EXHIBIT 10.4
THIS COMMERCIAL GUARANTY IS SUBJECT TO THAT CERTAIN SUBORDINATION AGREEMENT,
DATED OCTOBER 29, 2004, BETWEEN PCRL INVESTMENTS L.P., AND OTHERS, SAME BEING
MORE PARTICULARLY IDENTIFIED AND DESCRIBED AT SECTION 19 BELOW.
COMMERCIAL GUARANTY
COMMERCIAL GUARANTY (this "Agreement") made and entered into as of October
29, 2004, by CCBM, Inc., a Delaware corporation (hereinafter referred to as
"Guarantor"), in favor of PCRL INVESTMENTS L.P., a Texas limited partnership, as
collateral agent ("Collateral Agent") for itself and each of the financial
institutions (the "Holders") which now or hereafter become a holder of any of
the Notes (as defined below) pursuant to that certain Purchase Agreement (as
defined below), guarantying the Indebtedness (as defined below) of CARRIZO OIL &
GAS, INC., a Texas corporation (hereinafter referred to as "Company").
WITNESSETH:
FOR VALUE RECEIVED, and in consideration of and for credit and financial
accommodations extended, to be extended, or continued to or for the account of
the above named Company, the undersigned Guarantor, hereby jointly and
severally, agrees as follows:
SECTION 1. Continuing Guaranty of Company's Indebtedness. Guarantor hereby
absolutely and unconditionally agrees to, and by these presents does hereby,
guarantee the prompt and punctual payment, performance and satisfaction of any
and all notes, loans, extensions of credit and/or other obligations that Company
may now and/or in the future owe to and/or incur in favor of any Holder under or
pursuant to that certain Note Purchase Agreement dated of even date herewith, by
and among Company, the Collateral Agent, and Holders, as the same may be amended
and/or restated from time to time and in effect (the "Purchase Agreement"),
including the indebtedness of Company evidenced by (i) those certain 10% Senior
Subordinated Secured Notes dated of even date herewith, in the maximum aggregate
initial principal amount of up to $28,000,000.00 (plus interest added to such
principal amount in accordance with the terms of the Purchase Agreement and the
Notes), executed by Company pursuant to the Purchase Agreement (the "Notes"),
and any and all renewals, extensions, substitutions, modifications and
replacements of said Notes from time to time and in effect, and whether such
indebtedness and/or obligations are absolute or contingent, liquidated or
unliquidated, due or to become due, secured or unsecured, and whether now
existing or hereafter arising, of any nature or kind whatsoever, up to a maximum
principal amount outstanding at any one or more times not to exceed TWENTY-EIGHT
MILLION AND NO/100 DOLLARS (U.S. $28,000,000.00) plus interest added to the
principal amount outstanding in accordance with the terms of the Purchase
Agreement and the Notes, together with interest, costs and attorneys' fees
thereon, (ii) all obligations, indebtedness, and liabilities, whether now
existing or arising in the future, of the Company to the Collateral Agent, the
Holders or any Affiliate (as defined in the
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Purchase Agreement) of any Holder pursuant to a Hedging Agreement (as defined in
the Purchase Agreement) or other commodity or price management transaction
(including all renewals, extensions, modifications and substitutions thereof and
therefore) and all cancellations, buy backs, reversals, terminations or
assignments of Hedge Agreements, and (iii) all obligations, indebtedness, and
liabilities, whether now existing or arising in the future, of the Company to
the Holders pursuant to that certain Registration Rights Agreement, dated of
even date herewith, by and among the Company and the Purchasers, including,
without limitation, all obligations of Company to repurchase shares of Common
Stock issued in satisfaction of the Indebtedness described in the foregoing
clause (i) (with all of Company's indebtedness and/or obligations described in
this Section 1 being hereinafter individually and collectively referred to under
this Agreement as "Company's Indebtedness" or the "Indebtedness").
SECTION 2. Limitation on Liability. The liability of Guarantor hereunder
with respect to the Indebtedness shall be limited to the maximum amount of
liability that can be incurred without rendering this Commercial Guaranty, as it
relates to Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer, and not for any greater amount.
SECTION 3. Joint and Several Liability. Guarantor further agrees that its
obligations and liabilities for the prompt and punctual payment, performance and
satisfaction of all of Company's Indebtedness shall be on a "joint and several"
basis along with Company to the same degree and extent as if Guarantor had been
and/or will be a co-borrower, co-principal obligor and/or co-maker of all of
Company's Indebtedness. In the event that there is more than one guarantor under
this Agreement, or in the event that there are other guarantors, endorsers or
sureties of all or any portion of Company's Indebtedness, Guarantor's
obligations and liabilities hereunder shall be on a "joint and several" basis
along with such other guarantor or guarantors, endorsers and/or sureties.
SECTION 4. Duration; Cancellation of Agreement. This Agreement and
Guarantor's obligations and liabilities hereunder shall remain in full force and
effect until such time as each and every Indebtedness of Company shall be paid,
performed and/or satisfied in full, in principal, interest, costs and attorneys'
fees, or until such time as this Agreement may be cancelled or otherwise
terminated by Collateral Agent under a written cancellation instrument in favor
of Guarantor (subject to the automatic reinstatement provision hereinbelow).
Unless otherwise indicated under such a written cancellation instrument,
Collateral Agent's agreement to terminate or otherwise cancel this Agreement
shall only effect and shall be expressly limited to Guarantor's continuing
obligations and liabilities to guarantee the prompt and punctual payment,
performance and satisfaction of Company's Indebtedness incurred, originated
and/or extended or committed to by Collateral Agent and/or Holders after the
date of such a written cancellation instrument; with Guarantor remaining fully
obligated and liable under this Agreement for the prompt and punctual payment,
performance and satisfaction of any and all of Company's then outstanding
Indebtedness together with continuing assessment of interest thereon) that was
incurred, originated, extended or committed to prior to the date of such a
written cancellation instrument. Nothing under this Agreement or under any other
agreement or understanding by and between Guarantor, Collateral Agent, and
Holders, shall in any way obligate, or be construed to obligate, Collateral
Agent and/or Holders to agree to the subsequent
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termination or cancellation of Guarantor's obligations and liabilities
hereunder, it being fully understood and agreed by Guarantor that Collateral
Agent and/or Holders may, within their sole and uncontrolled discretion and
judgment, refuse to release Guarantor from any of its obligations and
liabilities under this Agreement for any reason whatsoever as long as any of
Company's Indebtedness remains unpaid and outstanding.
SECTION 5. Default of Company. Upon the occurrence of an Event of Default
as provided in the Purchase Agreement, Guarantor unconditionally and absolutely
agrees to pay in full the then unpaid amount of all of Company's Indebtedness
guaranteed hereunder, in principal interest, costs and reasonable attorneys'
fees. Such payment or payments shall be made immediately following demand by
Collateral Agent at its offices at 000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000. Other than the demand referred to in the immediately preceding sentence,
Guarantor hereby waives notice of acceptance of this Agreement and of any
Indebtedness to which it applies or may apply. Guarantor further waives
presentation and demand for payment of Company's Indebtedness, notice of
dishonor and of nonpayment, notice of intention to accelerate, notice of
acceleration, protest and notice of protest, collection or institution of any
suit or other action by Collateral Agent in collection thereof, including any
notice of default in payment thereof or other notice to, or demand for payment
thereof on any party.
SECTION 6. Guarantor's Subordination of Rights to Holders. In the event
that Guarantor should for any reason (i) make any payment for and on behalf of
Company under any of Company's Indebtedness, and/or (ii) make any payments to
Collateral Agent and/or Holders in total or partial satisfaction of Guarantor's
obligations and liabilities hereunder, Guarantor hereby agrees that any and all
rights that Guarantor may have or acquire to collect or to be reimbursed by
Company (or by any guarantor, endorser or surety of Company's Indebtedness),
whether Guarantor's rights of collection or reimbursement arise by way of
subrogation to the rights of Holders or otherwise, shall in all respects be
subordinate, inferior and junior to Collateral Agent's and/or Holders' rights to
collect and enforce payment, performance and satisfaction of Company's then
remaining Indebtedness, until such time as all of Company's Indebtedness is
fully paid and satisfied. Upon the occurrence and continuance of an Event of
Default (as defined in the Purchase Agreement) any and all amounts owed by
Company to Guarantor shall in all respects be subordinate, inferior and junior
to Collateral Agent's and/or Holders' rights to collect and enforce payment,
performance and satisfaction of Company's then remaining Indebtedness, until
such time as all of Company's Indebtedness is fully paid and satisfied.
Guarantor further agrees to refrain from attempting to collect and/or enforce
any of Guarantor's aforesaid rights against Company (or any other guarantor,
surety or endorser of Company's Indebtedness), arising by way of subrogation or
otherwise, until such time as all of Company's then remaining Indebtedness in
favor of Holders is fully paid and satisfied, in principal, interest, costs and
attorneys' fees.
SECTION 7. Additional Covenants. Guarantor further agrees that Collateral
Agent and/or Holders may, at its/their sole option, at any time, and from time
to time, without the consent of or notice to Guarantor, or to any other party,
and without incurring any responsibility to Guarantor or to any other party
(other than the Company to the extent provided
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in the Documents as such term is defined in the Purchase Agreement), and without
impairing or releasing the obligations of Guarantor under this Agreement:
(A) Discharge or release any party (including, but not limited to,
Company or any guarantor under this Agreement) who is or may be liable to
Collateral Agent and/or Holders for any of Company's Indebtedness;
(B) Sell, exchange, release, surrender, realize upon or otherwise deal
with, in any manner and in any order, any collateral directly or indirectly
securing repayment of any of Company's Indebtedness;
(C) Change the manner, place or terms of payment, or change or extend
the time of payment of or renew, as often and for such periods as Collateral
Agent and/or Holders may determine, or after, any of Company's Indebtedness;
(D) Settle or compromise any of Company's Indebtedness;
(E) Subordinate and/or agree to subordinate the payment of all or any
of Company's Indebtedness or Collateral Agent's and/or Holders' security rights
in and/or to any collateral directly or indirectly securing any such
indebtedness, to the payment and/or security rights of any other present and/or
future creditors of Company;
(F) Apply any sums paid to any of Company's Indebtedness, with such
payments being applied in such priority or with such preferences as Collateral
Agent and/or Holders may determine in its/their sole discretion, regardless of
what Indebtedness of Company remains unpaid;
(G) Take or accept any other security for any or all of Company's
Indebtedness; and/or
(H) Enter into, deliver, modify, amend or waive compliance with, any
instrument or arrangement (other than this Agreement) evidencing, securing or
otherwise affecting, all or any part of Company's Indebtedness.
In addition, no course of dealing between Collateral Agent and
Company, and/or the Holders and Company (or any other guarantor, surety or
endorser of Company's Indebtedness), nor any failure or delay on the part of
Collateral Agent and/or Holders to exercise any of its/their rights and
remedies, or any other agreement or agreements by and between Collateral Agent
and Company and/or Holders and Company (or any other guarantor, surety or
endorser) shall have the affect of impairing or releasing Guarantor's
obligations and liabilities to Collateral Agent and Holders or of waiving any of
Collateral Agent's and/or Holders' rights and remedies. Any partial exercise of
any rights and remedies granted to Collateral Agent and/or Holders shall
furthermore not constitute a waiver of any of Collateral Agent's and/or Holders'
other rights and remedies, it being Guarantor's intent and agreement that
Collateral Agent's and Holders' rights and remedies shall be cumulative in
nature. Guarantor further agrees that, should Company default under any of its
Indebtedness, any waiver or forbearance on the part of
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Collateral Agent and/or Holders to pursue the rights and remedies available to
Collateral Agent shall be binding upon Collateral Agent and Holders only to the
extent that Holders specifically agree to such waiver or forbearance in writing.
A waiver or forbearance on the part of Collateral Agent and/or Holders as to one
Event of Default shall not constitute a waiver of forbearance as to any other
Event of Default or Default (as defined in the Purchase Agreement).
SECTION 8. No Release of Guarantor. Guarantor's obligations and liabilities
under this Agreement shall not be released, impaired, reduced or otherwise
affected by, and shall continue in full force and effect, notwithstanding the
occurrence of any event (other than performance hereunder), including without
limitation any one of the following events:
(A) Insolvency, bankruptcy, arrangement, adjustment, composition,
liquidation, disability, dissolution or lack of authority (whether corporate,
partnership or trust) of Company (or any person acting on Company's behalf), or
any other guarantor, surety or endorser of any of Company's Indebtedness;
(B) Partial payment or payments of any amount due and/or outstanding
under any of Company's Indebtedness;
(C) Any payment of Company or any other party to Collateral Agent is
held to constitute a preferential transfer or a fraudulent conveyance under any
applicable law, or for any reason, Collateral Agent and/or Holders are required
to refund such payment or pay such amount to Company or to any other person;
(D) Any dissolution of Company or any sale, lease or transfer of all
or any part of Company's assets;
(E) Any failure of Collateral Agent to notify Guarantor of the
acceptance of this Agreement or of the making of loans or other extensions of
credit in reliance on this Agreement or of the failure of Company to make any
payment due by Company to Collateral Agent;
(F) Any application of any sums paid to any of Company's Indebtedness,
with such payments being applied in such priority or with such preferences as
Collateral Agent and/or Holders may determine in its/their own discretion,
regardless of what Indebtedness of Company remains unpaid;
(G) Any taking or acceptance of any other security for any or all of
Company's Indebtedness; and/or
(H) Any entry into, delivery, modification, amendment or waiver of
compliance with, any instrument or arrangement evidencing, securing or otherwise
affecting, all or any part of Company's Indebtedness.
This Agreement and Guarantor's obligations and liabilities hereunder
shall continue to be effective, and/or shall automatically and retroactively be
reinstated if a release or
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discharge has occurred, as the case may be, if at any time any payment or part
thereof to Collateral Agent with respect to any of Company's Indebtedness is
rescinded or must otherwise be restored by Collateral Agent and/or Holders
pursuant to any insolvency, bankruptcy, reorganization, receivership, or any
other debt relief granted to Company or to any other party. In the event that
Collateral Agent and/or Holders must rescind or restore any payment received by
Collateral Agent and/or Holders in satisfaction of Company's Indebtedness, any
prior release or discharge from the terms of this Agreement given to Guarantor
shall be without effect, and this Agreement and Guarantor's obligations and
liabilities hereunder shall automatically be renewed or reinstated and shall
remain in full force and effect to the same degree and extent as if such a
release or discharge was never granted. It is the intention of Collateral Agent,
Holders and Guarantor that Guarantor's obligations and liabilities hereunder
shall not be discharged except by Guarantor's full and complete performance of
such obligations and liabilities and then only to the extent of such
performance.
SECTION 9. Enforcement of Guarantor's Obligations and Liabilities.
Guarantor agrees that, should Collateral Agent and/or Holders deem it necessary
to file an appropriate collection action to enforce Guarantor's obligations and
liabilities under this Agreement, Collateral Agent may commence such a civil
action against Guarantor without the necessity of first (i) attempting to
collect Company's Indebtedness from Company or from any other guarantor, surety
or endorser, whether through filing of suit or otherwise, (ii) attempting to
exercise against any collateral directly or indirectly securing repayment of any
of Company's Indebtedness, whether through the filing of an appropriate
foreclosure action or otherwise, or (iii) including Company or any other
guarantor, surety or endorser of any of Company's Indebtedness as an additional
party defendant in such a collection action against Guarantor. In the event that
Collateral Agent should ever deem it necessary to refer this Agreement to an
attorney-at-law for the purpose of enforcing Guarantor obligations and
liabilities hereunder, or of protecting or preserving Collateral Agent's and/or
Holders' rights hereunder, Guarantor (on a joint and several basis) agrees to
reimburse Collateral Agent and/or Holders for the reasonable fees of such an
attorney. Guarantor additionally agrees that Collateral Agent and/or Holders
shall not be liable for failure to use diligence in the collection of any of
Company's Indebtedness or any collateral security therefor, or in creating or
preserving the liability of any person liable on any such Indebtedness, or in
creating, perfecting or preserving any security for any such Indebtedness.
SECTION 10. Additional Documents. Upon the reasonable request of Collateral
Agent, Guarantor will, at any time, and from time to time, duly execute and
deliver to Holder any and all such further instruments and documents, and supply
such additional information as may be reasonably necessary or advisable in the
opinion of Collateral Agent, to obtain the full benefits of this Agreement.
SECTION 11. Transfer of Indebtedness. This agreement is for the benefit of
Holders and for such other person or persons as may from time to time become or
be the holders of any of Company's Indebtedness hereby guaranteed and this
Agreement shall be transferable and negotiable, with the same force and effect
and to the same extent as Company's Indebtedness may be transferable under
Article 15 of the Purchase Agreement, it being understood that, upon the
transfer or assignment by Holders of any of Company's Indebtedness
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hereby guaranteed, the legal holder or holders of such Indebtedness shall have
all the rights granted to Holders under this Agreement.
Guarantor hereby recognizes and agrees that Holders may, from time to
time, one or more times, transfer all or any portion of Company's Indebtedness
to one or more third parties. Such transfers may include, but are not limited
to, sales of a participation or syndication interest in such Indebtedness in
favor of one or more third parties in accordance with Article 15 of the Purchase
Agreement. Guarantor specifically agrees and consents to all such transfers and
assignments in accordance with Article 15 of the Purchase Agreement and
Guarantor further waives any subsequent notice of and right to consent to any
such transfers and assignments as may be provided under applicable New York law.
Guarantor additionally agrees that the purchaser of a syndication interest in
Company's Indebtedness will be considered as the absolute owner of an interest
in, or a percentage interest of, such Indebtedness and that such a purchaser
shall have all of the rights granted to the purchaser under any agreement
governing the sale of such a syndication interest and all rights of Holders from
whom the syndication interest was purchased under the Purchase Agreement.
Guarantor further waives any right of offset that Guarantor may have against
Holders and/or any purchaser of such a participation or syndication interest in
Company's Indebtedness and Guarantor unconditionally agrees that either Holders
or such a purchaser may enforce Guarantor's obligations and liabilities under
this Agreement, irrespective of the failure or insolvency of Holders or any such
purchaser. Guarantor further agrees that, upon any transfer, in accordance with
Article 15 of the Purchase Agreement, of all or any portion of Company's
Indebtedness, Holders may transfer and deliver any and all collateral securing
repayment of such Indebtedness including, but not limited to, any collateral
provided by Guarantor) to the transferee of such Indebtedness and such
collateral (again, including but not limited to Guarantor's collateral) shall
secure any and all of Company's Indebtedness in favor of such transferee.
Guarantor additionally agrees that, after any such transfer or assignment has
taken place in accordance with Article 15 of the Purchase Agreement, Holders
shall be fully discharged from any and all liability and responsibility to
Company (and Guarantor) with respect to such collateral, and the transferee
thereafter shall be vested with all the powers and rights with respect to such
collateral.
SECTION 12. Right of Offset. As collateral security for the repayment of
Guarantor's obligations and liabilities under this Agreement, Guarantor hereby
grants Holders, as well as their successors and assigns, the right to apply,
upon the occurrence of an Event of Default under the Purchase Agreement, any and
all funds that Guarantor may then have on deposit with or in the possession or
control of any Holder and its successors or assigns (with the exception of funds
deposited in any XXX, pension or other tax-deferred deposit accounts), towards
repayment of any of Company's Indebtedness subject to this Agreement.
SECTION 13. Construction. The provisions of this Agreement shall be in
addition to and cumulative of, and not in substitution, novation or discharge
of, any and all prior or contemporaneous guaranty or other agreements by
Guarantor, in favor of Collateral Agent or assigned to Collateral Agent by
others, all of which shall be construed as complementing each other. Nothing
herein contained shall prevent Collateral Agent from enforcing any and all such
guaranties or agreements in accordance with their respective terms.
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SECTION 14. Amendment. No amendment, modification, consent or waiver of any
provision of this Agreement, and no consent to any departure by Guarantor
therefrom, shall be effective unless the same shall be in writing signed by the
Collateral Agent, and then shall be effective only to the specific instance and
for the specific purpose for which given.
SECTION 15. Successors and Assigns Bound. Guarantor's obligations and
liabilities under this Agreement shall be binding upon Guarantor's successors
and assigns. The rights and remedies granted to Collateral Agent and Holders
under this Agreement shall also inure to the benefit of Collateral Agent's and
Holders' (and any Holder's Affiliate in the case of any obligations of Company
and/or Guarantor under any Hedging Agreement) successors and assigns, as well as
to any and all subsequent holder or holders of any of Company's Indebtedness
subject to this Agreement.
SECTION 16. Caption Heading. Caption headings of the section of this
Agreement are for convenience purposes only and are not to be used to interpret
or to define their provisions. In this Agreement, whenever the context so
requires, the singular includes the plural and the plural also includes the
singular.
SECTION 17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK.
SECTION 18. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof; such provision shall be fully severable, this Agreement shall
be construed and enforceable as if the illegal, invalid or unenforceable
provision had never comprised a part of it, and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as a part of this Agreement, a provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible
and legal, valid and enforceable.
SECTION 19. Subordination Agreement. Reference is made herein for all
purposes to that certain Subordination Agreement (the "Subordination Agreement")
dated as of October 29, 2004, executed among the Collateral Agent, in its
capacity as collateral agent for the financial institutions and investment funds
party to the Purchase Agreement, Hibernia National Bank, in its capacity as
agent (the "Senior Agent") for the financial institutions party to the Senior
Credit Agreement and Company. Notwithstanding anything to the contrary herein,
until such time as the Senior Indebtedness (as such term is defined in the
Subordination Agreement) is paid in full and the commitments evidenced by the
Senior Credit Documents have been terminated, the provisions of this Guaranty
are subject to the terms, covenants, conditions and provisions of the
Subordination Agreement, which, among other things, provide that the interests
of the Collateral Agent in and to the Collateral shall be inferior, and
subordinate to the interests of Senior Agent in accordance with the
Subordination Agreement. In the event of any inconsistency between the terms and
provisions of this Guaranty and the Subordination Agreement, the terms,
covenants, conditions and provisions of the Subordination Agreement
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shall prevail until such time as the Senior Indebtedness (as such term is
defined in the Subordination Agreement) is paid in full and the commitments
evidenced by the Senior Credit Documents have been terminated.
THIS WRITTEN COMMERCIAL GUARANTY AND THE OTHER DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, Guarantor has executed this Agreement in favor of the
Collateral Agent for the ratable benefit of the Holders on the day, month, and
year first written above.
GUARANTOR:
CCBM, INC.,
a Delaware corporation
By: /s/ XXXX X. XXXXXX
-------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President and
Chief Financial Officer
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