granted is deemed by the Committee to be “independent” for
purposes of the rules of The Nasdaq Stock Market, Inc. or other such exchange on
which the Company’s Common Stock is listed or quoted.

         

        10. Payment of
Awards.

         

        (a) General.  Payment of
Employee Awards or Independent Contractor Awards may be made in the form of cash
or Common Stock, or a combination thereof, and may include such restrictions as
the Committee shall determine, including, in the case of Common Stock,
restrictions on transfer and forfeiture provisions. If payment of an Employee
Award or Independent Contractor Award is made in the form of Restricted Stock,
the applicable Award Agreement relating to such shares shall specify whether
they

         

        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

         

        
          are to be
issued at the beginning or end of the Restriction Period. In the event that
shares of Restricted Stock are to be issued at the beginning of the Restriction
Period, the certificates evidencing such shares (to the extent that such shares
are so evidenced) shall contain appropriate legends and restrictions that
describe the terms and conditions of the restrictions applicable thereto. In the
event that shares of Restricted Stock are to be issued at the end of the
Restriction Period, the right to receive such shares shall be evidenced by book
entry registration or in such other manner as the Committee may
determine.

           

          (b) Dividends and
Interest.  Unless specifically provided otherwise in an Award
Agreement, rights to dividends or Dividend Equivalents may be extended to and
made part of any Stock Award, but such dividends or Dividend Equivalents shall
be held by the Company and paid, without interest, within 10 days following the
lapse of the restrictions on the Stock Award.  In the event the Stock
Award is forfeited, dividends and Dividend Equivalents paid with respect to such
shares during the Restriction Period shall also be forfeited.

           

          (c) Substitution of
Awards.  Subject to the provisions of Section 6(b), at the
discretion of the Committee, a Participant who is an Employee or Independent
Contractor may be offered an election to substitute an Employee Award or
Independent Contractor Award for another Employee Award or Independent
Contractor Award or Employee Awards or Independent Contractor Awards of the same
or different type. No Option or SAR may be substituted for another Employee
Award or Independent Contractor Award without the approval of the shareholders
of the Company (except in connection with a change in the Company’s
capitalization or as otherwise provided in Section 15 hereof).

           

          11. Stock Option
Exercise.  The price at which shares of Common Stock may be
purchased under an Option shall be paid in full at the time of exercise in cash
or, if elected by the optionee, the optionee may purchase such shares by means
of tendering Common Stock or surrendering another Award, including Restricted
Stock or Director Restricted Stock, valued at Fair Market Value on the date of
exercise, or any combination thereof. The Committee shall determine acceptable
methods for Participants who are Employees or Independent Contractors to tender
Common Stock or other Employee Awards or Independent Contractor Awards; provided
that any Common Stock that is or was the subject of an Employee Award or
Independent Contractor Award may be so tendered only if it has been held by the
Participant for six months. The Committee may provide for procedures to permit
the exercise or purchase of such Awards by use of the proceeds to be received
from the sale of Common Stock issuable pursuant to an Employee Award or
Independent Contractor Award. Unless otherwise provided in the applicable Award
Agreement, in the event shares of Restricted Stock are tendered as consideration
for the exercise of an Option, a number of the shares issued upon the exercise
of the Option, equal to the number of shares of Restricted Stock or Director
Restricted Stock used as consideration therefor, shall be subject to the same
restrictions as the Restricted Stock or Director Restricted Stock so submitted
as well as any additional restrictions that may be imposed by the
Committee.

           

          12.
Taxes.  The Company shall have the right to deduct
applicable taxes from any Employee Award payment and withhold, at the time of
delivery or vesting of cash or shares of Common Stock under this Plan, an
appropriate amount of cash or number of shares of Common Stock or a combination
thereof for payment of taxes required by law or to take such other
action

           

          
            
              
              

            

            
              11

              
                

              

            

            
              
              

            

          

           

          
            as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. The Committee may also permit withholding to be
satisfied by the transfer to the Company of shares of Common Stock theretofore
owned by the holder of the Employee Award with respect to which withholding is
required. If shares of Common Stock are used to satisfy tax withholding, such
shares shall be valued based on the Fair Market Value when the tax withholding
is required to be made.  To the extent allowed by law, the Committee
may provide for loans, on either a short term or demand basis, from the Company
to a Participant who is an Employee or Independent Contractor to permit the
payment of taxes required by law.

             

            13. Amendment, Modification, Suspension
or Termination.  The Board may amend, modify, suspend or
terminate this Plan for the purpose of meeting or addressing any changes in
legal requirements or for any other purpose permitted by law, except that (i) no
amendment or alteration that would adversely affect the rights of any
Participant under any Award previously granted to such Participant shall be made
without the consent of such Participant and (ii) no amendment or alteration
shall be effective prior to its approval by the stockholders of the Company to
the extent such approval is then required pursuant to Rule 16b-3 in order to
preserve the applicability of any exemption provided by such rule to any Award
then outstanding (unless the holder of such Award consents) or to the extent
stockholder approval is otherwise required by applicable legal
requirements.

             

            14. Assignability.  Unless
otherwise determined by the Committee and provided in the Award Agreement, no
Award or any other benefit under this Plan constituting a derivative security
within the meaning of Rule 16a-1(c) under the Exchange Act shall be assignable
or otherwise transferable except by will or the laws of descent and distribution
or pursuant to a qualified domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act, or the rules thereunder.
The Committee may prescribe and include in applicable Award Agreements other
restrictions on transfer. Any attempted assignment of an Award or any other
benefit under this Plan in violation of this Section 14 shall be null and
void.

             

            15. Adjustments.

             

            (a) The
existence of outstanding Awards shall not affect in any manner the right or
power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the capital
stock of the Company or its business or any merger or consolidation of the
Company, or any issue of bonds, debentures, preferred or prior preference stock
(whether or not such issue is prior to, on a parity with or junior to the Common
Stock) or the dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other corporate act or
proceeding of any kind, whether or not of a character similar to that of the
acts or proceedings enumerated above.

             

            (b) In
the event of any subdivision or consolidation of outstanding shares of Common
Stock, declaration of a dividend payable in shares of Common Stock or other
stock split, then (i) the number of shares of Common Stock reserved under this
Plan, (ii) the number of shares of Common Stock covered by outstanding Awards in
the form of Common Stock or units denominated in Common Stock, (iii) the
exercise or other price in respect of such Awards, (iv) the appropriate Fair
Market Value and other price

             

            
              
                
                

              

              
                12

                
                  

                

              

              
                
                

              

            

             

            
              determinations
for such Awards, and (v) the Stock Based Awards Limitations shall each be
proportionately adjusted by the Board to reflect such transaction. In the event
of any other recapitalization or capital reorganization of the Company, any
consolidation or merger of the Company with another corporation or entity, the
adoption by the Company of any plan of exchange affecting the Common Stock or
any distribution to holders of Common Stock of securities or property (other
than normal cash dividends or dividends payable in Common Stock), the Board
shall make appropriate adjustments to (i) the number of shares of Common Stock
covered by Awards in the form of Common Stock or units denominated in Common
Stock, (ii) the exercise or other price in respect of such Awards, (iii) the
appropriate Fair Market Value and other price determinations for such Awards,
and (iv) the Stock Based Awards Limitations to give effect to such transaction
shall each be proportionately adjusted by the Board to reflect such transaction;
provided that such adjustments shall only be such as are necessary to maintain
the proportionate interest of the holders of the Awards and preserve, without
exceeding, the value of such Awards. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Board shall be authorized to issue or assume Awards by means of
substitution of new Awards, as appropriate, for previously issued Awards or to
assume previously issued Awards as part of such adjustment.

               

              (c) In the
event of a corporate merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Board may make such adjustments
to outstanding Awards or other provisions for the disposition of outstanding
Awards as it deems equitable, and shall be authorized, in its discretion, (i) to
provide for the substitution of a new Award or other arrangement (which, if
applicable, may be exercisable for such property or stock as the Board
determines) for an outstanding Award or the assumption of an outstanding Award,
regardless of whether in a transaction to which Section 424(a) of the Code
applies, (ii) to provide, prior to the transaction, for the acceleration of the
vesting and exercisability of, or lapse of restrictions with respect to, the
outstanding Award and, if the transaction is a cash merger, to provide for the
termination of any portion of the Award that remains unexercised at the time of
such transaction or (iii) to provide for the acceleration of the vesting and
exercisability of an outstanding Award and the cancellation thereof in exchange
for such payment as shall be determined by the Board in its sole
discretion.

               

              16. Restrictions.  No Common
Stock or other form of payment shall be issued with respect to any Award unless
the Company shall be satisfied based on the advice of its counsel that such
issuance will be in compliance with applicable federal and state securities
laws. It is the intent of the Company that grants of Awards under this Plan
comply with Rule 16b-3 with respect to persons subject to Section 16 of the
Exchange Act unless otherwise provided herein or in an Award Agreement and that
any ambiguities or inconsistencies in the construction of such an Award or this
Plan be interpreted to give effect to such intention. Certificates evidencing
shares of Common Stock delivered under this Plan (to the extent that such shares
are so evidenced) may be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any securities
exchange or transaction reporting system upon which the Common Stock is then
listed or to which it is admitted for quotation and any applicable
federal

               

              
                
                  
                  

                

                
                  13

                  
                    

                  

                

                
                  
                  

                

              

               

              
                or state
securities law. The Committee may cause a legend or legends to be placed upon
such certificates (if any) to make appropriate reference to such
restrictions.

                 

                17. Unfunded
Plan.  Insofar as it provides for Awards of cash, Common Stock
or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Participants who are entitled to cash, Common
Stock or rights thereto under this Plan, any such accounts shall be used merely
as a bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash, Common Stock or rights
thereto, nor shall this Plan be construed as providing for such segregation, nor
shall the Company, the Board or the Committee be deemed to be a trustee of any
cash, Common Stock or rights thereto to be granted under this Plan. Any
liability or obligation of the Company to any Participant with respect to an
Award of cash, Common Stock or rights thereto under this Plan shall be based
solely upon any contractual obligations that may be created by this Plan and any
Award Agreement, and no such liability or obligation of the Company shall be
deemed to be secured by any pledge or other encumbrance on any property of the
Company. Neither the Company nor the Board nor the Committee shall be required
to give any security or bond for the performance of any obligation that may be
created by this Plan.

                 

                18. Section 409A of the
Code.  All Awards under this Plan are intended either to be
exempt from, or to comply with the requirements of Section 409A, and this Plan
and all Awards shall be interpreted and operated in a manner consistent with
that intention.  Notwithstanding anything in this Plan to the
contrary, if any Plan provision or Award under this Plan would result in the
imposition of an applicable tax under Section 409A, that Plan provision or Award
shall be reformed to avoid imposition of the applicable tax and no such action
shall be deemed to adversely affect the Participant’s rights to an
Award.

                 

                19. Governing
Law.  This Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by mandatory provisions of
the Code or the securities laws of the United States, shall be governed by and
construed in accordance with the laws of the State of Texas.

                 

                20. No Right to Employment or
Directorship.  Nothing in this Plan or an Award Agreement shall
interfere with or limit in any way the right of the Company or a Subsidiary to
terminate any Participant’s employment or other service relationship at any
time, nor confer upon any Participant any right to continue in the capacity in
which he or she is employed or otherwise serves the Company or any
Subsidiary.  Further, nothing in this Plan or an Award Agreement
constitutes any assurance or obligation of the Board to nominate any Nonemployee
Director for re-election by the Company’s shareholders.

                 

                21. Successors.  All
obligations of the Company under this Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company by merger,
consolidation or otherwise.

                 

                22.
Effectiveness.  This Plan was previously amended and
restated effective February 17, 2000 and was thereafter amended.  This
amendment and restatement of the Plan is effective April 30, 2009, the date on
which it was approved by the shareholders of the Company.  This Plan
shall continue in effect for a term of ten years after the date on which the
shareholders of

                 

                
                  
                    
                    

                  

                  
                    14

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                the
Company approve this amended and restated Plan, unless sooner terminated by
action of the Board.

                 

                 

                
                  
                    
                    

                  

                  
                    15

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                
                  IN
WITNESS WHEREOF, the Company has caused this Plan to be executed by its duly
authorized officer on the date first written above.

                   

                  

                  CARRIZO
OIL & GAS, INC.

                  

                  By:   
/s/Paul F. Boling

                  

                  Title: 
VP & CFO

                   

                  

                  
                    
                      
                      

                    

                    
                      16

                      
                        

                      

                    

                    
                      
                      

                    

                  

                   

                  
                    ATTACHMENT
A

                     

                    “CHANGE
IN CONTROL”

                     

                    The
following definitions apply regarding Change in Control provisions of the
foregoing Plan:

                     

                    “Affiliate”
shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act, as in effect on the date of this
Agreement.

                     

                    “Associate”
shall mean, with reference to any Person, (a) any corporation, firm,
partnership, association, unincorporated organization or other entity (other
than the Company or a subsidiary of the Company) of which such Person is an
officer or general partner (or officer or general partner of a general partner)
or is, directly or indirectly, the Beneficial Owner of 10% or more of any class
of equity securities, (b) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity and (c) any relative or spouse of such Person,
or any relative of such spouse, who has the same home as such
Person.

                     

                    “Beneficial
Owner” shall mean, with reference to any securities, any Person if:

                     

                    (a) such Person or any of such Person’s
Affiliates and Associates, directly or indirectly, is the “beneficial owner” of
(as determined pursuant to Rule 13d-3 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement) such securities or
otherwise has the right to vote or dispose of such securities, including
pursuant to any agreement, arrangement or understanding (whether or not in
writing); provided, however, that a Person shall not be deemed the “Beneficial
Owner” of, or to “beneficially own,” any security under this subsection (a) as a
result of an agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding: (i) arises solely from a revocable
proxy or consent given in response to a public (i.e., not including a
solicitation exempted by Rule 14a-2(b)(2) of the General Rules and Regulations
under the Exchange Act) proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act and (ii) is not then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor
report);

                     

                    (b) such Person or any of such Person’s
Affiliates and Associates, directly or indirectly, has the right or obligation
to acquire such securities (whether such right or obligation is exercisable or
effective immediately or only after the passage of time or the occurrence of an
event) pursuant to any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights, exchange rights, other
rights, warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to “beneficially own,” (i)
securities tendered pursuant to a tender or exchange offer made by such Person
or any of such Person’s Affiliates or Associates until such tendered securities
are accepted for purchase or exchange or (ii) securities issuable upon exercise
of Exempt Rights; or

                     

                    (c) such Person or any such Person’s
Affiliates or Associates (i) has any agreement, arrangement or understanding
(whether or not in writing) with any other Person (or any Affiliate or Associate
thereof) that beneficially owns such securities for the purpose of acquiring,
holding, voting (except as set forth in the proviso to subsection (a) of this
definition) or disposing of such

                     

                    
                      
                        
                        

                      

                      
                        17

                        
                          

                        

                      

                      
                        
                        

                      

                    

                     

                    
                      securities
or (ii) is a member of a group (as that term is used in Rule 13d-5(b) of the
General Rules and Regulations under the Exchange Act) that includes any other
Person that beneficially owns such securities;

                       

                      provided,
however, that nothing in this definition shall cause a Person engaged in
business as an underwriter of securities to be the Beneficial Owner of, or to
“beneficially own,” any securities acquired through such Person’s participation
in good faith in a firm commitment underwriting until the expiration of 40 days
after the date of such acquisition. For purposes hereof, “voting” a security
shall include voting, granting a proxy, consenting or making a request or demand
relating to corporate action (including, without limitation, a demand for
stockholder list, to call a stockholder meeting or to inspect corporate books
and records) or otherwise giving an authorization (within the meaning of Section
14(a) of the Exchange Act) in respect of such security.

                       

                      The terms
“beneficially own” and “beneficially owning” shall have meanings that are
correlative to this definition of the term “Beneficial Owner”.

                       

                      “Change
of Control” shall mean any of the following:

                       

                      (a) any Person (other than an Exempt
Person) shall become the Beneficial Owner of 40% or more of the shares of Common
Stock then outstanding or 40% or more of the combined voting power of the Voting
Stock of the Company then outstanding; provided, however, that no Change of
Control shall be deemed to occur for purposes of this subsection (a) if such
Person shall become a Beneficial Owner of 40% or more of the shares of Common
Stock or 40% or more of the combined voting power of the Voting Stock of the
Company solely as a result of (i) an Exempt Transaction or (ii) an acquisition
by a Person pursuant to a reorganization, merger or consolidation, if, following
such reorganization, merger or consolidation, the conditions described in
clauses (i), (ii) and (iii) of subsection (c) of this definition are satisfied;
or

                       

                      (b) individuals who, as of April 30,
2009, constitute the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to April 30, 2009 whose election, or
nomination for election by the Company’s shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board;
provided, further, that there shall be excluded, for this purpose, any such
individual whose initial assumption of office occurs as a result of any actual
or  threatened election contest; or

                       

                      (c) the Company engages in and
completes a reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (i) more than 85% of the
then outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding Voting Stock of such corporation beneficially owned, directly
or indirectly, by all or substantially all of the Persons who were the
Beneficial Owners of the outstanding Common Stock immediately prior to such
reorganization, merger, or consolidation in substantially the same proportions
as their ownership, immediately prior to such reorganization, merger or
consolidation, of the outstanding Common Stock, (ii) no Person (excluding any
Exempt Person

                    

                     

                    
                      
                        
                        

                      

                      
                        18

                        
                          

                        

                      

                      
                        
                        

                      

                    

                     

                    
                      or any
Person beneficially owning, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 40% or more of the Common Stock then
outstanding or 40% or more of the combined voting power of the Voting Stock of
the Company then outstanding) beneficially owns, directly or indirectly, 40% or
more of the then outstanding shares of common stock of the corporation resulting
from such reorganization, merger or consolidation or the combined voting power
of the then outstanding Voting Stock of such corporation and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement or initial action by
the Board providing for such reorganization, merger or consolidation;
or

                       

                      (d) the Company engages in and
completes (i) a complete liquidation or dissolution of the Company unless such
liquidation or dissolution is approved as part of a plan of liquidation and
dissolution involving a sale or disposition of all or substantially all of the
assets of the Company to a corporation with respect to which, following such
sale or other disposition, all of the requirements of clauses (ii) (A), (B) and
(C) of this subsection (d) are satisfied, or (ii) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation, with respect to which, following such sale or other disposition,
(A) more than 85% of the then outstanding shares of common stock or such
corporation and the combined voting power of the Voting Stock of such
corporation is then beneficially owned, directly or indirectly, by all or
substantially all of the Persons who were the Beneficial Owners of the
outstanding Common Stock immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the outstanding Common Stock, (B) no Person
(excluding any Exempt Person and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, 40% or more of
the Common Stock then outstanding or 40% or more of the combined voting power of
the Voting Stock of the Company then outstanding) beneficially owns, directly or
indirectly, 40% or more of the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding Voting Stock
of such corporation and (C) at least a majority of the members of the board of
directors of such corporation were members of the Incumbent Board at the time of
the execution of the initial agreement or initial action of the Board providing
for such sale or other disposition of assets of the Company.

                       

                      Notwithstanding the foregoing, no
Change of Control shall be deemed to have occurred pursuant to subsections (a),
(c) or (d) of this definition as a result of (i) any Person that is currently
party to the Shareholders Agreement dated as of December 15, 1999 among the
Company, C.B. Capital Investors, L.P. (now J.P. Morgan Partners (23A SBIC),
LLC), S.P. Johnson IV, Frank A. Wojtek, Steven A. Webster and Mellon Ventures,
L.P., as amended from time to time, or the Shareholders Agreement dated as of
February 20, 2002 among the Company, Mellon Ventures, L.P., S.P. Johnson IV,
Frank A. Wojtek and Steven A. Webster, as amended from time to time
(collectively, the “Shareholders Agreements”), becoming the Beneficial Owner at
any time of 40% or more of the shares of Common Stock or 40% or more of the
combined voting power of the Voting Stock of the Company, or (ii) any other
Person becoming the Beneficial Owner at any time of 40% or more of the shares of
Common Stock or 40% or more of the combined voting power of the Voting Stock of
the Company to the extent caused by the attribution to that other Person of the
beneficial ownership of the Common Stock or Voting Stock of a Person who is
listed in clause (i) above and is a member of a group with such
other

                    

                     

                    
                      
                        
                        

                      

                      
                        19

                        
                          

                        

                      

                      
                        
                        

                      

                    

                     

                    
                      Person
solely because of a voting agreement, tag-along rights or other rights
substantially similar to the rights set forth in the Shareholders
Agreements.

                       

                      “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

                       

                      “Exempt
Person” shall mean the Company, any subsidiary of the Company, any employee
benefit plan of the Company or any subsidiary of the Company, and any Person
organized, appointed or established by the Company for or pursuant to the terms
of any such plan.

                       

                      “Exempt
Rights” shall mean any rights to purchase shares of Common Stock or other Voting
Stock of the Company if at the time of the issuance thereof such rights are not
separable from such Common Stock or other Voting Stock (i.e., are not
transferable otherwise than in connection with a transfer of the underlying
Common Stock or other Voting Stock) except upon the occurrence of a contingency,
whether such rights exist as of April 30, 2009 or are thereafter issued by the
Company as a dividend on shares of Common Stock or other Voting Securities or
otherwise.

                       

                      “Exempt
Transaction” shall mean an increase in the percentage of the outstanding shares
of Common Stock or the percentage of the combined voting power of the
outstanding Voting Stock of the Company beneficially owned by any Person solely
as a result of a reduction in the number of shares of Common Stock then
outstanding due to the repurchase of Common Stock or Voting Stock by the
Company, unless and until such time as (a) such Person or any Affiliate or
Associate of such Person shall purchase or otherwise become the Beneficial Owner
of additional shares of Common Stock constituting 1% or more of the then
outstanding shares of Common Stock or additional Voting Stock representing 1% or
more of the combined voting power of the then outstanding Voting Stock, or (b)
any other Person (or Persons) who is (or collectively are) the Beneficial Owner
of shares of Common Stock constituting 1% or more of the then outstanding shares
of Common Stock or Voting Stock representing 1% or more of the combined voting
power of the then outstanding Voting Stock shall become an Affiliate or
Associate of such Person.

                       

                      “Person”
shall mean any individual, firm, corporation, partnership, association, trust,
unincorporated organization or other entity.

                       

                      “Voting
Stock” shall mean, with respect to a corporation, all securities of such
corporation of any class or series that are entitled to vote generally in the
election of directors of such corporation (excluding any class or series that
would be entitled so to vote by reason of the occurrence of any contingency, so
long as such contingency has not occurred).

                       

                    

                    
                      
                        
                        

                      

                      
                        20

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