FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 23, 1999
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Commission File Number: 1-7940
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Goodrich Petroleum Corporation
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(Exact name of registrant as specified in its charter)
Delaware 76-466913
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State or other jurisdiction of (I.R.S. Employer ID. No.)
incorporation or organization)
815 Walker, Suite 1040, Houston, Texas 77002
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(Address of principal executive offices) (Zip Code)
(713) 780-9494
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(Registrant's telephone number, including area code)
None
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(Former name, former address and former fiscal year,
if changed since last report.)
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Item 5. Other Events
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Effective September 23, 1999, Goodrich Petroleum Corporation (the
"Company") and certain of its subsidiaries completed a private placement of $15
million of convertible securities in the form of convertible notes, preferred
stock, and warrants. The Company used approximately $3.5 million of the proceeds
to secure a 49% working interest in rights previously acquired in the Lafitte
Field, located in Jefferson Parish, Louisiana. The Company also restructured its
credit facility with Compass Bank to extend the maturity date on its
approximately $28 million in outstanding indebtedness to February 1, 2001.
Lafitte Field Acquisition
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On September 23, 1999, the Company acquired a 49% working interest in
the Lafitte Field located in Jefferson Parish, Louisiana for approximately $3.5
million in cash. The Lafitte Field, discovered in 1935, has produced in excess
of 262 million barrels of oil and 318 billion cubic feet (BCF) of gas from over
thirty (30) reservoirs. The Lafitte Field is a mature field with an excellent
production history and the Company believes that this acquisition provides it
with significant reserve growth potential. The Company has identified
approximately 45 development opportunities in the field. The field encompasses
over 8,000 acres and is located approximately thirty miles south of New Orleans.
The field's productive sands are of excellent quality and are predominantly
normal pressured water drive reservoirs encountered at depths between 3000' and
12000'. The Company anticipates commencement of development activities in the
fourth quarter of 1999.
Private Placement
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On September 23, 1999, the Company and two of its subsidiaries, Goodrich
Petroleum Company, L.L.C. ("Goodrich-Louisiana") and Goodrich Petroleum
Company-Lafitte, L.L.C. ("Goodrich-Lafitte"), completed a private placement of
$15 million of convertible securities.
Goodrich-Louisiana issued convertible notes in the amount of $6,000,000
that will accrue interest at 8% per annum accruing monthly in arrears until
October 1, 2002. Unless extended or converted, the principal and accrued
interest will be repayable in 24 months, beginning October 1, 2002. Principal
and accrued interest may be converted by the holder at any time into the common
stock of the Company at the rate of $4.00 per share. These convertible notes are
secured by various collateral, including a mortgage on Goodrich-Louisiana's oil
and gas properties. The purchasers of these notes received one warrant to
purchase a share of the common stock of the Company at $.9375 (the closing price
on the date the transaction was negotiated) for every $4.00 of notes issued. The
warrants may be exercised at any time before their expiration on September 30,
2006.
Goodrich-Lafitte is a newly formed Louisiana limited liability company
and is the entity which owns the interest in the Lafitte Field. Goodrich-Lafitte
also issued convertible notes in the amount of $6,000,000 that will accrue
interest at 8% per annum accruing monthly in arrears until October 1, 2002.
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Unless extended or converted, the principal and accrued interest will be
repayable in 24 months, beginning October 1, 2002. Principal and accrued
interest may be converted by the holder at any time into the common stock of the
Company at the rate of $4.00 per share. As an alternative conversion right, the
principal and accrued interest under these notes may be converted into common
equity interests in Goodrich-Lafitte, after October 1, 2002, if neither the
common stock of the Company has a closing price of at least $3.00 per share nor
the net asset value per share of the Company is at least $3.00. These
convertible notes are secured by various collateral, including a mortgage on
Goodrich-Lafitte's oil and gas properties. The purchasers of these notes
received one warrant to purchase a share of the common stock of the Company at
$.9375 (the closing price on the date the transaction was negotiated) for every
$4.00 of notes issued. The warrants may be exercised at any time before their
expiration on September 30, 2006.
Additionally, Goodrich-Louisiana issued $3,000,000 of preferred
interests consisting of 300,000 preferred units with a par value and liquidation
preference of $10 per share. Distributions on the preferred units will accrue
quarterly in arrears at 8% per annum through September 30, 2002.
Goodrich-Louisiana has the right to redeem the units at any time. The preference
amount and accrued distributions are convertible by the holder at any time into
the common stock of the Company at $2.00 per share. Each preferred unit holder
was also issued one warrant to purchase a share of common stock of the Company
for every $10 of preference value. The warrants are exercisable at $1.50 per
share.
Under the terms of the Goodrich-Louisiana Operating Agreement, the
holders of preferred units have no voting rights unless the payment of
distributions is six months or more in arrears, in which event the holders of
preferred units may participate in the election of company managers.
Goodrich-Louisiana is precluded from issuing any new units having preference or
priority over the preferred units as to distributions, liquidation or
redemption.
The Subscription Agreement pursuant to which the securities were
purchased from the Company provides that within 60 days of closing the Company
will register for resale under the Securities Act of 1933 all of the Company's
common stock issuable upon conversion or exercise of the securities issued in
the private placement.
Approximately $3.5 million of the proceeds from the private placement
were used to purchase the aforementioned interest in the Lafitte Field. The
remaining proceeds will be used for development capital expenditures and for
general corporate and working capital purposes.
This transaction would normally have required approval of the Company's
shareholders according to the Shareholder Approval Policy of the New York Stock
Exchange (the "Exchange"). Pursuant to an exception to this policy and based on
a determination by the Company's Audit Committee that the delay necessary in
securing shareholder approval prior to the transaction would seriously
jeopardize the financial viability of the Company, the Company's Audit Committee
approved the Company's omission to seek shareholder approval. The Exchange
accepted the Company's application for use of the exception.
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Restructuring of Credit Agreement
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The Company modified its Credit Agreement with Compass Bank. The
restructured credit facility provides for a borrowing base facility (Tranche A)
of 19,300,000 with monthly commitment reductions of $300,000 beginning on
December 1, 1999. Interest on the Tranche A facility is the Compass Bank Index
Rate and is payable monthly. The restructured credit facility also establishes a
Tranche B loan in the amount of $9,000,000. The Tranche B loan has an interest
rate of Compass Bank Index Rate plus 2% payable on a monthly basis. The maturity
date for amounts drawn under the Tranche A and Tranche B is February 1, 2001
with no borrowing base redeterminations conducted prior to that date.
Substantially all the Company's assets are pledged to secure both the
convertible notes and the credit facility.
The foregoing summaries of the Subscription Agreement governing the
sale of the securities and the other agreements pursuant to which the
transactions described above were consummated are qualified in their entirety by
reference to the complete documents, each of which is filed as an exhibit to
this report and incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
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(a) Financial Statement of Businesses Acquired:
Note: Financial statements with respect to the Lafitte Field
acquisition are not included in this report and will be filed by
amendment on or prior to December 10, 1999, if required.
(b) Pro forma financial information:
None
(c) Exhibits:
2.1 Lafitte Field Acquisition documents
4.1 Form of Subscription Agreement
4.2 Goodrich-Louisiana Credit Agreement
4.3 Convertible Note (Pari Passu Debt)
4.4 Convertible Note (Subordinated Debt)
4.5 Goodrich-Lafitte Credit Agreement
4.6 Convertible Note (Lafitte Debt)
4.7 Form of Preferred Unit
4.8 Designations for Series A Preferred Units
4.9 Form of Warrant (Issued with Convertible Notes)
4.10 Form of Warrant (Issued with Preferred Units)
4.11 Compass Bank Credit Agreement
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GOODRICH PETROLEUM CORPORATION
October 11, 1999
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Date Walter G. Goodrich, President and
Chief Executive Officer
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SALE AND ASSIGNMENT
STATE OF LOUISIANA
PARISH OF JEFFERSON
KNOW ALL MEN BY THESE PRESENTS, that STONE ENERGY CORPORATION, a Delaware
corporation, herein represented by E. J. Louviere, its duly authorized Vice
President Land, whose address is 625 East Kaliste Saloom Road, Lafayette,
Louisiana, 70508, hereinafter referred to as "Assignor", for and in
consideration of the sum of TEN AND NO/100 DOLLARS ($10.00), the receipt and
adequacy of which is hereby acknowledged and full acquittance granted therefore,
has granted, sold, conveyed and delivered and does hereby grant, sell, convey
and deliver unto GOODRICH PETROLEUM COMPANY, L.L.C., a Louisiana limited
liability company, hereby represented by Robert C. Turnham Jr., its duly
authorized Senior Vice President and Chief Operating Officer, whose address is
5847 San Felipe, Suite 700, Houston, Texas 77057, hereinafter referred to as
"Assignee", forty-nine percent (49%) of Assignor's right title and interest in,
to and under the following properties, assets, rights and interests:
(1) Those certain oil, gas and/or mineral leases and other interests more
fully and particularly described on and set forth in Exhibit "A," attached
hereto and incorporated herein by reference, hereinafter referred to
individually and collectively as "Leases."
(2) All of Assignor's non-exclusive rights to the use and occupancy of the
surface, including, without limitation, tenements, appurtenances, surface
leases, easements, permits, licenses, servitude and rights-of-way in any way
appertaining, belonging, affixed or incidental to or used in connection with the
ownership or operation of the Leases or Other Property, including, without
limitation, those listed on Exhibit "A" hereto, except to the extent consisting
of Excluded Assets (as that term is defined in the Purchase and Sale Agreement
referenced herein), hereinafter referred to individually and collectively as
"Easements."
(3) All of Assignor's right, title and interest in and to all farmout
agreements, unitization agreements, pooling agreements, unit declarations, gas
sales or purchase contracts, operating agreements and contracts attributable to
the Assets or other agreements and instruments (including all amendments thereto
and any agreements settling claims asserted thereunder ) to the extent and only
to the extent that the same relate, pertain or are incidental to the Easements,
the Leases or the Other Property, including, without limitation, those listed on
Schedule "B" hereto, but specifically excluding the Easements and Leases,
hereinafter referred to individually and collectively as "Contracts".
(4) (a) All of Assignor's right, title and interest in and to all wells
(including, without limitation, all oil, gas, injection, disposal and other
wells, whether active or inactive, productive or non-productive, plugged or
abandoned or temporarily abandoned), equipment, facilities and personal property
of any kind including but not limited to tubing, casing, wellheads, pumping
units, production units, compressors, valves, meters, flow lines, pipelines,
tanks, heaters, separators, dehydrators, pumps and injection units which are
either located on or connected with the Leases or Easements and which are or
have been used solely and exclusively in connection with the production,
treatment, gathering or transportation of Hydrocarbons (as that term is defined
in the Purchase and Sale Agreement referenced herein) from the Leases or
Easements, and all wellbores and the tubing and equipment located therein;
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(b) all of the following insofar as the same are attributable to,
appurtenant to, incidental to, or used for the operation of Leases or Easements:
(i) all unitization, communitization and pooling designations, declarations,
agreements and orders covering the Leases or Easements, or any portion thereof,
and the units and pooled or communitized areas created thereby; and (ii) all
lease files, land files, well files, gas and oil sales contract files, gas
processing files, division order files, abstracts, title opinions, and all other
books, files and records, information and data; and
(c) license to all two (2) dimensional and three (3) dimensional seismic
data, and all relevant backup information applicable thereto, with respect to
thirty-one (31) square miles, more or less, Lafitte Field three (3) dimensional
seismic survey, hereinafter referred to individually and collectively as "Other
Property", except to extent constituting Excluded Assets.
The Leases, the Easements, the Contracts, and the Other Property referred
to above are hereinafter sometimes referred to individually and collectively in
the singular as "Assets."
However, this Sale and Assignment is made and accepted by Assignee subject
to the following additional exceptions, reservations, covenants, conditions,
agreements and stipulations.
1. This Sale and Assignment is subject to the provisions of that certain
Purchase and Sale Agreement between Texaco Exploration and Production, Inc.
("TEPI") and Assignor fully executed June 29, 1999 ("Agreement").
2. Subject to the Agreement, Assignee will assume forty-nine percent (49%)
of all duties, responsibilities, obligations and liabilities as forty-nine
percent (49%) owner of the Assets and agrees to hold Assignor free and harmless
from any and all liability therefor.
3. Assignee, its successors or assigns, will not make any assignment of its
forty-nine percent (49%) interest unless (a) the assignee agrees to assume its
proportionate share of the plug and abandonment obligations, and (b) the
assignee agrees to be bound by the terms of the May 20, 1999 Letter Agreement
between Assignor and Assignee, the Purchase and Sale Agreement between Assignor
and TEPI, referenced herein, and the Joint Operating Agreement between Assignor
and Assignee dated June 1, 1999. The agreement of the assignee to the foregoing
will be set forth in any future assignment of any right, title or interest by
Assignee, its successors or assigns.
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4. As of the Effective date, Assignee will assume forty-nine percent (49%)
of the Assumed Obligations, as that term is defined in the Agreement referenced
herein.
5. This Sale and Assignment is made expressly subject to the terms and
conditions of that certain Letter Agreement by and between Assignor and Assignee
dated May 20, 1999 (the "Letter Agreement") and the parties shall be bound by
the terms and conditions contained in said Letter Agreement.
This Sale and Assignment shall be effective June 1, 1999, 7:00 AM, local
time ("Effective Date").
All the terms and provisions of this Sale and Assignment are hereby
expressly made subject to federal, state and local laws and to all orders,
rules, regulations and standards issued thereunder by all dully constituted
political subdivisions and agencies having jurisdiction.
THIS CONVEYANCE IS EXECUTED WITHOUT WARRANTY, EITHER EXPRESS OR IMPLIED, AS
TO TITLE PROVIDED. IT IS FURTHER EXPRESSLY UNDERSTOOD BY THE PARTIES HERETO THAT
ASSIGNOR DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS
TO TITLE OR THE CONDITION OR STATE OF REPAIR OF THE ASSETS, THEIR VALUE,
QUALITY, MERCHANTABILITY, SUITABILITY OR FITNESS FOR ANY USES OR PURPOSES, NOR
AS TO THE CURRENT VOLUME, NATURE, QUALITY, CLASSIFICATION, OR VALUE OF THE OIL,
GAS OR OTHER MINERAL RESERVES THEREUNDER OR COVERED THEREBY, NOR WITH RESPECT TO
ANY APPURTANCES THERETO BELONGING OR IN ANY WISE APPERTAINING TO SAID ASSETS, OR
OTHERWISE.
All of terms, provisions, covenants and agreements herein contained shall
constitute covenants running with the land, and shall extend to and be binding
upon the parties hereto, their respective successors and assigns.
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Executed on the day set forth below in the acknowledgment, but effective
for all purposes as of the Effective Date.
WITNESSES: ASSIGNOR:
STONE ENERGY CORPORATION
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----------------------------
By: E. J. Louviere
Vice President Land
Dated:
---------------------
WITNESSES: ASSIGNEE:
GOODRICH PETROLEUM COMPANY, L.L.C.
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- ---------------------------------------
----------------------------------
By: Robert C. Turnham, Jr.
Sr. Vice President and
Chief Operating Officer
Dated:
---------------------------
STATE OF LOUISIANA
PARISH OF LAFAYETTE
BEFORE ME, on this day personally appeared E. J. Louviere, known to me to
be the person whose name is subscribed to the foregoing instrument, and known to
me to be the Vice President Land of STONE ENERGY CORPORATION, a Delaware
corporation, and acknowledged to me that he executed said instrument for the
purposes and consideration therein expressed, and as the act of said
corporation.
Given under my hand and official seal this day of September, 1999.
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Notary Public
Commission Expires
------------------
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, on this day personally appeared Robert C. Turnham, Jr., known to
me to be the person whose name is subscribed to the foregoing instrument, and
known to me to be the Sr. Vice President and Chief Operating Officer of GOODRICH
PETROLEUM COMPANY, L.L.C., a Louisiana limited liability company, and
acknowledged to me that he executed said instrument for the purposes and
consideration therein expressed, and as the act of said corporation.
Given under my hand and official seal this day of September, 1999.
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Notary Public
Commission Expires
------------------
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SALE AND ASSIGNMENT
STATE OF LOUISIANA
PARISH OF JEFFERSON
KNOW ALL MEN BY THESE PRESENTS, that GOODRICH PETROLEUM COMPANY, L.L.C., a
Louisiana limited liability company, herein represented by Robert C. Turnham,
Jr., its duly authorized Senior Vice President and Chief Operating Officer,
whose address is 5847 San Felipe, Suite 700, Houston, Texas 77057, hereinafter
referred to as "Assignor", for and in consideration of the sum of TEN AND NO/100
DOLLARS ($10.00), the receipt and adequacy of which is hereby acknowledged and
full acquittance granted therefore, has granted, sold, conveyed and delivered
and does hereby grant, sell, convey and deliver unto GOODRICH PETROLEUM
COMPANY-LAFITTE, L.L.C., a Louisiana limited liability company, hereby
represented by Robert C. Turnham Jr., its duly authorized Senior Vice President
and Chief Operating Officer, whose address is 5847 San Felipe, Suite 700,
Houston, Texas 77057, hereinafter referred to as "Assignee", all of Assignor's
right title and interest in, to and under the following properties, assets,
rights and interests:
(1) Those certain oil, gas and/or mineral leases and other interests more
fully and particularly described on and set forth in Exhibit "A," attached
hereto and incorporated herein by reference, hereinafter referred to
individually and collectively as "Leases."
(2) All of Assignor's non-exclusive rights to the use and occupancy of the
surface, including, without limitation, tenements, appurtenances, surface
leases, easements, permits, licenses, servitude and rights-of-way in any way
appertaining, belonging, affixed or incidental to or used in connection with the
ownership or operation of the Leases or Other Property, including, without
limitation, those listed on Exhibit "A" hereto, except to the extent consisting
of Excluded Assets (as that term is defined in the Purchase and Sale Agreement
referenced herein), hereinafter referred to individually and collectively as
"Easements."
(3) All of Assignor's right, title and interest in and to all farmout
agreements, unitization agreements, pooling agreements, unit declarations, gas
sales or purchase contracts, operating agreements and contracts attributable to
the Assets or other agreements and instruments (including all amendments thereto
and any agreements settling claims asserted thereunder) to the extent and only
to the extent that the same relate, pertain or are incidental to the Easements,
the Leases or the Other Property, including, without limitation, those listed on
Schedule "B" hereto, but specifically excluding the Easements and Leases,
hereinafter referred to individually and collectively as "Contracts".
4) (a) All of Assignor's right, title and interest in and to all wells
(including, without limitation, all oil, gas, injection, disposal and other
wells, whether active or inactive, productive or non-productive, plugged or
abandoned or temporarily abandoned), equipment, facilities and personal property
of any kind including but not limited to tubing, casing, wellheads, pumping
units, production units, compressors, valves, meters, flow lines, pipelines,
tanks, heaters, separators, dehydrators, pumps and injection units which are
either located on or connected with the Leases or Easements and which are or
have been used solely and exclusively in connection with the production,
treatment, gathering or transportation of Hydrocarbons (as that term is defined
in the Purchase and Sale Agreement referenced herein) from the Leases or
Easements, and all wellbores and the tubing and equipment located therein;
1
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(b) all of the following insofar as the same are attributable to,
appurtenant to, incidental to, or used for the operation of Leases or Easements:
(i) all unitization, communitization and pooling designations, declarations,
agreements and orders covering the Leases or Easements, or any portion thereof,
and the units and pooled or communitized areas created thereby; and (ii) all
lease files, land files, well files, gas and oil sales contract files, gas
processing files, division order files, abstracts, title opinions, and all other
books, files and records, information and data; and
(c) license to all two (2) dimensional and three (3) dimensional
seismic data, and all relevant backup information applicable thereto, with
respect to thirty-one (31) square miles, more or less, Lafitte Field three (3)
dimensional seismic survey, hereinafter referred to individually and
collectively as "Other Property", except to extent constituting Excluded Assets.
The Leases, the Easements, the Contracts, and the Other Property referred
to above are hereinafter sometimes referred to individually and collectively in
the singular as "Assets."
However, this Sale and Assignment is made and accepted by Assignee subject
to the following additional exceptions, reservations, covenants, conditions,
agreements and stipulations.
1. This Sale and Assignment is subject to the provisions of that certain
Purchase and Sale Agreement between Texaco Exploration and Production, Inc.
("TEPI") and Stone Energy Corporation ("Stone") fully executed June 29, 1999
("Agreement").
2. Subject to the Agreement, Assignee will assume forty-nine percent (49%)
of all duties, responsibilities, obligations and liabilities as forty-nine
percent (49%) owner of the Assets and agrees to hold Assignor free and harmless
from any and all liability therefor.
3. Assignee, its successors or assigns, will not make any assignment of its
interest unless (a) the assignee agrees to assume its proportionate share of the
plug and abandonment obligations, and (b) the assignee agrees to be bound by the
terms of the May 20,1999 Letter Agreement between Assignor and Stone, the
Purchase and Sale Agreement between Stone and TEPI, referenced herein, and the
Joint Operating Agreement between Goodrich Petroleum Corporation and Stone dated
June 1, 1999. The agreement of the assignee to the foregoing will be set forth
in any future assignment of any right, title or interest by Assignee, its
successors or assigns.
4. As of the Effective date, Assignee will assume forty-nine percent (49%)
of the Assumed Obligations, as that term is defined in the Agreement referenced
herein.
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5. This Sale and Assignment is made expressly subject to the terms and
conditions of that certain Letter Agreement by and between Assignor and Stone
dated May 20, 1999 (the "Letter Agreement") and the parties shall be bound by
the terms and conditions contained in said Letter Agreement.
This Sale and Assignment shall be effective June 1, 1999, 7:00 AM, local
time ("Effective Date").
All the terms and provisions of this Sale and Assignment are hereby
expressly made subject to federal, state and local laws and to all orders,
rules, regulations and standards issued thereunder by all dully constituted
political subdivisions and agencies having jurisdiction.
THIS CONVEYANCE IS EXECUTED WITHOUT WARRANTY, EITHER EXPRESS OR IMPLIED, AS
TO TITLE PROVIDED. IT IS FURTHER EXPRESSLY UNDERSTOOD BY THE PARTIES HERETO THAT
ASSIGNOR DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS
TO TITLE OR THE CONDITION OR STATE OF REPAIR OF THE ASSETS, THEIR VALUE,
QUALITY, MERCHANTABILITY, SUITABILITY OR FITNESS FOR ANY USES OR PURPOSES, NOR
AS TO THE CURRENT VOLUME, NATURE, QUALITY, CLASSIFICATION, OR VALUE OF THE OIL,
GAS OR OTHER MINERAL RESERVES THEREUNDER OR COVERED THEREBY, NOR WITH RESPECT TO
ANY APPURTANCES THERETO BELONGING OR IN ANY WISE APPERTAINING TO SAID ASSETS, OR
OTHERWISE.
All of terms, provisions, covenants and agreements herein contained shall
constitute covenants running with the land, and shall extend to and be binding
upon the parties hereto, their respective successors and assigns.
3
<PAGE>
Executed on the day set forth below in the acknowledgment, but effective
for all purposes as of the Effective Date.
WITNESS ASSIGNOR:
GOODRICH PETROLEUM COMPANY, L.L.C.
- -----------------------------
- -----------------------------
By: Robert C. Turnham, Jr.
Sr. Vice President and
Chief Operating Officer
Dated:
--------------------------
WITNESSES: ASSIGNEE:
GOODRICH PETROLEUM COMPANY-LAFITTE, L.L.C.
- -----------------------------
- -----------------------------
By: Robert C. Turnham, Jr.
Sr. Vice President and
Chief Operating Officer
Dated:
-----------------------------------
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, on this day personally appeared Robert C. Turnham, Jr., known to
me to be the person whose name is subscribed to the foregoing instrument, and
known to me to be the Sr. Vice President and Chief Operating Officer of GOODRICH
PETROLEUM COMPANY, L.L.C., a Louisiana limited liability company, and
acknowledged to me that he executed said instrument for the purposes and
consideration therein expressed, and as the act of said corporation.
Given under my hand and official seal this day of September, 1999.
-------
Notary Public
Commission Expires
-------------------
STATE OF TEXAS
COUNTY OF HARRIS
BEFORE ME, on this day personally appeared Robert C. Turnham, Jr., known to
me to be the person whose name is subscribed to the foregoing instrument, and
known to me to be the Sr. Vice President and Chief Operating Officer of GOODRICH
PETROLEUM COMPANY-LAFITTE, L.L.C., a Louisiana limited liability company, and
acknowledged to me that he executed said instrument for the purposes and
consideration therein expressed, and as the act of said corporation.
Given under my hand and official seal this day of September, 1999.
--------
Notary Public
Commission Expires
------------------
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH NOR APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
REGULATORY AUTHORITY, NOR HAS ANY SUCH AUTHORITY PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS SUBSCRIPTION AGREEMENT OR THE MERITS OF THIS OFFERING. NO
TRANSFER OF ANY SECURITIES OFFERED HEREBY SHALL BE PERMITTED UNTIL THE
TRANSFEROR SHALL HAVE COMPLIED WITH ALL RESTRICTIONS ON TRANSFER SET FORTH
HEREIN AND SUCH SECURITIES HAVE BEEN REGISTERED UNDER SUCH ACTS OR UNTIL THE
COMPANY SHALL HAVE RECEIVED A FAVORABLE OPINION FROM LEGAL COUNSEL ACCEPTABLE TO
THE COMPANY TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER
SUCH ACTS. ANY REPRESENTATION CONTRARY TO THE ABOVE IS UNLAWFUL.
SUBSCRIPTION AGREEMENT
Goodrich Petroleum Corporation
Goodrich Petroleum Company, L.L.C.
Goodrich Petroleum Company-Lafitte, L.L.C.
333 Texas Street, Suite 1375
Shreveport, Louisiana 71101
Ladies and Gentlemen:
The undersigned (the "Undersigned") understands that Goodrich Petroleum
Corporation, a Delaware corporation ("Goodrich-Delaware"), Goodrich Petroleum
Company, L.L.C., a Louisiana limited liability company ("Goodrich-Louisiana")
and Goodrich Petroleum Company--Lafitte, L.L.C., a Louisiana limited liability
company ("Lafitte")(Goodrich-Delaware, Goodrich-Louisiana, and Lafitte are
hereinafter collectively referred to as the "Companies") are offering for sale
(the "Offering") 100,000 units ("Units").
Each Unit consists of the following:
a. Fifty and No/100 Dollars ($50.00) in principal under a series of
convertible promissory notes made and issued by Goodrich-Louisiana in the
aggregate principal amount of $5,000,000.00 (the "Pari Passu Notes"). The
principal and accrued interest under the Pari Passu Notes may be converted
into shares of common stock, par value $0.20 per share, of
Goodrich-Delaware (the "Common Stock") at the rate of $4.00 per share,
subject to certain adjustments. The Pari Passu Notes will be in the form
attached hereto as Exhibit A, and will be issued pursuant to the
terms of a Credit Agreement (the "Goodrich Credit Agreement") between
Goodrich-Louisiana, as Borrower, and Hambrecht & Quist Guaranty Finance,
LLC, (the "Noteholder Agent"), as agent for the holders of the Pari Passu
Notes. A copy of the Goodrich Credit Agreement is attached hereto as
Exhibit B.
b. Ten and No/100 Dollars ($10.00) in principal under a series of convertible
promissory notes made and issued by Goodrich-Louisiana in the aggregate
principal amount of $1,000,000.00 (the "Subordinated Notes"). The principal
and accrued interest under the Subordinated Notes may be converted into
shares of Common Stock at the rate of $4.00 per share, subject to certain
adjustments. The Subordinated Notes will be in the form attached hereto as
Exhibit C, and will be issued pursuant to the terms of the Goodrich Credit
Agreement.
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c. Sixty and No/100 Dollars ($60.00) in principal under a series of
convertible promissory notes made and issued by Lafitte in the aggregate
principal amount of $6,000,000.00 (the "Lafitte Notes"). The principal and
accrued interest under the Lafitte Notes may be converted into shares of
Common Stock at the rate of $4.00 per share. Under certain circumstances,
the principal and accrued interest under the Lafitte Notes may be converted
into membership interests (the "Membership Interests") of Lafitte. The
Lafitte Notes will be in the form attached hereto as Exhibit D, and will be
issued pursuant to the terms of a Credit Agreement (the "Lafitte Credit
Agreement") between Lafitte, as Borrower, and the Noteholder Agent, as
agent for the holders of the Lafitte Notes. A copy of the Lafitte Credit
Agreement is attached hereto as Exhibit E.
d. Three (3) shares of Series A Preferred Units of Goodrich-Louisiana (the
"Preferred Units"), having a par value and liquidation preference of Ten
and No/100 Dollars ($10.00), each. The preference amount and any accrued
distributions under the Preferred Units may be converted into shares of
Common Stock at the rate of $2.00 per share. The form of the Preferred Unit
certificate (the "Preferred Unit Certificate") is attached hereto as
Exhibit F. The Preferred Units will be issued pursuant to the Amended and
Restated Operating Agreement of Goodrich-Louisiana, a copy of which is
attached hereto as Exhibit G. The designations, preferences and rights of
the Preferred Units are set forth on Exhibit H, attached hereto.
e. A warrant (the "Debt Warrant") to purchase thirty (30) shares of Common
Stock for $0.9375 per share (the "Debt Warrant Exercise Price"). The terms
of the Debt Warrants are further set forth in the form of warrant
certificate (the "Debt Warrant Certificate") attached hereto as Exhibit I.
f. A warrant (the "Preferred Warrant") to purchase three (3) shares of Common
Stock for $1.50 per share (the "Preferred Warrant Exercise Price"). The
terms of the Preferred Warrants are further set forth in the form of
warrant certificate (the "Preferred Warrant Certificate") attached hereto
as Exhibit J.
The Undersigned further understands that the Offering is being made
without registration of (i) the Units, (ii) the Pari Passu Notes or the Common
Stock issuable upon the conversion thereof, (iii) the Subordinated Notes or the
Common Stock issuable upon the conversion thereof, (iv) the Lafitte Notes or the
Common Stock or the Membership Interests issuable upon the conversion thereof,
(v) the Preferred Units or the Common Stock issuable upon the conversion
thereof, (vi) the Debt Warrants or the Common Stock issuable upon the exercise
thereof, or (vii) the Preferred Warrants or the Common Stock issuable upon
exercise thereof, under the Securities Act of 1933, as amended (the "Securities
Act"), and is being made only to Accredited Investors (as defined in Rule 501 of
Regulation D under the Securities Act). The number of Units (and the
corresponding principal amounts of the Pari Passu Note, the Subordinated Note
and the Lafitte Note, and the corresponding numbers of Preferred Units, Debt
Warrants and Preferred Warrants) offered to the Undersigned are set forth beside
the Undersigned's name on the signature page hereof, subject to the right and
authority hereby granted to the Noteholder Agent to reduce the number of Units
in the event of an over-subscription to the Offering. The Pari Passu Notes,
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Subordinated Notes, Lafitte Notes, Preferred Units, Debt Warrants, Preferred
Warrants and the Common Stock issuable upon the respective conversion or
exercise of the foregoing are referred to collectively herein as the "Unit
Securities."
The Undersigned further understands that in connection with the
Offering, Goodrich-Louisiana is restructuring its revolving line of credit with
Compass Bank, an Alabama state banking association, pursuant to the terms of a
Credit Agreement to be executed between Goodrich-Louisiana, as borrower,
Goodrich-Delaware, as guarantor, and Compass Bank, as lender, which Credit
Agreement will be substantially in the form of Exhibit K (the Compass Bank
Credit Agreement"). Pursuant to a Collateral Agency Agreement between Compass
Bank, as collateral agent, Compass Bank in its own right and the Noteholder
Agent (the "Collateral Agency Agreement"), Compass Bank will hold certain
collateral that will serve as collateral for the obligations under the Compass
Bank Credit Agreement, the Goodrich Credit Agreement and the Lafitte Credit
Agreement. The Collateral Agency Agreement will be substantially in the form of
Exhibit L. Compass Bank and the Noteholder Agent will execute a Subordination
Agreement (the "Subordination Agreement") providing for the subordination of the
Subordinated Note and the guaranty by Goodrich-Louisiana of the Lafitte Note.
The Subordination Agreement will be substantially in the form of Exhibit M.
The Undersigned further acknowledges and agrees that, notwithstanding
any provision herein or in any of the Unit Documents to the contrary, the
Undersigned shall not exercise any warrant or any conversion right to acquire
any shares of Common Stock for the period commencing with the issuance of any of
the Unit Securities and ending eleven (11) days after the mailing of the notice
to Goodrich-Delaware's shareholders as required by the New York Stock Exchange
in connection with its exceptions to the Shareholder Approval Policy.
1. Subscription.
-------------
Subject to the terms and conditions hereof, the Undersigned hereby
irrevocably subscribes for and agrees to purchase from the Companies the number
of Units set forth underneath the Undersigned's name on the signature page
attached hereto, for a price of One Hundred Fifty and No/100 Dollars ($150.00)
per Unit in cash. The total amount of such consideration is referred to in this
Subscription Agreement as the Purchase Price. The Undersigned agrees to deliver
the Purchase Price to the Noteholder Agent in immediately available funds on the
date this Subscription Agreement is executed by the Undersigned. The Undersigned
understands that separate Subscription Agreements will be executed with other
purchasers for the remainder of the Units to be sold in this Offering.
2. Acceptance of Subscription; Delivery of Purchase Price; Power of Attorney.
--------------------------------------------------------------------------
(a) The Undersigned understands and acknowledges that (i) the Companies
have the unconditional right, exercisable in their sole and absolute
discretion, to accept or reject this Subscription Agreement, in whole or in
part, (ii) subscriptions need not be accepted in the order received, (iii)
all subscriptions are subject to prior sale and to withdrawal, modification
or cancellation of the Offering by the Companies, (iv) no subscription
shall be valid unless and until accepted by the Companies, (v) this
Subscription Agreement shall be deemed to be accepted by the Companies only
when it is signed by an authorized officer of each of the Companies on
behalf of the Companies, and (vi) notwithstanding anything in this
Subscription Agreement to the contrary, the Companies shall have no
obligation to issue Units to any person to whom the issuance of the Units
would constitute a violation of the Securities Act or any state securities
laws.
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(b) Upon execution of this Subscription Agreement by duly authorized
officers of the Companies (the "Time of Acceptance") and the satisfaction
of any conditions to funding, as set forth in the Goodrich Credit Agreement
or the Lafitte Credit Agreement, the Noteholder Agent will deliver the
Purchase Price to the Companies.
(c) The Undersigned has executed and delivered the Power of Attorney,
attached hereto as Exhibit L, to the Noteholder Agent. Such Power of
Attorney designates the Noteholder Agent as the Agent for the Undersigned
for the purposes set forth therein, including, without limitation, the
execution of the Unit Documents (hereinafter defined) in substantially the
form as attached hereto.
3. Tax Matters.
------------
The Undersigned understands and acknowledges that some risks and
uncertainties exist with respect to the federal income tax consequences of the
Units, and agrees to consult with and rely upon the Undersigned's tax advisors
with respect to the federal income tax consequences of the purchase, ownership
and disposition of a Unit.
4. Representations, Warranties and Covenants of the Companies. As of the Time of
Acceptance, the Companies represent and warrant to and covenant with the
Undersigned as follows:
(a) Each of the Companies is duly organized, validly existing and in good
standing under the laws of the State of its incorporation or organization,
as the case may be, with full corporate power and authority to own its
assets and to conduct its business as it is currently being conducted, and
is duly qualified and in good standing to do business in the jurisdictions
in which the nature of the business conducted by it or the ownership of its
assets makes such qualification necessary, other than any matters,
including failure to be so qualified and in good standing, that would not
have a material adverse effect on the Companies.
(b) Immediately prior to the Closing, the authorized and outstanding
capitalization of Goodrich-Delaware will consist of that which is described
on Schedule 1. Except as provided in Schedule 1, there are no outstanding
rights, options, warrants or agreements for the purchase or acquisition
from Goodrich-Delaware of any shares of its capital stock.
Goodrich-Delaware is not a party or subject to any agreement, and, to the
best of its knowledge, there is no agreement or understanding between any
other persons, which relates to the voting or giving of written consents
with respect to any security or by a director of the Goodrich-Delaware.
(c) Each of the Companies has duly authorized by all necessary corporate
action the issuance and sale of up to an aggregate of 100,000 Units
entitling the holders thereof to purchase, on certain terms and conditions,
up to an aggregate of $5,000,000 of Pari Passu Notes, $1,000,000 of
Subordinated Notes, $6,000,000 of Lafitte Notes, 300,000 Preferred Units,
and Warrants to purchase 3,300,000 shares of Common Stock. As of the Time
of Acceptance, this Agreement, and each of the documents and instruments to
be executed in connection with the Offering of the Units (collectively, the
"Unit Documents") will have been duly executed and delivered by the
Companies and (assuming due authorization, execution and delivery hereof by
the Undersigned or the Noteholder, as applicable) will constitute legal,
valid and binding obligations of the Companies, enforceable against the
Companies in accordance with their terms, except as the same may be limited
by legal principles of general applicability governing the application and
availability of equitable remedies.
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(d) The Common Stock issuable upon exercise of the Debt Warrants or the
Preferred Warrants or upon conversion of the other Unit Securities, when
issued and paid for in accordance herewith and in accordance with the terms
of the applicable Unit Documents, respectively, will represent validly
authorized, duly issued and fully paid and non-assessable shares of Common
Stock of Goodrich-Delaware. The issuance of the Unit Securities will not
conflict with the organizational documents of Goodrich-Delaware or any
agreement or other instrument binding upon Goodrich-Delaware that is
material to Goodrich-Delaware.
(e) The offer, issuance, sale or delivery of the Units will not conflict
with or violate any law, order, statute, regulation or consent applicable
to the Companies of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Companies.
(f) The Companies are not in violation of, conflict with or default under
(i) any provision of their organizational documents, or (ii) any contract,
instrument, judgment, order, writ or decree to which it or any of its
subsidiaries is a party or by which it or any of them is bound, or, to the
best of its knowledge, of any provision of any federal or state statute,
rule or regulation applicable to the Companies, except as would not have a
material adverse effect on the assets, condition, affairs or prospects of
the Companies taken as a whole, financial or otherwise. The Execution,
delivery and performance of this Agreement and the Unit Documents and the
consummation of the transactions contemplated hereby and thereby will not,
with or without the passage of time and giving of notice, result in any
such violation, conflict or default, or an event that results in the
creation of any material lien, charge or encumbrance upon any assets of the
Companies or the suspension, revocation, impairment or forfeiture of any
material permit, license, authorization, or approval applicable to the
Companies which is reasonably likely to have a materially adverse effect.
5. Representations, Warranties and Covenants of the Undersigned.
-------------------------------------------------------------
The Undersigned hereby represents and warrants to and covenants with the
Companies and to each officer, director and agent of the Companies as follows:
(a) General:
--------
(i) The Undersigned has all requisite authority to enter into this
Subscription Agreement and to perform all the obligations required to
be performed by the Undersigned hereunder.
(ii) The Undersigned is the sole party in interest and is not
acquiring the Units as an agent or otherwise for any other person. The
Undersigned is a resident of the state set forth below his, her or its
name on the signature page hereto and (A) if a corporation,
partnership, trust or other form of business organization, it has its
principal office within such state; (B) if an individual, he or she
has his or her principal residence in such state; and (C) if a
corporation, partnership, trust or other form of business organization
which was organized for the specific purpose of acquiring the Units,
all of the beneficial owners are residents of such state.
(b) Information Concerning the Companies:
-------------------------------------
(i) The Undersigned is familiar with the business and financial
condition, properties, operations and prospects of the Companies, and has
been afforded the opportunity to ask questions of, and has received
satisfactory answers from, the Companies' officers and directors, or other
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<PAGE>
persons acting on the Companies' behalf, concerning the business and
financial condition, properties, operations and prospects of the Companies'
and concerning the terms and conditions of the Offering.
(ii) The Undersigned understands that, unless the Undersigned notifies
the Companies in writing to the contrary before the Time of Acceptance, all
the representations and warranties contained in this Subscription Agreement
will be deemed to have been reaffirmed and confirmed as of the Time of
Acceptance, taking into account all information received by the
Undersigned.
(iii)The Undersigned understands that the purchase of the Units
involves various risks and that no assurance can be given as to the future
value of any investment in the Units or the future financial condition or
results of operations of the Company. The Undersigned understands that the
Companies' future performance will depend on a number of factors beyond the
Companies' control, including the price of oil and gas, the success of the
Companies' exploratory and development drilling program, its ability to
replace reserves and general economic and industry conditions.
(iv) No representations or warranties have been made to the
Undersigned by the Companies as to the tax consequences of this investment
or as to the expected profits, losses or cash flow of the Companies which
may be received or sustained as a result of this investment.
(v) All documents, records and books pertaining to a proposed
investment in the Units which the Undersigned has requested have been made
available to the Undersigned.
(c) Status of the Undersigned:
(i) The Undersigned has had the opportunity to consult with the
Undersigned's own attorney and/or accountant regarding the Undersigned's
investment in the Units and their suitability for purchase by the
Undersigned, and to the extent necessary, the Undersigned has retained, at
the Undersigned's own expense, and relied upon, appropriate professional
advice regarding the investment, tax and legal merits, risks and
consequences of this Subscription Agreement and of purchasing and owning
the Units.
(ii) The Undersigned represents that the Undersigned is (please
initial each category below which is applicable to the Undersigned):
( ) (A) a natural person whose individual net worth, or joint
net worth with his or her spouse, exceeds $1,000,000
(including the value of homes, home furnishings and personal
automobiles);
( ) (B) a natural person who had an individual income in excess
of $200,000 in each of the last two years or joint income with
his or her spouse in excess of $300,000 in each of the last
two years and who reasonably expects to reach the same level
of individual or joint income this year. For purposes of the
Offering, individual income shall equal adjusted gross income,
as reported in the Undersigned's federal income tax return,
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<PAGE>
less any income attributable to a spouse or to property owned
by the spouse, and as may be further adjusted in accordance
with the rules, regulations and releases of the Securities and
Exchange Commission;
( ) (C) a bank as defined in Section 3(a)(2) of the Securities
Act, or a savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act, whether
acting in its individual or fiduciary capacity; a broker or
dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934; an insurance company as defined in
Section 2(13) of the Securities Act; an investment company
registered under the Investment Company Act of 1940 (the "1940
Act") or a business development company as defined in Section
2(a)(48) of the 1940 Act; a Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act of
1958; a plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a
state or its political subdivisions for the benefit of its
employees with total assets in excess of $5,000,000; or an
employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974 ("ERISA"), if the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of ERISA, which is either a bank, savings and
loan association, insurance company or registered investment
advisor, or if the employee benefit plan has total assets in
excess of $5,000,000 or if a self-directed plan, with
investment decisions made solely by persons that are
Accredited Investors;
( ) (D) a private business development company as defined in
Section 202(a)(22) of the Investment Advisors Act of 1940;
( ) (E) an organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific
purpose of acquiring the Units, with total assets in excess of
$5,000,000;
( ) (F) an individual who is a director or executive officer of
the Company;
( ) (G) a trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Units, whose
purchase is directed by a sophisticated person as described in
Section 506(b)(2)(ii) of Regulation D under the Securities
Act; or
( ) (H) an entity in which all of the equity owners are
Accredited Investors set forth above.
(iii)The Undersigned agrees to furnish any additional information
requested to assure compliance with applicable federal and state securities
laws in connection with the purchase and sale of the Units.
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(d) Restrictions on Transfer or Sale of the Warrants and the Common Stock
Issuable upon Exercise of the Warrants or upon Conversion of the Other Unit
Securities:
(i) The Undersigned is acquiring the Units subscribed for solely for
the Undersigned's own beneficial account, for investment purposes, and not
with a view to, or for resale in connection with, any distribution of the
Units or the Unit Securities. The Undersigned understands that the offer
and sale of the Units and the Unit Securities has not been registered under
the Securities Act or any state securities laws by reason of specific
exemptions under the provisions thereof which depend in part upon the
investment intent of the Undersigned and the other representations made by
the Undersigned in this Subscription Agreement. The Undersigned understands
that the Companies are relying upon the representations, covenants and
agreements contained in this Subscription Agreement for the purpose of
determining whether this transaction meets the requirements for such
exemptions.
(ii) The Undersigned understands that the Units and the Unit
Securities are "restricted securities" under applicable federal securities
laws and that the Securities Act and the rules of the Commission provide in
substance that the Undersigned may dispose of the Units and the Unit
Securities only pursuant to an effective registration statement under the
Securities Act or an exemption therefrom, and the Undersigned understands
that the Company has no obligation or intention to register any of the
Units or the Unit Securities purchased by the Undersigned hereunder other
than as provided in the Unit Documents, or to take action so as to permit
sales pursuant to the Securities Act (including Rule 144 thereunder).
Accordingly, the Undersigned understands that under the Commission's rules,
the Undersigned may dispose of the Units and the Unit Securities acquired
pursuant to the Offering only by registration under the Securities Act or
in "private placements" which are exempt from registration under the
Securities Act, in which event the transferee will acquire "restricted
securities" subject to the same limitations as in the hands of the
Undersigned. As a consequence, the Undersigned understands that it must
bear the economic risks of the investment in the Units and the Unit
Securities for an extended period of time.
(iii)The Undersigned agrees: (A) that the Undersigned will not sell,
assign, pledge, give, transfer or otherwise dispose of the Units or the
Unit Securities or any interest therein, or make any offer or attempt to do
any of the foregoing, except pursuant to a registration of the offer and
sale of the applicable securities under the Securities Act and all
applicable state securities laws or in a transaction which is exempt from
the registration provisions of the Securities Act and all applicable state
securities laws; (B) that the Companies and any transfer agent for the
Common Stock shall not be required to give effect to any purported transfer
of any such securities except upon compliance with the foregoing
restrictions and the receipt of a favorable opinion of counsel satisfactory
to the Companies and/or evidence satisfactory to the Companies that such
restrictions have been complied with; and (C) that a legend in
substantially the following form will be placed on the certificates
representing the Unit Securities:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN
ACCORDANCE WITH SUCH ACT AND THE RULES AND REGULATIONS THEREUNDER AND
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IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. THE COMPANY WILL
NOT TRANSFER SUCH SECURITIES EXCEPT UPON RECEIPT OF A FAVORABLE
OPINION OF COUNSEL AND/OR EVIDENCE SATISFACTORY TO THE COMPANY THAT
THE REGISTRATION PROVISIONS OF SUCH ACT HAVE BEEN COMPLIED WITH OR
THAT SUCH REGISTRATION IS NOT REQUIRED AND THAT SUCH TRANSFER WILL NOT
VIOLATE ANY APPLICABLE STATE SECURITIES LAWS.
(iv) The Undersigned has not offered or sold any portion of the
subscribed for Units or Unit Securities and has no present intention
of dividing such Units or Unit Securities with others or of reselling
or otherwise disposing of any portion of such Units or Unit Securities
either currently or after the passage of a fixed or determinable
period of time or upon the occurrence or nonoccurrence of any
predetermined event or circumstance.
6. Survival; Indemnification.
--------------------------
All representations, warranties and covenants contained in this
Subscription Agreement and the indemnification contained in this Section 6 shall
survive (i) the acceptance of this Subscription Agreement by the Companies, (ii)
changes in the transactions, documents and instruments described herein which
are not material or which are to the benefit of the Undersigned, and (iii) the
death or disability of the Undersigned. The Undersigned acknowledges the meaning
and legal consequences of the representations, warranties and covenants in
Section 5 hereof and that the Companies have relied upon such representations,
warranties and covenants in determining the Undersigned's qualification and
suitability to purchase the Units. The Undersigned hereby agrees to indemnify,
defend and hold harmless the Companies, their respective officers, directors,
employees, agents and controlling persons, from and against any and all losses,
claims, damages, liabilities, expenses (including attorneys' fees and
disbursements), judgments or amounts paid in settlement of actions arising out
of or resulting from the untruth of any representation of the Undersigned herein
or the breach of any warranty or covenant herein by the Undersigned.
7. Registration.
-------------
"Registrable Shares" shall mean the Common Stock to be issued in connection
with the transactions referred to herein. Goodrich-Delaware shall file with the
SEC within sixty (60) days following the date of grant hereof a registration
statement on Form S-1 under the Securities Act of 1933, as amended, or such
other form that Goodrich-Delaware is eligible to use or that the SEC deems
appropriate (the "Registration Statement") for the registration of the resale by
the Undersigned of the Registrable Securities. Goodrich-Delaware shall use its
best efforts to have the Registration Statement declared effective by the SEC by
no later than ninety (90) days after the date of grant hereof and to ensure that
the Registration Statement, and the underlying prospectus, remains in effect
until such time as all of the Registrable Shares are freely tradable under Rule
144 promulgated under the Securities Act.
(a) Notwithstanding the foregoing, Goodrich-Delaware may defer the filing
of the Registration Statement until a date not later than sixty (60) days
after the time set forth above if Goodrich-Delaware or its subsidiaries are
engaged in confidential negotiations or other confidential business
activities, disclosure of which would be required in such Registration
Statement (but would not be required if such Registration Statement were
not filed).
(b) Notwithstanding the foregoing, if Goodrich-Delaware determines in its
good faith judgment that the filing of any supplement or amendment to the
Registration Statement in order to keep the Registration Statement
effective would require the disclosure of material information that
Goodrich-Delaware has a bona fide business purpose for preserving as
confidential, than upon written notice of such determination by
Goodrich-Delaware to the Undersigned, the obligation of Goodrich-Delaware
to supplement or amend the Registration Statement will be suspended until
Goodrich-Delaware notifies the Undersigned in writing that the reasons for
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suspension of such obligations no longer exist and Goodrich-Delaware amends
or supplements the Registration Statement as may be required. The maximum
number of consecutive days during which Goodrich-Delaware may delay the
filing of any such supplement or amendment shall not exceed sixty (60)
days.
8. Conditions to Obligations of the Undersigned and the Companies.
----------------------------------------------------------------------
The obligations of the Undersigned to purchase and pay for the Units
specified herein and of the Companies to sell such Units are subject to the
condition that the representations and warranties of the Companies contained in
Section 4 hereof and of the Undersigned contained in Section 5 hereof shall be
true and correct on and as of the Time of Acceptance in all respects with the
same effect as though such representations and warranties had been made on and
as of the Time of Acceptance.
9. Notices.
-------
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail, return receipt requested, postage prepaid:
(a) if to the Companies, to the following address:
Goodrich Petroleum Corporation
Goodrich Petroleum Company, L.L.C.
Goodrich Petroleum Company-Lafitte, L.L.C.
333 Texas Street, Suite 1375
Shreveport, Louisiana 71101
Attn: Walter G. Goodrich
(b) if to the Undersigned, to the address set forth on the signature page
hereto;
(c) or at such other address as either party shall have specified by notice
in writing to the other.
10. Notification of Changes.
-----------------------
The Undersigned agrees and covenants to notify the Companies immediately
upon the occurrence of any event prior to the Time of Acceptance which would
cause any representation, warranty, covenant or other statement contained in
this Subscription Agreement to be false or incorrect or of any change in any
statement made herein occurring prior to the Time of Acceptance.
11. Assignability.
-------------
This Subscription Agreement is not assignable by the Undersigned, and may
not be modified, waived or terminated except by an instrument in writing signed
by the party against whom enforcement of such modification, waiver or
termination is sought.
12. Binding Effect.
---------------
Except as otherwise provided herein, this Subscription Agreement shall be
binding upon and inure to the benefit of the parties and their heirs, executors,
administrators, successors, legal representatives and assigns, and the
agreements, representations, warranties and acknowledgments contained herein
shall be deemed to be made by and be binding upon such heirs, executors,
administrators, successors, legal representatives and assigns.
13. Obligations Irrevocable.
------------------------
The obligations of the Undersigned shall be irrevocable, except with the
consent of the Companies, until the Time of Acceptance or earlier termination of
the Offering.
14. Entire Agreement.
-----------------
This Subscription Agreement, and the Unit Documents constitute the entire
agreement of the Undersigned and the Companies relating to the matters contained
herein, superseding all prior contracts or agreements, whether oral or written.
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15. Governing Law.
--------------
This Subscription Agreement shall be governed by and construed in
accordance with the laws of the State of Louisiana, exclusive of any conflicts
of law principles; and the parties hereto agree that the state and federal
courts situated in Caddo Parish, Louisiana, shall have personal jurisdiction
over the parties hereto to hear all disputes arising under this Subscription
Agreement. This Subscription Agreement is to be at least partially performed in
Caddo Parish, Louisiana, and, as such, the parties agree that venue shall be
proper with the state or federal courts in Caddo Parish, Louisiana, to hear such
disputes.
16. Severability.
------------
If any provision of this Subscription Agreement or the application thereof
to the Undersigned or any circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Subscription Agreement and the application of
such provision to other subscriptions or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
17. Headings.
--------
The headings in this Subscription Agreement are inserted for convenience
and identification only and are not intended to describe, interpret, define, or
limit the scope, extent or intent of this Subscription Agreement or any
provision hereof.
18. Counterparts.
------------
This Subscription Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which together shall be deemed to be one and the same agreement.
NOTE: Please be certain you have initialed the appropriate category of
Accredited Investor in Section 6(c).
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IN WITNESS WHEREOF, the Undersigned has executed this Subscription
Agreement this day of September, 1999.
------
TYPE OF OWNERSHIP (Check One):
( ) INDIVIDUAL OWNERSHIP (one signature required)
( ) TRUST, AGENT OR OTHER PERSON ACTING IN A REPRESENTATIVE CAPACITY
List the name of the person or entity who will be the record holder and
provide (i) copy of trust agreement, power of attorney or other instrument
granting the power and authority to subscribe, or (ii)an opinion of counsel
as to such power and authority)
( ) JOINT TENANTS WITH RIGHT OF SURVIVORSHIP (both or all parties must sign)
( ) COMMUNITY PROPERTY (one signature required if shares are held in one name,
i.e., managing spouse; two signatures required if shares are held in both
names)
( ) TENANTS IN COMMON (both or all parties must sign) (Can only be used if
parties are related and living in same household)
( ) CORPORATION (please include copies of the corporation's Articles of
Incorporation and bylaws)
( ) PARTNERSHIP (include copy of Partnership Agreement authorizing signature)
(1) If a Partnership, Corporation or other qualified association, the
signature should be in the name of such entity followed by the authorized
signature and title of the person signing.
(2) Second signature required for any joint investment.
Name of Investor:
---------------------------
Signature:
- ----------------------------------------
Title:
---------------------------------
Address:
---------------------------------
- ----------------------------------------
- ----------------------------------------
Social Security or Tax I.D. No.:
- ----------------------------------------
Item Number/Amount Investment
- ---- ------------- ----------
Units
------------- ----------
Pari Passu Note
------------- ----------
Subordinated Note
------------- ----------
Lafitte Note
------------- ----------
Preferred Units
------------- ----------
Debt Warrants
------------- ----------
Deferred Warrant
------------- ----------
Total
------------- ----------
12
<PAGE>
If joint investment:
Name of additional investor:
---------------------------------
Signature:
-------------------------------------------
Title (if applicable):
-------------------------------
Address:
---------------------------------------------
Social Security or Tax I.D. No.:
--------------------
No. of Units subscribed for:
----------------------------------
Accepted by Goodrich Petroleum Corporation
By:
--------------------------------------
Walter G. Goodrich, President
Accepted by Goodrich Petroleum Company, L.L.C.
By:
--------------------------------------
Walter G. Goodrich, President
Accepted by Goodrich Petroleum Company-Lafitte, L.L.C.
By:
--------------------------------------
Walter G. Goodrich, President
13
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into this day of September,
-----
1999, by and between GOODRICH PETROLEUM COMPANY, L.L.C., a Louisiana limited
liability company (the "Borrower"), and HAMBRECHT & QUIST GUARANTY FINANCE, LLC,
as agent for the Noteholders (hereinafter defined) (the "Noteholder Agent"), and
is joined in, for the limited purpose of making the representations, warranties,
and covenants set forth in Articles IV, V and VI only, by GOODRICH PETROLEUM
CORPORATION, a Delaware corporation ("Goodrich-Delaware").
WITNESSETH:
In consideration of the mutual covenants and agreements herein contained,
the Borrower and the Noteholder Agent hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this Credit Agreement, the terms
"Borrower," "Goodrich-Delaware," and "Noteholder Agent," shall have the meaning
assigned to them hereinabove.
1.2 Additional Defined Terms. As used in this Credit Agreement, each of the
following terms shall have the meaning assigned thereto in this Section, unless
the context otherwise requires:
"Affiliate" shall mean any Person directly or indirectly controlling,
or under common control with, the Borrower and includes any Subsidiary of
the Borrower and any "affiliate" of the Borrower within the meaning of Reg.
ss.240.12b-2 of the Securities Exchange Act of 1934, as amended, with
"control," as used in this definition, meaning possession, directly or
indirectly, of the power to direct or cause the direction of management,
policies or action through ownership of voting securities, contract, voting
trust, or membership in management or in the group appointing or electing
management or otherwise through formal or informal arrangements or business
relationships.
"Agreement" shall mean this Credit Agreement, as it may be amended,
supplemented, or restated from time to time.
"Borrower Membership Interests" shall mean all of the membership
interests and other equity interests in and to the Borrower.
"Business Day" shall mean a day other than a day when commercial banks
are authorized or required to close in the State of Texas.
"Closing Date" shall mean September , 1999.
----
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time.
1
<PAGE>
"Collateral" shall mean the Mortgaged Properties, the Lafitte
Membership Interests, the Borrower Membership Interests, all other Property
of Goodrich-Delaware or Borrower and any other Property now or at any time
used or intended as security for the payment or performance of all or any
portion of the Obligations.
"Collateral Agency Agreement" shall mean that certain Collateral
Agency Agreement dated concurrently herewith executed by and among the
Noteholder Agent, Compass Bank, and Compass Bank, as Collateral Agent, as
it may be amended, supplemented, or restated from time to time.
"Commonly Controlled Entity" shall mean any Person which is under
common control with the Borrower or Goodrich-Delaware within the meaning of
Section 4001 of ERISA.
"Compliance Certificate" shall mean each certificate, substantially in
the form attached hereto as Exhibit 3, executed by a Responsible Officer of
the Borrower and furnished to the Noteholder Agent from time to time in
accordance with the terms hereof.
"Consolidated Net Income" shall mean, for any period, the net income
of Goodrich-Delaware and its Subsidiaries, on a consolidated basis, for
such period, determined in accordance with GAAP minus net income
attributable to Lafitte (except to the extent of cash distributions by
Lafitte to the Borrower).
"Consolidated Tangible Net Worth" shall mean (a) total assets, as
would, in accordance with GAAP, be reflected on a consolidated balance
sheet of Goodrich-Delaware and its Subsidiaries, exclusive of Intellectual
Property, experimental or organization expenses, franchises, licenses,
permits and other intangible assets, treasury stock, unamortized
underwriter's debt discount and expenses, and goodwill minus (b) total
liabilities, as would, in accordance with GAAP, be reflected on a
consolidated balance sheet of Goodrich-Delaware and its Subsidiaries plus
(c) the unpaid principal balance owed under the Subordinated Notes.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends, or other obligations of any other Person (for purposes
of this definition, a "primary obligation ") in any manner, whether
directly or indirectly, including, without limitation, any obligation of
such Person, regardless of whether such obligation is contingent, (a) to
purchase any primary obligation or any Property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any primary obligation, or (ii) to maintain working
or equity capital of any other Person in respect of any primary obligation,
or otherwise to maintain the net worth or solvency of any other Person, (c)
to purchase Property, securities or services primarily for the purpose of
assuring the owner of any primary obligation of the ability of the Person
primarily liable for such primary obligation to make payment thereof, or
(d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof, with the amount of any
Contingent Obligation being deemed to be equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
minimum reasonably anticipated liability in respect thereof as determined
by such Person in good faith.
2
<PAGE>
"Debt Service" shall mean, for any period and with respect to
Indebtedness of Goodrich-Delaware on a consolidated basis, the sum of all
principal payments made during such period on borrowed money Indebtedness
plus all interest expense paid in respect of borrowed money Indebtedness
during such period.
"Default" shall mean any event or occurrence which with the lapse of
time or the giving of notice or both would become an Event of Default.
"Default Rate" shall mean a per annum interest rate equal to eighteen
percent (18%), but in no event exceeding the Highest Lawful Rate.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"EBITDA" shall mean, for any period, (a) Consolidated Net Income for
such period plus (b) depreciation, amortization, depletion and other
non-cash expenses for such period deducted in the determination of
Consolidated Net Income minus (c) non-cash income for such period included
in the determination of Consolidated Net Income.
"Environmental Complaint" shall mean any written or oral complaint,
order, directive, claim, citation, notice of environmental report or
investigation, or other notice by any Governmental Authority or any other
Person with respect to (a) air emissions, (b) spills, releases, or
discharges to soils, any improvements located thereon, surface water,
groundwater, or the sewer, septic, waste treatment, storage, or disposal
systems servicing any Property of any Related Party, (c) solid or liquid
waste disposal, (d) the use, generation, storage, transportation, or
disposal of any Hazardous Substance, or (e) other environmental, health, or
safety matters affecting any Property of any Related Party or the business
conducted thereon.
"Environmental Laws" shall mean (a) the following federal laws as they
may be cited, referenced, and amended from time to time: the Clean Air Act,
the Clean Water Act, the Comprehensive Environmental Response, Compensation
and Liability Act, the Endangered Species Act, the Hazardous Materials
Transportation Act of 1986, the Occupational Safety and Health Act, the Oil
Pollution Act of 1990, the Resource Conservation and Recovery Act of 1976,
the Safe Drinking Water Act, the Superfund Amendments and Reauthorization
Act, and the Toxic Substances Control Act; (b) any and all equivalent
environmental statutes of any state, as they may be cited, referenced and
amended from time to time; (e) any rules or regulations promulgated under
or adopted pursuant to the above federal and state laws; and (d) any other
equivalent federal, state, or local statute or any requirement, rule,
regulation, code, ordinance, or order adopted pursuant thereto, including,
without limitation, those relating to the generation, transportation,
treatment, storage, recycling, disposal, handling, or release of Hazardous
Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder and
interpretations thereof.
"Event of Default" shall mean any of the events specified in Section
7.1.
3
<PAGE>
"Financial Statements" shall mean statements of the financial
condition as at the point in time and for the period indicated and
consisting of at least a balance sheet and related statements of
operations, common stock and other stockholders' equity, and cash flows
and, when required by applicable provisions of this Agreement to be
audited, accompanied by the unqualified certification of a
nationally-recognized firm of independent certified public accountants or
other independent certified public accountants acceptable to the Noteholder
Agent and footnotes to any of the foregoing, all of which shall be prepared
in accordance with GAAP consistently applied and in comparative form with
respect to the corresponding period of the preceding fiscal period.
"GAAP" shall mean generally accepted accounting principles established
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants and in effect in the United States from time
to time.
"Governmental Authority" shall mean any nation, country, commonwealth,
territory, government, state, county, parish, municipality, or other
political subdivision and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"Goodrich-Delaware" shall mean Goodrich Petroleum Corporation, a
Delaware Corporation.
"Hazardous Substances" shall mean flammables, explosives, radioactive
materials, hazardous wastes, asbestos, or any material containing asbestos,
polychlorinated biphenyls (PCBs), toxic substances or related materials,
petroleum, petroleum products, associated oil or natural gas exploration,
production, and development wastes, or any substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes," or "toxic
substances" under the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, the Superfund Amendments and Reauthorization
Act, as amended, the Hazardous Materials Transportation Act, as amended,
the Resource Conservation and Recovery Act, as amended, the Toxic
Substances Control Act, as amended, or any other Requirement of Law.
"Hedging Agreement" shall mean (a) any interest rate or currency swap,
rate cap, rate floor, rate collar, forward agreement, or other exchange or
rate protection agreement or any option with respect to any such
transaction and (b) any swap agreement, cap, floor, collar, exchange
transaction, forward agreement, or other exchange or protection agreement
relating to hydrocarbons or any option with respect to any such
transaction.
"Highest Lawful Rate" shall mean the maximum non-usurious interest
rate, if any (or, if the context so requires, an amount calculated at such
rate), that at any time or from time to time may be contracted for, taken,
reserved, charged, or received under applicable laws of the State of
Louisiana or the United States of America, whichever authorizes the greater
rate, as such laws are presently in effect or, to the extent allowed by
applicable law, as such laws may hereafter be in effect and which allow a
higher maximum non-usurious interest rate than such laws now allow.
4
<PAGE>
"Indebtedness" shall mean, as to any Person, without duplication, (a)
all liabilities (excluding reserves for deferred income taxes, deferred
compensation liabilities, and other deferred liabilities and credits) which
in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet, (b) all obligations of
such Person evidenced by bonds, debentures, promissory notes, or similar
evidences of indebtedness, (c) all other indebtedness of such Person for
borrowed money and capitalized leases, and (d) all obligations of others,
to the extent any such obligation is secured by a Lien on the assets of
such Person (whether or not such Person has assumed or become liable for
the obligation secured by such Lien).
"Insolvency Proceeding" shall mean application (whether voluntary or
instituted by another Person) for or the consent to the appointment of a
receiver, trustee, conservator, custodian, or liquidator of any Person, or
of all or a substantial part of the Property of such Person, or the filing
of a petition (whether voluntary or instituted by another Person)
commencing a case under Title 11 of the United States Code, seeking
liquidation, reorganization, or rearrangement or taking advantage of any
bankruptcy, insolvency, debtor's relief, or other similar law of the United
States, the State of Louisiana, or any other jurisdiction.
"Insolvent" or "Insolvency" shall mean, with respect to any
Multiemployer Plan, that such Plan is insolvent within the meaning of such
term as used in Section 4245 of ERISA.
"Intellectual Property" shall mean patents, patent applications,
trademarks, tradenames, copyrights, technology, know-how, and processes.
"Lafitte" shall mean Goodrich Petroleum Company-Lafitte, L.L.C., a
Louisiana limited liability company.
"Lafitte Membership Interests" shall mean all of the membership
interests or other equity interests in Lafitte.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other that the owner of such Property, whether
such interest is based on common law, statute, or contract and including,
but not limited to, the lien or security interest arising from a mortgage,
ship mortgage, encumbrance, pledge, security agreement, conditional sale or
trust receipt, or a lease, consignment, or bailment for security purposes
(other than true leases or true consignments), liens of mechanics,
materialmen, and artisans, maritime liens and reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting
Property which secure an obligation owed to, or a claim by, a Person other
than the owner of such Property (for the purpose of this Agreement, any
Person shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement, financing lease,
or other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security purposes), and the
filing or recording of any financing statement or other security instrument
in any public office.
5
<PAGE>
"Limitation Period" shall mean any period while any amount remains
owing on the Note and interest on such amount, calculated at the applicable
interest rate, plus any fees or other sums payable under any Loan Document
and deemed to be interest under applicable law, would exceed the amount of
interest which would accrue at the Highest Lawful Rate.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Instruments, and all other documents and instruments now or hereafter
delivered pursuant to the terms of or in connection with this Agreement,
the Notes, or the Security Instruments, and all renewals and extensions of,
amendments and supplements to, and restatements of, any or all of the
foregoing from time to time in effect.
"Material Adverse Effect" shall mean (a) any material adverse effect
on the business, operations, properties, condition (financial or
otherwise), or prospects of the Borrower or Goodrich-Delaware, (b) any
adverse effect upon the business operations, properties, condition
(financial or otherwise), or prospects of the Borrower or Goodrich-Delaware
which increases the risk that any of the Obligations will not be repaid as
and when due, or (c) any adverse effect upon the Collateral.
"Mortgaged Properties" shall mean all Oil and Gas Properties of the
Borrower subject to a perfected first-priority Lien in favor of the
Collateral Agent, subject only to Permitted Liens, as security for the
Obligations.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Noteholder Agent" shall mean, initially and any time the
circumstances described in the following sentence do not apply, Hambrecht &
Quist Guaranty Finance, LLC. In the event (a) Compass Bank is no longer
acting as the Collateral Agent under the Collateral Agency Agreement, and
(b) some other person or entity is acting as the Collateral Agent under the
Collateral Agency Agreement, such other person or entity shall also act as
the Noteholder Agent hereunder, if willing to do so.
"Noteholders" shall mean the holders and owners of the Notes, and
their successors and assigns.
"Notes" shall mean collectively, the Pari Passu Notes and the
Subordinated Notes, together with all renewals, extensions for any period,
increases, and rearrangements thereof.
"Obligations" shall mean, without duplication, (a) all Indebtedness
evidenced by the Notes, (b) the obligation of the Borrower for the payment
of fees and expenses pursuant to the Loan Documents, and (c) all other
obligations and liabilities of the Borrower to the Noteholders, now
existing or hereafter incurred, under, arising out of or in connection with
any Loan Document, and to the extent that any of the foregoing includes or
refers to the payment of amounts deemed or constituting interest, only so
much thereof as shall have accrued, been earned and which remains unpaid at
each relevant time of determination.
6
<PAGE>
"Oil and Gas Properties" shall mean fee, leasehold, or other interests
in or under mineral estates or oil, gas, and other liquid or gaseous
hydrocarbon leases with respect to Properties situated in the United States
or offshore from any State of the United States, including, without
limitation, overriding royalty and royalty interests, leasehold estate
interests, net profits interests, production payment interests, and mineral
fee interests, together with contracts executed in connection therewith and
all tenements, hereditaments, appurtenances, and Properties appertaining,
belonging, affixed, or incidental thereto.
"Pari Passu Notes" shall mean those certain promissory notes in the
aggregate principal amount of $5,000,000 dated concurrently herewith
executed by the Borrower payable to the order of the Noteholders and issued
to the Noteholders (as the same may from time to time be renewed, extended,
modified or rearranged).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any entity succeeding to any
or all of its functions under ERISA.
"Permitted Liens" shall mean (a) Liens for taxes, assessments, or
other governmental charges or levies not yet due or which (if foreclosure,
distraint, sale, or other similar proceedings shall not have been
initiated) are being contested in good faith by appropriate proceedings,
and such reserve as may be required by GAAP shall have been made therefor,
(b) Liens in connection with workers' compensation, unemployment insurance
or other social security (other than Liens created by Section 4068 of
ERISA), old-age pension, or public liability obligations which are not yet
due or which are being contested in good faith by appropriate proceedings,
if such reserve as may be required by GAAP shall have been made therefor,
(e) Liens in favor of vendors, carriers, warehousemen, repairmen,
mechanics, workmen, materialmen, construction, or similar Liens arising by
operation of law in the ordinary course of business in respect of
obligations which are not yet due or which are being contested in good
faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, (d) Liens in favor of operators and
non-operators under joint operating agreements or similar contractual
arrangements arising in the ordinary course of the business to secure
amounts owing, which amounts are not yet due or are being contested in good
faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, (e) Liens under production sales
agreements, division orders, operating agreements, and other agreements
customary in the oil and gas business for processing, producing, and
selling hydrocarbons securing obligations not constituting Indebtedness and
provided that such Liens do not secure obligations to deliver hydrocarbons
at some future date without receiving full payment therefor within 90 days
of delivery, (f) easements, rights of way, restrictions, and other similar
encumbrances, and minor defects in the chain of title which are customarily
accepted in the oil and gas financing industry, none of which interfere
with the ordinary conduct of the business of the owner of the relevant
Property or materially detract from the value or use of the Property to
which they apply, and other Liens expressly permitted under the Security
Instruments, and (g) Liens on Oil and Gas Properties securing non-recourse
debt used to acquire such Oil and Gas Properties.
7
<PAGE>
"Person" shall mean an individual, corporation, partnership, trust,
unincorporated organization, government, any agency or political
subdivision of any government, or any other form of entity.
"Plan" shall mean, at any time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or Goodrich-Delaware,
or any Commonly Controlled Entity is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an "employer"
as defined in Section 3(5) of ERISA.
"Prohibited Transaction" shall have the meaning assigned to such term
in Section 4975 of the Code.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"Release of Hazardous Substances" shall mean any emission, spill,
release, disposal, or discharge, except in accordance with a valid permit,
license, certificate, or approval of the relevant Governmental Authority,
of any Hazardous Substance into or upon (a) the air, (b) soils or any
improvements located thereon, (c) surface water or groundwater, or (d) the
sewer or septic system, or the waste treatment, storage, or disposal system
servicing any Property of the Borrower or Goodrich-Delaware.
"Reorganization" shall mean, with respect to any Multiemployer Plan,
that such Plan is in reorganization within the meaning of such term in
Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. ss.2615.
"Requirement of Law" shall mean, as to any Person, any applicable law,
treaty, ordinance, order, judgment, rule, decree, regulation, or
determination of an arbitrator, court, or other Government Authority,
including, without limitation, rules, regulations, orders, and requirements
for permits, licenses, registrations, approvals, or authorizations, in each
case as such now exist or may be hereafter amended and are applicable to or
binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.
"Responsible Officer" shall mean, as to any Person, its President or
chief financial officer.
"Security Instruments" shall mean the security instruments executed
and delivered in satisfaction of the conditions set forth in Section 3.1,
and all other documents and instruments at any time executed as security
for all or any portion of the Obligations, as such instruments may be
amended, restated, or supplemented from time to time.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
8
<PAGE>
"Subordinated Notes" shall mean those certain promissory notes in the
aggregate principal amount of $1,000,000.00, dated concurrently herewith
executed by the Borrower payable to the order of Noteholders and issued by
the Borrower to the Noteholders (as the same may from time to time be
renewed, extended, modified or rearranged).
"Subsidiary" shall mean, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation are at the
time owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
"Superfund Site" shall mean those sites listed on the Environmental
Protection Agency National Priority List and eligible for remedial action
or any comparable state registries or list in any state of the United
States.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of Texas.
1.3 Undefined Financial Accounting Terms. Undefined financial accounting
terms used in this Agreement shall be defined according to GAAP at the time in
effect.
1.4 References. References in this Agreement to Exhibit, Article, or
Section numbers shall be to Exhibits, Articles, or Sections of this Agreement,
unless expressly stated to the contrary. References in this Agreement to
"hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof,"
"hereunder" and words of similar import shall be to this Agreement in its
entirety and not only to the particular Exhibit, Article, or Section in which
such reference appears.
1.5 Articles and Sections. This Agreement, for convenience only, has been
divided into Articles and Sections; and it is understood that the rights and
other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
1.6 Number and Gender. Whenever the context requires, reference herein made
to the single number shall be understood to include the plural; and likewise,
the plural shall be understood to include the singular. Definitions of terms
defined in the singular or plural shall be equally applicable to the plural or
singular, as the case may be, unless otherwise indicated. Words denoting sex
shall be construed to include the masculine, feminine and neuter, when such
construction is appropriate; and specific enumeration shall not exclude the
general but shall be construed as cumulative.
1.7 Incorporation of Exhibits. The Exhibits attached to this Agreement are
incorporated herein and shall be considered a part of this Agreement for all
purposes.
9
<PAGE>
ARTICLE II
----------
TERMS OF FACILITY
-----------------
2.1 Purchase and Sale of Notes. Upon the terms and conditions and relying
on the representations and warranties contained in this Agreement, the
Noteholders agree to purchase from the Borrower and the Borrower agrees to issue
and sell to the Noteholders an aggregate principal amount of $5,000,000.00 of
the Pari Passu Notes and an aggregate principal amount of $1,000,000.00 of the
Subordinated Notes, in the amounts for each Noteholder as set forth on the
Schedule of Noteholders, attached hereto as Exhibit 1.
2.2 Use of Proceeds from the Sale of the Notes. The net proceeds from the
sale of the Notes shall be used solely for the acquisition and development by
the Borrower of Oil and Gas Properties, for working capital and for general
corporate purposes of the Borrower.
2.3 Interest. Beginning as of the date of the Notes and continuing until
the outstanding principal balance is paid in full, interest will accrue on the
Notes at an annual rate of Eight Percent (8.0%). Interest will be computed on a
365/360 day basis compounding monthly; that is in each month 1/360 of the Eight
Percent (8.0%) annual interest rate, will be multiplied by (a) the sum of (i)
the outstanding principal balance and (ii) accumulated interest outstanding as
of the end of the prior month and (b) the actual number of days that the
principal was outstanding in such month.
2.4 Repayment of Principal and Interest.
2.4.1 Interest Accrual Period. Beginning as of the date of the Notes
and continuing through October 1, 2002 (the "Interest Accrual Period"), interest
shall accrue at an annual rate of Eight Percent (8.0%), compounding on the last
date of each calendar month as described above. If on October 1, 2002, the
common stock of Goodrich-Delaware has a closing price of at least $4.00 per
share, as adjusted pursuant to Section 2.6.2 hereof (the "First Benchmark Stock
Price"), then, at Borrower's option the Interest Accrual Period shall be
extended to October 1, 2003 (the "First Extension Option"). If Borrower
exercised the First Extension Option, and if on October 1, 2003, the common
stock of Goodrich-Delaware has a closing price of at least $5.00 per share, as
adjusted pursuant to Section 2.6.2 hereof (the "Second Benchmark Stock Price"),
then, at Borrower's option, the Interest Accrual Period shall be extended to
October 1, 2004 (the "Second Extension Option").
2.4.2 Principal Repayment Period. Beginning as of the end of the
Interest Accrual Period (initially October 1, 2002, but as may be adjusted
pursuant to paragraph (a) above), the sum of all principal and accrued interest
through the last day of the Interest Accrual Period shall be repaid in
twenty-four equal monthly installments beginning on the last day of the Interest
Accrual Period and continuing on the first day of the subsequent twenty-three
months. The period of time beginning on the last day of the Interest Accrual
Period and ending on the first day of the month that is twenty- three months
after the last day of the Interest Accrual Period shall be referred to as the
"Principal Repayment Period". For example, if the last day of the Interest
Accrual Period is October 1, 2002, the Principal Repayment Period shall be from
October 1, 2002 through September 1, 2004.
2.4.3 Payment of Interest. During the Principal Repayment Period, all
interest that accrues beginning on the last day of the Interest Accrual Period
(initially October 1, 2002, but as may be adjusted by the First Extension
10
<PAGE>
Option, or the Second Extension Option), shall be paid monthly on the first day
of each of the following months during the Principal Repayment Period.
2.5 Conversion of Principal and Accrued Interest. Beginning as of the date
of the Notes and continuing until all accrued interest and the outstanding
principal balance is paid in full, the Noteholders may, at their option pursuant
to the terms hereof, by delivering to the Borrower a Conversion Notice, as
defined in Section 2.5.2, elect to require the Borrower to convert all or part
of the accrued interest and outstanding principal that is owing into shares of
Goodrich-Delaware's common stock as follows:
2.5.1 Conversion. Some or all of the accrued interest and principal
amount outstanding shall be convertible into a number of shares of
Goodrich-Delaware's common stock, which number of shares shall be equal to the
quotient of (a) the total accrued interest and outstanding principal subject to
conversion divided by (b) the Conversion Price, as defined in Section 2.6 (the
"Conversion Option").
2.5.2 Conversion Notice. "Conversion Notice" shall mean the written
notice that a Noteholder may, at its option, give to the Borrower, notifying the
Borrower of the Noteholder's decision to exercise a Conversion Option to convert
some or all of the accrued interest and outstanding principal into shares of
Goodrich-Delaware's common stock. The Borrower will deliver to the Noteholder
the required shares of Goodrich-Delaware's common stock within five (5) business
days of receiving the Conversion Notice.
2.5.3 Minimum Conversion Amount. Each Conversion Notice given by a
Noteholder to Borrower shall be for no less that 10% of the total amount of
outstanding principal and accrued interest owing under the Note from Borrower to
the Noteholder at the time that the Conversion Notice is given.
2.6 Conversion Price.
2.6.1 Conversion Price. The "Conversion Price" as used herein shall
mean $4.00, as adjusted pursuant to Section 2.6.2 hereof.
2.6.2 Adjustment to Conversion Price.
2.6.2.1 Definitions. As used in this Section 2.6.2 the following
terms shall have the following respective meanings:
(a) "Common Stock" shall mean shares of the presently
authorized common stock of Goodrich-Delaware and any stock into which
such common stock may hereafter be exchanged.
(b) "Options" shall mean the rights, options or warrants to
subscribe for, purchase or otherwise acquire shares of Common Stock or
Convertible Securities.
(c) "Convertible Amounts" shall mean the aggregate dollar
amounts that are subject to conversion at any given time pursuant to
the Conversion Option.
(d) "Convertible Securities" shall mean any evidence of
indebtedness, shares of stock or other securities directly or
indirectly convertible into or exchangeable for Common Stock.
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2.6.2.2 Adjustments to Conversion Price. The Conversion Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:
(a) Reclassification, Reorganization, Consolidation or
Merger. In the case of any reclassification of the Common Stock, or
any reorganization, consolidation or merger of Goodrich-Delaware with
or into another corporation (other than a merger or reorganization
with respect to which Goodrich-Delaware is the continuing corporation
and which does not result in any reclassification of the Common
Stock), each share of Common Stock theretofore issuable upon exercise
of any Conversion Option, shall be properly adjusted as to the number
and kind of securities receivable upon the exercise of any Conversion
Option, such that the Noteholder shall receive the number and kind of
securities which a holder of Common Stock would have been entitled to
receive after the happening of any of the events described in this
subsection (a) had the conversion pursuant to any Conversion Option
been made immediately prior to the happening of such event or the
record date for such event, whichever is earlier. The provisions of
this subsection (a) shall similarly apply to successive
reclassifications, reorganizations, consolidations or mergers.
(b) Split, Subdivision or Combination of Shares. If
Goodrich-Delaware at any time prior to the Noteholder's exercise of
any Conversion Option shall split, subdivide or combine the Common
Stock of Goodrich-Delaware, the Conversion Price shall be
proportionately decreased in the case of a split or subdivision or
proportionately increased in the case of a combination. Any adjustment
under this subsection (b) shall become effective when the split,
subdivision or combination becomes effective.
(c) Stock Dividends. If Goodrich-Delaware at any time prior
to the Noteholder's exercise of any Conversion Option shall pay a
dividend with respect to Common Stock of Goodrich-Delaware payable in
shares of Common Stock, Options, or Convertible Securities, the
Conversion Price shall be adjusted, from and after the date of
determination of the shareholders entitled to receive such dividend or
distributions, to that price determined by multiplying the Conversion
Price in effect immediately prior to such date of determination by a
fraction (i) the numerator of which shall be the total number of
shares of Common Stock outstanding immediately prior to such dividend
or distribution, and (ii) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such
dividend or distribution (including Common Stock issuable upon
exercise, conversion or exchange of any Option or Convertible
Securities issued as such dividend or distribution). If the Options or
Convertible Securities issued as such dividend or distribution by
their terms provide, with the passage of time or otherwise, for any
decrease in the consideration payable to Goodrich-Delaware, or any
increase by the number of shares issuable upon exercise, conversion or
exchange thereof (by change of rate or otherwise), the Conversion
Price shall, upon any such decrease or increase becoming effective, be
reduced to reflect such decrease or increased to reflect such increase
as if such decrease or increase became effective immediately prior to
the issuance of the Options or Convertible Securities as the dividend
or distribution. Any adjustment under this subsection (c) shall become
effective on the record date.
(d) Other Securities. In the event Goodrich-Delaware at any
time prior to the Noteholder's exercise of any Conversion Option
makes, or fixes a record date for the determination of holders of
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Common Stock entitled to receive, a dividend or other distribution
payable in securities of Goodrich-Delaware other than shares of Common
Stock, then, and in each such event, provision shall be made so that
the Noteholder shall receive, upon exercise of any Conversion Option,
in addition to the number of shares of Common Stock receivable
thereupon, the amount of securities of Goodrich-Delaware which the
Noteholder would have received had the Convertible Amounts been
exchangeable for such Common Stock on the date of such event and had
the Noteholder thereafter, during the period from the date of such
event to and including the date of exercise, retained such securities
receivable by the Noteholder as aforesaid during such period, subject
to all other adjustments called for during such period under this
Section 2.6.2.2 with respect to the rights of the Noteholder.
2.6.2.3 Other Adjustments. The First Benchmark Stock Price, the
Second Benchmark Stock Price, and the Clawback Price shall all be subject to
adjustment in the same manner and to the same extent as those adjustments made
to the Conversion Price pursuant to Section 2.6.2.2 above.
2.6.3 Fractional Shares. Pursuant to the Conversion Options, no
fractions of shares of Common Stock shall be issued, but in lieu thereof
Borrower shall pay a cash adjustment to the Noteholder in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the then applicable Conversion Price; provided, however, that no payment will be
made in respect of such cash adjustments if the amount payable is less than
Twenty and No/100 Dollars ($20.00).
2.6.4 Reserving Shares. Goodrich-Delaware shall at all times reserve
and keep available out of its authorized and unissued Common Stock, solely for
the purpose of effecting the Conversion Options of the Noteholders, such number
of shares of Common Stock as shall from time to time be adjusted pursuant to the
Section 2.6.2 hereof.
2.6.5 Registration of Shares. Goodrich-Delaware shall file with the
SEC, within sixty (60) days following the date of Notes, a registration
statement on Form S-1 under the Securities Act of 1933, as amended, or such
other form that Goodrich-Delaware is eligible to use or that the SEC deems
appropriate (the "Registration Statement") for the registration of the resale by
the Noteholders of the common stock of Goodrich-Delaware issuable upon
conversion of the Notes ("Registrable Securities"). The Company shall use its
best efforts to have the Registration Statement declared effective by the SEC by
no later than ninety (90) days after the Date of Note hereof and to ensure that
the Registration Statement, and the underlying prospectus, remains in effect for
so long as any Registrable Securities are outstanding.
(a) Notwithstanding the foregoing, Goodrich-Delaware may defer
the filing of the Registration Statement until a date not later than sixty (60)
days after the time set forth above if Goodrich-Delaware or its subsidiaries are
engaged in confidential negotiations or other confidential business activities,
disclosure of which would be required in such Registration Statement (but would
not be required if such Registration Statement were not filed).
(b) Notwithstanding the foregoing, if Goodrich-Delaware
determines in its good faith judgment that the filing of any supplement or
amendment to the Registration Statement in order to keep the Registration
Statement effective would require the disclosure of material information that
Goodrich-Delaware has a bona fide business purpose for preserving as
confidential, then upon written notice of such determination by
Goodrich-Delaware to the Noteholders, the obligation of Goodrich-Delaware to
supplement or amend the Registration Statement will be suspended until
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Goodrich-Delaware notifies the Noteholders in writing that the reasons for
suspension of such obligations no longer exist and Goodrich-Delaware amends or
supplements the Registration Statement as may be required. The maximum number of
consecutive days during which Goodrich-Delaware may delay the filing of any such
supplement or amendment shall not exceed sixty (60) days.
2.6.6 Notice of Adjustments. Whenever the Conversion Price is adjusted
pursuant to Section 2.6.2 hereof, the Borrower shall promptly issue a notice
signed by its chief financial officer or chief executive officer stating, in
reasonable detail, the new Conversion Price as a result of each adjustment, a
brief statement of the facts requiring such adjustments and the computation
thereof, and the date such adjustments became effective, and the Borrower shall
mail (by first class mail, postage prepaid) to Noteholder at the Noteholder's
address a copy of such notice.
2.7 Prepayment. Some or all of the outstanding principal and accrued
interest under the Notes may be prepaid at any time without penalty, pursuant to
the terms described herein (the "Prepayment Option"). Borrower may only exercise
the Prepayment Option, if after giving each Noteholder twenty (20) day's prior
written notice the Noteholder has not elected to exercise its Conversion Option
for such amount as Borrower wants to prepay.
2.8 Borrower's Option. If Borrower notifies a Noteholder that it wishes to
exercise its Prepayment Option for amounts that are not due for at least one
year, and the Noteholder then elects to use its Conversion Option for such
amounts, then Goodrich-Delaware may elect to repurchase one half of the Common
Stock that the Noteholder received as a result of exercising such Conversion
Option at a price of $6.00 per share, as adjusted pursuant to Section 2.6 (the
"Clawback Price"). This option shall not be assignable by Goodrich-Delaware to
any other party.
2.9 Method of Payment. Borrower will pay the Noteholders principal and
interest that is not converted into shares of Goodrich-Delaware's common stock
pursuant to the Conversion Option, and any loan fees by check made payable to
the Noteholder drawn on a United States bank and for United States dollars, or
by wire transfer to an account of the Noteholder at the Noteholder's address
shown above or at such other place as the Noteholder may designate in writing.
Unless otherwise agreed or required by applicable law, payments will be applied
first to any remaining amount of any unpaid collection costs and late charges,
then to accrued unpaid interest and then to any unpaid principal.
2.10 Note Register; Transfer and Substitution of Notes.
(a) The Borrower will keep at its principal office a register in which
the Borrower will provide for the registration of the Notes and the registration
of transfers of the Notes. The Borrower may treat any Person in whose name any
Note is registered on such register as the owner thereof for the purpose of
payment of the principal of and interest on such Note and for all other
purposes, including conversion of such Note under the terms hereof and any
notices provided for herein or required to be given herein.
(b) Upon receipt of evidence reasonably satisfactory to the Borrower
of the loss, theft, destruction or mutilation of a Note and, upon the delivery
to the Borrower of an indemnity bond in such reasonable amount as the Borrower
may determine or an unsecured indemnity agreement from the Noteholder whose Note
was lost, stolen, destroyed or mutilated in such form as may be reasonably
satisfactory to the Borrower, or upon the surrender of any partially mutilated
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Note for cancellation, the Borrower will execute and deliver a new Note of like
tenor to such Noteholder. Any Note in lieu of which any such new Note has been
so executed and delivered by the Borrower shall not be deemed to be an
outstanding Note for any purpose under this Agreement.
ARTICLE III
-----------
CONDITIONS
----------
The obligations of the Noteholders to close the purchase and sale of the
Notes are subject to the satisfaction of the following conditions precedent:
3.1 Receipt of Loan Documents and Other Items. The Noteholders shall have
no obligation under this Agreement unless and until all matters incident to the
consummation of the transactions contemplated herein, shall be satisfactory to
the Noteholder Agent, and the Noteholder Agent shall have received, reviewed,
and approved the following documents and other items, appropriately executed
when necessary and, where applicable, acknowledged by one or more authorized
officers of the applicable Person or Persons, all in form and substance
satisfactory to the Noteholder Agent and dated, where applicable, of even date
herewith or a date prior hereto and acceptable to the Noteholder Agent:
(a) multiple counterparts of this Agreement, as requested by the
Noteholder Agent;
(b) the Notes;
(c) copies of the organizational documents and all amendments thereto
of the Borrower and Goodrich-Delaware, accompanied by a certificate issued by
the secretary or an assistant secretary of the Borrower or Goodrich-Delaware, as
the case may be, to the effect that each such copy is correct and complete;
(d) certificates of incumbency and signatures of all officers of the
Borrower and Goodrich-Delaware who are authorized to execute Loan Documents on
behalf of such entities, each such certificate being executed by the secretary
or an assistant secretary of the Borrower or Goodrich-Delaware, as the case may
be;
(e) copies of corporate resolutions approving the Loan Documents and
authorizing the transactions contemplated herein and therein, duly adopted by
the management committee or board of directors of the Borrower and
Goodrich-Delaware, accompanied by certificates of the secretary or an assistant
secretary of the Borrower or Goodrich-Delaware, as the case may be, to the
effect that such copies are true and correct copies of resolutions duly adopted
at a meeting or by unanimous consent of the management committee or board of
directors of the Borrower and Goodrich-Delaware, as the case may be, and that
such resolutions constitute all the resolutions adopted with respect to such
transactions, have not been amended, modified, or revoked in any respect, and
are in full force and effect as of the date of such certificate;
(f) multiple counterparts, as requested by the Noteholder Agent, of
the following documents establishing Liens in favor of the Collateral Agent in
and to the Collateral:
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(i) Mortgage, Deed of Trust, Indenture, Security Agreement,
Assignment of Production, and Financing Statement from the Borrower covering all
Oil and Gas Properties of the Borrower and all improvements, personal property,
and fixtures related thereto, and Financing Statements constituent thereto; and
(ii) Security Agreements from Goodrich-Delaware and the Borrower
covering the Borrower Membership Interests, the Lafitte Membership Interests and
all other personal Property of Goodrich-Delaware and the Borrower, and Financing
Statements constituent thereto;
(g) certificates dated as of a recent date from the Secretary of State
or other appropriate Governmental Authority evidencing the existence or
qualification and good standing of each of the Borrower and Goodrich-Delaware in
its jurisdiction of incorporation and in any other jurisdictions where it does
business;
(h) results of searches of the UCC Records of (i) the Secretary of
State of the States of Louisiana, Michigan and Texas, in the name of the
Borrower, and (ii) of the Secretary of State of the States of Louisiana and
Texas in the name of Goodrich-Delaware, each from a source acceptable to the
Noteholder Agent and reflecting no Liens other than Permitted Liens and no Liens
against any Collateral;
(i) the opinion of counsel to the Borrower and Goodrich-Delaware
acceptable to the Noteholder Agent, in form and substance acceptable to the
Noteholder Agent;
(j) the Collateral Agency Agreement;
(k) the execution of the Common Stock Warrant Purchase Agreement by
and between Goodrich-Delaware and the Noteholders of even date herewith, and the
issuance and delivery of the Warrants (as defined therein) issuable under the
terms thereof; and
(l) such other agreements, documents, instruments, opinions,
certificates, waivers, consents, and evidence as the Noteholder Agent may
reasonably request.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Noteholders to enter into this Agreement and purchase the
Notes from the Borrower, the Borrower and, where indicated, Goodrich-Delaware
represent and warrant to the Noteholders (which representations and warranties
shall survive the delivery of the Notes) that:
4.1 Due Authorization. The execution and delivery by the Borrower of this
Agreement and the borrowings hereunder, the execution and delivery by the
Borrower of the Notes, the repayment of the Notes and interest and fees provided
for in the Notes and this Agreement, the execution and delivery of the Security
Instruments by the Borrower and the performance of all obligations of the
Borrower under the Loan Documents are within the power of the Borrower, have
been duly authorized by all necessary limited liability company action by the
Borrower, and do not and will not (a) require the consent of any Governmental
Authority, (b) contravene or conflict with any Requirement of Law or the
certificate or articles of organization and operating agreement or other
organizational or governing documents of the Borrower, (c) contravene or
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conflict with any indenture, instrument, or other agreement to which the
Borrower is a party or by which any Property of the Borrower may be presently
bound or encumbered, or (d) result in or require the creation or imposition of
any Lien in or upon any Property of the Borrower other than as contemplated by
the Loan Documents.
4.2 Corporate Existence. Each of the Borrower and Goodrich-Delaware is duly
organized, legally existing, and in good standing under the laws of its state of
organization and is duly qualified as a foreign entity and is in good standing
in all jurisdictions wherein the ownership of Property or the operation of its
business necessitates same, other than those jurisdictions wherein the failure
to so qualify will not have a Material Adverse Effect.
4.3 Valid and Binding Obligations. All Loan Documents to which the Borrower
is a party, when duly executed and delivered by the Borrower, will be the legal,
valid, and binding obligations of such entity, enforceable against the Borrower
in accordance with their respective terms, subject, however, to the effect of
bankruptcy, insolvency, reorganization, moratorium, and similar laws from time
to time in effect relating to the rights and remedies of creditors and to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.4 Security Instruments. The provisions of each Security Instrument are
effective to create in favor of the Collateral Agent, a legal, valid, and
enforceable Lien in the Collateral described therein, which Liens, assuming the
possession by the Collateral Agent of the certificates evidencing the Lafitte
Membership Interest and the Borrower Membership Interests, and the
accomplishment of recording and filing in accordance with applicable laws prior
to the intervention of rights of other Persons, shall constitute fully perfected
first-priority Liens.
4.5 Title to Assets. Each of the Borrower and Goodrich-Delaware has good
and indefeasible title to all of its Properties, free and clear of all Liens
except Permitted Liens.
4.6 Scope and Accuracy of Financial Statements. The Financial Statements of
Goodrich-Delaware as of December 31, 1998 and as of July 31, 1999 provided to
the Noteholder Agent present fairly the financial position and results of
operations and cash flows of Goodrich-Delaware and its Subsidiaries in
accordance with GAAP as at the relevant point in time or for the period
indicated, as applicable. No event or circumstance has occurred since June 30,
1999, which could reasonably be expected to have a Material Adverse Effect.
4.7 No Material Misstatements. No information, exhibit, statement, or
report furnished to the Noteholder Agent by or at the direction of the Borrower
or Goodrich-Delaware in connection with this Agreement contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the statements contained therein not misleading as of the date made or
deemed made.
4.8 Liabilities, Litigation, and Restrictions. Other than as listed under
the heading "Liabilities" on Exhibit 2, neither the Borrower or
Goodrich-Delaware has any liabilities, direct, or contingent, which may
materially and adversely affect its business or operations or its ownership of
any Collateral. Except as set forth under the heading "Litigation" on Exhibit 2,
no litigation or other action of any nature affecting the Borrower or
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Goodrich-Delaware is pending before any Governmental Authority or, to the best
knowledge of the Borrower, threatened against or affecting the Borrower or
Goodrich-Delaware. No unusual or unduly burdensome restriction, restraint or
hazard exists by contract, Requirement of Law, or otherwise relative to the
business or operations of the Borrower or Goodrich-Delaware or the ownership and
operation of its Property other than such as relate generally to Persons engaged
in business activities similar to those conducted by such party.
4.9 Authorizations and Consent. Except as expressly contemplated by this
Agreement, no authorization, consent, approval, exemption, franchise, permit, or
license of, or filing with, any Governmental Authority or any other Person is
required to authorize or is otherwise required in connection with the valid
execution and delivery by the Borrower or Goodrich-Delaware of the Loan
Documents to which it is a party or any instrument contemplated hereby, the
repayment by the Borrower of the Notes and interest and fees provided in the
Notes and this Agreement, or the performance by the Borrower or
Goodrich-Delaware of its Obligations.
4.10 Compliance with Laws. The Borrower and Goodrich-Delaware and their
Properties are in compliance with all applicable Requirements of Law, including,
without limitation, Environmental Laws, the Natural Gas Policy Act of 1978, as
amended, and ERISA.
4.11 ERISA. No Reportable Event has occurred with respect to any Single
Employer Plan, and each Single Employer Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. To the best knowledge of the Borrower, (a) no Reportable
Event has occurred with respect to any Multiemployer Plan, and (b) each
Multiemployer Plan has complied with and been administered in all material
respects with applicable provisions of ERISA and the Code. The present value of
all benefits vested under each Single Employer Plan (based on the assumptions
used to fund such Plan) did not, as of the last annual valuation date applicable
thereto, exceed the value of the assets of such Plan allocable to such vested
benefits. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan for which there is
any withdrawal liability. As of the most recent valuation date applicable to any
Multiemployer Plan, neither the Borrower nor any Commonly Controlled Entity
would become subject to any liability under ERISA if the Borrower or such
Commonly Controlled Entity were to withdraw completely from such Multiemployer
Plan. Neither the Borrower nor any Commonly Controlled Entity has received
notice that any Multiemployer Plan is Insolvent or in Reorganization. To the
best knowledge of the Borrower, no such Insolvency or Reorganization is
reasonably likely to occur. Based upon GAAP existing as of the date of this
Agreement and current factual circumstances, the Borrower has no reason to
believe that the annual cost during the term of this Agreement to the Borrower
and all Commonly Controlled Entities for post-retirement benefits to be provided
to the current and former employees of the Borrower and all Commonly Controlled
Entities under Plans which are welfare benefit plans (as defined in Section 3(l)
of ERISA) will, in the aggregate, have a Material Adverse Effect.
4.12 Environmental Laws. Except as described on Exhibit 2 under the heading
"Environmental Matters:"
(a) no Property of the Borrower or Goodrich-Delaware is currently on
or has ever been on, or is adjacent to any Property which is on or has ever been
on, any federal or state list of Superfund Sites;
(b) no Hazardous Substances have been generated, transported, and/or
disposed of by the Borrower or Goodrich-Delaware at a site which was, at the
time of such generation, transportation, and/or disposal, or has since become, a
Superfund Site;
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(c) no Release of Hazardous Substances by the Borrower or
Goodrich-Delaware or from, affecting, or related to any of their Property or
adjacent to any of their Property has occurred; and
(d) no Environmental Complaint has been received by the Borrower or
Goodrich-Delaware.
4.13 Investment Company Act Compliance. Neither the Borrower nor
Goodrich-Delaware is or is directly or indirectly controlled by or acting on
behalf of any Person which is an "investment company" or an "affiliated person"
of an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
4.14 Public Utility Holding Company Act Compliance. Neither the Borrower
nor Goodrich-Delaware is a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
4.15 Proper Filing of Tax Returns; Payment of Taxes Due. Each of the
Borrower and Goodrich-Delaware has duly and properly filed its United States
income tax return and all other tax returns which are required to be filed and
has paid all taxes due except such as are being contested in good faith and as
to which adequate provisions and disclosures have been made. The respective
charges and reserves on the books of the Borrower and Goodrich-Delaware with
respect to taxes and other governmental charges are adequate.
4.16 Refunds. Except as described on Exhibit 2 under the heading "Refunds,"
no orders of, proceedings pending before, or other requirements of, the Federal
Energy Regulatory Commission, the Texas Railroad Commission, or any Governmental
Authority exist which could result in the Borrower or Goodrich-Delaware being
required to refund any material portion of the proceeds received or to be
received from the sale of hydrocarbons from any of its Properties.
4.17 Gas Contracts. Except as described on Exhibit 2 under the heading "Gas
Contracts," neither the Borrower nor Goodrich-Delaware (a) is obligated in any
material respect by virtue of any prepayment made under any contract containing
a "take-or-pay" or "prepayment" provision or under any similar agreement to
deliver hydrocarbons produced from or allocated to any of its Properties at some
future date without receiving full payment therefor within 90 days of delivery,
or (b) is subject to or has produced gas, in any material amount, subject to, or
owns Properties subject to, balancing rights of third parties or balancing
duties under governmental requirements, except as to such matters for which such
party has established monetary reserves adequate in amount to satisfy such
obligations and has segregated such reserves from other accounts.
4.18 Intellectual Property. Each of the Borrower and Goodrich-Delaware owns
or is licensed to use all Intellectual Property necessary to conduct all
business material to its condition (financial or otherwise), business, or
operations as such business is currently conducted. No claim has been asserted
or is pending by any Person with the respect to the use of any such Intellectual
Property or challenging or questioning the validity or effectiveness of any such
Intellectual Property; and neither the Borrower nor Goodrich-Delaware knows of
any valid basis for any such claim. The use of such Intellectual Property by the
Borrower or Goodrich-Delaware does not infringe on the rights of any Person,
except for such claims and infringements as do not, in the aggregate, give rise
to any material liability on the part of the Borrower or Goodrich-Delaware.
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4.19 Casualties or Taking of Property. Except as disclosed on Exhibit 2
under the heading "Casualties," since June 30, 1999, neither the business nor
any Property of the Borrower or Goodrich-Delaware has been materially adversely
affected as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of Property, or cancellation of contracts, permits, or concessions by any
Governmental Authority, riot, activities of armed forces, or acts of God.
4.20 Locations of Borrower and Goodrich-Delaware. The principal place of
business and chief executive office of the Borrower and Goodrich-Delaware is
located at 333 Texas Street, Suite 1375, Shreveport, Louisiana 71101 or at such
other location as the Borrower may have, by proper written notice hereunder,
advised the Noteholder Agent, provided that (in the case of Borrower and
Goodrich-Delaware) such other location is within a state in which appropriate
financing statements from the Borrower or Goodrich-Delaware, as the case may be,
in favor of the Collateral Agent have been flied.
4.21 Scope of Collateral. The Collateral constitutes the only real or
personal Property owned by the Borrower or Goodrich-Delaware.
ARTICLE V
---------
AFFIRMATIVE COVENANTS
---------------------
For so long as any Notes remain outstanding or unpaid, the Borrower and
Goodrich-Delaware shall do the following:
5.1 Maintenance and Access to Records. Keep adequate records, in
accordance with GAAP, of all its transactions so that at any time, and from time
to time, its true and complete financial condition may be readily determined,
and promptly following the reasonable request of the Noteholder Agent, make such
records available for inspection by the Noteholder Agent and, at the expense of
the Borrower, allow the Noteholder Agent to make and take away copies thereof.
5.2 Quarterly Financial Statements. Deliver to the Noteholders, on or
before the 45th day after the close of each quarterly period of each fiscal year
of Goodrich-Delaware, (a) a copy of the unaudited consolidated and consolidating
Financial Statements of Goodrich-Delaware as at the close of such quarterly
period and from the beginning of such fiscal year to the end of such period,
such Financial Statements to be certified by the chief financial officer of
Goodrich-Delaware as having been prepared in accordance with GAAP consistently
applied and as a fair presentation of the condition of Goodrich-Delaware and its
Subsidiaries, subject to changes resulting from normal year-end audit
adjustments.
5.3 Annual Financial Statements. Deliver to the Noteholders, on or before
the 90th day after the close of each fiscal year of Goodrich-Delaware, (a) a
copy of the annual audited consolidated Financial Statements of
Goodrich-Delaware, together with the audit report issued in connection
therewith, (b) a copy of the annual unaudited consolidating Financial Statements
of Goodrich-Delaware, and (c) a Compliance Certificate.
5.4 Oil and Gas Reserve Report.
(a) Deliver to the Noteholder Agent no later than the last day of
March of each year during the term of this Agreement, engineering reports in
form and substance satisfactory to the Noteholder Agent, certified by any
nationally- or regionally-recognized independent consulting petroleum engineers
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acceptable to the Noteholder Agent as fairly and accurately setting forth (i)
the proven and producing, shut-in, behind-pipe, and undeveloped oil and gas
reserves (separately classified as such) attributable to the Oil and Gas
Properties of the Borrower as of January 1 of the year for which such reserve
reports are furnished, (ii) the aggregate present value of the future net income
with respect to such Oil and Gas Properties, discounted at a stated per annum
discount rate of such reserves, (iii) projections of the annual rate of
production, gross income, and net income with respect to such reserves, and (iv)
information with respect to the "take-or-pay," "prepayment," and gas-balancing
liabilities of the Borrower.
(b) Deliver to the Noteholder Agent no later than the last day of
August of each year during the term of this Agreement, engineering reports in
form and substance satisfactory to the Noteholder prepared by or under the
supervision of the chief petroleum engineer or geologist of the Borrower
evaluating the Oil and Gas Properties of the Borrower as of July 1 of the year
for which such reserve reports are furnished and updating the information
provided in the reports pursuant to Section 5.4(a).
(c) Deliver to the Noteholder Agent, on or before the 45th day after
the close of each month, a report of monthly production of its Oil and Gas
Properties, setting forth production volumes for oil, gas, other hydrocarbons
and water, broken out by major fields or by wells.
(d) Each of the reports provided pursuant to this Section shall be
accompanied by additional data concerning pricing, quantities of production from
the Oil and Gas Properties, volumes of production sold, purchasers of
production, gross revenues, expenses, and such other information and engineering
and geological data with respect thereto and in such format as the Noteholder
Agent may reasonably request.
(e) In the event the Noteholder Agent has a reasonable concern as to
the ability of the Borrower to meet its obligations as they become due, then the
Borrower will provide to the Noteholder Agent such additional financial or other
information and reports, in such formats and at such times as the Noteholder may
reasonably request.
5.5 Notices of Certain Events. Deliver to the Noteholder Agent, immediately
upon having knowledge of the occurrence of any of the following events or
circumstances, a written statement with respect thereto, signed by a Responsible
Officer of the Borrower or Goodrich-Delaware and setting forth the relevant
event or circumstance and the steps being taken with respect to such event or
circumstance:
(a) any Default or Event of Default;
(b) any default or event of default under any contractual obligation
of the Borrower or Goodrich-Delaware, or any litigation, investigation, or
proceeding between the Borrower or Goodrich-Delaware and any Governmental
Authority which, in either case, if not cured or if adversely determined, as the
case may be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding involving the Borrower or
Goodrich-Delaware as a defendant or in which any Property of the Borrower or
Goodrich-Delaware is subject to a claim and in which the amount involved is
$500,000 or more and which is not covered by insurance or in which injunctive or
similar relief is sought;
(d) the receipt by the Borrower or Goodrich-Delaware of any
Environmental Complaint;
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(e) any actual, proposed, or threatened testing or other investigation
by any Governmental Authority or other Person concerning the environmental
condition of, or relating to, any Property of the Borrower or Goodrich-Delaware,
or adjacent to any Property of the Borrower or Goodrich-Delaware following any
allegation of a violation of any Requirement of Law;
(f) any Release of Hazardous Substances by the Borrower or
Goodrich-Delaware from, affecting, or related to any Property of the Borrower or
Goodrich-Delaware, or adjacent to any Property of the Borrower or
Goodrich-Delaware, or the violation of any Environmental Law, or the revocation,
suspension, or forfeiture of or failure to renew, any permit, license,
registration, approval, or authorization which could reasonably be expected to
have a Material Adverse Effect;
(g) any Reportable Event or imminently expected Reportable Event with
respect to any Plan; any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan; the institution of proceedings or the
taking of any other action by the PBGC, the Borrower or any Commonly Controlled
Entity or Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Single Employer Plan or
Multiemployer Plan; or any Prohibited Transaction in connection with any Plan or
any trust created thereunder and the action being taken by the Internal Revenue
Service with respect thereto;
(h) the change in identity or address of any Person remitting to the
Borrower proceeds from the sale of hydrocarbon production from or attributable
to any Mortgaged Property;
(i) any change in the senior management of the Borrower or
Goodrich-Delaware;
(j) the Borrower's or Goodrich-Delaware's acquisition or ownership of
any estate (fee simple or leasehold) of real or personal Property, wherever
located, which is not included in the Collateral; and
(k) any other event or condition which could reasonably be expected to
have a Material Adverse Effect.
5.6 Letters in Lieu of Transfer Orders; Division Orders. Promptly upon
request by the Noteholder Agent at any time and from time to time, execute such
letters in lieu of transfer orders, in addition to the letters signed by the
Borrower and delivered to the Collateral Agent and/or division and/or transfer
orders as are necessary or appropriate to transfer and deliver to the Noteholder
Agent proceeds from or attributable to any Mortgaged Property.
5.7 Additional Information. Furnish to the Noteholder Agent within five
days after any material report (other than financial statements) or other
communication is sent by the Borrower or Goodrich-Delaware to its stockholders
or filed by the Borrower or Goodrich-Delaware with the Securities and Exchange
Commission or any successor or analogous Government Authority, copies of such
report or communication and, promptly upon the request of the Noteholder Agent,
such additional financial or other information concerning the assets,
liabilities, operations, and transactions of the Borrower or Goodrich-Delaware
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as the Noteholder Agent may from time to time request; and notify the Noteholder
Agent not less than ten Business Days prior to the occurrence of any condition
or event that may change the proper location for the filing of any financing
statement or other public notice or recording for the purpose of perfecting a
Lien in any Collateral, including, without limitation, any change in name or the
location of the principal place of business or chief executive office of the
Borrower or Goodrich-Delaware; and upon the request of the Noteholder Agent,
execute such additional Security Instruments as may be necessary or appropriate
in connection therewith.
5.8 Compliance with Laws. Comply with all applicable Requirements of Law,
including, without limitation, (a) the Natural Gas Policy Act of 1978, as
amended, (b) ERISA, (c) Environmental Laws, and (d) all permits, licenses,
registrations, approvals, and authorizations (i) related to any natural or
environmental resource or media located on, above, within, in the vicinity of,
related to or affected by any Property of the Borrower or Goodrich-Delaware,
(ii) required for the performance of the operations of the Borrower or
Goodrich-Delaware, or (iii) applicable to the use, generation, handling,
storage, treatment, transport, or disposal of any Hazardous Substances; and
cause all employees, crew members, agents, contractors, subcontractors, and
future lessees (pursuant to appropriate lease provisions) of each of the
Borrower or Goodrich-Delaware, while such Persons are acting within the scope of
their relationship with such party, to comply with all such Requirements of Law
as may be necessary or appropriate to enable such party to so comply.
5.9 Payment of Assessments and Charges. Pay all taxes, assessments,
governmental charges, rent, and other Indebtedness which, if unpaid, might
become a Lien against its Property, except any of the foregoing being contested
in good faith and as to which adequate reserve in accordance with GAAP has been
established or unless failure to pay would not have a Material Adverse Effect.
5.10 Maintenance of its Existence and Good Standing. Maintain its corporate
or limited liability company existence or qualification and good standing in its
jurisdictions of incorporation or organization and in all jurisdictions wherein
the Property now owned or hereafter acquired or business now or hereafter
conducted necessitates same.
5.11 Further Assurances. Promptly cure any defects in the execution and
delivery of any of the Loan Documents and all agreements contemplated thereby,
and execute, acknowledge, and deliver such other assurances and instruments as
may, in the opinion of the Noteholder Agent, be necessary to fulfill the terms
of the Loan Documents.
5.12 Fees and Expenses.
(a) Upon request by the Noteholder Agent, promptly pay all reasonable
fees and expenses of the Noteholder Agent in connection with the preparation,
negotiation, syndication, execution, delivery, administration, and enforcement
of this Agreement and the other Loan Documents and any amendments, restatements,
or supplements thereto, the satisfaction of the conditions precedent set forth
herein, the filing and recordation of Security Instruments, and the consummation
of the transactions contemplated in the Loan Documents, including, without
limitation, fees and expenses of legal counsel.
(b) Upon request by the Noteholder Agent, promptly pay (to the fullest
extent permitted by law) for all amounts reasonably expended, advanced, or
incurred by or on behalf of the Noteholders to satisfy any obligation of the
Borrower or Goodrich-Delaware under any of the Loan Documents; to collect the
Obligations; to enforce the rights of the Noteholders under any of the Loan
Documents; and to protect the Properties or business of the Borrower and
Goodrich-Delaware including, without limitation, the Collateral, which amounts
shall be deemed compensatory in nature and liquidated as to amount upon notice
to the Borrower by the Noteholder Agent and which amounts shall include, but not
be limited to (i) all court costs, (ii) reasonable fees and expenses of legal
counsel, auditors and accountants, engineers, and environmental and insurance
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consultants, (iii) fees and expenses incurred in connection with the
participation by the Noteholder Agent as a member of the creditors' committee in
a case commenced under any Insolvency Proceeding, (iv) fees and expenses
incurred in connection with lifting the automatic stay prescribed in ss.362,
Title 11 of the United States Code, and (v) fees and expenses incurred in
connection with any action pursuant to ss.1129, Title 11 of the United States
Code, all reasonably incurred by the Noteholder Agent in connection with the
collection of any sums due under the Loan Documents, together with interest at
the per annum interest rate equal to the Default Rate, with the obligations
under this Section surviving the non-assumption of this Agreement in a case
commenced under any Insolvency Proceeding and being binding upon the Borrower
and/or a trustee, receiver, custodian, or liquidator of the Borrower appointed
in any such case.
5.13 Operation of Oil and Gas Properties. Develop, maintain, and operate
its Oil and Gas Properties in a prudent and workmanlike manner in accordance
with industry standards.
5.14 Maintenance and Inspection of Properties. Maintain all of its tangible
Properties in good repair and condition, ordinary wear and tear excepted; make
all necessary replacements thereof and operate such Properties in a good and
workmanlike manner; and permit any authorized representative of the Noteholder
Agent to visit and inspect any tangible Property of the Borrower or
Goodrich-Delaware. So long as no Event of Default shall have occurred and be
continuing, such visits and inspections shall be at the expense of the
Noteholders. If an Event of Default has occurred and is continuing, such visits
and inspections shall be at the expense of the Borrower.
5.15 Maintenance of Insurance. Maintain insurance with respect to its
Properties and businesses against such liabilities, casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
acceptable to the Noteholder Agent and naming the Noteholder Agent as loss
payee, and, upon any renewal of any such insurance and at other times upon
request by the Noteholder Agent furnish to the Noteholder Agent evidence,
satisfactory to the Noteholder Agent, of the maintenance of such insurance. The
Noteholder Agent shall have the right to collect, and the Borrower hereby
assigns to the Noteholder Agent, any and all monies that may become payable
under any policies of insurance relating to business interruption or by reason
of damage, loss, or destruction of any of the Collateral. In the event of any
damage, loss, or destruction for which insurance proceeds relating to business
interruption or Collateral exceed $500,000, the Noteholder Agent may, at its
option, apply all such sums or any part thereof received by it toward the
payment of the Obligations, whether matured or unmatured, application to be made
first to interest and then to principal, and shall deliver to the Borrower the
balance, if any, after such application has been made. In the event of any such
damage, loss, or destruction for which insurance proceeds are $500,000 or less,
provided that no Default or Event of Default has occurred and is continuing, the
Noteholder Agent shall deliver any such proceeds received by it to the Borrower.
In the event the Noteholder Agent receives insurance proceeds not attributable
to Collateral or business interruption, the Noteholder Agent shall deliver any
such proceeds to the Borrower.
5.16 Indemnification. INDEMNIFY AND HOLD THE NOTEHOLDERS AND THEIR
RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT AND AFFILIATES AND EACH TRUSTEE OR AGENT FOR THE BENEFIT OF
THE NOTEHOLDERS UNDER ANY SECURITY INSTRUMENT HARMLESS FROM AND AGAINST ANY AND
ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES, CHARGES,
ADMINISTRATIVE AND JUDICIAL PROCEEDINGS AND ORDERS, JUDGMENTS, REMEDIAL ACTIONS,
REQUIREMENTS AND ENFORCEMENT ACTIONS OF ANY KIND, AND ALL COSTS AND EXPENSES
INCURRED IN CONNECTION THEREWITH (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES
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AND EXPENSES), ARISING DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, FROM (A) THE
PRESENCE OF ANY HAZARDOUS SUBSTANCES ON, UNDER, OR FROM ANY PROPERTY OF THE
BORROWER OR GOODRICH-DELWARE, WHETHER PRIOR TO OR DURING THE TERM HEREOF, (B)
ANY ACTIVITY CARRIED ON OR UNDERTAKEN ON OR OFF ANY PROPERTY OF THE BORROWER OR
GOODRICH-DELAWARE WHETHER PRIOR TO OR DURING THE TERM HEREOF, AND WHETHER BY THE
BORROWER OR GOODRICH-DELAWARE OR ANY PREDECESSOR IN TITLE, EMPLOYEE, AGENT,
CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER OR GOODRICH-DELAWARE OR ANY OTHER
PERSON AT ANY TIME OCCUPYING OR PRESENT ON SUCH PROPERTY, IN CONNECTION WITH THE
HANDLING, TREATMENT, REMOVAL, STORAGE, DECONTAMINATION, CLEANUP, TRANSPORTATION,
OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR
UNDER SUCH PROPERTY, (c) ANY RESIDUAL CONTAMINATION ON OR UNDER ANY PROPERTY OF
THE BORROWER OR GOODRICH-DELAWARE, (D) ANY CONTAMINATION OF ANY PROPERTY OR
NATURAL RESOURCES ARISING IN CONNECTION WITH THE GENERATION, USE, HANDLING,
STORAGE, TRANSPORTATION OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES BY THE BORROWER
OR GOODRICH-DELAWARE, OR ANY EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF
THE BORROWER OR GOODRICH-DELAWARE WHILE SUCH PERSONS ARE ACTING WITHIN THE SCOPE
OF THEIR RELATIONSHIP WITH THE BORROWER OR GOODRICH-DELAWARE, IRRESPECTIVE OF
WHETHER ANY OF SUCH ACTIVITIES WERE OR WILL BE UNDERTAKEN IN ACCORDANCE WITH
APPLICABLE REQUIREMENTS OF LAW, OR (E) THE PERFORMANCE AND ENFORCEMENT OF ANY
LOAN DOCUMENT, OR ANY OTHER ACT OR OMISSION IN CONNECTION WITH OR RELATED TO ANY
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING, WITHOUT
LIMITATION, ANY OF THE FOREGOING IN THIS SECTION ARISING FROM NEGLIGENCE,
WHETHER SOLE OR CONCURRENT, ON THE PART OF THE NOTEHOLDERS OR ANY OF THEIR
RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT, OR AFFILIATES OR ANY TRUSTEE OR AGENT FOR THE BENEFIT OF THE
NOTEHOLDERS UNDER ANY SECURITY INSTRUMENT, BUT EXCLUDING ANY OCCURRENCE
RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PERSONS; WITH
THE FOREGOING INDEMNITY SURVIVING SATISFACTION OF ALL OBLIGATIONS AND THE
TERMINATION OF THIS AGREEMENT.
5.17 Guaranty by Goodrich-Delaware. At such time as it is able to do so
without violating its certificate of incorporation, Goodrich-Delaware will
execute and deliver to the Noteholder Agent a guaranty instrument guaranteeing
the payment and performance of all of the Borrower's obligations to the
Noteholders, whether direct or contingent.
5.18 Retention of Excess Assets in Goodrich-Delaware. Goodrich Delaware
shall not retain at the parent corporation level any asset or assets (other than
the Borrower Membership Interests) having a value in excess of $1,000,000. At
any time that Goodrich-Delaware owns any assets (other than the Borrower
Membership Interests) having, in the aggregate, a value in excess of $1,000,000,
Goodrich-Delaware will invest such assets in, or contribute such assets to, the
Borrower or a Subsidiary of the Borrower.
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ARTICLE VI
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NEGATIVE COVENANTS
------------------
For so long as any Notes remain outstanding or unpaid, the Borrower will
not and Goodrich-Delaware will not do any of the following:
6.1 Indebtedness; Contingent Obligations. Create, incur, assume, or suffer
to exist any Indebtedness or Contingent Obligation, whether by way of loan or
otherwise; provided, however, the foregoing restriction shall not apply to (a)
the Obligations, the Subordinated Debt, the Pari Passu Debt and the Compass Bank
Debt, (b) unsecured accounts payable incurred in the ordinary course of
business, which are not unpaid in excess of 60 days beyond invoice date or are
being contested in good faith and as to which such reserve as is required by
GAAP has been made, (e) performance guarantees and performance surety or other
bonds provided in the ordinary course of business, (d) Indebtedness with respect
to Hedging Agreements entered into with a Person acceptable to the Noteholder
Agent, provided that such Hedging Agreements relating to hydrocarbons cover not
more than 75% of the projected monthly production from proved developed
producing Oil and Gas Properties of the Borrower, (e) trade credit (including
authorizations for expenditures with respect to Oil and Gas Properties) incurred
or operating leases entered into in the ordinary course of business.
6.2 Liens. Create, incur, assume, or suffer to exist any Lien on any of its
Properties, whether now owned or hereafter acquired; provided, however, the
foregoing restrictions shall not apply to Permitted Liens.
6.3 Sales of Assets. Without the prior written consent of the Noteholder
Agent, sell, transfer, or otherwise dispose of, in one or any series of
transactions, any stock of any Subsidiary, any Collateral, or any other assets,
whether now owned or hereafter acquired, or enter into any agreement to do so;
provided, however, the foregoing restriction shall not apply to (a) the sale of
hydrocarbons or inventory in the ordinary course of business provided that no
contract for the sale of hydrocarbons shall obligate the Borrower to deliver
hydrocarbons produced from any Property at some future date without receiving
full payment therefor within 90 days of delivery, (b) the sale or other
disposition of Property destroyed, lost, worn out, damaged, or having only
salvage value or no longer used or useful in its business, (c) the sale or other
disposition of other assets (excluding any stock of any Subsidiary) which are
not material to the operations of the Borrower, taken as a whole, provided that
any mandatory prepayment required as a result thereof is made at the time of
such sale or disposition, or (d) Property representing less than ten percent
(10%) of the Borrower's total assets on a book value basis and on an SEC PV-10
basis.
6.4 Leasebacks. Enter into any agreement to sell or transfer any Property
and thereafter rent or lease as lessee such Property or other Property intended
for the same use or purpose as the Property sold or transferred.
6.5 Changes in Corporate Structure. Without the prior written consent of
the Noteholder Agent, which will not be unreasonably withheld, enter into any
transaction of consolidation, merger, or amalgamation; liquidate, wind up, or
dissolve (or suffer any liquidation or dissolution).
6.6 Transactions with Affiliates. Directly or indirectly, enter into any
transaction (including the sale, lease, or exchange of Property or the rendering
of service) with any of its Affiliates, other than upon fair and reasonable
terms no less favorable than could be obtained in an arm's length transaction
with a Person which was not an Affiliate.
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6.7 Lines of Business. Expand, on its own or through any Subsidiary, into
any line of business other than those in which it is engaged as of the date
hereof.
6.8 ERISA Compliance. Permit any Plan maintained by it or any Commonly
Controlled Entity to (a) engage in any Prohibited Transaction, (b) incur any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA, or (c) terminate in a manner which could result in the imposition of a
Lien on any Property of the Borrower or Goodrich-Delaware pursuant to Section
4068 of ERISA; or assume an obligation to contribute to any Multiemployer Plan;
or acquire any Person or the assets of any Person which has now or has had at
any time an obligation to contribute to any Multiemployer Plan.
6.9 Consolidated Net Worth. Permit, as of the close of any fiscal quarter
ending on or after December 31, 1999, Consolidated Tangible Net Worth to be less
than $7,000,000 plus 50% of positive Consolidated Net Income after March 31,
1999 and 100% of all cash equity proceeds, net of expenses incurred in
connection with any offering transaction after the date hereof.
6.10 Debt Service Ratio. Permit, as of the close of any fiscal quarter
ending on or after December 31, 1999, the ratio of (a) the sum of EBITDA for
such fiscal quarter plus cash equity investments made to Goodrich-Delaware or to
the Borrower within 45 days after the end of such quarter to (b) Debt Service
for such fiscal quarter to be less than 1.10 to 1.00.
6.11 General and Administrative Expenses. Permit, as of the close of any
fiscal quarter ending on or after December 31, 1999, general and administrative
expenses (including capitalized general and administrative expenses), on a
consolidated basis for Goodrich-Delaware and its Subsidiaries, to exceed twenty
percent (20%) of total consolidated revenues for Goodrich-Delaware and its
Subsidiaries (excluding proceeds from asset sales and other non-recurring
revenues) for such period.
6.12 Creation of Subsidiaries. Create or permit to exist any Subsidiaries
of Goodrich-Delaware other than the Borrower. This covenant will not prevent the
Borrower from creating or having additional Subsidiaries.
ARTICLE VII
EVENTS OF DEFAULT
7.1 Enumeration of Events of Default. Any of the following events shall
constitute an Event of Default:
(a) default shall be made in the payment when due of any installment
of principal or interest under this Agreement or the Notes or in the payment
when due of any fee or other sum payable under any Loan Document and, with
respect to the payment of interest only, such default shall continue for three
days;
(b) default shall be made by the Borrower or Goodrich-Delaware in the
due observance or performance of any of their respective obligations under the
Loan Documents, other than as described in Section 7. 1 (a), and with respect to
default in the observance or performance of obligations under Article V and
under Sections 6.9, 6.10 or 6.11, such default shall continue for 30 days after
notice thereof to the Borrower by the Noteholder Agent;
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(c) any representation or warranty made by the Borrower or
Goodrich-Delaware in any of the Loan Documents proves to have been untrue in any
material respect or any representation, statement (including Financial
Statements), certificate, or data furnished or made to the Noteholder Agent in
connection herewith proves to have been untrue in any material respect as of the
date the facts therein set forth were stated or certified;
(d) default shall be made by the Borrower or Goodrich-Delaware (as
principal or guarantor or other surety) in the payment or performance of any
bond, debenture, note, or other Indebtedness exceeding $100,000 or under any
credit agreement, loan agreement, indenture, promissory note, or similar
agreement or instrument executed in connection with any of the foregoing, and
such default shall remain unremedied for in excess of the period of grace, if
any, with respect thereto;
(e) the Borrower or Goodrich-Delaware shall (i) apply for or consent
to the appointment of a receiver, trustee, or liquidator of it or all or a
substantial part of its assets, (ii) file a voluntary petition commencing an
Insolvency Proceeding, (iii) make a general assignment for the benefit of
creditors, (iv) be unable, or admit in writing its inability, to pay its debts
generally as they become due, or (v) file an answer admitting the material
allegations of a petition filed against it in any Insolvency Proceeding;
(f) an order, judgment, or decree shall be entered against the
Borrower or Goodrich-Delaware by any court of competent jurisdiction or by any
other duly authorized authority, on the petition of a creditor or otherwise,
granting relief in any Insolvency Proceeding or approving a petition seeking
reorganization or an arrangement of its debts or appointing a receiver, trustee,
conservator, custodian, or liquidator of it or all or any substantial part of
its assets, and such order, judgment, or decree shall not be dismissed or stayed
within 30 days;
(g) the levy against any significant portion of the Property of the
Borrower or Goodrich-Delaware, or any execution, garnishment, attachment,
sequestration, or other writ or similar proceeding which is not permanently
dismissed or discharged within 30 days after the levy;
(h) a final and non-appealable order, judgment, or decree shall be
entered against the Borrower or Goodrich-Delaware for money damages and/or
Indebtedness due in an amount in excess of $500,000, and such order, judgment or
decree shall not be dismissed or stayed within 30 days;
(i) the Borrower or Goodrich-Delaware shall have (i) concealed,
removed, or diverted, or permitted to be concealed, removed, or diverted, any
part of its Property, with intent to hinder, delay, or defraud its creditors or
any of them, (ii) made any transfer of its Property to or for the benefit of a
creditor at a time when other creditors similarly situated have not been paid,
or (iii) shall have suffered or permitted, while insolvent, any creditor to
obtain a Lien upon any of its Property through legal proceedings or distraint
which is not vacated within 30 days from the date thereof;
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(j) the Security Instruments shall for any reason not, or cease to,
create valid and perfected first-priority Liens against all of the real and
personal Property of Goodrich-Delaware and the Borrower;
(k) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan;
any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan for which an excise
tax is due or would be due in the absence of a waiver; a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Noteholder Agent,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA; any Single Employer Plan shall terminate for purposes of Title IV of
ERISA; the Borrower or any Commonly Controlled Entity shall incur, or in the
reasonable opinion of the Noteholder Agent, be likely to incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan; or any other event or condition shall occur or exist with
respect to a Plan and the result of such events or conditions referred to in
this Section 7.1(k) could subject the Borrower or any Commonly Controlled Entity
to any tax (other than an excise tax under Section 4980 of the Code), penalty or
other liabilities which taken in the aggregate would have a Material Adverse
Effect and any such circumstance shall exist for in excess of 30 days; or
(l) any payment of royalties on Oil and Gas Properties of the Borrower
shall not be paid when due or any account payable of the Borrower (except as the
Noteholder Agent may expressly agree in writing) shall not be paid within sixty
(60) days of invoice date.
7.2 Remedies.
(a) Upon the occurrence of an Event of Default specified in Sections
7.1(f) or 7.1(g), immediately and without notice, (i) all Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest, notice of protest, default, or dishonor, notice of intent to accelerate
maturity, notice of acceleration of maturity, or other notice of any kind,
except as may be provided to the contrary elsewhere herein, all of which are
hereby expressly waived by the Borrower.
(b) Upon the occurrence of any Event of Default other than those
specified in Sections 7.1(f) or 7.1(g), (i) the Noteholder Agent may, by notice
to the Borrower, declare all Obligations immediately due and payable, without
presentment, demand, protest, notice of protest, default, or dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity, or other
notice of any kind, except as may be provided to the contrary elsewhere herein,
all of which are hereby expressly waived by the Borrower.
(c) Upon the occurrence of any Event of Default, the Noteholder Agent
may, in addition to the foregoing in this Section, exercise any or all of its
rights and remedies provided by law or pursuant to the Loan Documents.
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ARTICLE VIII
------------
MISCELLANEOUS
-------------
8.1 Survival of Representations, Warranties, and Covenants. All
representations and warranties of the Borrower and all covenants and agreements
herein made shall survive the execution and delivery of the Note and the
Security Instruments and shall remain in force and effect so long as any
Obligation is outstanding.
8.2 Notices and Other Communications. Except as to oral notices expressly
authorized herein, which oral notices shall be confirmed in writing, all
notices, requests, and communications hereunder shall be in writing (including
by telecopy). Unless otherwise expressly provided herein, any such notice,
request, demand, or other communication shall be deemed to have been duly given
or made when delivered by hand, or, in the case of delivery by mail, two
Business Days after deposited in the mail, certified mail, return receipt
requested, postage prepaid, or, in the case of telecopy notice, when receipt
thereof is acknowledged orally or by written confirmation report, addressed as
follows:
(a) if to the Noteholder Agent, to:
Hambrecht & Quist Guaranty Finance, LLC
One Bush Street
San Francisco, California 94104
Attention: Lorraine Nield
(415)439-3804 (telecopy)
(b) if to the Borrower, to:
Goodrich Petroleum Company, L.L.C.
333 Texas Street, Suite 1375
Shreveport, Louisiana 71101
Attention: Walter G. Goodrich
Telecopy: (318)429-2296
(c) if to a Noteholder, to:
the Noteholder's address or telecopy number shown on Exhibit 1.
Any party may, by proper written notice hereunder to the others, change the
individuals or addresses to which such notices to it shall thereafter be sent.
8.3 Parties in Interest. All covenants and agreements herein contained by
or on behalf of the Borrower, Goodrich-Delaware or the Noteholders shall be
binding upon the Borrower, Goodrich-Delaware or the Noteholders, as the case may
be, and their respective legal representatives, agents, successors, and assigns.
8.4 Rights of Third Parties. All provisions herein are imposed solely and
exclusively for the benefit of the Borrower and the Noteholders and their
successors and assigns. No other Person shall have any right, benefit, priority,
30
<PAGE>
or interest hereunder or as a result hereof or have standing to require
satisfaction of provisions hereof in accordance with their terms.
8.5 No Waiver, Rights Cumulative. No course of dealing on the part of the
Noteholders, the Noteholder Agent, their respective officers or employees, nor
any failure or delay by the foregoing with respect to exercising any rights
under any Loan Document shall operate as a waiver thereof. The rights of the
Noteholders under the Loan Documents shall be cumulative and the exercise or
partial exercise of any such right shall not preclude the exercise of any other
right.
8.6 Survival Upon Unenforceability. In the event any one or more of the
provisions contained in any of the Loan Documents or in any other instrument
referred to herein or executed in connection with the Obligations shall, for any
reason, be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
of any Loan Document or of any other instrument referred to herein or executed
in connection with such Obligations.
8.7 Amendments; Waivers. Neither this Agreement nor any provision hereof
may be amended, waived, discharged, or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, waiver, discharge, or termination is sought.
8.8 Controlling Agreement. In the event of a conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control.
8.9 Governing Law. THIS AGREEMENT, THE NOTES, AND THE GUARANTY AND ALL
ISSUES ARISING IN CONNECTION THEREWITH AND THE TRANSACTIONS CONTEMPLATED THEREBY
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
LOUISIANA, WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF
LAW.
8.10 Jurisdiction and Venue. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO,
ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE SOLE
DISCRETION AND ELECTION OF THE NOTEHOLDER AGENT IN COURTS HAVING SITUS IN
SHREVEPORT, LOUISIANA. THE BORROWER HEREBY SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE, OR FEDERAL COURT LOCATED IN SHREVEPORT, LOUISIANA AND HEREBY
WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF
ANY LITIGATION BROUGHT AGAINST IT BY THE NOTEHOLDERS, THE NOTEHOLDER AGENT OR
THE COLLATERAL AGENT IN ACCORDANCE WITH THIS SECTION.
8.11 Waiver of Rights to Jury Trial. THE BORROWER, THE NOTEHOLDERS AND THE
NOTEHOLDER AGENT HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY, AND
UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT RELATES TO OR ARISES OUT OF
ANY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS OF THE
31
<PAGE>
NOTEHOLDERS, THE NOTEHOLDER AGENT OR THE COLLATERAL AGENT IN THE ENFORCEMENT OF
ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE A MATERIAL
INDUCEMENT FOR THE NOTEHOLDERS ENTERING INTO THIS AGREEMENT.
8.12 Entire Agreement. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL SUPERSEDE
ANY PRIOR AGREEMENT AMONG THE PARTIES HERET09 WHETHER WRITTEN OR ORAL, RELATING
TO THE SUBJECT HEREOF. FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER
WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE
PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
8.13 Counterparts. For the convenience of the parties, this Agreement may
be executed in multiple counterparts and by different parties hereto in separate
counterparts, each of which for all purposes shall be deemed to be an original
and all of which together shall constitute one and the same Agreement.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
BORROWER:
GOODRICH PETROLEUM COMPANY, L.L.C.
By:
------------------------------------
Walter G. Goodrich,
President
GOODRICH-DELAWARE:
GOODRICH PETROLEUM CORPORATION
(Joining for the limited purpose of making the representations, warranties and
covenants set forth in Articles IV, V and VI hereinabove.)
By:
------------------------------------
Walter G. Goodrich,
President
NOTEHOLDER AGENT: By:
-------------------------------
HAMBRECHT & QUIST GUARANTY FINANCE, LLC
32
<PAGE>
EXHIBIT 1
---------
SCHEDULE OF NOTEHOLDERS
-----------------------
33
<PAGE>
EXHIBIT 2
---------
DISCLOSURES
-----------
Section 4.8 "Liabilities" -- None.
Section 4.8 "Litigation" --See attached Schedule 1.
Section 4.12 "Environmental Matters" -- None, except as disclosed on Schedule 1
Section 4.16 "Refunds" -- None.
Section 4.17 "Gas Contracts" -- None.
Section 4.19 "Casualties" -- None.
34
<PAGE>
EXHIBIT 3
---------
FORM OF COMPLIANCE CERTIFICATE
------------------------------
35
<PAGE>
CONVERTIBLE PROMISSORY NOTE
(PARI PASSU DEBT)
- --------------------------------------------------------------------------------
Borrower: Goodrich Petroleum Company, L.L.C.
333 Texas Street
Suite 1375
Shreveport, Louisiana 71101
Lender:
-------------------------------------
-------------------------------------
-------------------------------------
- --------------------------------------------------------------------------------
Principal Amount: $ Interest Rate: 8.0 %
------------------ --------
Date of Note:
-----------------------
PROMISE TO PAY.
- ---------------
Goodrich Petroleum Company, L.L.C. ("Borrower") promises to pay to
("Lender"), or order, in lawful money of the United States
- ----------------------
of America, the principal amount of ($ ), or so much as may be outstanding,
together with interest on the unpaid outstanding principal balance from the Date
of Note, as indicated above, until such balance is paid in full. This
Convertible Promissory Note executed by Borrower in favor of Lender shall be
referred to as a "Note".
1. PAYMENT OF PRINCIPAL AND ACCRUED INTEREST.
------------------------------------------
Beginning as of the date of this Note first written above (the "Date of
Note") and continuing until the outstanding principal balance is paid in full,
interest will accrue at an annual rate of Eight Percent (8.0%). Interest will be
computed on a 365/360 day basis compounding monthly; that is in each month 1/360
of the Eight Percent (8.0%) annual interest rate, will be multiplied by (a) the
sum of (i) the outstanding principal balance and (ii) accumulated interest
outstanding as of the end of the prior month and (b) the actual number of days
that the principal was outstanding in such month.
1.1 Interest Accrual Period. Beginning as of the Date of Note first written
above and continuing through October 1, 2002 (the "Interest Accrual Period"),
interest shall accrue at an annual rate of Eight Percent (8.0%), compounding on
the last date of each calendar month as described above; provided, however, if
the Collateral Agent commences any action (judicial or extrajudicial) against
any collateral held by it pursuant to the terms of the Collateral Agency
Agreement, then such interest as may thereafter accrue shall be payable monthly,
in arrears, on or before the first day of each month thereafter. If on October
1, 2002, the common stock of Goodrich Petroleum Corporation, a Delaware
Corporation ("Goodrich-Delaware") has a closing price of at least $4.00 per
share, as adjusted pursuant to Section 3.2 hereof (the "First Benchmark Stock
Price"), then, at Borrower's option the Interest Accrual Period shall be
extended to October 1, 2003 (the "First Extension Option"). If Borrower
exercised the First Extension Option, and if on October 1, 2003, the common
stock of Goodrich-Delaware has a closing price of at least $5.00 per share, as
adjusted pursuant to Section 3.2 hereof (the "Second Benchmark Stock Price"),
then, at Borrower's option, the Interest Accrual Period shall be extended to
October 1, 2004 (the "Second Extension Option").
1.2 Principal Repayment Period. Beginning as of the end of the Interest
Accrual Period (initially October 1, 2002, but as may be adjusted pursuant to
Section 1.1 above), the sum of all principal and accrued interest through the
1
<PAGE>
last day of the Interest Accrual Period shall be repaid in twenty-four equal
monthly installments beginning on the last day of the Interest Accrual Period
and continuing on the first day of the subsequent twenty-three months. The
period of time beginning on the last day of the Interest Accrual Period and
ending on the first day of the month that is twenty- three months after the last
day of the Interest Accrual Period shall be referred to as the "Principal
Repayment Period". For example, if the last day of the Interest Accrual Period
is October 1, 2002, the Principal Repayment Period shall be from October 1, 2002
through September 1, 2004.
1.3 Payment of Interest. During the Principal Repayment Period, all
interest that accrues beginning on the last day of the Interest Accrual Period
(initially October 1, 2002, but as may be adjusted by the First Extension
Option, or the Second Extension Option), shall be paid monthly on the first day
of each of the following months during the Principal Repayment Period.
2. CONVERSION OF PRINCIPAL AND ACCRUED INTEREST.
---------------------------------------------
Beginning as of the Date of this Note first written above and continuing
until all accrued interest and the outstanding principal balance is paid in
full, Lender may, at its option pursuant to the terms hereof, by delivering to
Borrower a Conversion Notice, as defined in Section 2.2, elect to require
Borrower to convert all or part of the accrued interest and outstanding
principal that is owing into shares of Goodrich-Delaware's common stock as
follows:
2.1 Conversion. Some or all of the accrued interest and principal amount
outstanding shall be convertible into a number of shares of Goodrich-Delaware's
common stock, which number of shares shall be equal to the quotient of (a) the
total accrued interest and outstanding principal subject to conversion divided
by (b) the Conversion Price, as defined in Section 3.1 (the "Conversion
Option").
2.2 Conversion Notice. "Conversion Notice" shall mean the written notice
that Lender may, at its option, give to Borrower, notifying Borrower of Lender's
decision to exercise a Conversion Option to convert some or all of the accrued
interest and outstanding principal into shares of Goodrich-Delaware's common
stock. Borrower will deliver to Lender the required shares of
Goodrich-Delaware's common stock within five (5) business days of receiving the
Conversion Notice.
2.3 Minimum Conversion Amount. Each Conversion Notice given by Lender to
Borrower shall be for no less that 10% of the total amount of outstanding
principal and accrued interest owing under this Note from Borrower to Lender at
the time that the Conversion Notice is given.
3. CONVERSION PRICE.
-----------------
3.1 Conversion Price. The "Conversion Price" as used herein shall mean
$4.00, as adjusted pursuant to Section 3.2 hereof.
3.2 Adjustment to Conversion Price.
3.2.1 Definitions. As used in this Section 3.2 the following terms
shall have the following respective meanings:
2
<PAGE>
(a) "Common Stock" shall mean shares of the presently authorized
common stock of Goodrich-Delaware and any stock into which such common stock may
hereafter be exchanged.
(b) "Options" shall mean the rights, options or warrants to
subscribe for, purchase or otherwise acquire shares of Common Stock or
Convertible Securities.
(c) "Convertible Amounts" shall mean the aggregate dollar amounts
that are subject to conversion at any given time pursuant to the Conversion
Option.
(d) "Convertible Securities" shall mean any evidence of
indebtedness, shares of stock or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
3.2.2 Adjustments to Conversion Price. The Conversion Price shall be
subject to adjustment from time to time upon the occurrence of certain events,
as follows:
(a) Reclassification, Reorganization, Consolidation or Merger. In
the case of any reclassification of the Common Stock, or any reorganization,
consolidation or merger of Goodrich-Delaware with or into another corporation
(other than a merger or reorganization with respect to which Goodrich-Delaware
is the continuing corporation and which does not result in any reclassification
of the Common Stock), each share of Common Stock theretofore issuable upon
exercise of any Conversion Option, shall be properly adjusted as to the number
and kind of securities receivable upon the exercise of any Conversion Option,
such that Lender shall receive the number and kind of securities which a holder
of Common Stock would have been entitled to receive after the happening of any
of the events described in this subsection (a) had the conversion pursuant to
any Conversion Option been made immediately prior to the happening of such event
or the record date for such event, whichever is earlier. The provisions of this
subsection (a) shall similarly apply to successive reclassifications,
reorganizations, consolidations or mergers.
(b) Split, Subdivision or Combination of Shares. If
Goodrich-Delaware at any time prior to Lender's exercise of any Conversion
Option shall split, subdivide or combine the Common Stock of Goodrich-Delaware,
the Conversion Price shall be proportionately decreased in the case of a split
or subdivision or proportionately increased in the case of a combination. Any
adjustment under this subsection (b) shall become effective when the split,
subdivision or combination becomes effective.
(c) Stock Dividends. If Goodrich-Delaware at any time prior to
Lender's exercise of any Conversion Option shall pay a dividend with respect to
Common Stock of Goodrich-Delaware payable in shares of Common Stock, Options, or
Convertible Securities, the Conversion Price shall be adjusted, from and after
the date of determination of the shareholders entitled to receive such dividend
or distributions, to that price determined by multiplying the Conversion Price
in effect immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution (including Common
Stock issuable upon exercise, conversion or exchange of any Option or
Convertible Securities issued as such dividend or distribution). If the Options
or Convertible Securities issued as such dividend or distribution by their terms
provide, with the passage of time or otherwise, for any decrease in the
consideration payable to Goodrich-Delaware, or any increase by the number of
3
<PAGE>
shares issuable upon exercise, conversion or exchange thereof (by change of rate
or otherwise), the Conversion Price shall, upon any such decrease or increase
becoming effective, be reduced to reflect such decrease or increased to reflect
such increase as if such decrease or increase became effective immediately prior
to the issuance of the Options or Convertible Securities as the dividend or
distribution. Any adjustment under this subsection (c) shall become effective on
the record date.
(d) Other Securities. In the event Goodrich-Delaware at any time
prior to Lender's exercise of any Conversion Option makes, or fixes a record
date for the determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in securities of Goodrich-Delaware other
than shares of Common Stock, then, and in each such event, provision shall be
made so that the Lender shall receive, upon exercise of any Conversion Option,
in addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Borrower which the Lender would have received had
the Convertible Amounts been exchangeable for such Common Stock on the date of
such event and had the Lender thereafter, during the period from the date of
such event to and including the date of exercise, retained such securities
receivable by Lender as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 3.2 with respect to
the rights of the Lender.
3.2.3 Other Adjustments. The First Benchmark Stock Price, the Second
Benchmark Stock Price, and the Clawback Price shall all be subject to adjustment
in the same manner and to the same extent as those adjustments made to the
Conversion Price pursuant to Section 3.2.2 above.
3.2.4 Fractional Shares. Pursuant to the Conversion Options, no
fractions of shares of Common Stock shall be issued, but in lieu thereof
Borrower shall pay a cash adjustment to Lender in respect of such fractional
interest in an amount equal to such fractional interest multiplied by the then
applicable Conversion Price; provided, however, that no payment will be made in
respect of such cash adjustment if the amount payable is less than Twenty and
No/100 Dollars ($20.00).
3.2.5 Reserving Shares. Borrower shall at all times reserve and keep
available out of its authorized and unissued Common Stock, solely for the
purpose of effecting the Conversion Options of Lender, such number of shares of
Common Stock as shall from time to time be adjusted pursuant to this Section 3
hereof.
3.2.6 Registration of Shares. Goodrich-Delaware shall file with the
SEC within sixty (60) days following the Date of Note hereof a registration
statement on Form S-1 under the Securities Act of 1933, as amended, or such
other form that the Company is eligible to use or that the SEC deems appropriate
(the "Registration Statement") for the registration of the resale by the Lender
of the common stock of Goodrich-Delaware issuable upon conversion of this Note
("Registrable Securities"). The Company shall use its best efforts to have the
Registration Statement declared effective by the SEC by no later than ninety
(90) days after the Date of Note hereof and to ensure that the Registration
Statement, and the underlying prospectus, remains in effect for so long as any
Registrable Shares are outstanding.
(a) Notwithstanding the foregoing, Goodrich-Delaware may defer
the filing of the Registration Statement until a date not later than sixty (60)
days after the time set forth above if Goodrich-Delaware or its subsidiaries are
engaged in confidential negotiations or other confidential business activities,
disclosure of which would be required in such Registration Statement (but would
not be required if such Registration Statement were not filed).
(b) Notwithstanding the foregoing, if Goodrich-Delaware
determines in its good faith judgment that the filing of any supplement or
amendment to the Registration Statement in order to keep the Registration
4
<PAGE>
Statement effective would require the disclosure of material information that
Goodrich-Delaware has a bona fide business purpose for preserving as
confidential, then upon written notice of such determination by
Goodrich-Delaware to the Lender, the obligation of Goodrich-Delaware to
supplement or amend the Registration Statement will be suspended until
Goodrich-Delaware notifies the Lender in writing that the reasons for suspension
of such obligations no longer exist and Goodrich-Delaware amends or supplements
the Registration Statement as may be required. The maximum number of consecutive
days during which Goodrich-Delaware may delay the filing of any such supplement
or amendment shall not exceed sixty (60) days.
3.2.7 Notice of Adjustments. Whenever the Conversion Price is adjusted
pursuant to Section 3 hereof, Borrower shall promptly issue a notice signed by
its chief financial officer or chief executive officer stating, in reasonable
detail, the new Conversion Price as a result of each adjustment, a brief
statement of the facts requiring such adjustments and the computation thereof,
and the date such adjustments became effective, and Borrower shall mail (by
first class mail, postage prepaid) to Lender at Lender's address a copy of such
notice.
4. PREPAYMENT.
-----------
Some or all of the outstanding principal and accrued interest under this
Note may be prepaid at any time without penalty, pursuant to the terms described
herein (the "Prepayment Option"). Borrower may only exercise the Prepayment
Option, if after giving Lender twenty (20) day's prior written notice Lender has
not elected to exercise its Conversion Option for such amount as Borrower wants
to prepay.
5. BORROWER'S OPTION.
------------------
If Borrower notifies Lender that it wishes to exercise its Prepayment
Option for amounts that are not due for at least one year, and Lender then
elects to use its Conversion Option for such amounts, then Goodrich-Delaware may
elect to repurchase one half of the Common Stock that Lender received as a
result of exercising such Conversion Option at a price of $6.00 per share, as
adjusted pursuant to Section 3.2 (the "Clawback Price"). This option shall not
be assignable by Goodrich-Delaware to any other party.
6. METHOD OF PAYMENT.
------------------
Borrower will pay Lender principal and interest that is not converted into
shares of Goodrich-Delaware's common stock pursuant to the Conversion Option,
and loan fees by check made payable to the Lender drawn on a United States bank
and for United States dollars, or by wire transfer to an account of Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to any remaining amount of any unpaid collection costs and late
charges, then to accrued unpaid interest and then to any unpaid principal.
7. FIXED INTEREST RATE.
--------------------
The interest rate on this Note is Eight Percent (8.0%) per annum, or, if
lower, the maximum rate of interest allowed by applicable law.
5
<PAGE>
8. NOTICES.
--------
Any notice or other communication required or permitted under this Note
shall be in writing and shall be delivered personally, sent by facsimile
transmission, or sent by overnight courier. Any such notice shall be deemed
received when so delivered personally, or when so transmitted by facsimile, or
if sent by overnight courier on the day after delivered to the courier as
follows:
TO BORROWER: Goodrich Petroleum Company, L.L.C.
333 Texas Street
Suite 1375
Shreveport, Louisiana 71101
Fax: (318)429-2296
TO LENDER:
--------------------------------------
--------------------------------------
--------------------------------------
Fax: ( )
--- ---------------------------
with a copy to: Attn: Donald M. Campbell
Hambrecht & Quist Guaranty Finance, LLC
One Bush Street
San Francisco, CA 94104
Fax: (415) 439-3804
Any party may, by notice given in accordance with this Section to the other
parties, designate another address or person for receipt of notices hereunder.
9. DEFAULT.
--------
Borrower will be in default if any Event of Default occurs under the
Goodrich Credit Agreement.
10. LENDER'S RIGHTS.
----------------
Upon the occurrence and during the continuance of an Event of Default,
Lender may declare the entire unpaid principal balance on this Note and all
accrued unpaid interest immediately due and payable, without notice, and then
Borrower will pay that amount. Upon Borrower's failure to pay all amounts
declared due pursuant to this section, including failure to pay upon final
maturity, Lender at its option, may also, if permitted under applicable law, do
one or both of the following: (a) increase the interest rate on this Note up to
eighteen percent (18%) per annum, or, if lower, up to the maximum interest
amount allowable by applicable law, and (b) add any unpaid accrued interest to
principal and such sum will bear interest therefrom until paid at the rate
provided in this Note. Borrower agrees to pay all reasonable out of pocket
expenses of Lender in connection with the collection and enforcement of this
Note. This includes, subject to any limits under applicable law, Lender's
attorneys' fees and legal expenses whether or not there is a lawsuit, including
6
<PAGE>
attorneys' fees and legal expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collections services. Borrower also will pay any court
costs, in addition to all other sums provided by law. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction of any
federal or state court located in Shreveport, Louisiana. This Note shall be
governed by and construed in accordance with the laws of the State of Louisiana.
11. LOAN AGREEMENT.
---------------
This Note is subject to and shall be governed by all the terms and
conditions of the Credit Agreement, dated September , 1999, between the
----
Borrower and Hambrecht & Quist Guaranty Finance, LLC, as Agent for Lender, as
amended from time to time (the "Goodrich Credit Agreement").
12. OUT-OF-POCKET EXPENSES.
-----------------------
Borrower shall pay to Lender the reasonable out-of-pocket expenses of
Lender according to the provisions of Section 5.12 of the Goodrich Credit
Agreement.
13. SERVICE CHARGE.
---------------
Since it would be impractical or extremely difficult to fix Lender's actual
damages for collecting and accounting for a late payment, if any payment to
Lender required herein is not paid on or before its due date, Borrower shall pay
to Lender an amount equal to five percent (5%) of any such late payment (but not
less than ten dollars ($10) nor more than two-hundred and fifty dollars ($250)).
14. GENERAL PROVISIONS.
-------------------
Lender may delay or forgo enforcing any of its rights or remedies under
this Note without losing them. Borrower and any other person who signs,
guarantees or endorses this Note may, to the extent allowed by law, waive any
applicable statute of limitations, presentment, demand for payment, protest and
notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew, extend (repeatedly and
for any length of time) or modify this Note, or release any party or guarantor;
or impair, fail to realize upon or perfect Lender's security interest in any
collateral securing this Note and take any other action deemed necessary by
Lender without the consent of or notice to anyone.
15. COLLATERAL.
-----------
This Note is secured by certain collateral of the Borrower and others as
more thoroughly described in the Security Documents (as defined in the Goodrich
Credit Agreement).
PRIOR TO SIGNING THIS NOTE BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF
A COMPLETED COPY OF THE NOTE.
BORROWER:
GOODRICH PETROLEUM COMPANY, L.L.C.
By:
-----------------------------------
Walter G. Goodrich, President
7
<PAGE>
CONVERTIBLE PROMISSORY NOTE
(SUBORDINATED DEBT)
- --------------------------------------------------------------------------------
Borrower: Goodrich Petroleum Company, L.L.C.
333 Texas Street
Suite 1375
Shreveport, Louisiana 71101
Lender:
-------------------------------
-------------------------------
-------------------------------
- --------------------------------------------------------------------------------
Principal Amount: $ Interest Rate: 8.0 %
------------------- ------
Date of Note:
------------------------
PROMISE TO PAY.
- ---------------
Goodrich Petroleum Company, L.L.C. ("Borrower") promises to pay to
("Lender"), or order, in lawful money of the United States
- ----------------------
of America, the principal amount of ($ ), or so much as may be outstanding,
together with interest on the unpaid outstanding principal balance from the Date
of Note, as indicated above, until such balance is paid in full. This
Convertible Promissory Note executed by Borrower in favor of Lender shall be
referred to as a "Note".
1. PAYMENT OF PRINCIPAL AND ACCRUED INTEREST.
------------------------------------------
Beginning as of the date of this Note first written above (the "Date of
Note") and continuing until the outstanding principal balance is paid in full,
interest will accrue at an annual rate of Eight Percent (8.0%). Interest will be
computed on a 365/360 day basis compounding monthly; that is in each month 1/360
of the Eight Percent (8.0%) annual interest rate, will be multiplied by (a) the
sum of (i) the outstanding principal balance and (ii) accumulated interest
outstanding as of the end of the prior month and (b) the actual number of days
that the principal was outstanding in such month.
1.1 Interest Accrual Period. Beginning as of the Date of Note first written
above and continuing through October 1, 2002 (the "Interest Accrual Period"),
interest shall accrue at an annual rate of Eight Percent (8.0%), compounding on
the last date of each calendar month as described above; provided, however, if
the Collateral Agent commences any action (judicial or extrajudicial) against
any collateral held by it pursuant to the terms of the Collateral Agency
Agreement, then such interest as may thereafter accrue shall be payable monthly,
in arrears, on or before the first day of each month thereafter. If on October
1, 2002, the common stock of Goodrich Petroleum Corporation, a Delaware
Corporation ("Goodrich-Delaware") has a closing price of at least $4.00 per
share, as adjusted pursuant to Section 3.2 hereof (the "First Benchmark Stock
Price"), then, at Borrower's option the Interest Accrual Period shall be
extended to October 1, 2003 (the "First Extension Option"). If Borrower
exercised the First Extension Option, and if on October 1, 2003, the common
stock of Goodrich-Delaware has a closing price of at least $5.00 per share, as
adjusted pursuant to Section 3.2 hereof (the "Second Benchmark Stock Price"),
then, at Borrower's option, the Interest Accrual Period shall be extended to
October 1, 2004 (the "Second Extension Option").
1.2 Principal Repayment Period. Beginning as of the end of the Interest
Accrual Period (initially October 1, 2002, but as may be adjusted pursuant to
Section 1.1 above), the sum of all principal and accrued interest through the
last day of the Interest Accrual Period shall be repaid in twenty-four equal
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monthly installments beginning on the last day of the Interest Accrual Period
and continuing on the first day of the subsequent twenty-three months. The
period of time beginning on the last day of the Interest Accrual Period and
ending on the first day of the month that is twenty- three months after the last
day of the Interest Accrual Period shall be referred to as the "Principal
Repayment Period". For example, if the last day of the Interest Accrual Period
is October 1, 2002, the Principal Repayment Period shall be from October 1, 2002
through September 1, 2004.
1.3 Payment of Interest. During the Principal Repayment Period, all
interest that accrues beginning on the last day of the Interest Accrual Period
(initially October 1, 2002, but as may be adjusted by the First Extension
Option, or the Second Extension Option), shall be paid monthly on the first day
of each of the following months during the Principal Repayment Period.
2. CONVERSION OF PRINCIPAL AND ACCRUED INTEREST.
---------------------------------------------
Beginning as of the Date of this Note first written above and continuing
until all accrued interest and the outstanding principal balance is paid in
full, Lender may, at its option pursuant to the terms hereof, by delivering to
Borrower a Conversion Notice, as defined in Section 2.2, elect to require
Borrower to convert all or part of the accrued interest and outstanding
principal that is owing into shares of Goodrich-Delaware's common stock as
follows:
2.1 Conversion. Some or all of the accrued interest and principal amount
outstanding shall be convertible into a number of shares of Goodrich-Delaware's
common stock, which number of shares shall be equal to the quotient of (a) the
total accrued interest and outstanding principal subject to conversion divided
by (b) the Conversion Price, as defined in Section 3.1 (the "Conversion
Option").
2.2 Conversion Notice. "Conversion Notice" shall mean the written notice
that Lender may, at its option, give to Borrower, notifying Borrower of Lender's
decision to exercise a Conversion Option to convert some or all of the accrued
interest and outstanding principal into shares of Goodrich-Delaware's common
stock. Borrower will deliver to Lender the required shares of
Goodrich-Delaware's common stock within five (5) business days of receiving the
Conversion Notice.
2.3 Minimum Conversion Amount. Each Conversion Notice given by Lender to
Borrower shall be for no less that 10% of the total amount of outstanding
principal and accrued interest owing under this Note from Borrower to Lender at
the time that the Conversion Notice is given.
3. CONVERSION PRICE.
-----------------
3.1 Conversion Price. The "Conversion Price" as used herein shall mean
$4.00, as adjusted pursuant to Section 3.2 hereof.
3.2 Adjustment to Conversion Price.
3.2.1 Definitions. As used in this Section 3.2 the following terms
shall have the following respective meanings:
(a) "Common Stock" shall mean shares of the presently authorized
common stock of Goodrich-Delaware and any stock into which such common stock may
hereafter be exchanged.
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(b) "Options" shall mean the rights, options or warrants to
subscribe for, purchase or otherwise acquire shares of Common Stock or
Convertible Securities.
(c) "Convertible Amounts" shall mean the aggregate dollar amounts
that are subject to conversion at any given time pursuant to the Conversion
Option.
(d) "Convertible Securities" shall mean any evidence of
indebtedness, shares of stock or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
3.2.2 Adjustments to Conversion Price. The Conversion Price shall be
subject to adjustment from time to time upon the occurrence of certain events,
as follows:
(a) Reclassification, Reorganization, Consolidation or Merger. In
the case of any reclassification of the Common Stock, or any reorganization,
consolidation or merger of Goodrich-Delaware with or into another corporation
(other than a merger or reorganization with respect to which Goodrich-Delaware
is the continuing corporation and which does not result in any reclassification
of the Common Stock), each share of Common Stock theretofore issuable upon
exercise of any Conversion Option, shall be properly adjusted as to the number
and kind of securities receivable upon the exercise of any Conversion Option,
such that Lender shall receive the number and kind of securities which a holder
of Common Stock would have been entitled to receive after the happening of any
of the events described in this subsection (a) had the conversion pursuant to
any Conversion Option been made immediately prior to the happening of such event
or the record date for such event, whichever is earlier. The provisions of this
subsection (a) shall similarly apply to successive reclassifications,
reorganizations, consolidations or mergers.
(b) Split, Subdivision or Combination of Shares. If
Goodrich-Delaware at any time prior to Lender's exercise of any Conversion
Option shall split, subdivide or combine the Common Stock of Goodrich-Delaware,
the Conversion Price shall be proportionately decreased in the case of a split
or subdivision or proportionately increased in the case of a combination. Any
adjustment under this subsection (b) shall become effective when the split,
subdivision or combination becomes effective.
(c) Stock Dividends. If Goodrich-Delaware at any time prior to
Lender's exercise of any Conversion Option shall pay a dividend with respect to
Common Stock of Goodrich-Delaware payable in shares of Common Stock, Options, or
Convertible Securities, the Conversion Price shall be adjusted, from and after
the date of determination of the shareholders entitled to receive such dividend
or distributions, to that price determined by multiplying the Conversion Price
in effect immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution (including Common
Stock issuable upon exercise, conversion or exchange of any Option or
Convertible Securities issued as such dividend or distribution). If the Options
or Convertible Securities issued as such dividend or distribution by their terms
provide, with the passage of time or otherwise, for any decrease in the
consideration payable to Goodrich-Delaware, or any increase by the number of
shares issuable upon exercise, conversion or exchange thereof (by change of rate
or otherwise), the Conversion Price shall, upon any such decrease or increase
becoming effective, be reduced to reflect such decrease or increased to reflect
such increase as if such decrease or increase became effective immediately prior
to the issuance of the Options or Convertible Securities as the dividend or
distribution. Any adjustment under this subsection (c) shall become effective on
the record date.
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(d) Other Securities. In the event Goodrich-Delaware at any time
prior to Lender's exercise of any Conversion Option makes, or fixes a record
date for the determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in securities of Goodrich-Delaware other
than shares of Common Stock, then, and in each such event, provision shall be
made so that the Lender shall receive, upon exercise of any Conversion Option,
in addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Borrower which the Lender would have received had
the Convertible Amounts been exchangeable for such Common Stock on the date of
such event and had the Lender thereafter, during the period from the date of
such event to and including the date of exercise, retained such securities
receivable by Lender as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 3.2 with respect to
the rights of the Lender.
3.2.3 Other Adjustments. The First Benchmark Stock Price, the Second
Benchmark Stock Price, and the Clawback Price shall all be subject to adjustment
in the same manner and to the same extent as those adjustments made to the
Conversion Price pursuant to Section 3.2.2 above.
3.2.4 Fractional Shares. Pursuant to the Conversion Options, no
fractions of shares of Common Stock shall be issued, but in lieu thereof
Borrower shall pay a cash adjustment to Lender in respect of such fractional
interest in an amount equal to such fractional interest multiplied by the then
applicable Conversion Price; provided, however, that no payment will be made in
respect of such cash adjustment if the amount payable is less than Twenty and
No/100 Dollars ($20.00).
3.2.5 Reserving Shares. Borrower shall at all times reserve and keep
available out of its authorized and unissued Common Stock, solely for the
purpose of effecting the Conversion Options of Lender, such number of shares of
Common Stock as shall from time to time be adjusted pursuant to this Section 3
hereof.
3.2.6 Registration of Shares. Goodrich-Delaware shall file with the
SEC within sixty (60) days following the Date of Note hereof a registration
statement on Form S-1 under the Securities Act of 1933, as amended, or such
other form that the Company is eligible to use or that the SEC deems appropriate
(the "Registration Statement") for the registration of the resale by the Lender
of the common stock of Goodrich-Delaware issuable upon conversion of this Note
("Registrable Securities"). The Company shall use its best efforts to have the
Registration Statement declared effective by the SEC by no later than ninety
(90) days after the Date of Note hereof and to ensure that the Registration
Statement, and the underlying prospectus, remains in effect for so long as any
Registrable Shares are outstanding.
(a) Notwithstanding the foregoing, Goodrich-Delaware may defer
the filing of the Registration Statement until a date not later than sixty (60)
days after the time set forth above if Goodrich-Delaware or its subsidiaries are
engaged in confidential negotiations or other confidential business activities,
disclosure of which would be required in such Registration Statement (but would
not be required if such Registration Statement were not filed).
(b) Notwithstanding the foregoing, if Goodrich-Delaware
determines in its good faith judgment that the filing of any supplement or
amendment to the Registration Statement in order to keep the Registration
Statement effective would require the disclosure of material information that
Goodrich-Delaware has a bona fide business purpose for preserving as
confidential, then upon written notice of such determination by
Goodrich-Delaware to the Lender, the obligation of Goodrich-Delaware to
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<PAGE>
supplement or amend the Registration Statement will be suspended until
Goodrich-Delaware notifies the Lender in writing that the reasons for suspension
of such obligations no longer exist and Goodrich-Delaware amends or supplements
the Registration Statement as may be required. The maximum number of consecutive
days during which Goodrich-Delaware may delay the filing of any such supplement
or amendment shall not exceed sixty (60) days.
3.2.7 Notice of Adjustments. Whenever the Conversion Price is adjusted
pursuant to Section 3 hereof, Borrower shall promptly issue a notice signed by
its chief financial officer or chief executive officer stating, in reasonable
detail, the new Conversion Price as a result of each adjustment, a brief
statement of the facts requiring such adjustments and the computation thereof,
and the date such adjustments became effective, and Borrower shall mail (by
first class mail, postage prepaid) to Lender at Lender's address a copy of such
notice.
4. PREPAYMENT.
-----------
Some or all of the outstanding principal and accrued interest under this
Note may be prepaid at any time without penalty, pursuant to the terms described
herein (the "Prepayment Option"). Borrower may only exercise the Prepayment
Option, if after giving Lender twenty (20) day's prior written notice Lender has
not elected to exercise its Conversion Option for such amount as Borrower wants
to prepay.
5. BORROWER'S OPTION.
------------------
If Borrower notifies Lender that it wishes to exercise its Prepayment
Option for amounts that are not due for at least one year, and Lender then
elects to use its Conversion Option for such amounts, then Goodrich-Delaware may
elect to repurchase one half of the Common Stock that Lender received as a
result of exercising such Conversion Option at a price of $6.00 per share, as
adjusted pursuant to Section 3.2 (the "Clawback Price"). This option shall not
be assignable by Goodrich-Delaware to any other party.
6. METHOD OF PAYMENT.
------------------
Borrower will pay Lender principal and interest that is not converted into
shares of Goodrich-Delaware's common stock pursuant to the Conversion Option,
and loan fees by check made payable to the Lender drawn on a United States bank
and for United States dollars, or by wire transfer to an account of Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to any remaining amount of any unpaid collection costs and late
charges, then to accrued unpaid interest and then to any unpaid principal.
7. FIXED INTEREST RATE.
--------------------
The interest rate on this Note is Eight Percent (8.0%) per annum, or, if
lower, the maximum rate of interest allowed by applicable law.
8. NOTICES.
--------
Any notice or other communication required or permitted under this Note
shall be in writing and shall be delivered personally, sent by facsimile
transmission, or sent by overnight courier. Any such notice shall be deemed
received when so delivered personally, or when so transmitted by facsimile, or
if sent by overnight courier on the day after delivered to the courier as
follows:
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TO BORROWER: Goodrich Petroleum Company, L.L.C
333Texas Street
Suite 1375
Shreveport, Louisiana 71101
Fax: (318)429-2296
TO LENDER:
------------------------------------
------------------------------------
------------------------------------
with a copy to: Attn: Donald M. Campbell
Hambrecht & Quist Guaranty Finance, LLC
One Bush Street
San Francisco, CA 94104
Fax: (415) 439-3804
Any party may, by notice given in accordance with this Section to the other
parties, designate another address or person for receipt of notices hereunder.
9. DEFAULT.
--------
Borrower will be in default if any Event of Default occurs under the
Goodrich Credit Agreement.
10. LENDER'S RIGHTS.
----------------
Upon the occurrence and during the continuance of an Event of Default,
Lender may declare the entire unpaid principal balance on this Note and all
accrued unpaid interest immediately due and payable, without notice, and then
Borrower will pay that amount. Upon Borrower's failure to pay all amounts
declared due pursuant to this section, including failure to pay upon final
maturity, Lender at its option, may also, if permitted under applicable law, do
one or both of the following: (a) increase the interest rate on this Note up to
eighteen percent (18%) per annum, or, if lower, up to the maximum interest
amount allowable by applicable law, and (b) add any unpaid accrued interest to
principal and such sum will bear interest therefrom until paid at the rate
provided in this Note. Borrower agrees to pay all reasonable out of pocket
expenses of Lender in connection with the collection and enforcement of this
Note. This includes, subject to any limits under applicable law, Lender's
attorneys' fees and legal expenses whether or not there is a lawsuit, including
attorneys' fees and legal expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collections services. Borrower also will pay any court
costs, in addition to all other sums provided by law. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction of any
federal or state court located in Shreveport, Louisiana. This Note shall be
governed by and construed in accordance with the laws of the State of Louisiana.
11. LOAN AGREEMENT.
---------------
This Note is subject to and shall be governed by all the terms and
conditions of the Goodrich Credit Agreement, dated September , 1999, between
----
the Borrower and Hambrecht & Quist Guaranty Finance, LLC, as Agent for Lender,
as amended from time to time (the "Goodrich Credit Agreement"). Capitalized
terms not otherwise defined herein shall have the meanings set forth in Goodrich
Credit Agreement.
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12. OUT-OF-POCKET EXPENSES.
-----------------------
Borrower shall pay to Lender the reasonable out-of-pocket expenses of
Lender according to the provisions of Section 5.12 of the Goodrich Credit
Agreement.
13. SERVICE CHARGE.
---------------
Since it would be impractical or extremely difficult to fix Lender's actual
damages for collecting and accounting for a late payment, if any payment to
Lender required herein is not paid on or before its due date, Borrower shall pay
to Lender an amount equal to five percent (5%) of any such late payment (but not
less than ten dollars ($10) nor more than two-hundred and fifty dollars ($250)).
14. GENERAL PROVISIONS.
-------------------
Lender may delay or forgo enforcing any of its rights or remedies under
this Note without losing them. Borrower and any other person who signs,
guarantees or endorses this Note may, to the extent allowed by law, waive any
applicable statute of limitations, presentment, demand for payment, protest and
notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew, extend (repeatedly and
for any length of time) or modify this Note, or release any party or guarantor;
or impair, fail to realize upon or perfect Lender's security interest in any
collateral securing this Note and take any other action deemed necessary by
Lender without the consent of or notice to anyone.
15. COLLATERAL.
-----------
This Note is secured by certain collateral of the Borrower and others as
more thoroughly described in the Security Documents (as defined in the Goodrich
Credit Agreement).
PRIOR TO SIGNING THIS NOTE BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF
A COMPLETED COPY OF THE NOTE.
BORROWER:
GOODRICH PETROLEUM COMPANY, L.L.C.
By:
------------------------------------
Walter G. Goodrich, President
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<PAGE>
CREDIT AGREEMENT
----------------
THIS CREDIT AGREEMENT is made and entered into this day of September,
-----
1999, by and between GOODRICH PETROLEUM COMPANY-LAFITTE, L.L.C., a Louisiana
limited liability company (the "Borrower"), and HAMBRECHT & QUIST GUARANTY
FINANCE, LLC, as agent for the Noteholders (hereinafter defined) (the
"Noteholder Agent"), and is joined in, for the limited purpose of making the
representations, warranties, and covenants set forth in Articles IV, V and VI
only, by GOODRICH PETROLEUM COMPANY, L.L.C., a Louisiana limited liability
company ("Goodrich-Louisiana").
WITNESSETH:
In consideration of the mutual covenants and agreements herein contained,
the Borrower and the Noteholder Agent hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this Credit Agreement, the terms
"Borrower," "Goodrich-Louisiana," and "Noteholder Agent," shall have the meaning
assigned to them hereinabove.
1.2 Additional Defined Terms. As used in this Credit Agreement, each of the
following terms shall have the meaning assigned thereto in this Section, unless
the context otherwise requires:
"Affiliate" shall mean any Person directly or indirectly controlling,
or under common control with, the Borrower and includes any Subsidiary of
the Borrower and any "affiliate" of the Borrower within the meaning of Reg.
ss.240.12b-2 of the Securities Exchange Act of 1934, as amended, with
"control," as used in this definition, meaning possession, directly or
indirectly, of the power to direct or cause the direction of management,
policies or action through ownership of voting securities, contract, voting
trust, or membership in management or in the group appointing or electing
management or otherwise through formal or informal arrangements or business
relationships.
"Agreement" shall mean this Credit Agreement, as it may be amended,
supplemented, or restated from time to time.
"Borrower Membership Interests" shall mean all of the membership
interests and other equity interests in and to the Borrower.
"Business Day" shall mean a day other than a day when commercial banks
are authorized or required to close in the State of Texas.
"Closing Date" shall mean September , 1999.
------
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time.
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"Collateral" shall mean (a) the Goodrich-Louisiana Collateral, (b) the
Lafitte Collateral and (c) any other Property now or at any time used or
intended as security for the payment or performance of all or any portion
of the Obligations.
"Collateral Agency Agreement" shall mean that certain Collateral
Agency Agreement dated concurrently herewith executed by and among the
Noteholder Agent, Compass Bank, and Compass Bank, as Collateral Agent, as
it may be amended, supplemented, or restated from time to time.
"Commonly Controlled Entity" shall mean any Person which is under
common control with the Borrower or Goodrich-Louisiana within the meaning
of Section 4001 of ERISA.
"Compass Bank Debt" the "Obligations" of Goodrich-Louisiana to Compass
Bank, an Alabama state banking association, under that certain Credit
Agreement between Goodrich-Louisiana and Compass Bank.
"Compliance Certificate" shall mean each certificate, substantially in
the form attached hereto as Exhibit 3, executed by a Responsible Officer of
the Borrower and furnished to the Noteholder Agent from time to time in
accordance with the terms hereof.
"Consolidated Net Income" shall mean, for any period, the net income
of Goodrich and its Subsidiaries, on a consolidated basis, for such period,
determined in accordance with GAAP minus net income attributable to Lafitte
(except to the extent of cash distributions by Lafitte to the Borrower).
"Consolidated Tangible Net Worth" shall mean (a) total assets, as
would, in accordance with GAAP, be reflected on a consolidated balance
sheet of Goodrich and its Subsidiaries, exclusive of Intellectual Property,
experimental or organization expenses, franchises, licenses, permits and
other intangible assets, treasury stock, unamortized underwriter's debt
discount and expenses, and goodwill minus (b) total liabilities, as would,
in accordance with GAAP, be reflected on a consolidated balance sheet of
Goodrich and its Subsidiaries plus (c) the unpaid principal balance owed
under the Subordinated Notes.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends, or other obligations of any other Person (for purposes
of this definition, a "primary obligation ") in any manner, whether
directly or indirectly, including, without limitation, any obligation of
such Person, regardless of whether such obligation is contingent, (a) to
purchase any primary obligation or any Property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any primary obligation, or (ii) to maintain working
or equity capital of any other Person in respect of any primary obligation,
or otherwise to maintain the net worth or solvency of any other Person, (c)
to purchase Property, securities or services primarily for the purpose of
assuring the owner of any primary obligation of the ability of the Person
primarily liable for such primary obligation to make payment thereof, or
(d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof, with the amount of any
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Contingent Obligation being deemed to be equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
minimum reasonably anticipated liability in respect thereof as determined
by such Person in good faith.
"Debt Service" shall mean, for any period and with respect to
Indebtedness of Goodrich on a consolidated basis, the sum of all principal
payments made during such period on borrowed money Indebtedness plus all
interest expense paid in respect of borrowed money Indebtedness during such
period.
"Default" shall mean any event or occurrence which with the lapse of
time or the giving of notice or both would become an Event of Default.
"Default Rate" shall mean a per annum interest rate equal to eighteen
percent (18%), but in no event exceeding the Highest Lawful Rate.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"EBITDA" shall mean, for any period, (a) Consolidated Net Income for
such period plus (b) depreciation, amortization, depletion and other
non-cash expenses for such period deducted in the determination of
Consolidated Net Income minus (c) non-cash income for such period included
in the determination of Consolidated Net Income.
"Environmental Complaint" shall mean any written or oral complaint,
order, directive, claim, citation, notice of environmental report or
investigation, or other notice by any Governmental Authority or any other
Person with respect to (a) air emissions, (b) spills, releases, or
discharges to soils, any improvements located thereon, surface water,
groundwater, or the sewer, septic, waste treatment, storage, or disposal
systems servicing any Property of any Related Party, (c) solid or liquid
waste disposal, (d) the use, generation, storage, transportation, or
disposal of any Hazardous Substance, or (e) other environmental, health, or
safety matters affecting any Property of any Related Party or the business
conducted thereon.
"Environmental Laws" shall mean (a) the following federal laws as they
may be cited, referenced, and amended from time to time: the Clean Air Act,
the Clean Water Act, the Comprehensive Environmental Response, Compensation
and Liability Act, the Endangered Species Act, the Hazardous Materials
Transportation Act of 1986, the Occupational Safety and Health Act, the Oil
Pollution Act of 1990, the Resource Conservation and Recovery Act of 1976,
the Safe Drinking Water Act, the Superfund Amendments and Reauthorization
Act, and the Toxic Substances Control Act; (b) any and all equivalent
environmental statutes of any state, as they may be cited, referenced and
amended from time to time; (e) any rules or regulations promulgated under
or adopted pursuant to the above federal and state laws; and (d) any other
equivalent federal, state, or local statute or any requirement, rule,
regulation, code, ordinance, or order adopted pursuant thereto, including,
without limitation, those relating to the generation, transportation,
treatment, storage, recycling, disposal, handling, or release of Hazardous
Substances.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder and
interpretations thereof.
"Event of Default" shall mean any of the events specified in Section
7.1.
"Financial Statements" shall mean statements of the financial
condition as at the point in time and for the period indicated and
consisting of at least a balance sheet and related statements of
operations, common stock and other stockholders' equity, and cash flows
and, when required by applicable provisions of this Agreement to be
audited, accompanied by the unqualified certification of a
nationally-recognized firm of independent certified public accountants or
other independent certified public accountants acceptable to the Noteholder
Agent and footnotes to any of the foregoing, all of which shall be prepared
in accordance with GAAP consistently applied and in comparative form with
respect to the corresponding period of the preceding fiscal period.
"GAAP" shall mean generally accepted accounting principles established
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants and in effect in the United States from time
to time.
"Governmental Authority" shall mean any nation, country, commonwealth,
territory, government, state, county, parish, municipality, or other
political subdivision and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"Goodrich-Delaware" shall mean Goodrich Petroleum Corporation, a
Delaware Corporation.
"Goodrich-Louisiana Collateral" shall mean the collateral securing the
obligations of Goodrich-Louisiana to the Noteholders under and pursuant to
the Goodrich-Louisiana Credit Agreement.
"Goodrich-Louisiana Credit Agreement" shall mean the Credit Agreement
of even date herewith executed by Goodrich-Louisiana as the borrower, and
the Noteholder Agent as the agent for the Noteholders.
"Guaranty" shall mean the guaranty of the Guarantor guaranteeing the
payment and performance of the Obligations as provided herein, as the same
may be ratified, amended, restated, or supplemented from time to time.
"Guarantor" shall mean Goodrich-Louisiana.
"Hazardous Substances" shall mean flammables, explosives, radioactive
materials, hazardous wastes, asbestos, or any material containing asbestos,
polychlorinated biphenyls (PCBs), toxic substances or related materials,
petroleum, petroleum products, associated oil or natural gas exploration,
production, and development wastes, or any substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes," or "toxic
substances" under the Comprehensive Environmental Response, Compensation
4
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and Liability Act, as amended, the Superfund Amendments and Reauthorization
Act, as amended, the Hazardous Materials Transportation Act, as amended,
the Resource Conservation and Recovery Act, as amended, the Toxic
Substances Control Act, as amended, or any other Requirement of Law.
"Hedging Agreement" shall mean (a) any interest rate or currency swap,
rate cap, rate floor, rate collar, forward agreement, or other exchange or
rate protection agreement or any option with respect to any such
transaction and (b) any swap agreement, cap, floor, collar, exchange
transaction, forward agreement, or other exchange or protection agreement
relating to hydrocarbons or any option with respect to any such
transaction.
"Highest Lawful Rate" shall mean the maximum non-usurious interest
rate, if any (or, if the context so requires, an amount calculated at such
rate), that at any time or from time to time may be contracted for, taken,
reserved, charged, or received under applicable laws of the State of
Louisiana or the United States of America, whichever authorizes the greater
rate, as such laws are presently in effect or, to the extent allowed by
applicable law, as such laws may hereafter be in effect and which allow a
higher maximum non-usurious interest rate than such laws now allow.
"Indebtedness" shall mean, as to any Person, without duplication, (a)
all liabilities (excluding reserves for deferred income taxes, deferred
compensation liabilities, and other deferred liabilities and credits) which
in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet, (b) all obligations of
such Person evidenced by bonds, debentures, promissory notes, or similar
evidences of indebtedness, (c) all other indebtedness of such Person for
borrowed money and capitalized leases, and (d) all obligations of others,
to the extent any such obligation is secured by a Lien on the assets of
such Person (whether or not such Person has assumed or become liable for
the obligation secured by such Lien).
"Insolvency Proceeding" shall mean application (whether voluntary or
instituted by another Person) for or the consent to the appointment of a
receiver, trustee, conservator, custodian, or liquidator of any Person, or
of all or a substantial part of the Property of such Person, or the filing
of a petition (whether voluntary or instituted by another Person)
commencing a case under Title 11 of the United States Code, seeking
liquidation, reorganization, or rearrangement or taking advantage of any
bankruptcy, insolvency, debtor's relief, or other similar law of the United
States, the State of Louisiana, or any other jurisdiction.
"Insolvent" or "Insolvency" shall mean, with respect to any
Multiemployer Plan, that such Plan is insolvent within the meaning of such
term as used in Section 4245 of ERISA.
"Intellectual Property" shall mean patents, patent applications,
trademarks, tradenames, copyrights, technology, know-how, and processes.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other that the owner of such Property, whether
such interest is based on common law, statute, or contract and including,
but not limited to, the lien or security interest arising from a mortgage,
ship mortgage, encumbrance, pledge, security agreement, conditional sale or
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trust receipt, or a lease, consignment, or bailment for security purposes
(other than true leases or true consignments), liens of mechanics,
materialmen, and artisans, maritime liens and reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting
Property which secure an obligation owed to, or a claim by, a Person other
than the owner of such Property (for the purpose of this Agreement, any
Person shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement, financing lease,
or other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security purposes), and the
filing or recording of any financing statement or other security instrument
in any public office.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Instruments, and all other documents and instruments now or hereafter
delivered pursuant to the terms of or in connection with this Agreement,
the Notes, or the Security Instruments, and all renewals and extensions of,
amendments and supplements to, and restatements of, any or all of the
foregoing from time to time in effect.
"Material Adverse Effect" shall mean (a) any material adverse effect
on the business, operations, properties, condition (financial or
otherwise), or prospects of the Borrower or Goodrich-Louisiana, (b) any
adverse effect upon the business operations, properties, condition
(financial or otherwise), or prospects of the Borrower or
Goodrich-Louisiana which increases the risk that any of the Obligations
will not be repaid as and when due, or (c) any adverse effect upon the
Collateral.
"Mortgaged Properties" shall mean all Oil and Gas Properties of the
Borrower subject to a perfected first-priority Lien in favor of the
Noteholder Agent, subject only to Permitted Liens, as security for the
Obligations.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Noteholder Agent" shall mean, initially and any time the
circumstances described in the following sentence do not apply, Hambrecht &
Quist Guaranty Finance, LLC. In the event (a) Compass Bank is no longer
acting as the Collateral Agent under the Collateral Agency Agreement, and
(b) some other person or entity is acting as the Collateral Agent under the
Collateral Agency Agreement, such other person or entity shall also act as
the Noteholder Agent hereunder, if willing to do so.
"Noteholders" shall mean the holders and owners of the Notes, and
their successors and assigns.
"Notes" shall mean those certain promissory notes in the aggregate
principal amount of $6,000,000 dated concurrently herewith executed by the
Borrower payable to the order of the Noteholders and issued to the
Noteholders (as the same may from time to time be renewed, extended,
modified or rearranged).
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"Obligations" shall mean, without duplication, (a) all Indebtedness
evidenced by the Notes, (b) the obligation of the Borrower for the payment
of fees and expenses pursuant to the Loan Documents, and (c) all other
obligations and liabilities of the Borrower to the Noteholders, now
existing or hereafter incurred, under, arising out of or in connection with
any Loan Document, and to the extent that any of the foregoing includes or
refers to the payment of amounts deemed or constituting interest, only so
much thereof as shall have accrued, been earned and which remains unpaid at
each relevant time of determination.
"Oil and Gas Properties" shall mean fee, leasehold, or other interests
in or under mineral estates or oil, gas, and other liquid or gaseous
hydrocarbon leases with respect to Properties situated in the United States
or offshore from any State of the United States, including, without
limitation, overriding royalty and royalty interests, leasehold estate
interests, net profits interests, production payment interests, and mineral
fee interests, together with contracts executed in connection therewith and
all tenements, hereditaments, appurtenances, and Properties appertaining,
belonging, affixed, or incidental thereto.
"Pari Passu Notes" shall mean those certain promissory notes in the
aggregate principal amount of $5,000,000.00, dated concurrently herewith
executed by Goodrich-Louisiana payable to the order of Noteholders and
issued by Goodrich-Louisiana to the Noteholders pursuant to the
Goodrich-Louisiana Credit Agreement (as the same may from time to time be
renewed, extended, modified or rearranged).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any entity succeeding to any
or all of its functions under ERISA.
"Permitted Liens" shall mean (a) Liens for taxes, assessments, or
other governmental charges or levies not yet due or which (if foreclosure,
distraint, sale, or other similar proceedings shall not have been
initiated) are being contested in good faith by appropriate proceedings,
and such reserve as may be required by GAAP shall have been made therefor,
(b) Liens in connection with workers' compensation, unemployment insurance
or other social security (other than Liens created by Section 4068 of
ERISA), old-age pension, or public liability obligations which are not yet
due or which are being contested in good faith by appropriate proceedings,
if such reserve as may be required by GAAP shall have been made therefor,
(e) Liens in favor of vendors, carriers, warehousemen, repairmen,
mechanics, workmen, materialmen, construction, or similar Liens arising by
operation of law in the ordinary course of business in respect of
obligations which are not yet due or which are being contested in good
faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, (d) Liens in favor of operators and
non-operators under joint operating agreements or similar contractual
arrangements arising in the ordinary course of the business to secure
amounts owing, which amounts are not yet due or are being contested in good
faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, (e) Liens under production sales
agreements, division orders, operating agreements, and other agreements
customary in the oil and gas business for processing, producing, and
selling hydrocarbons securing obligations not constituting Indebtedness and
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provided that such Liens do not secure obligations to deliver hydrocarbons
at some future date without receiving full payment therefor within 90 days
of delivery, (f) easements, rights of way, restrictions, and other similar
encumbrances, and minor defects in the chain of title which are customarily
accepted in the oil and gas financing industry, none of which interfere
with the ordinary conduct of the business of the owner of the relevant
Property or materially detract from the value or use of the Property to
which they apply, and other Liens expressly permitted under the Security
Instruments, and (g) Liens on Oil and Gas Properties securing non-recourse
debt used to acquire such Oil and Gas Properties.
"Person" shall mean an individual, corporation, partnership, trust,
unincorporated organization, government, any agency or political
subdivision of any government, or any other form of entity.
"Plan" shall mean, at any time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or Goodrich-Delaware,
or any Commonly Controlled Entity is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an "employer"
as defined in Section 3(5) of ERISA.
"Prohibited Transaction" shall have the meaning assigned to such term
in Section 4975 of the Code.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"Release of Hazardous Substances" shall mean any emission, spill,
release, disposal, or discharge, except in accordance with a valid permit,
license, certificate, or approval of the relevant Governmental Authority,
of any Hazardous Substance into or upon (a) the air, (b) soils or any
improvements located thereon, (c) surface water or groundwater, or (d) the
sewer or septic system, or the waste treatment, storage, or disposal system
servicing any Property of the Borrower or Goodrich-Louisiana.
"Reorganization" shall mean, with respect to any Multiemployer Plan,
that such Plan is in reorganization within the meaning of such term in
Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. ss.2615.
"Requirement of Law" shall mean, as to any Person, any applicable law,
treaty, ordinance, order, judgment, rule, decree, regulation, or
determination of an arbitrator, court, or other Government Authority,
including, without limitation, rules, regulations, orders, and requirements
for permits, licenses, registrations, approvals, or authorizations, in each
case as such now exist or may be hereafter amended and are applicable to or
binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.
"Responsible Officer" shall mean, as to any Person, its President or
chief financial officer.
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"Security Instruments" shall mean the security instruments executed
and delivered in satisfaction of the conditions set forth in Section 3.1,
and all other documents and instruments at any time executed as security
for all or any portion of the Obligations, as such instruments may be
amended, restated, or supplemented from time to time.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
"Subordinated Notes" shall mean those certain promissory notes in the
aggregate principal amount of $1,000,000.00, dated concurrently herewith
executed by Goodrich-Louisiana payable to the order of Noteholders and
issued by Goodrich-Louisiana to the Noteholders pursuant to the
Goodrich-Louisiana Credit Agreement (as the same may from time to time be
renewed, extended, modified or rearranged).
"Subsidiary" shall mean, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation are at the
time owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
"Superfund Site" shall mean those sites listed on the Environmental
Protection Agency National Priority List and eligible for remedial action
or any comparable state registries or list in any state of the United
States.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of Louisiana.
1.3 Undefined Financial Accounting Terms. Undefined financial accounting
terms used in this Agreement shall be defined according to GAAP at the time in
effect.
1.4 References. References in this Agreement to Exhibit, Article, or
Section numbers shall be to Exhibits, Articles, or Sections of this Agreement,
unless expressly stated to the contrary. References in this Agreement to
"hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof,"
"hereunder" and words of similar import shall be to this Agreement in its
entirety and not only to the particular Exhibit, Article, or Section in which
such reference appears.
1.5 Articles and Sections. This Agreement, for convenience only, has been
divided into Articles and Sections; and it is understood that the rights and
other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
1.6 Number and Gender. Whenever the context requires, reference herein made
to the single number shall be understood to include the plural; and likewise,
the plural shall be understood to include the singular. Definitions of terms
defined in the singular or plural shall be equally applicable to the plural or
singular, as the case may be, unless otherwise indicated. Words denoting sex
shall be construed to include the masculine, feminine and neuter, when such
construction is appropriate; and specific enumeration shall not exclude the
general but shall be construed as cumulative. 1.7 Incorporation of Exhibits. The
Exhibits attached to this Agreement are incorporated herein and shall be
considered a part of this Agreement for all purposes.
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ARTICLE II
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TERMS OF FACILITY
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2.1 Purchase and Sale of Notes. Upon the terms and conditions and relying
on the representations and warranties contained in this Agreement, the
Noteholders agree to purchase from the Borrower and the Borrower agrees to issue
and sell to the Noteholders an aggregate principal amount of $6,000,000.00 of
the Notes, in the amounts for each Noteholder as set forth on the Schedule of
Noteholders, attached hereto as Exhibit 1.
2.2 Use of Proceeds from the Sale of the Notes. The net proceeds from the
sale of the Notes shall be used solely for the acquisition, development and
exploration by the Borrower of Oil and Gas Properties, for working capital and
for general corporate purposes of the Borrower.
2.3 Interest. Beginning as of the date of the Notes and continuing until
the outstanding principal balance is paid in full, interest will accrue on the
Notes at an annual rate of Eight Percent (8.0%). Interest will be computed on a
365/360 day basis compounding monthly; that is in each month 1/360 of the Eight
Percent (8.0%) annual interest rate, will be multiplied by (a) the sum of (i)
the outstanding principal balance and (ii) accumulated interest outstanding as
of the end of the prior month and (b) the actual number of days that the
principal was outstanding in such month.
2.4 Repayment of Principal and Interest.
2.4.1 Interest Accrual Period. Beginning as of the date of the Notes
and continuing through October 1, 2002 (the "Interest Accrual Period"), interest
shall accrue at an annual rate of Eight Percent (8.0%), compounding on the last
date of each calendar month as described above. If on October 1, 2002, the
common stock of Goodrich-Delaware has a closing price of at least $4.00 per
share, as adjusted pursuant to Section 2.6.2 hereof (the "First Benchmark Stock
Price"), then, at Borrower's option the Interest Accrual Period shall be
extended to October 1, 2003 (the "First Extension Option"). If Borrower
exercised the First Extension Option, and if on October 1, 2003, the common
stock of Goodrich-Delaware has a closing price of at least $5.00 per share, as
adjusted pursuant to Section 2.6.2 hereof (the "Second Benchmark Stock Price"),
then, at Borrower's option, the Interest Accrual Period shall be extended to
October 1, 2004 (the "Second Extension Option").
2.4.2 Principal Repayment Period. Beginning as of the end of the
Interest Accrual Period (initially October 1, 2002, but as may be adjusted
pursuant to paragraph (a) above), the sum of all principal and accrued interest
through the last day of the Interest Accrual Period shall be repaid in
twenty-four equal monthly installments beginning on the last day of the Interest
Accrual Period and continuing on the first day of the subsequent twenty-three
months. The period of time beginning on the last day of the Interest Accrual
Period and ending on the first day of the month that is twenty- three months
after the last day of the Interest Accrual Period shall be referred to as the
"Principal Repayment Period". For example, if the last day of the Interest
Accrual Period is October 1, 2002, the Principal Repayment Period shall be from
October 1, 2002 through September 1, 2004.
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2.4.3 Payment of Interest. During the Principal Repayment Period, all
interest that accrues beginning on the last day of the Interest Accrual Period
(initially October 1, 2002, but as may be adjusted by the First Extension
Option, or the Second Extension Option), shall be paid monthly on the first day
of each of the following months during the Principal Repayment Period.
2.5 Conversion of Principal and Accrued Interest. Beginning as of the date
of the Notes and continuing until all accrued interest and the outstanding
principal balance is paid in full, the Noteholders may, at their option pursuant
to the terms hereof, by delivering to the Borrower a Conversion Notice, as
defined in Section 2.5.2, elect to require the Borrower to convert all or part
of the accrued interest and outstanding principal that is owing into shares of
Goodrich-Delaware's common stock as follows:
2.5.1 Conversion. Some or all of the accrued interest and principal
amount outstanding shall be convertible into a number of shares of
Goodrich-Delaware's common stock, which number of shares shall be equal to the
quotient of (a) the total accrued interest and outstanding principal subject to
conversion divided by (b) the Conversion Price, as defined in Section 2.6 (the
"Conversion Option").
2.5.2 Conversion Notice. "Conversion Notice" shall mean the written
notice that a Noteholder may, at its option, give to the Borrower, notifying the
Borrower of the Noteholder's decision to exercise a Conversion Option to convert
some or all of the accrued interest and outstanding principal into shares of
Goodrich-Delaware's common stock. The Borrower will deliver to the Noteholder
the required shares of Goodrich-Delaware's common stock within five (5) business
days of receiving the Conversion Notice.
2.5.3 Minimum Conversion Amount. Each Conversion Notice given by a
Noteholder to Borrower shall be for no less that 10% of the total amount of
outstanding principal and accrued interest owing under the Note from Borrower to
the Noteholder at the time that the Conversion Notice is given.
2.6 Conversion Price.
2.6.1 Conversion Price. The "Conversion Price" as used herein shall
mean $4.00, as adjusted pursuant to Section 2.6.2 hereof.
2.6.2 Adjustment to Conversion Price.
2.6.2.1 Definitions. As used in this Section 2.6.2 the following
terms shall have the following respective meanings:
(a) "Common Stock" shall mean shares of the presently
authorized common stock of Goodrich-Delaware and any stock into which such
common stock may hereafter be exchanged.
(b) "Options" shall mean the rights, options or warrants to
subscribe for, purchase or otherwise acquire shares of Common Stock or
Convertible Securities.
(c) "Convertible Amounts" shall mean the aggregate dollar
amounts that are subject to conversion at any given time pursuant to the
Conversion Option.
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(d) "Convertible Securities" shall mean any evidence of
indebtedness, shares of stock or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
2.6.2.2 Adjustments to Conversion Price. The Conversion Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:
(a) Reclassification, Reorganization, Consolidation or
Merger. In the case of any reclassification of the Common Stock, or any
reorganization, consolidation or merger of Goodrich-Delaware with or into
another corporation (other than a merger or reorganization with respect to
which Goodrich-Delaware is the continuing corporation and which does not
result in any reclassification of the Common Stock), each share of Common
Stock theretofore issuable upon exercise of any Conversion Option, shall be
properly adjusted as to the number and kind of securities receivable upon
the exercise of any Conversion Option, such that the Noteholder shall
receive the number and kind of securities which a holder of Common Stock
would have been entitled to receive after the happening of any of the
events described in this subsection (a) had the conversion pursuant to any
Conversion Option been made immediately prior to the happening of such
event or the record date for such event, whichever is earlier. The
provisions of this subsection (a) shall similarly apply to successive
reclassifications, reorganizations, consolidations or mergers.
(b) Split, Subdivision or Combination of Shares. If
Goodrich-Delaware at any time prior to the Noteholder's exercise of any
Conversion Option shall split, subdivide or combine the Common Stock of
Goodrich-Delaware, the Conversion Price shall be proportionately decreased
in the case of a split or subdivision or proportionately increased in the
case of a combination. Any adjustment under this subsection (b) shall
become effective when the split, subdivision or combination becomes
effective.
(c) Stock Dividends. If Goodrich-Delaware at any time prior
to the Noteholder's exercise of any Conversion Option shall pay a dividend
with respect to Common Stock of Goodrich-Delaware payable in shares of
Common Stock, Options, or Convertible Securities, the Conversion Price
shall be adjusted, from and after the date of determination of the
shareholders entitled to receive such dividend or distributions, to that
price determined by multiplying the Conversion Price in effect immediately
prior to such date of determination by a fraction (i) the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution (including
Common Stock issuable upon exercise, conversion or exchange of any Option
or Convertible Securities issued as such dividend or distribution). If the
Options or Convertible Securities issued as such dividend or distribution
by their terms provide, with the passage of time or otherwise, for any
decrease in the consideration payable to Goodrich-Delaware, or any increase
by the number of shares issuable upon exercise, conversion or exchange
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thereof (by change of rate or otherwise), the Conversion Price shall, upon
any such decrease or increase becoming effective, be reduced to reflect
such decrease or increased to reflect such increase as if such decrease or
increase became effective immediately prior to the issuance of the Options
or Convertible Securities as the dividend or distribution. Any adjustment
under this subsection (c) shall become effective on the record date.
(d) Other Securities. In the event Goodrich-Delaware at any
time prior to the Noteholder's exercise of any Conversion Option makes, or
fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities
of Goodrich-Delaware other than shares of Common Stock, then, and in each
such event, provision shall be made so that the Noteholder shall receive,
upon exercise of any Conversion Option, in addition to the number of shares
of Common Stock receivable thereupon, the amount of securities of
Goodrich-Delaware which the Noteholder would have received had the
Convertible Amounts been exchangeable for such Common Stock on the date of
such event and had the Noteholder thereafter, during the period from the
date of such event to and including the date of exercise, retained such
securities receivable by the Noteholder as aforesaid during such period,
subject to all other adjustments called for during such period under this
Section 2.6.2.2 with respect to the rights of the Noteholder.
2.6.2.3 Other Adjustments. The First Benchmark Stock Price, the
Second Benchmark Stock Price, the Lafitte Conversion Benchmark and the Clawback
Price shall all be subject to adjustment in the same manner and to the same
extent as those adjustments made to the Conversion Price pursuant to Section
2.6.2.2 above.
2.6.3 Fractional Shares. Pursuant to the Conversion Options, no
fractions of shares of Common Stock shall be issued, but in lieu thereof
Borrower shall pay a cash adjustment to the Noteholder in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the then applicable Conversion Price; provided, however, that no payment will be
made in respect of such cash adjustments if the amount payable is less than
Twenty and No/100 Dollars ($20.00).
2.6.4 Reserving Shares. Goodrich-Delaware shall at all times reserve
and keep available out of its authorized and unissued Common Stock, solely for
the purpose of effecting the Conversion Options of the Noteholders, such number
of shares of Common Stock as shall from time to time be adjusted pursuant to the
Section 2.6.2 hereof.
2.6.5 Registration of Shares. Goodrich-Delaware shall file with the
SEC, within sixty (60) days following the date of Notes, a registration
statement on Form S-1 under the Securities Act of 1933, as amended, or such
other form that Goodrich-Delaware is eligible to use or that the SEC deems
appropriate (the "Registration Statement") for the registration of the resale by
the Noteholders of the common stock of Goodrich-Delaware issuable upon
conversion of the Notes ("Registrable Securities"). The Company shall use its
best efforts to have the Registration Statement declared effective by the SEC by
no later than ninety (90) days after the Date of Note hereof and to ensure that
the Registration Statement, and the underlying prospectus, remains in effect for
so long as any Registrable Securities are outstanding.
(a) Notwithstanding the foregoing, Goodrich-Delaware may defer
the filing of the Registration Statement until a date not later than sixty (60)
days after the time set forth above if Goodrich-Delaware or its subsidiaries are
engaged in confidential negotiations or other confidential business activities,
disclosure of which would be required in such Registration Statement (but would
not be required if such Registration Statement were not filed).
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(b) Notwithstanding the foregoing, if Goodrich-Delaware
determines in its good faith judgment that the filing of any supplement or
amendment to the Registration Statement in order to keep the Registration
Statement effective would require the disclosure of material information that
Goodrich-Delaware has a bona fide business purpose for preserving as
confidential, then upon written notice of such determination by
Goodrich-Delaware to the Noteholders, the obligation of Goodrich-Delaware to
supplement or amend the Registration Statement will be suspended until
Goodrich-Delaware notifies the Noteholders in writing that the reasons for
suspension of such obligations no longer exist and Goodrich-Delaware amends or
supplements the Registration Statement as may be required. The maximum number of
consecutive days during which Goodrich-Delaware may delay the filing of any such
supplement or amendment shall not exceed sixty (60) days.
2.6.6 Notice of Adjustments. Whenever the Conversion Price is adjusted
pursuant to Section 2.6.2 hereof, the Borrower shall promptly issue a notice
signed by its chief financial officer or chief executive officer stating, in
reasonable detail, the new Conversion Price as a result of each adjustment, a
brief statement of the facts requiring such adjustments and the computation
thereof, and the date such adjustments became effective, and the Borrower shall
mail (by first class mail, postage prepaid) to Noteholder at the Noteholder's
address a copy of such notice.
2.7 Alternative Conversion Option. Beginning as of October 1, 2002 and
continuing until all accrued interest and outstanding principal balance is paid
in full, each Noteholder may, at its option pursuant to the terms hereof, by
delivering to Borrower a Alternative Conversion Notice, as defined in Section
2.7.2, elect to require Borrower to convert all or part of the accrued interest
and outstanding principal that is owing into the Borrower's membership units as
follows:
2.7.1 Alternative Conversion. If after October 1, 2002, neither (a)
the common stock of Goodrich-Delaware has a closing price of at least $3.00 per
share nor (b) the net asset value per share of the common stock of
Goodrich-Delaware is at least $3.00 (calculated by valuing the oil and gas
reserves of Goodrich-Delaware on a consolidated basis at their SEC PV10% value,
and all other assets and liabilities in accordance with GAAP), both as adjusted
pursuant to Section 2.6.2 hereof (the "Lafitte Conversion Benchmark"); then the
accrued interest and principal amount outstanding, or any portion of it, shall
be convertible into the Borrower's membership units pursuant to the provisions
of this Section 2.7 (the "Alternative Conversion Option").
2.7.2 Alternative Conversion Notice. "Alternative Conversion Notice"
shall mean the written notice that a Noteholder may, at its option, give to
Borrower, notifying Borrower of the Noteholder's decision to exercise an
Alternative Conversion Option to convert all of the accrued interest and
outstanding principal into membership units of the Borrower. Borrower will
deliver the required membership units to the Noteholder's electing to
participate in the conversion, in accordance with Section 2.7.5, within five
business days of the end of the notice period provided in Section 2.7.5.
2.7.3 Defined Terms. As used in Section 2.7.4 the following terms
shall have the following respective meanings:
(a) "Aggregate Borrower's Convertible Debt Instruments" shall
mean all those Convertible Promissory Notes described on Exhibit.
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(b) "Total Borrower's Convertible Debt Amount" shall mean all
principal and accrued interest owing on the Aggregate Borrower's Convertible
Debt Instruments at any given time.
(c) "Value of Lafitte" shall mean 130% of the SEC PV-10 value of
Borrower's reserves, plus all other assets and less all liabilities of Borrower,
as determined by GAAP.
2.7.4 Conversion Rate. The accrued interest and principal amount
outstanding, or any portion of it, shall be convertible into a number of the
Borrower's membership units, which number of units shares shall be equal to the
quotient of (a) the total accrued interest and outstanding principal subject to
conversion divided by (b) the Total Borrower's Convertible Debt Amount, times
(c) the Adjustment Factor, as defined herein. The Adjustment Factor shall mean
100% less one half of the percentage by which the Value of Lafitte exceeds Total
Borrower's Convertible Debt Amount; provided that the Adjustment Factor shall
never be less than 50%.
2.7.5 Notice to Noteholders. Because the exercise of the Alternative
Conversion Option by any Noteholder may result in a less advantageous Adjustment
Factor for subsequent alternative conversions by other Noteholders, Borrower
shall notify all Noteholders of any exercise of the Alternative Conversion
Option. All Noteholders who then submit an Alternative Conversion Notice within
20 days shall have their conversions considered together pursuant to this
Article 2.7.
2.7.6 Termination of Alternative Conversion. In the event that either
of Goodrich-Delaware, Goodrich-Louisiana or Borrower shall file for protection,
or shall be petitioned into bankruptcy, under the United States Bankruptcy laws,
the Alternative Conversion Option shall automatically terminate and have no
further force or effect; provided, however, that the Alternative Conversion
Option shall not terminate if, (i) upon request of Lender, Compass Bank, at its
exclusive option and in its sole discretion, agrees that such conversion option
shall not terminate or, (ii) all obligations of Goodrich-Delaware,
Goodrich-Louisiana, and Borrower, if any, are indefeasibly paid, and the Credit
Agreement between Compass Bank and Goodrich-Louisiana of even date herewith has
been terminated.
2.8 Prepayment. Some or all of the outstanding principal and accrued
interest under the Notes may be prepaid at any time without penalty, pursuant to
the terms described herein (the "Prepayment Option"). Borrower may only exercise
the Prepayment Option, if after giving each Noteholder twenty (20) day's prior
written notice the Noteholder has not elected to exercise its Conversion Option
for such amount as Borrower wants to prepay.
2.9 Borrower's Option. If Borrower notifies a Noteholder that it wishes to
exercise its Prepayment Option for amounts that are not due for at least one
year, and the Noteholder then elects to use its Conversion Option for such
amounts, then Borrower or Goodrich-Delaware may elect to repurchase one half of
the Common Stock that the Noteholder received as a result of exercising such
Conversion Option at a price of $6.00 per share, as adjusted pursuant to Section
2.6 (the "Clawback Price"). This option shall not be assignable by Borrower or
Goodrich-Delaware to any other party.
2.10 Method of Payment. Borrower will pay the Noteholders principal and
interest that is not converted into shares of Goodrich-Delaware's common stock
pursuant to the Conversion Option, and any loan fees by check made payable to
the Noteholder drawn on a United States bank and for United States dollars, or
by wire transfer to an account of the Noteholder at the Noteholder's address
shown above or at such other place as the Noteholder may designate in writing.
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Unless otherwise agreed or required by applicable law, payments will be applied
first to any remaining amount of any unpaid collection costs and late charges,
then to accrued unpaid interest and then to any unpaid principal.
2.11 Note Register; Transfer and Substitution of Notes.
(a) The Borrower will keep at its principal office a register in which
the Borrower will provide for the registration of the Notes and the registration
of transfers of the Notes. The Borrower may treat any Person in whose name any
Note is registered on such register as the owner thereof for the purpose of
payment of the principal of and interest on such Note and for all other
purposes, including conversion of such Note under the terms hereof and any
notices provided for herein or required to be given herein.
(b) Upon receipt of evidence reasonably satisfactory to the Borrower
of the loss, theft, destruction or mutilation of a Note and, upon the delivery
to the Borrower of an indemnity bond in such reasonable amount as the Borrower
may determine or an unsecured indemnity agreement from the Noteholder whose Note
was lost, stolen, destroyed or mutilated in such form as may be reasonably
satisfactory to the Borrower, or upon the surrender of any partially mutilated
Note for cancellation, the Borrower will execute and deliver a new Note of like
tenor to such Noteholder. Any Note in lieu of which any such new Note has been
so executed and delivered by the Borrower shall not be deemed to be an
outstanding Note for any purpose under this Agreement.
ARTICLE III
-----------
CONDITIONS
----------
The obligations of the Noteholders to close the purchase and sale of the
Notes are subject to the satisfaction of the following conditions precedent:
3.1 Receipt of Loan Documents and Other Items. The Noteholders shall have
no obligation under this Agreement unless and until all matters incident to the
consummation of the transactions contemplated herein, shall be satisfactory to
the Noteholder Agent, and the Noteholder Agent shall have received, reviewed,
and approved the following documents and other items, appropriately executed
when necessary and, where applicable, acknowledged by one or more authorized
officers of the applicable Person or Persons, all in form and substance
satisfactory to the Noteholder Agent and dated, where applicable, of even date
herewith or a date prior hereto and acceptable to the Noteholder Agent:
(a) multiple counterparts of this Agreement, as requested by the
Noteholder Agent;
(b) the Notes;
(c) the Guaranty;
(d) copies of the organizational documents and all amendments thereto
of the Borrower and Goodrich-Louisiana, accompanied by a certificate issued by
the secretary or an assistant secretary of the Borrower or Goodrich-Louisiana,
as the case may be, to the effect that each such copy is correct and complete;
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(e) certificates of incumbency and signatures of all officers of
Borrower and Goodrich-Louisiana who are authorized to execute Loan Documents on
behalf of such entities, each such certificate being executed by the secretary
or an assistant secretary of the Borrower or Goodrich-Louisiana, as the case may
be;
(f) copies of corporate resolutions approving the Loan Documents and
authorizing the transactions contemplated herein and therein, duly adopted by
the management committee or board of directors of the Borrower and
Goodrich-Louisiana, accompanied by certificates of the secretary or an assistant
secretary of the Borrower or Goodrich-Louisiana, as the case may be, to the
effect that such copies are true and correct copies of resolutions duly adopted
at a meeting or by unanimous consent of the management committee or board of
directors of the Borrower and Goodrich-Louisiana, as the case may be, and that
such resolutions constitute all the resolutions adopted with respect to such
transactions, have not been amended, modified, or revoked in any respect, and
are in full force and effect as of the date of such certificate;
(g) multiple counterparts, as requested by the Noteholder Agent, of
the following documents establishing Liens in favor of the Noteholder Agent in
and to the Lafitte Collateral:
(i) Mortgage, Deed of Trust, Indenture, Security Agreement,
Assignment of Production, and Financing Statement from the Borrower
covering all Oil and Gas Properties of the Borrower and all improvements,
personal property, and fixtures related thereto, and Financing Statements
constituent thereto; and
(ii) Security Agreement from the Borrower covering all other
personal Property of the Borrower, and Financing Statements constituent
thereto;
(h) certificates dated as of a recent date from the Secretary of State
or other appropriate Governmental Authority evidencing the existence or
qualification and good standing of each of the Borrower and Goodrich-Louisiana
in its jurisdiction of incorporation and in any other jurisdictions where it
does business;
(i) results of searches of the UCC Records of (i) the Secretary of
State of the State of Louisiana in the name of the Borrower, and (ii) of the
Secretary of State of the States of Louisiana and Texas in the name of
Goodrich-Louisiana, each from a source acceptable to the Noteholder Agent and
reflecting no Liens other than Permitted Liens and no Liens against any
Collateral;
(j) the opinion of counsel to the Borrower and Goodrich-Louisiana
acceptable to the Noteholder Agent, in form and substance acceptable to the
Noteholder Agent;
(k) the execution of the Common Stock Warrant Purchase Agreement by
and between Goodrich-Delaware and the Noteholder Agent of even date herewith,
and the issuance and delivery of the Warrants (as defined therein) issuable
under the terms thereof; and
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(l) such other agreements, documents, instruments, opinions,
certificates, waivers, consents, and evidence as the Noteholder Agent may
reasonably request.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Noteholders to enter into this Agreement and purchase the
Notes from the Borrower, the Borrower and, where indicated, Goodrich-Louisiana
represent and warrant to the Noteholders (which representations and warranties
shall survive the delivery of the Notes) that:
4.1 Due Authorization. The execution and delivery by the Borrower of this
Agreement and the borrowings hereunder, the execution and delivery by the
Borrower of the Notes, the repayment of the Notes and interest and fees provided
for in the Notes and this Agreement, the execution and delivery of the Security
Instruments by the Borrower and the performance of all obligations of the
Borrower under the Loan Documents are within the power of the Borrower, have
been duly authorized by all necessary limited liability company action by the
Borrower, and do not and will not (a) require the consent of any Governmental
Authority, (b) contravene or conflict with any Requirement of Law or the
certificate or articles of organization and operating agreement or other
organizational or governing documents of the Borrower, (c) contravene or
conflict with any indenture, instrument, or other agreement to which the
Borrower is a party or by which any Property of the Borrower may be presently
bound or encumbered, or (d) result in or require the creation or imposition of
any Lien in or upon any Property of the Borrower other than as contemplated by
the Loan Documents.
4.2 Corporate Existence. Each of the Borrower and Goodrich-Louisiana is
duly organized, legally existing, and in good standing under the laws of its
state of organization and is duly qualified as a foreign entity and is in good
standing in all jurisdictions wherein the ownership of Property or the operation
of its business necessitates same, other than those jurisdictions wherein the
failure to so qualify will not have a Material Adverse Effect.
4.3 Valid and Binding Obligations. All Loan Documents to which the Borrower
is a party, when duly executed and delivered by the Borrower, will be the legal,
valid, and binding obligations of such entity, enforceable against the Borrower
in accordance with their respective terms, subject, however, to the effect of
bankruptcy, insolvency, reorganization, moratorium, and similar laws from time
to time in effect relating to the rights and remedies of creditors and to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.4 Security Instruments. The provisions of each Security Instrument are
effective to create in favor of the Collateral Agent, a legal, valid, and
enforceable Lien in the Lafitte Collateral described therein, which Liens,
assuming the accomplishment of recording and filing in accordance with
applicable laws prior to the intervention of rights of other Persons, shall
constitute fully perfected first-priority Liens.
4.5 Title to Assets. Each of the Borrower and Goodrich-Louisiana has good
and indefeasible title to all of its Properties, free and clear of all Liens
except Permitted Liens.
4.6 Scope and Accuracy of Financial Statements. The Financial Statements of
Goodrich-Delaware as of December 31, 1998 and as of July 31, 1999 provided to
the Noteholder Agent present fairly the financial position and results of
operations and cash flows of Goodrich-Delaware and its Subsidiaries in
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accordance with GAAP as at the relevant point in time or for the period
indicated, as applicable. No event or circumstance has occurred since June 30,
1999, which could reasonably be expected to have a Material Adverse Effect.
4.7 No Material Misstatements. No information, exhibit, statement, or
report furnished to the Noteholder Agent by or at the direction of the Borrower
or Goodrich-Louisiana in connection with this Agreement contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the statements contained therein not misleading as of the date made or
deemed made.
4.8 Liabilities, Litigation, and Restrictions. Other than as listed under
the heading "Liabilities" on Exhibit 2, neither the Borrower or
Goodrich-Louisiana has any liabilities, direct, or contingent, which may
materially and adversely affect its business or operations or its ownership of
any Collateral. Except as set forth under the heading "Litigation" on Exhibit 2,
no litigation or other action of any nature affecting the Borrower or
Goodrich-Louisiana is pending before any Governmental Authority or, to the best
knowledge of the Borrower, threatened against or affecting the Borrower or
Goodrich-Louisiana. No unusual or unduly burdensome restriction, restraint or
hazard exists by contract, Requirement of Law, or otherwise relative to the
business or operations of the Borrower or Goodrich-Louisiana or the ownership
and operation of its Property other than such as relate generally to Persons
engaged in business activities similar to those conducted by such party.
4.9 Authorizations and Consent. Except as expressly contemplated by this
Agreement, no authorization, consent, approval, exemption, franchise, permit, or
license of, or filing with, any Governmental Authority or any other Person is
required to authorize or is otherwise required in connection with the valid
execution and delivery by the Borrower or Goodrich-Louisiana of the Loan
Documents to which it is a party or any instrument contemplated hereby, the
repayment by the Borrower of the Notes and interest and fees provided in the
Notes and this Agreement, or the performance by the Borrower or
Goodrich-Louisiana of its Obligations.
4.10 Compliance with Laws. The Borrower and Goodrich-Louisiana and their
Properties are in compliance with all applicable Requirements of Law, including,
without limitation, Environmental Laws, the Natural Gas Policy Act of 1978, as
amended, and ERISA.
4.11 ERISA. No Reportable Event has occurred with respect to any Single
Employer Plan, and each Single Employer Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. To the best knowledge of the Borrower, (a) no Reportable
Event has occurred with respect to any Multiemployer Plan, and (b) each
Multiemployer Plan has complied with and been administered in all material
respects with applicable provisions of ERISA and the Code. The present value of
all benefits vested under each Single Employer Plan (based on the assumptions
used to fund such Plan) did not, as of the last annual valuation date applicable
thereto, exceed the value of the assets of such Plan allocable to such vested
benefits. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan for which there is
any withdrawal liability. As of the most recent valuation date applicable to any
Multiemployer Plan, neither the Borrower nor any Commonly Controlled Entity
would become subject to any liability under ERISA if the Borrower or such
Commonly Controlled Entity were to withdraw completely from such Multiemployer
Plan. Neither the Borrower nor any Commonly Controlled Entity has received
notice that any Multiemployer Plan is Insolvent or in Reorganization. To the
best knowledge of the Borrower, no such Insolvency or Reorganization is
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reasonably likely to occur. Based upon GAAP existing as of the date of this
Agreement and current factual circumstances, the Borrower has no reason to
believe that the annual cost during the term of this Agreement to the Borrower
and all Commonly Controlled Entities for post-retirement benefits to be provided
to the current and former employees of the Borrower and all Commonly Controlled
Entities under Plans which are welfare benefit plans (as defined in Section 3(l)
of ERISA) will, in the aggregate, have a Material Adverse Effect.
4.12 Environmental Laws. Except as described on Exhibit 2 under the heading
"Environmental Matters:"
(a) no Property of the Borrower or Goodrich-Louisiana is currently on
or has ever been on, or is adjacent to any Property which is on or has ever been
on, any federal or state list of Superfund Sites;
(b) no Hazardous Substances have been generated, transported, and/or
disposed of by the Borrower or Goodrich-Louisiana at a site which was, at the
time of such generation, transportation, and/or disposal, or has since become, a
Superfund Site;
(c) no Release of Hazardous Substances by the Borrower or
Goodrich-Louisiana or from, affecting, or related to any of their Property or
adjacent to any of their Property has occurred; and
(d) no Environmental Complaint has been received by the Borrower or
Goodrich-Louisiana.
4.13 Investment Company Act Compliance. Neither the Borrower nor
Goodrich-Louisiana is or is directly or indirectly controlled by or acting on
behalf of any Person which is an "investment company" or an "affiliated person"
of an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
4.14 Public Utility Holding Company Act Compliance. Neither the Borrower
nor Goodrich-Louisiana is a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
4.15 Proper Filing of Tax Returns; Payment of Taxes Due. Each of the
Borrower and Goodrich-Louisiana has duly and properly filed its United States
income tax return and all other tax returns which are required to be filed and
has paid all taxes due except such as are being contested in good faith and as
to which adequate provisions and disclosures have been made. The respective
charges and reserves on the books of the Borrower and Goodrich-Louisiana with
respect to taxes and other governmental charges are adequate.
4.16 Refunds. Except as described on Exhibit 2 under the heading "Refunds,"
no orders of, proceedings pending before, or other requirements of, the Federal
Energy Regulatory Commission, the Texas Railroad Commission, or any Governmental
Authority exist which could result in the Borrower or Goodrich-Louisiana being
required to refund any material portion of the proceeds received or to be
received from the sale of hydrocarbons from any of its Properties.
4.17 Gas Contracts. Except as described on Exhibit 2 under the heading "Gas
Contracts," neither the Borrower nor Goodrich-Louisiana (a) is obligated in any
material respect by virtue of any prepayment made under any contract containing
a "take-or-pay" or "prepayment" provision or under any similar agreement to
deliver hydrocarbons produced from or allocated to any of its Properties at some
future date without receiving full payment therefor within 90 days of delivery,
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or (b) is subject to or has produced gas, in any material amount, subject to, or
owns Properties subject to, balancing rights of third parties or balancing
duties under governmental requirements, except as to such matters for which such
party has established monetary reserves adequate in amount to satisfy such
obligations and has segregated such reserves from other accounts.
4.18 Intellectual Property. Each of the Borrower and Goodrich-Louisiana
owns or is licensed to use all Intellectual Property necessary to conduct all
business material to its condition (financial or otherwise), business, or
operations as such business is currently conducted. No claim has been asserted
or is pending by any Person with the respect to the use of any such Intellectual
Property or challenging or questioning the validity or effectiveness of any such
Intellectual Property; and neither the Borrower nor Goodrich-Louisiana knows of
any valid basis for any such claim. The use of such Intellectual Property by the
Borrower or Goodrich-Louisiana does not infringe on the rights of any Person,
except for such claims and infringements as do not, in the aggregate, give rise
to any material liability on the part of the Borrower or Goodrich-Louisiana.
4.19 Casualties or Taking of Property. Except as disclosed on Exhibit 2
under the heading "Casualties," since June 30, 1999, neither the business nor
any Property of the Borrower or Goodrich-Louisiana has been materially adversely
affected as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of Property, or cancellation of contracts, permits, or concessions by any
Governmental Authority, riot, activities of armed forces, or acts of God.
4.20 Locations of Borrower and Goodrich-Louisiana. The principal place of
business and chief executive office of the Borrower and Goodrich-Louisiana is
located at 333 Texas Street, Suite 1375, Shreveport, Louisiana 71101 or at such
other location as the Borrower may have, by proper written notice hereunder,
advised the Noteholder Agent, provided that (in the case of Borrower and
Goodrich-Louisiana) such other location is within a state in which appropriate
financing statements from the Borrower or Goodrich-Louisiana, as the case may
be, in favor of the Collateral Agent have been flied.
4.21 Scope of Collateral. The Collateral constitutes the only real or
personal Property owned by the Borrower or Goodrich-Louisiana.
ARTICLE V
---------
AFFIRMATIVE COVENANTS
---------------------
For so long as any Notes remain outstanding or unpaid, the Borrower and
Goodrich-Louisiana shall do the following:
5.1 Maintenance and Access to Records. Keep adequate records, in accordance
with GAAP, of all its transactions so that at any time, and from time to time,
its true and complete financial condition may be readily determined, and
promptly following the reasonable request of the Noteholder Agent, make such
records available for inspection by the Noteholder Agent and, at the expense of
the Borrower, allow the Noteholder Agent to make and take away copies thereof.
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5.2 Quarterly Financial Statements. Deliver to the Noteholders, on or
before the 45th day after the close of each quarterly period of each fiscal year
of Goodrich-Delaware, (a) a copy of the unaudited consolidated and consolidating
Financial Statements of Goodrich-Delaware as at the close of such quarterly
period and from the beginning of such fiscal year to the end of such period,
such Financial Statements to be certified by the chief financial officer of
Goodrich-Delaware as having been prepared in accordance with GAAP consistently
applied and as a fair presentation of the condition of Goodrich-Delaware and its
Subsidiaries, subject to changes resulting from normal year-end audit
adjustments.
5.3 Annual Financial Statements. Deliver to the Noteholders, on or before
the 90th day after the close of each fiscal year of Goodrich-Delaware, (a) a
copy of the annual audited consolidated Financial Statements of
Goodrich-Delaware, together with the audit report issued in connection
therewith, (b) a copy of the annual unaudited consolidating Financial Statements
of Goodrich-Delaware, and (c) a Compliance Certificate.
5.4 Oil and Gas Reserve Report.
(a) Deliver to the Noteholder Agent no later than the last day of
March of each year during the term of this Agreement, engineering reports in
form and substance satisfactory to the Noteholder Agent, certified by any
nationally- or regionally-recognized independent consulting petroleum engineers
acceptable to the Noteholder Agent as fairly and accurately setting forth (i)
the proven and producing, shut-in, behind-pipe, and undeveloped oil and gas
reserves (separately classified as such) attributable to the Oil and Gas
Properties of the Borrower as of January 1 of the year for which such reserve
reports are furnished, (ii) the aggregate present value of the future net income
with respect to such Oil and Gas Properties, discounted at a stated per annum
discount rate of such reserves, (iii) projections of the annual rate of
production, gross income, and net income with respect to such reserves, and (iv)
information with respect to the "take-or-pay," "prepayment," and gas-balancing
liabilities of the Borrower.
(b) Deliver to the Noteholder Agent no later than the last day of
August of each year during the term of this Agreement, engineering reports in
form and substance satisfactory to the Noteholder prepared by or under the
supervision of the chief petroleum engineer or geologist of the Borrower
evaluating the Oil and Gas Properties of the Borrower as of July 1 of the year
for which such reserve reports are furnished and updating the information
provided in the reports pursuant to Section 5.4(a).
(c) Deliver to the Noteholder Agent, on or before the 45th day after
the close of each month, a report of monthly production of its Oil and Gas
Properties, setting forth production volumes for oil, gas, other hydrocarbons
and water, broken out by major fields or by wells.
(d) Each of the reports provided pursuant to this Section shall be
accompanied by additional data concerning pricing, quantities of production from
the Oil and Gas Properties, volumes of production sold, purchasers of
production, gross revenues, expenses, and such other information and engineering
and geological data with respect thereto and in such format as the Noteholder
Agent may reasonably request.
(e) In the event the Noteholder Agent has a reasonable concern as to
the ability of the Borrower to meet its obligations as they become due, then the
Borrower will provide to the Noteholder Agent such additional financial or other
information and reports, in such formats and at such times as the Noteholder may
reasonably request.
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5.5 Notices of Certain Events. Deliver to the Noteholder Agent, immediately
upon having knowledge of the occurrence of any of the following events or
circumstances, a written statement with respect thereto, signed by a Responsible
Officer of the Borrower or Goodrich-Louisiana and setting forth the relevant
event or circumstance and the steps being taken with respect to such event or
circumstance:
(a) any Default or Event of Default;
(b) any default or event of default under any contractual obligation
of the Borrower or Goodrich-Louisiana, or any litigation, investigation, or
proceeding between the Borrower or Goodrich-Louisiana and any Governmental
Authority which, in either case, if not cured or if adversely determined, as the
case may be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding involving the Borrower or
Goodrich-Louisiana as a defendant or in which any Property of the Borrower or
Goodrich-Louisiana is subject to a claim and in which the amount involved is
$500,000 or more and which is not covered by insurance or in which injunctive or
similar relief is sought;
(d) the receipt by the Borrower or Goodrich-Louisiana of any
Environmental Complaint;
(e) any actual, proposed, or threatened testing or other investigation
by any Governmental Authority or other Person concerning the environmental
condition of, or relating to, any Property of the Borrower or
Goodrich-Louisiana, or adjacent to any Property of the Borrower or
Goodrich-Louisiana following any allegation of a violation of any Requirement of
Law;
(f) any Release of Hazardous Substances by the Borrower or
Goodrich-Louisiana from, affecting, or related to any Property of the Borrower
or Goodrich-Louisiana, or adjacent to any Property of the Borrower or
Goodrich-Louisiana, or the violation of any Environmental Law, or the
revocation, suspension, or forfeiture of or failure to renew, any permit,
license, registration, approval, or authorization which could reasonably be
expected to have a Material Adverse Effect;
(g) any Reportable Event or imminently expected Reportable Event with
respect to any Plan; any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan; the institution of proceedings or the
taking of any other action by the PBGC, the Borrower or any Commonly Controlled
Entity or Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Single Employer Plan or
Multiemployer Plan; or any Prohibited Transaction in connection with any Plan or
any trust created thereunder and the action being taken by the Internal Revenue
Service with respect thereto;
(h) the change in identity or address of any Person remitting to the
Borrower proceeds from the sale of hydrocarbon production from or attributable
to any Mortgaged Property;
(i) any change in the senior management of the Borrower or
Goodrich-Louisiana;
(j) the Borrower's or Goodrich-Louisiana's acquisition or ownership of
any estate (fee simple or leasehold) of real or personal Property, wherever
located, which is not included in the Collateral; and
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(k) any other event or condition which could reasonably be expected to
have a Material Adverse Effect.
5.6 Letters in Lieu of Transfer Orders; Division Orders. Promptly upon
request by the Noteholder Agent at any time and from time to time, execute such
letters in lieu of transfer orders, in addition to the letters signed by the
Borrower and delivered to the Collateral Agent and/or division and/or transfer
orders as are necessary or appropriate to transfer and deliver to the Noteholder
Agent proceeds from or attributable to any Mortgaged Property.
5.7 Additional Information. Furnish to the Noteholder Agent within five
days after any material report (other than financial statements) or other
communication is sent by the Borrower or Goodrich-Louisiana to its stockholders
or filed by the Borrower or Goodrich-Louisiana with the Securities and Exchange
Commission or any successor or analogous Government Authority, copies of such
report or communication and, promptly upon the request of the Noteholder Agent,
such additional financial or other information concerning the assets,
liabilities, operations, and transactions of the Borrower or Goodrich-Louisiana
as the Noteholder Agent may from time to time request; and notify the Noteholder
Agent not less than ten Business Days prior to the occurrence of any condition
or event that may change the proper location for the filing of any financing
statement or other public notice or recording for the purpose of perfecting a
Lien in any Collateral, including, without limitation, any change in name or the
location of the principal place of business or chief executive office of the
Borrower or Goodrich-Louisiana; and upon the request of the Noteholder Agent,
execute such additional Security Instruments as may be necessary or appropriate
in connection therewith.
5.8 Compliance with Laws. Comply with all applicable Requirements of Law,
including, without limitation, (a) the Natural Gas Policy Act of 1978, as
amended, (b) ERISA, (c) Environmental Laws, and (d) all permits, licenses,
registrations, approvals, and authorizations (i) related to any natural or
environmental resource or media located on, above, within, in the vicinity of,
related to or affected by any Property of the Borrower or Goodrich-Louisiana,
(ii) required for the performance of the operations of the Borrower or
Goodrich-Louisiana, or (iii) applicable to the use, generation, handling,
storage, treatment, transport, or disposal of any Hazardous Substances; and
cause all employees, crew members, agents, contractors, subcontractors, and
future lessees (pursuant to appropriate lease provisions) of each of the
Borrower or Goodrich-Louisiana, while such Persons are acting within the scope
of their relationship with such party, to comply with all such Requirements of
Law as may be necessary or appropriate to enable such party to so comply.
5.9 Payment of Assessments and Charges. Pay all taxes, assessments,
governmental charges, rent, and other Indebtedness which, if unpaid, might
become a Lien against its Property, except any of the foregoing being contested
in good faith and as to which adequate reserve in accordance with GAAP has been
established or unless failure to pay would not have a Material Adverse Effect.
5.10 Maintenance of its Existence and Good Standing. Maintain its corporate
or limited liability company existence or qualification and good standing in its
jurisdictions of incorporation or organization and in all jurisdictions wherein
the Property now owned or hereafter acquired or business now or hereafter
conducted necessitates same.
5.11 Further Assurances. Promptly cure any defects in the execution and
delivery of any of the Loan Documents and all agreements contemplated thereby,
and execute, acknowledge, and deliver such other assurances and instruments as
24
<PAGE>
may, in the opinion of the Noteholder Agent, be necessary to fulfill the terms
of the Loan Documents.
5.12 Fees and Expenses.
(a) Upon request by the Noteholder Agent, promptly pay all reasonable
fees and expenses of the Noteholder Agent in connection with the preparation,
negotiation, syndication, execution, delivery, administration, and enforcement
of this Agreement and the other Loan Documents and any amendments, restatements,
or supplements thereto, the satisfaction of the conditions precedent set forth
herein, the filing and recordation of Security Instruments, and the consummation
of the transactions contemplated in the Loan Documents, including, without
limitation, fees and expenses of legal counsel.
(b) Upon request by the Noteholder Agent, promptly pay (to the fullest
extent permitted by law) for all amounts reasonably expended, advanced, or
incurred by or on behalf of the Noteholders to satisfy any obligation of the
Borrower or Goodrich-Louisiana under any of the Loan Documents; to collect the
Obligations; to enforce the rights of the Noteholders under any of the Loan
Documents; and to protect the Properties or business of the Borrower and
Goodrich-Louisiana including, without limitation, the Collateral, which amounts
shall be deemed compensatory in nature and liquidated as to amount upon notice
to the Borrower by the Noteholder Agent and which amounts shall include, but not
be limited to (i) all court costs, (ii) reasonable fees and expenses of legal
counsel, auditors and accountants, engineers, and environmental and insurance
consultants, (iii) fees and expenses incurred in connection with the
participation by the Noteholder Agent as a member of the creditors' committee in
a case commenced under any Insolvency Proceeding, (iv) fees and expenses
incurred in connection with lifting the automatic stay prescribed in ss.362,
Title 11 of the United States Code, and (v) fees and expenses incurred in
connection with any action pursuant to ss.1129, Title 11 of the United States
Code, all reasonably incurred by the Noteholder Agent in connection with the
collection of any sums due under the Loan Documents, together with interest at
the per annum interest rate equal to the Default Rate, with the obligations
under this Section surviving the non-assumption of this Agreement in a case
commenced under any Insolvency Proceeding and being binding upon the Borrower
and/or a trustee, receiver, custodian, or liquidator of the Borrower appointed
in any such case.
5.13 Operation of Oil and Gas Properties. Develop, maintain, and operate
its Oil and Gas Properties in a prudent and workmanlike manner in accordance
with industry standards.
5.14 Maintenance and Inspection of Properties. Maintain all of its tangible
Properties in good repair and condition, ordinary wear and tear excepted; make
all necessary replacements thereof and operate such Properties in a good and
workmanlike manner; and permit any authorized representative of the Noteholder
Agent to visit and inspect any tangible Property of the Borrower or
Goodrich-Louisiana. So long as no Event of Default shall have occurred and be
continuing, such visits and inspections shall be at the expense of the
Noteholders. If an Event of Default has occurred and is continuing, such visits
and inspections shall be at the expense of the Borrower.
5.15 Maintenance of Insurance. Maintain insurance with respect to its
Properties and businesses against such liabilities, casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
acceptable to the Noteholder Agent and naming the Noteholder Agent as loss
payee, and, upon any renewal of any such insurance and at other times upon
request by the Noteholder Agent furnish to the Noteholder Agent evidence,
satisfactory to the Noteholder Agent, of the maintenance of such insurance. The
Noteholder Agent shall have the right to collect, and the Borrower hereby
assigns to the Noteholder Agent, any and all monies that may become payable
under any policies of insurance relating to business interruption or by reason
of damage, loss, or destruction of any of the Collateral. In the event of any
25
<PAGE>
damage, loss, or destruction for which insurance proceeds relating to business
interruption or Collateral exceed $500,000, the Noteholder Agent may, at its
option, apply all such sums or any part thereof received by it toward the
payment of the Obligations, whether matured or unmatured, application to be made
first to interest and then to principal, and shall deliver to the Borrower the
balance, if any, after such application has been made. In the event of any such
damage, loss, or destruction for which insurance proceeds are $500,000 or less,
provided that no Default or Event of Default has occurred and is continuing, the
Noteholder Agent shall deliver any such proceeds received by it to the Borrower.
In the event the Noteholder Agent receives insurance proceeds not attributable
to Collateral or business interruption, the Noteholder Agent shall deliver any
such proceeds to the Borrower.
5.16 Indemnification. INDEMNIFY AND HOLD THE NOTEHOLDERS AND THEIR
RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT AND AFFILIATES AND EACH TRUSTEE OR AGENT FOR THE BENEFIT OF
THE NOTEHOLDERS UNDER ANY SECURITY INSTRUMENT HARMLESS FROM AND AGAINST ANY AND
ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES, CHARGES,
ADMINISTRATIVE AND JUDICIAL PROCEEDINGS AND ORDERS, JUDGMENTS, REMEDIAL ACTIONS,
REQUIREMENTS AND ENFORCEMENT ACTIONS OF ANY KIND, AND ALL COSTS AND EXPENSES
INCURRED IN CONNECTION THEREWITH (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES
AND EXPENSES), ARISING DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, FROM (A) THE
PRESENCE OF ANY HAZARDOUS SUBSTANCES ON, UNDER, OR FROM ANY PROPERTY OF THE
BORROWER OR GOODRICH-LOUISIANA, WHETHER PRIOR TO OR DURING THE TERM HEREOF, (B)
ANY ACTIVITY CARRIED ON OR UNDERTAKEN ON OR OFF ANY PROPERTY OF THE BORROWER OR
GOODRICH-LOUISIANA WHETHER PRIOR TO OR DURING THE TERM HEREOF, AND WHETHER BY
THE BORROWER OR GOODRICH-LOUISIANA OR ANY PREDECESSOR IN TITLE, EMPLOYEE, AGENT,
CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER OR GOODRICH-LOUISIANA OR ANY OTHER
PERSON AT ANY TIME OCCUPYING OR PRESENT ON SUCH PROPERTY, IN CONNECTION WITH THE
HANDLING, TREATMENT, REMOVAL, STORAGE, DECONTAMINATION, CLEANUP, TRANSPORTATION,
OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR
UNDER SUCH PROPERTY, (c) ANY RESIDUAL CONTAMINATION ON OR UNDER ANY PROPERTY OF
THE BORROWER OR GOODRICH-LOUISIANA, (D) ANY CONTAMINATION OF ANY PROPERTY OR
NATURAL RESOURCES ARISING IN CONNECTION WITH THE GENERATION, USE, HANDLING,
STORAGE, TRANSPORTATION OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES BY THE BORROWER
OR GOODRICH-LOUISIANA, OR ANY EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF
THE BORROWER OR GOODRICH-LOUISIANA WHILE SUCH PERSONS ARE ACTING WITHIN THE
SCOPE OF THEIR RELATIONSHIP WITH THE BORROWER OR GOODRICH-LOUISIANA,
IRRESPECTIVE OF WHETHER ANY OF SUCH ACTIVITIES WERE OR WILL BE UNDERTAKEN IN
ACCORDANCE WITH APPLICABLE REQUIREMENTS OF LAW, OR (E) THE PERFORMANCE AND
26
<PAGE>
ENFORCEMENT OF ANY LOAN DOCUMENT, OR ANY OTHER ACT OR OMISSION IN CONNECTION
WITH OR RELATED TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING, WITHOUT LIMITATION, ANY OF THE FOREGOING IN THIS SECTION ARISING FROM
NEGLIGENCE, WHETHER SOLE OR CONCURRENT, ON THE PART OF THE NOTEHOLDERS OR ANY OF
THEIR RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT, OR AFFILIATES OR ANY TRUSTEE OR AGENT FOR THE BENEFIT OF THE
NOTEHOLDERS UNDER ANY SECURITY INSTRUMENT, BUT EXCLUDING ANY OCCURRENCE
RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PERSONS; WITH
THE FOREGOING INDEMNITY SURVIVING SATISFACTION OF ALL OBLIGATIONS AND THE
TERMINATION OF THIS AGREEMENT.
5.17 Distributions by Borrower. Borrower may, and shall, make distributions
in respect of the Lafitte Membership Interests, at the maximum level permitted
by law, so long as (a) Borrower's forecasted cash flow for the next twelve
months (net of any capital expenditures proposed by the operator of the Lafitte
Field) plus two times the Borrower's cash on hand exceeds the Borrower's
forecasted capital expenditures for the same twelve month period, and (b) the
SEC PV10% value of the Borrower's oil and gas reserves (net of the Obligations)
exceeds the Obligations by two times.
ARTICLE VI
----------
NEGATIVE COVENANTS
------------------
For so long as any Notes remain outstanding or unpaid, the Borrower will
not and Goodrich-Louisiana will not do any of the following:
6.1 Indebtedness; Contingent Obligations. Create, incur, assume, or suffer
to exist any Indebtedness or Contingent Obligation, whether by way of loan or
otherwise; provided, however, the foregoing restriction shall not apply to (a)
the Obligations, the Subordinated Notes, the Pari Passu Notes and the Compass
Bank Debt, (b) unsecured accounts payable incurred in the ordinary course of
business, which are not unpaid in excess of 60 days beyond invoice date or are
being contested in good faith and as to which such reserve as is required by
GAAP has been made, (e) performance guarantees and performance surety or other
bonds provided in the ordinary course of business, (d) Indebtedness with respect
to Hedging Agreements entered into with a Person acceptable to the Noteholder
Agent, provided that such Hedging Agreements relating to hydrocarbons cover not
more than 75% of the projected monthly production from proved developed
producing Oil and Gas Properties of the Borrower, (e) trade credit (including
authorizations for expenditures with respect to Oil and Gas Properties) incurred
or operating leases entered into in the ordinary course of business.
6.2 Liens. Create, incur, assume, or suffer to exist any Lien on any of its
Properties, whether now owned or hereafter acquired; provided, however, the
foregoing restrictions shall not apply to Permitted Liens.
6.3 Sales of Assets. Without the prior written consent of the Noteholder
Agent, sell, transfer, or otherwise dispose of, in one or any series of
transactions, any stock of any Subsidiary, any Collateral, or any other assets,
whether now owned or hereafter acquired, or enter into any agreement to do so;
provided, however, the foregoing restriction shall not apply to (a) the sale of
hydrocarbons or inventory in the ordinary course of business provided that no
contract for the sale of hydrocarbons shall obligate the Borrower to deliver
hydrocarbons produced from any Property at some future date without receiving
full payment therefor within 90 days of delivery, (b) the sale or other
disposition of Property destroyed, lost, worn out, damaged, or having only
salvage value or no longer used or useful in its business, (c) the sale or other
disposition of other assets (excluding any stock of any Subsidiary) which are
not material to the operations of the Borrower, taken as a whole, provided that
any mandatory prepayment required as a result thereof is made at the time of
such sale or disposition, or (d) Property representing less than ten percent
(10%) of the Borrower's total assets on a book value basis and on an SEC PV-10
basis.
27
<PAGE>
6.4 Leasebacks. Enter into any agreement to sell or transfer any Property
and thereafter rent or lease as lessee such Property or other Property intended
for the same use or purpose as the Property sold or transferred.
6.5 Changes in Corporate Structure. Without the prior written consent of
the Noteholder Agent, which will not be unreasonably withheld, enter into any
transaction of consolidation, merger, or amalgamation; liquidate, wind up, or
dissolve (or suffer any liquidation or dissolution).
6.6 Transactions with Affiliates. Directly or indirectly, enter into any
transaction (including the sale, lease, or exchange of Property or the rendering
of service) with any of its Affiliates, other than upon fair and reasonable
terms no less favorable than could be obtained in an arm's length transaction
with a Person which was not an Affiliate.
6.7 Lines of Business. Expand, on its own or through any Subsidiary, into
any line of business other than those in which it is engaged as of the date
hereof.
6.8 ERISA Compliance. Permit any Plan maintained by it or any Commonly
Controlled Entity to (a) engage in any Prohibited Transaction, (b) incur any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA, or (c) terminate in a manner which could result in the imposition of a
Lien on any Property of the Borrower or Goodrich-Louisiana pursuant to Section
4068 of ERISA; or assume an obligation to contribute to any Multiemployer Plan;
or acquire any Person or the assets of any Person which has now or has had at
any time an obligation to contribute to any Multiemployer Plan.
6.9 Consolidated Net Worth. Permit, as of the close of any fiscal quarter
ending on or after December 31, 1999, Consolidated Tangible Net Worth to be less
than $7,000,000 plus 50% of positive Consolidated Net Income after March 31,
1999 and 100% of all cash equity proceeds, net of expenses incurred in
connection with any offering transaction after the date hereof.
6.10 Debt Service Ratio. Permit, as of the close of any fiscal quarter
ending on or after December 31, 1999, the ratio of (a) the sum of EBITDA for
such fiscal quarter plus cash equity investments made to Goodrich-Louisiana or
to the Borrower within 45 days after the end of such quarter to (b) Debt Service
for such fiscal quarter to be less than 1.10 to 1.00.
6.11 General and Administrative Expenses. Permit, as of the close of any
fiscal quarter ending on or after December 31, 1999, general and administrative
expenses (including capitalized general and administrative expenses), on a
consolidated basis for Goodrich-Delaware and its Subsidiaries, to exceed twenty
percent (20%) of total consolidated revenues for Goodrich-Delaware and its
Subsidiaries (excluding proceeds from asset sales and other non-recurring
revenues) for such period.
ARTICLE VII
-----------
EVENTS OF DEFAULT
-----------------
7.1 Enumeration of Events of Default. Any of the following events shall
constitute an Event of Default:
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<PAGE>
(a) default shall be made in the payment when due of any installment
of principal or interest under this Agreement or the Notes or in the payment
when due of any fee or other sum payable under any Loan Document and, with
respect to the payment of interest only, such default shall continue for three
days;
(b) default shall be made by the Borrower or Goodrich-Louisiana in the
due observance or performance of any of their respective obligations under the
Loan Documents, other than as described in Section 7.1(a), and with respect to
default in the observance or performance of obligations under Article V and
under Sections 6.9, 6.10 and 6.11, such default shall continue for 30 days after
notice thereof to the Borrower by the Noteholder Agent;
(c) any representation or warranty made by the Borrower or
Goodrich-Louisiana in any of the Loan Documents proves to have been untrue in
any material respect or any representation, statement (including Financial
Statements), certificate, or data furnished or made to the Noteholder Agent in
connection herewith proves to have been untrue in any material respect as of the
date the facts therein set forth were stated or certified;
(d) default shall be made by the Borrower or Goodrich-Louisiana (as
principal or guarantor or other surety) in the payment or performance of any
bond, debenture, note, or other Indebtedness exceeding $100,000 or under any
credit agreement, loan agreement, indenture, promissory note, or similar
agreement or instrument executed in connection with any of the foregoing, and
such default shall remain unremedied for in excess of the period of grace, if
any, with respect thereto;
(e) the Borrower or Goodrich-Louisiana shall (i) apply for or consent
to the appointment of a receiver, trustee, or liquidator of it or all or a
substantial part of its assets, (ii) file a voluntary petition commencing an
Insolvency Proceeding, (iii) make a general assignment for the benefit of
creditors, (iv) be unable, or admit in writing its inability, to pay its debts
generally as they become due, or (v) file an answer admitting the material
allegations of a petition filed against it in any Insolvency Proceeding;
(f) an order, judgment, or decree shall be entered against the
Borrower or Goodrich-Louisiana by any court of competent jurisdiction or by any
other duly authorized authority, on the petition of a creditor or otherwise,
granting relief in any Insolvency Proceeding or approving a petition seeking
reorganization or an arrangement of its debts or appointing a receiver, trustee,
conservator, custodian, or liquidator of it or all or any substantial part of
its assets, and such order, judgment, or decree shall not be dismissed or stayed
within 30 days;
(g) the levy against any significant portion of the Property of the
Borrower or Goodrich-Louisiana, or any execution, garnishment, attachment,
sequestration, or other writ or similar proceeding which is not permanently
dismissed or discharged within 30 days after the levy;
(h) a final and non-appealable order, judgment, or decree shall be
entered against the Borrower or Goodrich-Louisiana for money damages and/or
Indebtedness due in an amount in excess of $500,000, and such order, judgment or
decree shall not be dismissed or stayed within 30 days;
29
<PAGE>
(i) the Borrower or Goodrich-Louisiana shall have (i) concealed,
removed, or diverted, or permitted to be concealed, removed, or diverted, any
part of its Property, with intent to hinder, delay, or defraud its creditors or
any of them, (ii) made any transfer of its Property to or for the benefit of a
creditor at a time when other creditors similarly situated have not been paid,
or (iii) shall have suffered or permitted, while insolvent, any creditor to
obtain a Lien upon any of its Property through legal proceedings or distraint
which is not vacated within 30 days from the date thereof;
(j) the Security Instruments shall for any reason not, or cease to,
create valid and perfected first-priority Liens against all of the Lafitte
Collateral;
(k) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan;
any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan for which an excise
tax is due or would be due in the absence of a waiver; a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Noteholder Agent,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA; any Single Employer Plan shall terminate for purposes of Title IV of
ERISA; the Borrower or any Commonly Controlled Entity shall incur, or in the
reasonable opinion of the Noteholder Agent, be likely to incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan; or any other event or condition shall occur or exist with
respect to a Plan and the result of such events or conditions referred to in
this Section 7.1(k) could subject the Borrower or any Commonly Controlled Entity
to any tax (other than an excise tax under Section 4980 of the Code), penalty or
other liabilities which taken in the aggregate would have a Material Adverse
Effect and any such circumstance shall exist for in excess of 30 days; or
(l) any payment of royalties on Oil and Gas Properties of the Borrower
shall not be paid when due or any account payable of the Borrower (except as the
Noteholder Agent may expressly agree in writing) shall not be paid within sixty
(60) days of invoice date.
7.2 Remedies.
(a) Upon the occurrence of an Event of Default specified in Sections
7.1(f) or 7.1(g), immediately and without notice, (i) all Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest, notice of protest, default, or dishonor, notice of intent to accelerate
maturity, notice of acceleration of maturity, or other notice of any kind,
except as may be provided to the contrary elsewhere herein, all of which are
hereby expressly waived by the Borrower.
(b) Upon the occurrence of any Event of Default other than those
specified in Sections 7.1(f) or 7.1(g), (i) the Noteholder Agent may, by notice
to the Borrower, declare all Obligations immediately due and payable, without
presentment, demand, protest, notice of protest, default, or dishonor, notice of
30
<PAGE>
intent to accelerate maturity, notice of acceleration of maturity, or other
notice of any kind, except as may be provided to the contrary elsewhere herein,
all of which are hereby expressly waived by the Borrower.
(c) Upon the occurrence of any Event of Default, the Noteholder Agent
may, in addition to the foregoing in this Section, exercise any or all of its
rights and remedies provided by law or pursuant to the Loan Documents.
ARTICLE VIII
------------
MISCELLANEOUS
-------------
8.1 Survival of Representations, Warranties, and Covenants. All
representations and warranties of the Borrower and all covenants and agreements
herein made shall survive the execution and delivery of the Note and the
Security Instruments and shall remain in force and effect so long as any
Obligation is outstanding.
8.2 Notices and Other Communications. Except as to oral notices expressly
authorized herein, which oral notices shall be confirmed in writing, all
notices, requests, and communications hereunder shall be in writing (including
by telecopy). Unless otherwise expressly provided herein, any such notice,
request, demand, or other communication shall be deemed to have been duly given
or made when delivered by hand, or, in the case of delivery by mail, two
Business Days after deposited in the mail, certified mail, return receipt
requested, postage prepaid, or, in the case of telecopy notice, when receipt
thereof is acknowledged orally or by written confirmation report, addressed as
follows:
(a) if to the Noteholder Agent, to:
Hambrecht & Quist Guaranty Finance, LLC
One Bush Street
San Francisco, California 94104
Attention: Lorraine Nield
(415)439-3804 (telecopy)
(b) if to the Borrower, to:
Goodrich Petroleum Company-Lafitte, L.L.C.
333 Texas Street, Suite 1375
Shreveport, Louisiana 71101
Attention: Walter G. Goodrich
Telecopy: (318)429-2296
(c) if to a Noteholder, to:
the Noteholder's address or telecopy number shown on Exhibit 1
Any party may, by proper written notice hereunder to the others, change the
individuals or addresses to which such notices to it shall thereafter be sent.
8.3 Parties in Interest. All covenants and agreements herein contained by
or on behalf of the Borrower, Goodrich-Louisiana or the Noteholders shall be
binding upon the Borrower, Goodrich-Louisiana or the Noteholders, as the case
may be, and their respective legal representatives, agents, successors, and
assigns.
31
<PAGE>
8.4 Rights of Third Parties. All provisions herein are imposed solely and
exclusively for the benefit of the Borrower and the Noteholders and their
successors and assigns. No other Person shall have any right, benefit, priority,
or interest hereunder or as a result hereof or have standing to require
satisfaction of provisions hereof in accordance with their terms.
8.5 No Waiver, Rights Cumulative. No course of dealing on the part of the
Noteholders, the Noteholder Agent, their respective officers or employees, nor
any failure or delay by the foregoing with respect to exercising any rights
under any Loan Document shall operate as a waiver thereof. The rights of the
Noteholders under the Loan Documents shall be cumulative and the exercise or
partial exercise of any such right shall not preclude the exercise of any other
right.
8.6 Survival Upon Unenforceability. In the event any one or more of the
provisions contained in any of the Loan Documents or in any other instrument
referred to herein or executed in connection with the Obligations shall, for any
reason, be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
of any Loan Document or of any other instrument referred to herein or executed
in connection with such Obligations.
8.7 Amendments; Waivers. Neither this Agreement nor any provision hereof
may be amended, waived, discharged, or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, waiver, discharge, or termination is sought.
8.8 Controlling Agreement. In the event of a conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control.
8.9 Governing Law. THIS AGREEMENT, THE NOTES, AND THE GUARANTY AND ALL
ISSUES ARISING IN CONNECTION THEREWITH AND THE TRANSACTIONS CONTEMPLATED THEREBY
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
LOUISIANA, WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF
LAW.
8.10 Jurisdiction and Venue. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO,
ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE SOLE
DISCRETION AND ELECTION OF THE NOTEHOLDER AGENT IN COURTS HAVING SITUS IN
SHREVEPORT, LOUISIANA. THE BORROWER HEREBY SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE, OR FEDERAL COURT LOCATED IN SHREVEPORT, LOUISIANA AND HEREBY
WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF
ANY LITIGATION BROUGHT AGAINST IT BY THE NOTEHOLDERS, THE NOTEHOLDER AGENT OR
THE COLLATERAL AGENT IN ACCORDANCE WITH THIS SECTION.
8.11 Waiver of Rights to Jury Trial. THE BORROWER, THE NOTEHOLDERS AND THE
NOTEHOLDER AGENT HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY, AND
UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT RELATES TO OR ARISES OUT OF
ANY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS OF THE
NOTEHOLDERS, THE NOTEHOLDER AGENT OR THE COLLATERAL AGENT IN THE ENFORCEMENT OF
32
<PAGE>
ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE A MATERIAL
INDUCEMENT FOR THE NOTEHOLDERS ENTERING INTO THIS AGREEMENT.
8.12 Entire Agreement. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL SUPERSEDE
ANY PRIOR AGREEMENT AMONG THE PARTIES HERET0 WHETHER WRITTEN OR ORAL, RELATING
TO THE SUBJECT HEREOF. FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER
WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE
PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
8.13 Counterparts. For the convenience of the parties, this Agreement may
be executed in multiple counterparts and by different parties hereto in separate
counterparts, each of which for all purposes shall be deemed to be an original
and all of which together shall constitute one and the same Agreement.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
BORROWER:
GOODRICH PETROLEUM COMPANY-LAFITTE, L.L.C.
By:
---------------------------------------
Walter G. Goodrich, President
GOODRICH-LOUISIANA:
GOODRICH PETROLEUM COMPANY, L.L.C.
(Joining for the limited purpose of making the representations, warranties and
covenants set forth in Articles IV, V and VI hereinabove.)
By:
---------------------------------------
Walter G. Goodrich, President
33
<PAGE>
NOTEHOLDER AGENT:
HAMBRECHT & QUIST GUARANTY FINANCE, LLC
By:
-------------------------------------
34
<PAGE>
EXHIBIT 1
SCHEDULE OF NOTEHOLDERS
35
<PAGE>
EXHIBIT 2
DISCLOSURES
Section 4.8 "Liabilities" --None.
Section 4.8 "Litigation" --See attached Schedule 1.
Section 4.12 "Environmental Matters" --None, except as disclosed on Schedule 1
Section 4.16 "Refunds" --None.
Section 4.17 "Gas Contracts" --None.
Section 4.19 "Casualties" --None.
36
<PAGE>
EXHIBIT 3
FORM OF COMPLIANCE CERTIFICATE
37
<PAGE>
CONVERTIBLE PROMISSORY NOTE
(LAFITTE DEBT)
- --------------------------------------------------------------------------------
Borrower: Goodrich Petroleum Company-Lafitte, L.L.C.
333 Texas Street
Suite 1375
Shreveport, Louisiana 71101
Lender:
---------------------------------
---------------------------------
---------------------------------
- --------------------------------------------------------------------------------
Principal Amount: $ Interest Rate: 8.0 %
------------------- ------
Date of Note:
------------------------
PROMISE TO PAY.
- ---------------
Goodrich Petroleum Company-Lafitte, L.L.C. ("Borrower") promises to pay
to ("Lender"), or order, in lawful money of the United
------------------------
States of America, the principal amount of ($ ), or so much as may be
outstanding, together with interest on the unpaid outstanding principal balance
from the Date of Note, as indicated above, until such balance is paid in full.
This Convertible Promissory Note executed by Borrower in favor of Lender shall
be referred to as a "Note".
1. PAYMENT OF PRINCIPAL AND ACCRUED INTEREST.
------------------------------------------
Beginning as of the date of this Note first written above (the "Date of
Note") and continuing until the outstanding principal balance is paid in full,
interest will accrue at an annual rate of Eight Percent (8.0%). Interest will be
computed on a 365/360 day basis compounding monthly; that is in each month 1/360
of the Eight Percent (8.0%) annual interest rate, will be multiplied by (a) the
sum of (i) the outstanding principal balance and (ii) accumulated interest
outstanding as of the end of the prior month and (b) the actual number of days
that the principal was outstanding in such month.
1.1 Interest Accrual Period. Beginning as of the Date of Note first written
above and continuing through October 1, 2002 (the "Interest Accrual Period"),
interest shall accrue at an annual rate of Eight Percent (8.0%), compounding on
the last date of each calendar month as described above; provided, however, if
the Collateral Agent commences any action (judicial or extrajudicial) against
any collateral held by it pursuant to the terms of the Collateral Agency
Agreement, then such interest as may thereafter accrue shall be payable monthly,
in arrears, on or before the first day of each month thereafter. If on October
1, 2002, the common stock of Goodrich Petroleum Corporation, a Delaware
corporation ("Goodrich-Delaware") has a closing price of at least $4.00 per
share, as adjusted pursuant to Section 3.2 hereof (the "First Benchmark Stock
Price"), then, at Borrower's option the Interest Accrual Period shall be
extended to October 1, 2003 (the "First Extension Option"). If Borrower
exercised the First Extension Option, and if on October 1, 2003, the common
stock of Goodrich-Delaware has a closing price of at least $5.00 per share, as
adjusted pursuant to Section 3.2 hereof (the "Second Benchmark Stock Price"),
then, at Borrower's option, the Interest Accrual Period shall be extended to
October 1, 2004 (the "Second Extension Option").
1.2 Principal Repayment Period. Beginning as of the end of the Interest
Accrual Period (initially October 1, 2002, but as may be adjusted pursuant to
Section 1.1 above), the sum of all principal and accrued interest through the
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last day of the Interest Accrual Period shall be repaid in twenty-four equal
monthly installments beginning on the last day of the Interest Accrual Period
and continuing on the first day of the subsequent twenty-three months. The
period of time beginning on the last day of the Interest Accrual Period and
ending on the first day of the month that is twenty- three months after the last
day of the Interest Accrual Period shall be referred to as the "Principal
Repayment Period." For example, if the last day of the Interest Accrual Period
is October 1, 2002, the Principal Repayment Period shall be from October 1, 2002
through September 1, 2004.
1.3 Payment of Interest. During the Principal Repayment Period, all
interest that accrues beginning on the last day of the Interest Accrual Period
(initially October 1, 2002, but as may be adjusted by the First Extension
Option, or the Second Extension Option), shall be paid monthly on the first day
of each of the following months during the Principal Repayment Period.
2. CONVERSION OF PRINCIPAL AND ACCRUED INTEREST.
---------------------------------------------
Beginning as of the Date of this Note first written above and continuing
until all accrued interest and the outstanding principal balance is paid in
full, Lender may, at its option pursuant to the terms hereof, by delivering to
Borrower a Conversion Notice, as defined in Section 2.2, elect to require
Borrower to convert all or part of the accrued interest and outstanding
principal that is owing into shares of Goodrich-Delaware's common stock as
follows:
2.1 Conversion. Some or all of the accrued interest and principal amount
outstanding shall be convertible into a number of shares of Goodrich-Delaware's
common stock, which number of shares shall be equal to the quotient of (a) the
total accrued interest and outstanding principal subject to conversion divided
by (b) the Conversion Price, as defined in Section 3.1 (the "Conversion
Option").
2.2 Conversion Notice. "Conversion Notice" shall mean the written notice
that Lender may, at its option, give to Borrower, notifying Borrower of Lender's
decision to exercise a Conversion Option to convert some or all of the accrued
interest and outstanding principal into shares of Goodrich-Delaware's common
stock. Borrower will deliver to Lender the required shares of
Goodrich-Delaware's common stock within five (5) business days of receiving the
Conversion Notice.
2.3 Minimum Conversion Amount. Each Conversion Notice given by Lender to
Borrower shall be for no less that 10% of the total amount of outstanding
principal and accrued interest owing under this Note from Borrower to Lender at
the time that the Conversion Notice is given.
3. CONVERSION PRICE.
-----------------
3.1 Conversion Price. The "Conversion Price" as used herein shall mean
$4.00, as adjusted pursuant to Section 3.2 hereof.
3.2 Adjustment to Conversion Price.
3.2.1 Definitions. As used in this Section 3.2 the following terms
shall have the following respective meanings: ------------
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(a) "Common Stock" shall mean shares of the presently authorized
common stock of the Goodrich-Delaware and any stock into which such common stock
may hereafter be exchanged.
(b) "Options" shall mean the rights, options or warrants to
subscribe for, purchase or otherwise acquire shares of Common Stock or
Convertible Securities.
(c) "Convertible Amounts" shall mean the aggregate dollar amounts
that are subject to conversion at any given time pursuant to the Conversion
Option.
(d) "Convertible Securities" shall mean any evidence of
indebtedness, shares of stock or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
3.2.2 Adjustments to Conversion Price. The Conversion Price shall be
subject to adjustment from time to time upon the occurrence of certain events,
as follows:
(a) Reclassification, Reorganization, Consolidation or Merger. In
the case of any reclassification of the Common Stock, or any reorganization,
consolidation or merger of Goodrich-Delaware with or into another corporation
(other than a merger or reorganization with respect to which Goodrich-Delaware
is the continuing corporation and which does not result in any reclassification
of the Common Stock), each share of Common Stock theretofore issuable upon
exercise of any Conversion Option, shall be properly adjusted as to the number
and kind of securities receivable upon the exercise of any Conversion Option,
such that Lender shall receive the number and kind of securities which a holder
of Common Stock would have been entitled to receive after the happening of any
of the events described in this subsection (a) had the conversion pursuant to
any Conversion Option been made immediately prior to the happening of such event
or the record date for such event, whichever is earlier. The provisions of this
subsection (a) shall similarly apply to successive reclassifications,
reorganizations, consolidations or mergers.
(b) Split, Subdivision or Combination of Shares. If
Goodrich-Delaware at any time prior to Lender's exercise of any Conversion
Option shall split, subdivide or combine the Common Stock of Goodrich-Delaware,
the Conversion Price shall be proportionately decreased in the case of a split
or subdivision or proportionately increased in the case of a combination. Any
adjustment under this subsection (b) shall become effective when the split,
subdivision or combination becomes effective.
(c) Stock Dividends. If Goodrich-Delaware at any time prior to
Lender's exercise of any Conversion Option shall pay a dividend with respect to
Common Stock of Goodrich-Delaware payable in shares of Common Stock, Options, or
Convertible Securities, the Conversion Price shall be adjusted, from and after
the date of determination of the shareholders entitled to receive such dividend
or distributions, to that price determined by multiplying the Conversion Price
in effect immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution (including Common
Stock issuable upon exercise, conversion or exchange of any Option or
Convertible Securities issued as such dividend or distribution). If the Options
or Convertible Securities issued as such dividend or distribution by their terms
provide, with the passage of time or otherwise, for any decrease in the
consideration payable to Goodrich-Delaware, or any increase by the number of
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<PAGE>
shares issuable upon exercise, conversion or exchange thereof (by change of rate
or otherwise), the Conversion Price shall, upon any such decrease or increase
becoming effective, be reduced to reflect such decrease or increased to reflect
such increase as if such decrease or increase became effective immediately prior
to the issuance of the Options or Convertible Securities as the dividend or
distribution. Any adjustment under this subsection (c) shall become effective on
the record date.
(d) Other Securities. In the event Goodrich-Delaware at any time
prior to Lender's exercise of any Conversion Option makes, or fixes a record
date for the determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in securities of Goodrich-Delaware other
than shares of Common Stock, then, and in each such event, provision shall be
made so that the Lender shall receive, upon exercise of any Conversion Option,
in addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Borrower which the Lender would have received had
the Convertible Amounts been exchangeable for such Common Stock on the date of
such event and had the Lender thereafter, during the period from the date of
such event to and including the date of exercise, retained such securities
receivable by Lender as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 3.2 with respect to
the rights of the Lender.
3.2.3 Other Adjustments. The First Benchmark Stock Price, the Second
Benchmark Stock Price, the Lafitte Conversion Benchmark and the Clawback Price
shall all be subject to adjustment in the same manner and to the same extent as
those adjustments made to the Conversion Price pursuant to Section 3.2.2 above.
3.2.4 Fractional Shares. Pursuant to the Conversion Options, no
fractions of shares of Common Stock shall be issued, but in lieu thereof
Borrower shall pay a cash adjustment to Lender in respect of such fractional
interest in an amount equal to such fractional interest multiplied by the then
applicable Conversion Price; provided, however, that no payment will be made in
respect of such cash adjustment if the amount payable is less than Twenty and
No/100 Dollars ($20.00).
3.2.5 Reserving Shares. Borrower shall at all times reserve and keep
available out of its authorized and unissued Common Stock, solely for the
purpose of effecting the Conversion Options of Lender, such number of shares of
Common Stock as shall from time to time be adjusted pursuant to this Section 3
hereof.
3.2.6 Registration of Shares. Goodrich-Delaware shall file with the
SEC within sixty (60) days following the Date of Note hereof a registration
statement on Form S-1 under the Securities Act of 1933, as amended, or such
other form that Goodrich-Delaware is eligible to use or that the SEC deems
appropriate (the "Registration Statement") for the registration of the resale by
the Lender of the common stock of Goodrich-Delaware issuable upon conversion of
this Note ("Registrable Securities"). The Goodrich-Delaware shall use its best
efforts to have the Registration Statement declared effective by the SEC by no
later than ninety (90) days after the Date of Note hereof and to ensure that the
Registration Statement, and the underlying prospectus, remains in effect for so
long as any Registrable Shares are outstanding.
(a) Notwithstanding the foregoing, Goodrich-Delaware may defer
the filing of the Registration Statement until a date not later than sixty (60)
days after the time set forth above if Goodrich-Delaware or its subsidiaries are
engaged in confidential negotiations or other confidential business activities,
disclosure of which would be required in such Registration Statement (but would
not be required if such Registration Statement were not filed).
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<PAGE>
(b) Notwithstanding the foregoing, if Goodrich-Delaware
determines in its good faith judgment that the filing of any supplement or
amendment to the Registration Statement in order to keep the Registration
Statement effective would require the disclosure of material information that
Goodrich-Delaware has a bona fide business purpose for preserving as
confidential, then upon written notice of such determination by
Goodrich-Delaware to the Lender, the obligation of Goodrich-Delaware to
supplement or amend the Registration Statement will be suspended until
Goodrich-Delaware notifies the Lender in writing that the reasons for suspension
of such obligations no longer exist and Goodrich-Delaware amends or supplements
the Registration Statement as may be required. The maximum number of consecutive
days during which Goodrich-Delaware may delay the filing of any such supplement
or amendment shall not exceed sixty (60) days.
3.2.7 Notice of Adjustments. Whenever the Conversion Price is adjusted
pursuant to Section 3 hereof, Borrower shall promptly issue a notice signed by
its chief financial officer or chief executive officer stating, in reasonable
detail, the new Conversion Price as a result of each adjustment, a brief
statement of the facts requiring such adjustments and the computation thereof,
and the date such adjustments became effective, and Borrower shall mail (by
first class mail, postage prepaid) to Lender at Lender's address a copy of such
notice.
4. ALTERNATIVE CONVERSION OPTION
-----------------------------
Beginning as of October 1, 2002 and continuing until all accrued interest
and outstanding principal balance is paid in full, each Lender may, at its
option pursuant to the terms hereof, by delivering to Borrower an Alternative
Conversion Notice, as defined in Section 4.2, elect to require Borrower to
convert all or part of the accrued interest and outstanding principal that is
owing into the Borrower's membership units as follows:
4.1 Alternative Conversion. If after October 1, 2002, neither (a) the
common stock of Goodrich-Delaware has a closing price of at least $3.00 per
share nor (b) the net asset value per share of the common stock of
Goodrich-Delaware is at least $3.00 (calculated by valuing the oil and gas
reserves of Goodrich-Delaware on a consolidated basis at their SEC PV10% value,
and all other assets and liabilities in accordance with Generally Accepted
Accounting Principles ("GAAP")), both as adjusted pursuant to Section 3.2 hereof
(the "Lafitte Conversion Benchmark"); then the accrued interest and principal
amount outstanding, or any portion of it, shall be convertible into the
Borrower's membership units pursuant to the provisions of this Section 4 (the
"Alternative Conversion Option").
4.2 Alternative Conversion Notice. "Alternative Conversion Notice" shall
mean the written notice that Lender may, at its option, give to Borrower,
notifying Borrower of Lender's decision to exercise an Alternative Conversion
Option to convert all of the accrued interest and outstanding principal into
membership units of the Borrower. Borrower will deliver the required membership
units to the Lenders electing to participate in the conversion, in accordance
with Section 4.5, within five business days of the end of the notice period
provided in Section 4.5.
4.3 Defined Terms. As used in Section 4.4 the following terms shall have
the following respective meanings:
(a) "Aggregate Borrower's Convertible Debt Instruments" shall mean all
those Convertible Promissory Notes described on Exhibit A.
5
<PAGE>
(b) "Total Borrower's Convertible Debt Amount" shall mean all
principal and accrued interest owing on the Aggregate Borrower's Convertible
Debt Instruments at any given time.
(c) "Value of Lafitte" shall mean 130% of the SEC PV10% value of
Borrower's reserves, plus all other assets and less all liabilities of Borrower,
as determined by GAAP.
4.4 Conversion Rate. The accrued interest and principal amount outstanding,
or any portion of it, shall be convertible into a number of the Borrower's
membership units, which number of units shall be equal to the quotient of (a)
the total accrued interest and outstanding principal subject to conversion
divided by (b) the Total Borrower's Convertible Debt Amount, times (c) the
Adjustment Factor, as defined herein. The Adjustment Factor shall mean 100% less
one half of the percentage by which the Value of Lafitte exceeds Total
Borrower's Convertible Debt Amount; provided that the Adjustment Factor shall
never be less than 50%.
4.5 Notice to Lenders. Because the exercise of the Alternative Conversion
Option by any Lender may result in a less advantageous Adjustment Factor for
subsequent alternative conversions by other Lenders, Borrower shall notify all
Lenders of any exercise of the Alternative Conversion Option. All Lenders who
then submit an Alternative Conversion Notice within 20 days shall have their
conversions considered together pursuant to this Article 4.
4.6 Termination of Alternative Conversion. In the event that either of
Goodrich-Delaware, Goodrich-Louisiana or Borrower shall file for protection, or
shall be petitioned into bankruptcy, under the United States Bankruptcy laws,
the Alternative Conversion Option shall automatically terminate and have no
further force or effect; provided, however, that the Alternative Conversion
Option shall not terminate if, (i) upon request of Lender, Compass Bank, at its
exclusive option and in its sole discretion, agrees that such conversion option
shall not terminate or, (ii) all obligations of Goodrich-Delaware,
Goodrich-Louisiana and Borrower, if any, are indefeasibly paid, and the Credit
Agreement between Compass Bank and Goodrich-Louisiana of even date herewith has
been terminated.
5. PREPAYMENT.
-----------
Some or all of the outstanding principal and accrued interest under this
Note may be prepaid at any time, provided that a penalty fee is paid to Lender
equal to 10% of such principal and interest being prepaid, pursuant to the terms
described herein (the "Prepayment Option"). Borrower may only exercise the
Prepayment Option, if after giving Lender twenty (20) day's prior written notice
Lender has not elected to exercise its Conversion Option for such amount as
Borrower wants to prepay.
6. BORROWER'S OPTION.
------------------
If Borrower notifies Lender that it wishes to exercise its Prepayment
Option for amounts that are not due for at least one year, and Lender then
elects to use its Conversion Option for such amounts, then Borrower or
Goodrich-Delaware may elect to repurchase one half of the Common Stock that
Lender received as a result of exercising such Conversion Option at a price of
$6.00 per share, as adjusted pursuant to Section 3.2 (the "Clawback Price").
This option shall not be assignable by Borrower or Goodrich-Delaware to any
other party.
6
<PAGE>
7. METHOD OF PAYMENT.
------------------
Borrower will pay Lender principal and interest that is not converted into
shares of Goodrich-Delaware's common stock pursuant to the Conversion Option,
and loan fees by check made payable to the Lender drawn on a United States bank
and for United States dollars, or by wire transfer to an account of Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to any remaining amount of any unpaid collection costs and late
charges, then to accrued unpaid interest and then to any unpaid principal.
8. FIXED INTEREST RATE.
--------------------
The interest rate on this Note is Eight Percent (8.0%) per annum, or, if
lower, the maximum rate of interest allowed by applicable law.
9. NOTICES.
--------
Any notice or other communication required or permitted under this Note
shall be in writing and shall be delivered personally, sent by facsimile
transmission, or sent by overnight courier. Any such notice shall be deemed
received when so delivered personally, or when so transmitted by facsimile, or
if sent by overnight courier on the day after delivered to the courier as
follows:
TO BORROWER: Goodrich Petroleum Company-Lafitte, L.L.C.
333 Texas Street, Suite 1375
Shreveport, Louisiana 71101
Fax: (318)429-2296
TO LENDER:
---------------------------------------
------------------------------
------------------------------
Fax: ( )
--- -------------------
with a copy to: Attn: Donald M. Campbell
Hambrecht & Quist Guaranty Finance, LLC
One Bush Street
San Francisco, CA 94104
Fax: (415) 439-3804
Any party may, by notice given in accordance with this Section to the other
parties, designate another address or person for receipt of notices hereunder.
10. DEFAULT.
--------
Borrower will be in default if any Event of Default occurs under the
Lafitte Credit Agreement.
7
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11. LENDER'S RIGHTS.
----------------
Upon the occurrence and during the continuance of an Event of Default,
Lender may declare the entire unpaid principal balance on this Note and all
accrued unpaid interest immediately due and payable, without notice, and then
Borrower will pay that amount. Upon Borrower's failure to pay all amounts
declared due pursuant to this section, including failure to pay upon final
maturity, Lender at its option, may also, if permitted under applicable law, do
one or both of the following: (a) increase the interest rate on this Note up to
eighteen percent (18%) per annum, or, if lower, up to the maximum interest
amount allowable by applicable law, and (b) add any unpaid accrued interest to
principal and such sum will bear interest therefrom until paid at the rate
provided in this Note. Borrower agrees to pay all reasonable out of pocket
expenses of Lender in connection with the collection and enforcement of this
Note. This includes, subject to any limits under applicable law, Lender's
attorneys' fees and legal expenses whether or not there is a lawsuit, including
attorneys' fees and legal expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collections services. Borrower also will pay any court
costs, in addition to all other sums provided by law. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction of any
federal or state court located in Shreveport, Louisiana. This Note shall be
governed by and construed in accordance with the laws of the State of Louisiana.
12. LOAN AGREEMENT.
---------------
This Note is subject to and shall be governed by all the terms and
conditions of the Credit Agreement, dated September , 1999, between the
----
Borrower and Hambrecht & Quist Guaranty Finance, LLC, as Agent for Lender, as
amended from time to time (the "Lafitte Credit Agreement").
13. OUT-OF-POCKET EXPENSES.
-----------------------
Borrower shall pay to Lender the reasonable out-of-pocket expenses of
Lender according to the provisions of Section 5.12 of the Lafitte Credit
Agreement.
14. SERVICE CHARGE.
---------------
Since it would be impractical or extremely difficult to fix Lender's actual
damages for collecting and accounting for a late payment, if any payment to
Lender required herein is not paid on or before its due date, Borrower shall pay
to Lender an amount equal to five percent (5%) of any such late payment (but not
less than ten dollars ($10) nor more than two-hundred and fifty dollars ($250)).
15. GENERAL PROVISIONS.
-------------------
Lender may delay or forgo enforcing any of its rights or remedies under
this Note without losing them. Borrower and any other person who signs,
guarantees or endorses this Note may, to the extent allowed by law, waive any
applicable statute of limitations, presentment, demand for payment, protest and
notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew, extend (repeatedly and
for any length of time) or modify this Note, or release any party or guarantor;
8
<PAGE>
or impair, fail to realize upon or perfect Lender's security interest in any
collateral securing this Note and take any other action deemed necessary by
Lender without the consent of or notice to anyone.
16. COLLATERAL.
-----------
This Note is secured by certain collateral of the Borrower and others as
more thoroughly described in the Security Documents (as defined in the Lafitte
Credit Agreement).
PRIOR TO SIGNING THIS NOTE BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE. BORROWER AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF
A COMPLETED COPY OF THE NOTE.
BORROWER:
GOODRICH PETROLEUM COMPANY-LAFITTE, L.L.C.
By:
----------------------------------------
Walter G. Goodrich, President
9
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Certificate Evidencing Membership Interest
in a Limited Liability Company
Number Units
-------------------- ----------------
GOODRICH PETROLEUM COMPANY, L.L.C.
A LIMITED LIABILITY COMPANY UNDER THE
LAWS OF THE STATE OF LOUISIANA
SERIES A PREFERRED UNITS
THIS CERTIFIES THAT is the owner of
---------------------------------------
Series A Preferred Units (the "Units") in Goodrich Petroleum
- ----------------
Company, L.L.C. (hereinafter referred to as the "Company") transferable on the
books of the Company by the holder hereof in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. The designations,
preferences and relative participating, optional or other special rights, powers
and duties of the Units are set forth in, and this Certificate, and the Units
represented hereby, is issued and shall in all respects be subject to all of the
provisions of, the Amended and Restated Operating Agreement of the Company, as
amended, supplemented or restated from time to time (the "Company Agreement").
Copies of the Company Agreement are on file at, and will be furnished without
charge on delivery of written request to the Company at, the principal office of
the Company located at 333 Texas Street, Suite 1375, Shreveport, Louisiana
71101. Capitalized terms used but not defined herein shall have the meaning
given them in the Company Agreement.
The holder hereof, by accepting this Certificate, is deemed to have (i)
requested admission as, and agreed to become, a Member and to have agreed to
comply with and be bound by and to have executed the Company Agreement, and (ii)
represented and warranted that the holder has all right, power and authority
and, if an individual, the capacity necessary to enter into the Company
Agreement.
Witness the signature of its duly authorized representative.
GOODRICH PETROLEUM COMPANY, L.L.C.
By:
----------------------------------
Walter G. Goodrich, President
Dated:
--------------------
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GOODRICH PETROLEUM COMPANY, L.L.C.
The Company will furnish without charge to each Member who so requests a
statement of the designations, preferences and relative participating, optional
or other special rights, powers and duties relating to the Units. Any such
request should be made to the Secretary of the Company at its principal place of
business.
For Value Received, hereby sell, assign and transfer
----------------------
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ----------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS,
INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
of the Units represented by the within Certificate, and do hereby
- --------------
irrevocably constitute and appoint
Attorney to
- ---------------------------------------------------------------------
transfer said Membership Interest on the books of the within-named Company with
full power of substitution in the premises.
Dated
----------------------------
----------------------------------------
----------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD, UNLESS IT HAS
BEEN REGISTERED UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE (AND, IN SUCH CASE, AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY SHALL HAVE BEEN DELIVERED TO THE COMPANY TO THE
EFFECT THAT SUCH OFFER OR SALE IS NOT REQUIRED TO BE REGISTERED UNDER THE
SECURITIES ACT). THIS SECURITY IS SUBJECT TO CERTAIN TERMS AND CONDITIONS SET
FORTH IN THE AMENDED AND RESTATED OPERATING AGREEMENT OF THE COMPANY, DATED AS
OF SEPTEMBER 13, 1999 (AS SUCH AGREEMENT MAY BE AMENDED FROM TIME TO TIME), A
COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE
OFFICES.
2
<PAGE>
EXHIBIT C
UNIT DESIGNATION ESTABLISHING
SERIES A PREFERRED UNITS
Pursuant to the provisions of Section 3.2 of the Amended and Restated
Operating Agreement of Goodrich Petroleum Company, L.L.C., a Louisiana limited
liability company (the "Company"), dated as of September 13, 1999, as such
agreement may be amended and restated from time to time (the "LLC Agreement"),
the Board hereby submits the following Unit Designation for the purpose of
establishing and designating a series of Units and fixing the designations,
rights and preferences thereof:
1. Defined Terms. Capitalized terms defined in this Exhibit C shall have
the meanings given to them only for purposes for this Exhibit C as the same
terms may be differently defined elsewhere in the LLC Agreement (including the
Exhibits thereto). Capitalized terms used in this Exhibit C that are not defined
herein shall have the meanings given thereto in the LLC Agreement.
2. Number and Designation. One Million (1,000,000) Preferred Units are
hereby designated as the "Series A Preferred Units." Three Hundred Thousand
(300,000) of such Series A Preferred Units will be issued by the Company in
connection with the initial offering of Series A Preferred Units. The Company
may issue subsequent Series A Preferred Units only if (a) such Preferred Units
are offered initially on a pro-rata basis to all then-existing holders of Series
A Preferred Units with the proviso that any then-existing holder of Series A
Preferred Units would have the right to purchase any units declined by any other
then-existing holder of Series A Preferred Units, or (b) such Preferred Units
are issued pursuant to the provisions of Section 3(b) hereof.
3. Distributions.
(a) Distribution Accrual Period. Beginning on the Issue Date and
continuing until September 30, 2002 (the "Distribution Accrual Period"),
the Company shall accrue on its books and records, but shall not pay, a
distribution at an annual rate of $0.80 per Preferred Unit. Such
distribution shall be accrued quarterly, in arrears, on March 31, June 30,
September 30 and December 31 of each year during the Distribution Accrual
Period. The distribution accrual for any period that is shorter or longer
than a full quarterly period shall be computed on the basis of a 360-day
year and the actual number of days elapsed (including the first day but
excluding the last day) occurring in the period.
(b) Payment of Accrued Distribution. On October 1, 2002, with respect
to each Series A Preferred Unit outstanding on the books and records of the
Company as of such date, the Company will convert the total distribution
accrued during the Distribution Accrual Period into additional Preferred
Units at the rate of Ten Dollars ($10.00) per Preferred Unit. No fractional
Preferred Units will be issued, but in lieu thereof, the Company will pay a
cash adjustment to the holder in respect of such fractional interest;
provided, however, that no payment will be made in respect of such cash
adjustment if the amount payable is less than $20.00.
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<PAGE>
(c) Distributions After Accrual Period. Beginning on October 1, 2002,
the holders of Preferred Units will be entitled to receive, when, as and if
declared by the Board out of funds legally available therefor, cumulative
cash distributions at annual rate of $1.00 per Preferred Unit. Beginning on
October 1, 2002, and on each October 1 thereafter, the annual rate of the
cash distributions payable to the holders of Series A Preferred Units shall
increase by $0.20 per year; provided, that, (i) no such increase shall be
made for any such annual period if the closing price for the common stock
of Goodrich Petroleum Corporation, a Delaware corporation
("Goodrich-Delaware) is equal to or greater than $4.00 per share (as
adjusted) on the last business day in September prior to the commencement
of a new annual period, and (ii) the annual dividend rate shall never
exceed $2.00 per Preferred Unit. The distributions payable under this
paragraph 3(c) shall be cumulative whether or not in any distribution
period there are funds of the Company legally available for the payment of
such distributions and whether or not such distributions are declared. The
distributions payable under this paragraph 3(c) shall be payable quarterly,
in arrears, on March 31, June 30, September 30 and December 31 of each
year. Notwithstanding anything to the contrary above, distributions shall
be paid only when, as and if declared by the Board out of funds legally
available therefor; provided, neither the failure of the Board to declare a
distribution nor the absence of funds legally available to make a cash
distribution shall affect the Company's obligation to make accruals. The
distribution amount for any period that is shorter or longer than a full
quarterly distribution period shall be computed on the basis of a 360-day
year and the actual number of days elapsed (including the first day but
excluding the last day) occurring in the period for which such amount is
payable.
4. Liquidation Rights. In the event of any liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, distributions shall
be made to the holders of Series A Preferred Units in the following manner:
(a) Series A Preferred. Before payment of any amount to the holders of
Junior Units, each holder of Series A Preferred Units shall be entitled to
receive from the assets of the Company available for distribution to
holders of its Units an amount equal to Liquidation Preference of each
Series A Preferred Unit held thereby. If, upon the occurrence of a
liquidation, dissolution or winding up, the assets and funds available for
distribution among the holders of the Series A Preferred Units shall be
insufficient to permit the payment in full of the Liquidation Preference of
all of the outstanding Series A Preferred Units, then the entire assets and
funds of the Company so available shall be distributed ratably in respect
of the Series A Preferred Units.
(b) Remaining Assets. If assets are remaining after payment of the
full preferential amount with respect to the Series A Preferred Units set
forth in Section 4(a), then the Company shall make distributions in respect
of the Junior Units according to the relative rights and preferences
thereof.
(c) Valuation of Securities and Property. The Company may only
distribute assets other than cash to holders of the Series A Preferred
Units in connection with any liquidation, dissolution or winding up of the
Company, on the prior written consent of the holders of a majority of the
Series A Preferred Units, and in such case, the value of the assets to be
distributed to the holders of Series A Preferred Units shall be determined
in good faith by the Board.
2
<PAGE>
5. Voting Rights. The holders of Series A Preferred Units shall have no
voting rights with respect to the Series A Preferred Units held thereby;
provided, however, that if and for so long as the Company is six months or more
in arrears in the payment of the cash distributions payable under Section 3(c)
hereof , the holders of Series A Preferred Units shall have the right to vote on
the election of Managers. In such event, each Series A Preferred Unit shall be
entitled to cast one vote.
6. Redemption. The Series A Preferred Units may be redeemed as follows:
(a) Redemption Price. The Company may, at any time, and from time to
time, redeem a Series A Preferred Unit by paying to the holder thereof an
amount equal to the Liquidation Preference.
(b) Redemption Procedures. The following procedures shall apply to any
redemption by the Company of the Series A Preferred Units pursuant to the
preceding provisions of this Section 6:
(i) Any redemption shall be effected by written or printed notice
by certified mail, postage prepaid, return receipt requested, to the
holders of record of the Series A Preferred Units being redeemed, such
notice to be addressed to each holder at the address shown in the Company's
records which notice shall (A) specify the date of redemption, (B) the
place at which holders of the Series A Preferred Units shall surrender
their certificate or certificates and obtain payment of the applicable
redemption price and (C) such other information, if any, as the Board may
deem appropriate. Such notice shall be given no more than 60 but no less
than 20 days prior to the date fixed for redemption.
(ii) On or after the date of redemption as specified in the
notice specified in Section 6(e)(i), each holder shall surrender to the
Company, at the place specified in such notice, its certificate or
certificates (or comply with applicable lost certificate provisions) for
the Series A Preferred Units upon payment by the Company of the applicable
redemption price.
(c) Pro Rata Redemption. Each redemption made pursuant to Section 6
shall be made pro rata with respect to all then outstanding Series A
Preferred Units.
(d) No Reissue of Units. Any Series A Preferred Units redeemed,
purchased, or otherwise acquired by the Company shall be deemed retired and
restored to the status of undesignated authorized but unissued units of
Preferred Units and may not under any circumstances thereafter be issued or
otherwise disposed of by the Company until such time as such Units have
been redesignated in accordance with Section 3.2 of the LLC Agreement.
7. Notices. Any notice required by the provisions of this Unit Designation
to be given to the holders of Series A Preferred Units shall be given in
accordance with Section 11.2 of the LLC Agreement.
3
<PAGE>
8. Protective Provisions. So long as any Series A Preferred Unit is
outstanding, the Company shall not, without first obtaining the consent of the
Persons holding a majority of the Series A Preferred Units then outstanding,
voting as a separate class:
(a) amend this Unit Designation or otherwise alter the rights,
preferences or privileges of the Series A Preferred Units;
(b) authorize, create or issue units of any new class or series of
Units having any preference or priority as to distributions, liquidation,
redemption or assets superior to or on a parity with any such preference or
priority of the Series A Preferred Units, or authorize, create or issue
Units of any class or series or any bonds, debentures, notes or other
obligations convertible into or exchangeable for, or having optional rights
to purchase, any Units of the Company having any such preference or
priority;
(c) reclassify Units into Units having a preference over or parity
with the Series A Preferred Units with respect to voting, distributions or
liquidation preferences, or any other rights and/or remedies;
9. Definitions. As used in this Unit Designation, the following terms
shall have the following meanings given to them:
"Issue Date" means the date on which a Series A Preferred Unit is issued by
the Company.
"Issue Price" means $10.
"Junior Units" means any class or series of Units of the Company other than
the Series A Preferred Units.
"Liquidation Preference" means, with respect to each Series A Preferred
Unit, the sum of (a) the Issue Price of such Unit plus (b) all accruals made
with respect to such Unit pursuant to Section 3 of this Exhibit C minus (c) the
fair market value of distributions made in respect of such Unit.
4
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS FOR SUCH LAWS AS MAY THEN BE IN EFFECT, OR AN OPINION
OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
(Issued with Secured Notes)
Company: Goodrich Petroleum Corporation, a Delaware corporation (the "Company"),
and any corporation that shall succeed to the obligations of the
Company under this Warrant.
Number of Shares:
---------------------------
Class of Stock: Common Stock
---------------------------
Initial Warrant Price: $0.9375 per share
----------------------
Expiration Date: September 30, 2006
---------------------------
Date of Grant:
-----------------------------
THIS CERTIFIES THAT, for value received,
-----------------------------------
("Investor") is entitled to purchase the above number (as adjusted pursuant to
Section 5 hereof) of fully paid and nonassessable shares of the above Class of
Stock of the Company at the Initial Warrant Price above (as adjusted pursuant to
Section 5 hereof), subject to the provisions and upon the terms and conditions
set forth herein.
1. Definitions.
------------
As used herein, the following terms, unless the context otherwise requires,
shall have the following meanings:
(a) "Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations thereunder, as shall
be in effect at the time.
(b) "Common Stock" shall mean shares of the presently authorized
common stock of the Company and any stock into which such common stock may
hereafter be exchanged.
(c) "Effective Registration Statement" shall mean a registration
statement of the Company filed with, and declared effective by, the SEC on
Form S-1 under the Act or such other form that the Company is eligible to
use or that the SEC deems appropriate for the registration of the resale by
the Investor of the Registrable Securities.
(d) "Holder" shall mean any person who shall at the time be the holder
of this Warrant.
(e) "Subsidiary Preferred Units" shall mean the Series A Convertible
Preferred Units of Goodrich Petroleum Company, L.L.C., a Louisiana limited
liability company ("GPC").
(f) "Registrable Securities" shall mean the Shares, the common stock
of the Company issuable upon conversion of the Secured Notes, and the
common stock of the Company issuable upon conversion of the Subsidiary
Preferred Units.
(g) "Registration Lapse Day" shall mean any day in which an Effective
Registration Statement is not in effect, or has lapsed with the SEC for any
reason.
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<PAGE>
(h) "Registration Lapse Period" shall mean the period of time in which
one or more Registration Lapse Days consecutively occur.
(i) "SEC" shall mean the Securities and Exchange Commission
(j) "Secured Notes" shall mean those convertible promissory notes
issued by GPC to the Investor dated as of the date hereof representing the
Pari Passu Debt, those convertible promissory notes issued by GPC to the
Investor dated as of the date hereof representing the Subordinated Debt,
and those convertible promissory notes issued by Goodrich Petroleum
Company-Lafitte, L.L.C. ("Lafitte") to the Investor dated as of the date
hereof representing the Lafitte Debt.
(k) "Shares" shall mean the shares of the Class of Stock that the
Holder is entitled to purchase upon exercise of this Warrant, as adjusted
pursuant to Section 5 hereof.
(l) "Warrant Price" shall mean the Initial Warrant Price at which this
Warrant may be exercised, as adjusted pursuant to ------------- Section 5
hereof.
2. Term.
-----
The purchase right represented by this Warrant is exercisable, in whole or
in part, on or before the Expiration Date.
3. Exercise of Warrant; Payment; Issuance of New Warrant.
------------------------------------------------------
3.1 Exercise. Subject to Section 2 hereof, the purchase rights represented
by this Warrant may be exercised by the Holder, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Appendix A duly executed) at the principal office of the Company and by the
payment to the Company, in the manner set forth in Section 3.2 below, of an
amount equal to the then applicable Warrant Price per share multiplied by the
number of Shares then being purchased. In the event of any exercise of the
purchase right represented by this Section 3, certificates for the Shares so
purchased shall be delivered to the Holder within five (5) business days of
receipt of such payment and, unless this Warrant has been fully exercised or
expired, a new Warrant (dated as of the date hereof) representing the portion of
the Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the Holder within such period.
3.2 Payment. Subject to Section 2 hereof, at the option of the Holder, the
payment of any exercise of purchase rights may be paid by the Holder to the
Company in any one or more of the following manners:
(a) by cash;
(b) by certified check or money order made payable to the Company;
(c) by wire transfer to the Company pursuant to wire transfer
instructions obtained by the Holder from the Company at the time of
exercise; or
(d) by the cancellation of some or all of the accrued interest, first,
and then the outstanding principal owing under the Secured Notes.
3.3. The Company may require that such certificate or certificates and any
new Warrant contain on the face thereof a legend substantially as follows:
"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended, or applicable state
securities laws and rules. No sale, offer to sell or transfer of the
2
<PAGE>
securities represented by this certificate shall be made unless a
registration statement under such act, and applicable state securities laws
with respect to such securities is then in effect, or pursuant to an
exemption from such registration requirements for such laws is then in
effect, or an opinion of counsel reasonably satisfactory to Company and its
counsel that such registration is not required."
4. Exercise Price.
---------------
The Warrant Price at which this Warrant may be exercised shall be the
Initial Warrant Price, as adjusted from time to time pursuant to Section 5
hereof.
5. Adjustment of Number and Kind of Shares and Adjustment of Warrant Price.
------------------------------------------------------------------------
5.1 Certain Definitions. As used in this Section 5 the following terms
shall have the following respective meanings:
(a) "Options" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire shares of Common Stock or Convertible
Securities.
(b) "Convertible Securities" shall mean any evidence of indebtedness,
shares of stock or other securities directly or indirectly convertible into
or exchangeable for Common Stock.
5.2 Adjustments. The number and kind of securities purchasable upon the
exercise of this Warrant and the Warrant Price shall be subject to adjustment
from time to time upon the occurrence of certain events, as follows:
(a) Reclassification, Reorganization, Consolidation or Merger. In the
case of any reclassification of the Common Stock, or any reorganization,
consolidation or merger of the Company with or into another corporation
(other than a merger or reorganization with respect to which the Company is
the continuing corporation and which does not result in any
reclassification of the Common Stock) (a "Reclassification"), the Company,
or such successor corporation, as the case may be, shall execute a new
warrant, providing that the Holder shall have the right to exercise such
new warrant and upon such exercise to receive, in lieu of each share of the
Class of Stock theretofore issuable upon exercise of this Warrant, the
number and kind of securities receivable upon such reclassification,
reorganization, consolidation or merger by a holder of shares of the same
Class of Stock of the Company for each such share of such Class of Stock.
The aggregate Warrant Price of the new warrant shall be the aggregate
Warrant Price in effect immediately prior to the reclassification,
reorganization, consolidation or merger and the Warrant Price per share
shall be appropriately increased or decreased. Such new warrant shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 5 including,
without limitation, adjustments to the Warrant Price and to the number of
shares issuable upon exercise of this Warrant. In the case of a
Reclassification in which the holder of shares of the same Class of Stock
of the Company as the Class of Stock theretofore issuable upon exercise of
this Warrant receives compensation in cash that is less per share than the
Warrant Price (which amount of cash compensation per share shall be
referred to as the "Acquisition Price"), then the Holder of this Warrant
shall have the option to receive from the Company cash compensation equal
to Fifty Percent (50%) of the Acquisition Price times the number of Shares
issuable upon exercise of this Warrant, which option may be exercised by
the Holder by surrendering this Warrant to the Company. The provisions of
this subsection (a) shall similarly apply to successive reclassifications,
reorganizations, consolidations or mergers.
(b) Split, Subdivision or Combination of Shares. If the Company at any
time while this Warrant remains outstanding and unexpired shall split,
subdivide or combine the Class of Stock for which this Warrant is then
exercisable, the Warrant Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of
a combination. Any adjustment under this subsection (b) shall become
effective when the split, subdivision or combination becomes effective.
3
<PAGE>
(c) Stock Dividends. If the Company at any time while this Warrant
remains outstanding and unexpired shall pay a dividend with respect to the
Class of Stock for which this Warrant is then exercisable, payable in
shares of that Class of Stock, Options, or Convertible Securities, the
Warrant Price shall be adjusted, from and after the date of determination
of the shareholders entitled to receive such dividend or distributions, to
that price determined by multiplying the Warrant Price in effect
immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of shares of that Class of
Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of the
same Class of Stock outstanding immediately after such dividend or
distribution (including shares of that Class of Stock issuable upon
exercise, conversion or exchange of any Option or Convertible Securities
issued as such dividend or distribution). If the Options or Convertible
Securities issued as such dividend or distribution by their terms provide,
with the passage of time or otherwise, for any decrease in the
consideration payable to the Company, or any increase by the number of
shares issuable upon exercise, conversion or exchange thereof (by change of
rate or otherwise), the Warrant Price shall, upon any such decrease or
increase becoming effective, be adjusted to reflect such decrease or
increase as if such decrease or increase became effective immediately prior
to the issuance of the Options or Convertible Securities as the dividend or
distribution. Any adjustment under this subsection (c) shall become
effective on the record date.
(d) Other Securities. In the event the Company at any time or from
time to time after the issuance of this Warrant makes, or fixes a record
date for the determination of Holders of Common Stock entitled to receive,
a dividend or other distribution payable in securities of the Company other
than shares of Common Stock, then, and in each such event, provision shall
be made so that the Holder shall receive, upon exercise hereof, in addition
to the number of shares of Common Stock receivable thereupon, the amount of
securities of the Company which the Holder would have received had this
Warrant been exercised for such Common Stock on the date of such event and
had the Holder thereafter, during the period from the date of such event to
and including the date of exercise, retained such securities receivable by
such Holder as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 5 with respect
to the rights of the Holder.
(e) New Securities. If the Company at any time while this Warrant
remains outstanding and unexpired shall issue additional shares of Common
Stock, Options or Convertible Securities at a price per share below the
Warrant Price, the Warrant Price shall be reduced to such price.
Notwithstanding the foregoing, the Company shall not be required to make
any adjustment to the Warrant Price in the case of the issuance of shares
of Common Stock, Options or Convertible Securities upon the exercise of any
options or warrants outstanding as of the Date of Grant.
5.3 Adjustment of Number of Shares. Upon each adjustment in the Warrant
Price pursuant to subsection 5.2 of this Article 5, the number of Shares
issuable upon exercise of this Warrant shall be adjusted to the product obtained
by multiplying the number of Shares issuable immediately prior to such
adjustment in the Warrant Price by a fraction (i) the numerator of which shall
be the Warrant Price immediately prior to such adjustment, and (ii) the
denominator of which shall be the Warrant Price immediately after such
adjustment.
6. Notice of Adjustments.
----------------------
Whenever the Warrant Price shall be adjusted pursuant to Section 5 hereof,
the Company shall issue a certificate signed by its chief financial officer or
chief executive officer setting forth, in reasonable detail, the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated and the Warrant Price after giving effect to such
adjustment and shall cause a copy of such certificate to be mailed (by first
class mail, postage prepaid) to the Holder.
4
<PAGE>
7. Right to Convert Warrant Into Stock.
------------------------------------
7.1 Certain Definition. As used in this Section 7, the following term shall
have the following meaning:
"Conversion Price." The Conversion Price of one share of the Class of
Stock for which this Warrant is then exercisable is determined as follows,
for the Registration Lapse Period during which the conversion of the
Warrant into such Class of Stock occurs:
(a) if the Common Stock is publicly traded, the product of (a) the
highest closing sale price or, if no closing sale price is reported, the
highest value that is the average between the ask and bid prices of the
Common Stock quoted on any exchange or over the-counter market on which the
Common Stock is listed, whichever is applicable, as published in the
Western Edition of The Wall Street Journal for each Registration Lapse Day
during the Registration Lapse Period, and (b) the number of shares of
Common Stock into which each share of the Class of Stock for which this
Warrant is then convertible, if applicable; or,
(b) if the Common Stock is not traded in an over-the-counter market or
on an exchange, the highest fair market value of a single share of the
Class of Stock for which this Warrant is then exercisable shall be as
determined in good faith by the Company's Board of Directors provided;
however, that if the Holder disputes in writing the fair market value
determined by the Board of Directors within thirty (30) days of being
informed of such fair market value, the fair market value shall be
determined by an independent appraiser, appointed in good faith by the
Company's Board of Directors.
7.2 Right to Convert. In addition to the rights granted under Section 3 of
this Warrant, during any Registration Lapse Period, until the SEC declares an
Effective Registration Statement, the Holder shall have the right to require the
Company to convert this Warrant (the "Conversion Right") into shares of the
Class of Stock for which the Warrant is then exercisable, as provided in this
Section 7. Upon exercise of the Conversion Right, the Company shall deliver to
the Holder (without payment by the Holder of any Warrant Price) that number of
shares of stock, if any, equal to the quotient obtained by dividing (x) the
value of this Warrant at the time the Conversion Right is exercised (determined
by subtracting the aggregate Warrant Price immediately prior to the exercise of
the Conversion Right from the aggregate Conversion Price) by (y) the Conversion
Price.
7.3 Method of Exercise. The Conversion Right may be exercised at any time
during a Registration Lapse Period by the Holder by the surrender of this
Warrant at the principal office of the Company together with a written statement
specifying that the Holder thereby intends to exercise the Conversion Right.
Certificates of the shares of stock issuable upon exercise of the Conversion
Right shall be delivered to the Holder within five (5) business days following
the Company's receipt of this Warrant together with the aforesaid written
statement.
7.4 Automatic Conversion Prior to Expiration. To the extent this Warrant is
not previously exercised, and if the value of one share of the Class of Stock
for which this Warrant is then exercisable (determined as of the expiration of
this Warrant in the manner provided in Section 7.1(a) or Section 7.1(b), as
applicable) is greater than the Warrant Price per share on the expiration date,
this Warrant shall be deemed automatically converted in accordance with Section
7.2 hereof (even if not surrendered) immediately before its expiration. To the
extent this Warrant or any portion thereof is deemed automatically converted
pursuant to this Section 7.4, the Company agrees to notify Holder within a
reasonable period of time of the number of shares of the Class of Stock, if any,
Holder is to receive by reason of such automatic conversion. The Company shall
issue to the Holder certificates for the Shares issued upon such automatic
conversion in accordance with Section 7.3 above, although the Company may
condition receipt of the certificate upon surrender of the Warrant to the
Company.
8. Transferability and Non-negotiability of Warrants and Shares.
-------------------------------------------------------------
This Warrant and the Shares issued upon exercise hereof may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
5
<PAGE>
(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, if reasonably
requested by the Company). Subject to the provisions of this Section 8, title to
the Warrant may be transferred in the same manner as a negotiable instrument
transferable by endorsement and delivery.
9. Notices.
--------
The Company shall mail to the registered Holder of the Warrant, at its last
known post office address appearing on the books of the Company, not less than
twenty (20) days prior to the date on which (a) a record will be taken for the
purpose of determining the Holders of Common Stock entitled to dividends or
subscription rights, or (b) a record will be taken (or in lieu thereof, the
transfer books will be closed) for the purpose of determining the Holders of
Common Stock entitled to notice of and to vote at a meeting of stockholders at
which any capital reorganization, reclassification of shares of Common Stock,
consolidation, merger, dissolution, liquidation, winding up or sales of
substantially all of the Company's assets shall be considered and acted upon.
10. Miscellaneous.
--------------
No fractional shares of the Shares shall be issued in connection with any
exercise hereunder, but in lieu of such fractional shares the Company shall make
a cash payment therefor upon the basis of the Warrant Price then in effect;
provided, however, that no payment shall be made in respect of such fractional
share if the amount due is less than $20.00. The terms and provisions of this
Warrant shall inure to the benefit of, and be binding upon, the Company and the
Holders hereof and their respective successors and assigns. This Warrant shall
be governed by and construed under the laws of the State of California as
applied to contracts entered into between residents of the State of California
to wholly performed in the State of California. The representations, warranties
and agreements herein contained shall survive the exercise of the Warrant.
References to the "holder of" include the immediate Holder of shares purchased
on the exercise of this Warrant, and the word "Holder" shall include the plural
thereof. The titles of the section and the subscriptions of this Warrant are for
convenience only and are not to be considered in construing this Warrant. All
pronouns used in the Warrant shall be deemed to include masculine, feminine and
neuter forms.
All shares of Common Stock or other securities issued upon the exercise of
this Warrant shall be validly issued, fully paid and nonassessable, and the
Company will pay all taxes in respect of the issuance thereof (other than any
income or capital gain taxes payable by the Holder)
IN WITNESS WHEREOF, the Warrant has been duly executed by the undersigned,
as of the day of September, 1999.
-----
GOODRICH PETROLEUM CORPORATION
By:
------------------------------------------
Walter G. Goodrich, President
6
<PAGE>
APPENDIX A
NOTICE OF EXERCISE
The undersigned, the Holder of the foregoing Warrant, hereby irrevocably
elects, pursuant to Section 3 of the Warrant, to exercise purchase rights
represented by such Warrant for, and to purchase thereunder,
---------------
shares of the Common Stock of Goodrich Petroleum Corporation (the "Company") to
which such Warrant relates and herewith makes payment of $
----------------------
therefor, as follows:
$ in cash,
-----------------------
$ by wire transfer to the Company,
-----------------------
$ by certified check or money order, or
-----------------------
$ by cancellation of accrued interest,
-----------------------
first, and then outstanding principal under the Secured Notes,
and requests that certificates for such shares (and any other securities or
property deliverable upon such conversion including a revised warrant) be
delivered to the undersigned at the address set forth below the signature of the
undersigned.
Dated:
------------------------------
Name of Holder:
--------------------------------------------------
By:
-----------------------------------------------
(Signature of Authorized Officer)
Title:
-----------------------------------------------
Address:
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
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<PAGE>
APPENDIX B
NOTICE OF CONVERSION
The undersigned, the Holder of the foregoing Warrant, hereby elects
pursuant to Section 7 of the Warrant, to convert the rights to purchase
--------
shares of the Common Stock covered by such Warrant and herewith makes payment in
full therefor by surrender of such Warrant, and requests that certificates for
the appropriate number of shares (and any other securities or property
deliverable upon such conversion including a revised warrant) be issued in the
name of the undersigned and delivered to its address as set forth below.
Dated:
-----------------------------
Name of Holder:
---------------------------------------------------
By:
-----------------------------------------------
(Signature of Authorized Officer)
Title:
-----------------------------------------------
Address:
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
8
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS FOR SUCH LAWS AS MAY THEN BE IN EFFECT, OR AN OPINION
OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED.
WARRANT TO PURCHASE SHARES
OF COMMON STOCK
(Issued with Preferred Units)
Company: Goodrich Petroleum Corporation, a Delaware corporation (the "Company"),
and any corporation that shall succeed to the obligations of the
Company under this Warrant.
Number of Shares:
---------------------------
Class of Stock: Common Stock
---------------------------
Initial Warrant Price: $1.5000 per share
-----------------------
Expiration Date: September 30, 2006
----------------------------
Date of Grant:
------------------------------
THIS CERTIFIES THAT, for value received,
----------------------------------
("Investor") is entitled to purchase the above number (as adjusted pursuant to
Section 5 hereof) of fully paid and nonassessable shares of the above Class of
Stock of the Company at the Initial Warrant Price above (as adjusted pursuant to
Section 5 hereof), subject to the provisions and upon the terms and conditions
set forth herein.
1. Definitions.
------------
As used herein, the following terms, unless the context otherwise requires,
shall have the following meanings:
(a) "Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations thereunder, as shall
be in effect at the time.
(b) "Common Stock" shall mean shares of the presently authorized
common stock of the Company and any stock into which such common stock may
hereafter be exchanged.
(c) "Effective Registration Statement" shall mean a registration
statement of the Company filed with, and declared effective by, the SEC on
Form S-1 under the Act or such other form that the Company is eligible to
use or that the SEC deems appropriate for the registration of the resale by
the Investor of the Registrable Securities.
(d) "Holder" shall mean any person who shall at the time be the holder
of this Warrant.
(e) "Subsidiary Preferred Units" shall mean the Series A Convertible
Preferred Units of Goodrich Petroleum Company, L.L.C., a Louisiana limited
liability company ("GPC").
(f) "Registrable Securities" shall mean the Shares, the common stock
of the Company issuable upon conversion of the Secured Notes, and the
common stock of the Company issuable upon conversion of the Subsidiary
Preferred Units.
(g) "Registration Lapse Day" shall mean any day in which an Effective
Registration Statement is not in effect, or has lapsed with the SEC for any
reason.
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(h) "Registration Lapse Period" shall mean the period of time in which
one or more Registration Lapse Days consecutively occur.
(i) "SEC" shall mean the Securities and Exchange Commission
(j) "Secured Notes" shall mean those convertible promissory notes
issued by GPC to the Investor dated as of the date hereof representing the
Pari Passu Debt, those convertible promissory notes issued by GPC to the
Investor dated as of the date hereof representing the Subordinated Debt,
and those convertible promissory notes issued by Goodrich Petroleum
Company-Lafitte, L.L.C. ("Lafitte") to the Investor dated as of the date
hereof representing the Lafitte Debt.
(k) "Shares" shall mean the shares of the Class of Stock that the
Holder is entitled to purchase upon exercise of this Warrant, as adjusted
pursuant to Section 5 hereof.
(l) "Warrant Price" shall mean the Initial Warrant Price at which this
Warrant may be exercised, as adjusted pursuant to ------------- Section 5
hereof.
2. Term.
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The purchase right represented by this Warrant is exercisable, in whole or
in part, on or before the Expiration Date.
3. Exercise of Warrant; Payment; Issuance of New Warrant.
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3.1 Exercise. Subject to Section 2 hereof, the purchase rights represented
by this Warrant may be exercised by the Holder, in whole or in part, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
Appendix A duly executed) at the principal office of the Company and by the
payment to the Company, in the manner set forth in Section 3.2 below, of an
amount equal to the then applicable Warrant Price per share multiplied by the
number of Shares then being purchased. In the event of any exercise of the
purchase right represented by this Section 3, certificates for the Shares so
purchased shall be delivered to the Holder within five (5) business days of
receipt of such payment and, unless this Warrant has been fully exercised or
expired, a new Warrant (dated as of the date hereof) representing the portion of
the Shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be issued to the Holder within such period.
3.2 Payment. Subject to Section 2 hereof, at the option of the Holder, the
payment of any exercise of purchase rights may be paid by the Holder to the
Company in any one or more of the following manners:
(a) by cash;
(b) by certified check or money order made payable to the Company;
(c) by wire transfer to the Company pursuant to wire transfer
instructions obtained by the Holder from the Company at the time of
exercise; or
(d) by the cancellation of some or all of the accrued interest, first,
and then the outstanding principal owing under the Secured Notes.
3.3. The Company may require that such certificate or certificates and any
new Warrant contain on the face thereof a legend substantially as follows:
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"The securities evidenced by this certificate have not been registered
under the Securities Act of 1933, as amended, or applicable state
securities laws and rules. No sale, offer to sell or transfer of the
securities represented by this certificate shall be made unless a
registration statement under such act, and applicable state securities laws
with respect to such securities is then in effect, or pursuant to an
exemption from such registration requirements for such laws is then in
effect, or an opinion of counsel reasonably satisfactory to Company and its
counsel that such registration is not required."
4. Exercise Price.
---------------
The Warrant Price at which this Warrant may be exercised shall be the
Initial Warrant Price, as adjusted from time to time pursuant to Section 5
hereof.
5. Adjustment of Number and Kind of Shares and Adjustment of Warrant Price.
------------------------------------------------------------------------
5.1 Certain Definitions. As used in this Section 5 the following terms
shall have the following respective meanings:
(a) "Options" shall mean rights, options or warrants to subscribe for,
purchase or otherwise acquire shares of Common Stock or Convertible
Securities.
(b) "Convertible Securities" shall mean any evidence of indebtedness,
shares of stock or other securities directly or indirectly convertible into
or exchangeable for Common Stock.
5.2 Adjustments. The number and kind of securities purchasable upon the
exercise of this Warrant and the Warrant Price shall be subject to adjustment
from time to time upon the occurrence of certain events, as follows:
(a) Reclassification, Reorganization, Consolidation or Merger. In the
case of any reclassification of the Common Stock, or any reorganization,
consolidation or merger of the Company with or into another corporation
(other than a merger or reorganization with respect to which the Company is
the continuing corporation and which does not result in any
reclassification of the Common Stock) (a "Reclassification"), the Company,
or such successor corporation, as the case may be, shall execute a new
warrant, providing that the Holder shall have the right to exercise such
new warrant and upon such exercise to receive, in lieu of each share of the
Class of Stock theretofore issuable upon exercise of this Warrant, the
number and kind of securities receivable upon such reclassification,
reorganization, consolidation or merger by a holder of shares of the same
Class of Stock of the Company for each such share of such Class of Stock.
The aggregate Warrant Price of the new warrant shall be the aggregate
Warrant Price in effect immediately prior to the reclassification,
reorganization, consolidation or merger and the Warrant Price per share
shall be appropriately increased or decreased. Such new warrant shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 5 including,
without limitation, adjustments to the Warrant Price and to the number of
shares issuable upon exercise of this Warrant. In the case of a
Reclassification in which the holder of shares of the same Class of Stock
of the Company as the Class of Stock theretofore issuable upon exercise of
this Warrant receives compensation in cash that is less per share than the
Warrant Price (which amount of cash compensation per share shall be
referred to as the "Acquisition Price"), then the Holder of this Warrant
shall have the option to receive from the Company cash compensation equal
to Fifty Percent (50%) of the Acquisition Price times the number of Shares
issuable upon exercise of this Warrant, which option may be exercised by
the Holder by surrendering this Warrant to the Company. The provisions of
this subsection (a) shall similarly apply to successive reclassifications,
reorganizations, consolidations or mergers.
(b) Split, Subdivision or Combination of Shares. If the Company at any
time while this Warrant remains outstanding and unexpired shall split,
subdivide or combine the Class of Stock for which this Warrant is then
3
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exercisable, the Warrant Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of
a combination. Any adjustment under this subsection (b) shall become
effective when the split, subdivision or combination becomes effective.
(c) Stock Dividends. If the Company at any time while this Warrant
remains outstanding and unexpired shall pay a dividend with respect to the
Class of Stock for which this Warrant is then exercisable, payable in
shares of that Class of Stock, Options, or Convertible Securities, the
Warrant Price shall be adjusted, from and after the date of determination
of the shareholders entitled to receive such dividend or distributions, to
that price determined by multiplying the Warrant Price in effect
immediately prior to such date of determination by a fraction (i) the
numerator of which shall be the total number of shares of that Class of
Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of the
same Class of Stock outstanding immediately after such dividend or
distribution (including shares of that Class of Stock issuable upon
exercise, conversion or exchange of any Option or Convertible Securities
issued as such dividend or distribution). If the Options or Convertible
Securities issued as such dividend or distribution by their terms provide,
with the passage of time or otherwise, for any decrease in the
consideration payable to the Company, or any increase by the number of
shares issuable upon exercise, conversion or exchange thereof (by change of
rate or otherwise), the Warrant Price shall, upon any such decrease or
increase becoming effective, be adjusted to reflect such decrease or
increase as if such decrease or increase became effective immediately prior
to the issuance of the Options or Convertible Securities as the dividend or
distribution. Any adjustment under this subsection (c) shall become
effective on the record date.
(d) Other Securities. In the event the Company at any time or from
time to time after the issuance of this Warrant makes, or fixes a record
date for the determination of Holders of Common Stock entitled to receive,
a dividend or other distribution payable in securities of the Company other
than shares of Common Stock, then, and in each such event, provision shall
be made so that the Holder shall receive, upon exercise hereof, in addition
to the number of shares of Common Stock receivable thereupon, the amount of
securities of the Company which the Holder would have received had this
Warrant been exercised for such Common Stock on the date of such event and
had the Holder thereafter, during the period from the date of such event to
and including the date of exercise, retained such securities receivable by
such Holder as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 5 with respect
to the rights of the Holder.
(e) New Securities. If the Company at any time while this Warrant
remains outstanding and unexpired shall issue additional shares of Common
Stock, Options or Convertible Securities at a price per share below the
Warrant Price, the Warrant Price shall be reduced to such price.
Notwithstanding the foregoing, the Company shall not be required to make
any adjustment to the Warrant Price in the case of the issuance of shares
of Common Stock, Options or Convertible Securities upon the exercise of any
options or warrants outstanding as of the Date of Grant.
5.3 Adjustment of Number of Shares. Upon each adjustment in the Warrant
Price pursuant to subsection 5.2 of this Article 5, the number of Shares
issuable upon exercise of this Warrant shall be adjusted to the product obtained
by multiplying the number of Shares issuable immediately prior to such
adjustment in the Warrant Price by a fraction (i) the numerator of which shall
be the Warrant Price immediately prior to such adjustment, and (ii) the
denominator of which shall be the Warrant Price immediately after such
adjustment.
6. Notice of Adjustments.
----------------------
Whenever the Warrant Price shall be adjusted pursuant to Section 5 hereof,
the Company shall issue a certificate signed by its chief financial officer or
chief executive officer setting forth, in reasonable detail, the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated and the Warrant Price after giving effect to such
adjustment and shall cause a copy of such certificate to be mailed (by first
class mail, postage prepaid) to the Holder.
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7. Right to Convert Warrant Into Stock.
------------------------------------
7.1 Certain Definition. As used in this Section 7, the following term shall
have the following meaning:
"Conversion Price." The Conversion Price of one share of the Class of
Stock for which this Warrant is then exercisable is determined as follows,
for the Registration Lapse Period during which the conversion of the
Warrant into such Class of Stock occurs:
(a) if the Common Stock is publicly traded, the product of (a) the
highest closing sale price or, if no closing sale price is reported, the
highest value that is the average between the ask and bid prices of the
Common Stock quoted on any exchange or over the-counter market on which the
Common Stock is listed, whichever is applicable, as published in the
Western Edition of The Wall Street Journal for each Registration Lapse Day
during the Registration Lapse Period, and (b) the number of shares of
Common Stock into which each share of the Class of Stock for which this
Warrant is then convertible, if applicable; or,
(b) if the Common Stock is not traded in an over-the-counter market or
on an exchange, the highest fair market value of a single share of the
Class of Stock for which this Warrant is then exercisable shall be as
determined in good faith by the Company's Board of Directors provided;
however, that if the Holder disputes in writing the fair market value
determined by the Board of Directors within thirty (30) days of being
informed of such fair market value, the fair market value shall be
determined by an independent appraiser, appointed in good faith by the
Company's Board of Directors.
7.2 Right to Convert. In addition to the rights granted under Section 3 of
this Warrant, during any Registration Lapse Period, until the SEC declares an
Effective Registration Statement, the Holder shall have the right to require the
Company to convert this Warrant (the "Conversion Right") into shares of the
Class of Stock for which the Warrant is then exercisable, as provided in this
Section 7. Upon exercise of the Conversion Right, the Company shall deliver to
the Holder (without payment by the Holder of any Warrant Price) that number of
shares of stock, if any, equal to the quotient obtained by dividing (x) the
value of this Warrant at the time the Conversion Right is exercised (determined
by subtracting the aggregate Warrant Price immediately prior to the exercise of
the Conversion Right from the aggregate Conversion Price) by (y) the Conversion
Price.
7.3 Method of Exercise. The Conversion Right may be exercised at any time
during a Registration Lapse Period by the Holder by the surrender of this
Warrant at the principal office of the Company together with a written statement
specifying that the Holder thereby intends to exercise the Conversion Right.
Certificates of the shares of stock issuable upon exercise of the Conversion
Right shall be delivered to the Holder within five (5) business days following
the Company's receipt of this Warrant together with the aforesaid written
statement.
7.4 Automatic Conversion Prior to Expiration. To the extent this Warrant is
not previously exercised, and if the value of one share of the Class of Stock
for which this Warrant is then exercisable (determined as of the expiration of
this Warrant in the manner provided in Section 7.1(a) or Section 7.1(b), as
applicable) is greater than the Warrant Price per share on the expiration date,
this Warrant shall be deemed automatically converted in accordance with Section
7.2 hereof (even if not surrendered) immediately before its expiration. To the
extent this Warrant or any portion thereof is deemed automatically converted
pursuant to this Section 7.4, the Company agrees to notify Holder within a
reasonable period of time of the number of shares of the Class of Stock, if any,
Holder is to receive by reason of such automatic conversion. The Company shall
issue to the Holder certificates for the Shares issued upon such automatic
conversion in accordance with Section 7.3 above, although the Company may
condition receipt of the certificate upon surrender of the Warrant to the
Company.
8. Transferability and Non-negotiability of Warrants and Shares.
-------------------------------------------------------------
This Warrant and the Shares issued upon exercise hereof may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee
5
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(including, without limitation, the delivery of investment representation
letters and legal opinions reasonably satisfactory to the Company, if reasonably
requested by the Company). Subject to the provisions of this Section 8, title to
the Warrant may be transferred in the same manner as a negotiable instrument
transferable by endorsement and delivery.
9. Notices.
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The Company shall mail to the registered Holder of the Warrant, at its last
known post office address appearing on the books of the Company, not less than
twenty (20) days prior to the date on which (a) a record will be taken for the
purpose of determining the Holders of Common Stock entitled to dividends or
subscription rights, or (b) a record will be taken (or in lieu thereof, the
transfer books will be closed) for the purpose of determining the Holders of
Common Stock entitled to notice of and to vote at a meeting of stockholders at
which any capital reorganization, reclassification of shares of Common Stock,
consolidation, merger, dissolution, liquidation, winding up or sales of
substantially all of the Company's assets shall be considered and acted upon.
10. Miscellaneous.
--------------
No fractional shares of the Shares shall be issued in connection with any
exercise hereunder, but in lieu of such fractional shares the Company shall make
a cash payment therefor upon the basis of the Warrant Price then in effect;
provided, however, that no payment shall be made in respect of such fractional
share if the amount due is less than $20.00. The terms and provisions of this
Warrant shall inure to the benefit of, and be binding upon, the Company and the
Holders hereof and their respective successors and assigns. This Warrant shall
be governed by and construed under the laws of the State of California as
applied to contracts entered into between residents of the State of California
to wholly performed in the State of California. The representations, warranties
and agreements herein contained shall survive the exercise of the Warrant.
References to the "holder of" include the immediate Holder of shares purchased
on the exercise of this Warrant, and the word "Holder" shall include the plural
thereof. The titles of the section and the subscriptions of this Warrant are for
convenience only and are not to be considered in construing this Warrant. All
pronouns used in the Warrant shall be deemed to include masculine, feminine and
neuter forms.
All shares of Common Stock or other securities issued upon the exercise of
this Warrant shall be validly issued, fully paid and nonassessable, and the
Company will pay all taxes in respect of the issuance thereof (other than any
income or capital gain taxes payable by the Holder)
IN WITNESS WHEREOF, the Warrant has been duly executed by the undersigned,
as of the day of September, 1999.
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GOODRICH PETROLEUM CORPORATION
By:
------------------------------------------
Walter G. Goodrich, President
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APPENDIX A
NOTICE OF EXERCISE
The undersigned, the Holder of the foregoing Warrant, hereby
irrevocably elects, pursuant to Section 3 of the Warrant, to exercise purchase
rights represented by such Warrant for, and to purchase thereunder,
shares of the Common Stock of Goodrich Petroleum Corporation (the
- -------------
"Company") to which such Warrant relates and herewith makes payment of
$ therefor, as follows:
----------------------
$ in cash,
-----------------------
$ by wire transfer to the Company,
-----------------------
$ by certified check or money order, or
-----------------------
$ by cancellation of accrued interest,
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first, and then outstanding principal under the Secured Notes,
and requests that certificates for such shares (and any other securities or
property deliverable upon such conversion including a revised warrant) be
delivered to the undersigned at the address set forth below the signature of the
undersigned.
Dated:
----------------------
Name of Holder:
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By:
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(Signature of Authorized Officer)
Title:
-----------------------------------------------
Address:
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APPENDIX B
NOTICE OF CONVERSION
The undersigned, the Holder of the foregoing Warrant, hereby elects
pursuant to Section 7 of the Warrant, to convert the rights to purchase
--------
shares of the Common Stock covered by such Warrant and herewith makes payment in
full therefor by surrender of such Warrant, and requests that certificates for
the appropriate number of shares (and any other securities or property
deliverable upon such conversion including a revised warrant) be issued in the
name of the undersigned and delivered to its address as set forth below.
Dated:
----------------------
Name of Holder:
---------------------------------------------------
By:
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(Signature of Authorized Officer)
Title:
-----------------------------------------------
Address:
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8
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CREDIT AGREEMENT
BETWEEN
GOODRICH PETROLEUM COMPANY, L.L.C.
AND
COMPASS BANK
September 23, 1999
REVOLVING LINE OF CREDIT
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above...................................................1
1.2 Additional Defined Terms..............................................1
1.3 Undefined Financial Accounting Terms.................................13
1.4 References...........................................................13
1.5 Articles and Sections................................................13
1.6 Number and Gender....................................................13
1.7 Incorporation of Exhibits............................................14
ARTICLE II TERMS OF FACILITY
2.1 Revolving Line of Credit.............................................14
2.2 Use of Loan Proceeds.................................................14
2.3 Interest.............................................................14
2.4 Repayment of Loans and Interest......................................15
2.5 Outstanding Amounts..................................................15
2.6 Time, Place, and Method of Payments..................................15
2.7 Mandatory Prepayments................................................15
2.8 Voluntary Prepayments................................................16
2.9 Facility Fee.........................................................16
2.10 Engineering Fee......................................................16
2.11 Commitment Fee; Reduction of Commitment Amount.......................16
2.12 Loans to Satisfy Obligations of Borrower.............................16
2.13 Security Interest in Accounts; Right of Offset.......................16
2.14 General Provisions Relating to Interest..............................17
2.15 Yield Protection.....................................................18
2.16 Power of Attorney....................................................18
ARTICLE III CONDITIONS
3.1 Receipt of Loan Documents and Other Items............................19
3.2 Each Loan............................................................21
ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.1 Due Authorization....................................................22
4.2 Corporate Existence..................................................23
4.3 Valid and Binding Obligations........................................23
4.4 Security Instruments.................................................23
4.5 Title to Assets......................................................23
4.6 Scope and Accuracy of Financial Statements...........................23
4.7 No Material Misstatements............................................23
4.8 Liabilities, Litigation, and Restrictions............................23
<PAGE>
4.9 Authorizations; Consents.............................................24
4.10 Compliance with Laws.................................................24
4.11 ERISA................................................................24
4.12 Environmental Laws...................................................24
4.13 Compliance with Federal Reserve Regulations..........................25
4.14 Investment Company Act Compliance....................................25
4.15 Public Utility Holding Company Act Compliance........................25
4.16 Proper Filing of Tax Returns; Payment of Taxes Due...................25
4.17 Refunds..............................................................25
4.18 Gas Contracts........................................................25
4.19 Intellectual Property................................................26
4.20 Casualties or Taking of Property.....................................26
4.21 Locations of Borrower, Lafitte and Guarantors........................26
4.22 Subsidiaries.........................................................26
4.23 Scope of Collateral; Property Owned by Lafitte.......................26
4.24 Ownership Interests in Goodrich......................................26
ARTICLE V AFFIRMATIVE COVENANTS
5.1 Maintenance and Access to Records....................................27
5.2 Quarterly Financial Statements; Compliance Certificates..............27
5.3 Annual Financial Statements; Compliance Certificates.................27
5.4 Oil and Gas Reserve Reports..........................................27
5.5 Accounts Payable/Receivable..........................................28
5.6 Capital Expenditures.................................................28
5.7 Declining Additional Lafitte Operations..............................28
5.8 Hedging Position.....................................................28
5.9 Title Opinions; Title Defects........................................29
5.10 Notices of Certain Events............................................29
5.11 Letters in Lieu of Transfer Orders; Division Orders..................30
5.12 Additional Information...............................................30
5.13 Compliance with Laws.................................................30
5.14 Payment of Assessments and Charges...................................31
5.15 Maintenance of Corporate Existence and Good Standing.................31
5.16 Further Assurances...................................................31
5.17 Fees and Expenses....................................................31
5.18 Operation of Oil and Gas Properties..................................32
5.19 Maintenance and Inspection of Properties.............................32
5.20 Maintenance of Insurance.............................................32
5.21 Maintenance of Operating Accounts....................................32
5.22 Asset Sales Proceeds.................................................32
5.23 Cash Collateral Account..............................................33
5.24 Indemnification......................................................33
ARTICLE VI NEGATIVE COVENANTS
6.1 Indebtedness; Contingent Obligations.................................34
6.2 Liens................................................................34
<PAGE>
6.3 Sales of Assets......................................................35
6.4 Leasebacks...........................................................35
6.5 Loans; Advances; Investments.........................................35
6.6 Changes in Corporate Structure.......................................35
6.7 Dividends and Distributions..........................................35
6.8 Transactions with Affiliates.........................................36
6.9 Lines of Business....................................................36
6.10 ERISA Compliance.....................................................36
6.11 Consolidated Tangible Net Worth......................................36
6.12 Debt Service Ratio...................................................36
6.13 Subordinated Debt, Pari Passu Debt and Lafitte Debt..................36
6.14 Agreements Regarding Lafitte Field...................................36
6.15 Capital Expenditures.................................................37
6.16 Declining Additional Lafitte Operations..............................37
6.17 General and Administrative Expenses..................................37
ARTICLE VII EVENTS OF DEFAULT
7.1 Enumeration of Events of Default.....................................37
7.2 Remedies.............................................................40
ARTICLE VIII MISCELLANEOUS
8.1 Transfers; Participations............................................40
8.2 Survival of Representations, Warranties, and Covenants...............41
8.3 Notices and Other Communications.....................................41
8.4 Parties in Interest..................................................42
8.5 Rights of Third Parties..............................................42
8.6 No Waiver; Rights Cumulative.........................................42
8.7 Survival Upon Unenforceability.......................................42
8.8 Amendments; Waivers..................................................43
8.9 Controlling Agreement................................................43
8.10 Release by Borrower..................................................43
8.11 Governing Law........................................................43
8.12 Jurisdiction and Venue...............................................43
8.13 Waiver of Rights to Jury Trial.......................................43
8.14 Entire Agreement.....................................................43
8.15 Counterparts.........................................................44
<PAGE>
LIST OF EXHIBITS
Exhibit I - Form of Borrowing Request
Exhibit II - Form of Compliance Certificate
Exhibit III - Disclosures
<PAGE>
CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT is made and entered into this 23rd day of September,
1999, by and between GOODRICH PETROLEUM COMPANY, L.L.C., a Louisiana limited
liability company (the "Borrower"), and COMPASS BANK, an Alabama state chartered
banking institution (the "Lender"), and is joined in for the limited purpose of
making the representations, warranties, and covenants set forth in Articles IV,
V, and VI only by GOODRICH PETROLEUM CORPORATION, a Delaware corporation
("Goodrich").
W I T N E S S E T H:
In consideration of the mutual covenants and agreements herein contained,
the Borrower and the Lender hereby agree as follows, amending and restating in
its entirety the Credit Agreement dated as of August 16, 1995, by and between
the Borrower and the Lender, as heretofore amended, restated, or supplemented
(the "Existing Credit Agreement"):
ARTICLE I
DEFINITIONS AND INTERPRETATION
I.1 Terms Defined Above. As used in this Credit Agreement, the terms
"Borrower," "Existing Credit Agreement," "Goodrich," and "Lender," shall have
the meaning assigned to them hereinabove.
I.2 Additional Defined Terms. As used in this Credit Agreement, each of the
following terms shall have the meaning assigned thereto in this Section, unless
the context otherwise requires:
"Affiliate" shall mean any Person directly or indirectly controlling,
or under common control with, the Borrower and includes any Subsidiary of
the Borrower and any "affiliate" of the Borrower within the meaning of Reg.
'240.12b-2 of the Securities Exchange Act of 1934, as amended, with
"control," as used in this definition, meaning possession, directly or
indirectly, of the power to direct or cause the direction of management,
policies or action through ownership of voting securities, contract, voting
trust, or membership in management or in the group appointing or electing
management or otherwise through formal or informal arrangements or business
relationships.
"Agreement" shall mean this Credit Agreement, as it may be amended,
supplemented, or restated from time to time.
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"Applicable Margin" shall mean, as to each Tranche A Loan, zero
percent (0%), and as to each Tranche B Loan, two percent (2%).
"Available Commitment" shall mean, at any time, an amount equal to the
remainder, if any, of (a) the lesser of the Commitment Amount or the
Borrowing Base in effect at such time minus (b) the Loan Balance at such
time.
"Borrower Membership Interests" shall mean all of the membership
interests and other equity interests in and to the Borrower other than the
Borrower Series A Preferred Units.
"Borrower Series A Preferred Units" means the "Series A Preferred
Units" (as defined in Section 3.2(b) of the Amended and Restated Operating
Agreement of Borrower as in effect on the date hereof) issued to the
holders of the Pari Passu Debt and the Subordinated Debt and having the
rights, preferences and designations set forth in Exhibit C to such Amended
and Restated Operating Agreement.
"Borrowing Base" shall mean the sum of (x) the Tranche B Loan plus (y)
(i) from the Closing Date through November 30, 1999, $19,300,000 and (ii)
for each month thereafter, an amount equal to the Borrowing Base for the
immediately preceding month minus $300,000.
"Borrowing Request" shall mean each written request, in substantially
the form attached hereto as Exhibit I, by the Borrower to the Lender for a
borrowing pursuant to Section 2.1 which shall:
(a) be signed by a Responsible Officer of the Borrower;
(b) specify the amount of the Loan requested, and, as applicable,
the Loan to be prepaid and the date of the borrowing or prepayment
(which shall be a Business Day);
(c) be delivered to the Lender no later than 10:00 a.m., Central
Standard or Daylight Savings Time, as the case may be, on the Business
Day of the requested borrowing or prepayment; and
"Business Day" shall mean a day other than a day when commercial banks
are authorized or required to close in the State of Texas.
"Change of Control" shall mean a change resulting when any Unrelated
Person or any Unrelated Persons acting together which would constitute a
Group together with any Affiliates or Related Persons thereof (in each case
also constituting Unrelated Persons) shall at any time either (i)
Beneficially Own more than 50% of the aggregate voting power of all classes
of Voting Stock of Goodrich or (ii) succeed in having sufficient of its or
their nominees elected to the Board of Directors of Goodrich such that such
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nominees, when added to any existing director remaining on the Board of
Directors of Goodrich after such election who is an Affiliate or Related
Person of such Person or Group, shall constitute a majority of the Board of
Directors of Goodrich. As used herein (a) "Beneficially Own" means
"beneficially own" as defined in Rule 13d-3 of the United States Securities
Exchange Act of 1934, as amended, or any successor provision thereto;
provided, however, that, for purposes of this definition, a Person shall
not be deemed to Beneficially Own securities tendered pursuant to a tender
or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates until such tendered securities are accepted for
purchase or exchange; (b) "Group" means a "group" for purposes of Section
13(d) of the United States Securities Exchange Act of 1934, as amended; (c)
"Unrelated Person" means at any time any Person (I) other than Goodrich or
any of its Subsidiaries, (II) other than any trust for any employee benefit
plan of Goodrich or any of its Subsidiaries and (III) other than the
holders of the Pari Passu Debt and the Subordinated Debt on the date
hereof; (d) "Related Person" of any Person shall mean any other Person
owning (1) 5% or more of the outstanding common stock of such Person or (2)
5% or more of the Voting Stock of such Person; and (e) "Voting Stock" of
any Person shall mean capital stock of such Person which ordinarily has
voting power for the election of directors (or persons performing similar
functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any
contingency.
"Closing Date" shall mean September 23, 1999.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall mean the Mortgaged Properties, the Lafitte
Membership Interests, the Borrower Membership Interests, all other Property
of Goodrich or Borrower and any other Property now or at any time used or
intended as security for the payment or performance of all or any portion
of the Obligations.
"Collateral Agency Agreement" shall mean that certain Collateral
Agency Agreement dated concurrently herewith executed by and among (i) the
Lender, (ii) Hambrecht & Quist Guaranty Finance, LLC, as agent for the
noteholders of the Lafitte Debt, the Pari Passu Debt and the Subordinated
Debt, and (iii) Compass Bank, as Collateral Agent, as it may be amended,
supplemented, or restated from time to time. Concurrently herewith, the
Existing Security Instruments have been assigned by the Lender to Compass
Bank, as Collateral Agent under the Collateral Agency Agreement, and, so
long as the Collateral Agency Agreement is in effect, any Security
Instruments executed after the date hereof shall be executed in favor of
Compass Bank, as Collateral Agent under the Collateral Agency Agreement.
"Commitment" shall mean the obligation of the Lender, subject to
applicable provisions of this Agreement, to make Loans to or for the
benefit of the Borrower pursuant to Section 2.1.
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"Commitment Amount" shall mean $28,300,000.
"Commitment Period" shall mean the period from and including the
Closing Date to but not including the Commitment Termination Date.
"Commitment Termination Date" shall mean February 1, 2001.
"Commonly Controlled Entity" shall mean any Person which is under
common control with the Borrower, Lafitte or any Guarantor within the
meaning of Section 4001 of ERISA.
"Compliance Certificate" shall mean each certificate, substantially in
the form attached hereto as Exhibit II, executed by a Responsible Officer
of the Borrower and the Guarantors and furnished to the Lender from time to
time in accordance with the terms hereof.
"Consolidated Net Income" shall mean, for any period, the net income
of Goodrich and its Subsidiaries, on a consolidated basis, for such period,
determined in accordance with GAAP minus net income attributable to Lafitte
(except to the extent of cash distributions paid from Lafitte to the
Borrower).
"Consolidated Tangible Net Worth" shall mean, without duplication, (a)
total assets, as would, in accordance with GAAP, be reflected on a
consolidated balance sheet of Goodrich and its Subsidiaries, exclusive of
Intellectual Property, experimental or organization expenses, franchises,
licenses, permits, and other intangible assets, treasury stock, unamortized
underwriters' debt discount and expenses, and goodwill, plus (b) the unpaid
principal balance (up to $1,000,000) of the Subordinated Debt, plus (c) to
the extent not already included in total assets, the net proceeds (up to
$3,000,000) received by Borrower from the issuance of the Borrower Series A
Preferred Stock as of the Closing Date, minus (d) total liabilities, as
would, in accordance with GAAP, be reflected on a consolidated balance
sheet of Goodrich and its Subsidiaries.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends, or other obligations of any other Person (for purposes
of this definition, a "primary obligation") in any manner, whether directly
or indirectly, including, without limitation, any obligation of such
Person, regardless of whether such obligation is contingent, (a) to
purchase any primary obligation or any Property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any primary obligation, or (ii) to maintain working
or equity capital of any other Person in respect of any primary obligation,
or otherwise to maintain the net worth or solvency of any other Person, (c)
to purchase Property, securities or services primarily for the purpose of
assuring the owner of any primary obligation of the ability of the Person
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primarily liable for such primary obligation to make payment thereof, or
(d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof, with the amount of any
Contingent Obligation being deemed to be equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined
by such Person in good faith.
"Debt Service" shall mean, for any period and with respect to
Indebtedness of Goodrich on a consolidated basis, the sum of all principal
payments made during such period on borrowed money Indebtedness plus all
interest expense paid in respect of borrowed money Indebtedness during such
period.
"Default" shall mean any event or occurrence which with the lapse of
time or the giving of notice or both would become an Event of Default.
"Default Rate" shall mean a per annum interest rate equal to the Index
Rate from time to time in effect plus five percent (5%), but in no event
exceeding the Highest Lawful Rate.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"EBITDA" shall mean, for any period, (a) Consolidated Net Income for
such period plus (b) depreciation, amortization, depletion, and other
non-cash expenses for such period deducted in the determination of
Consolidated Net Income minus (c) non-cash income for such period included
in the determination of Consolidated Net Income.
"Environmental Complaint" shall mean any written or oral complaint,
order, directive, claim, citation, notice of environmental report or
investigation, or other notice by any Governmental Authority or any other
Person with respect to (a) air emissions, (b) spills, releases, or
discharges to soils, any improvements located thereon, surface water,
groundwater, or the sewer, septic, waste treatment, storage, or disposal
systems servicing any Property of any Related Party, (c) solid or liquid
waste disposal, (d) the use, generation, storage, transportation, or
disposal of any Hazardous Substance, or (e) other environmental, health, or
safety matters affecting any Property of any Related Party or the business
conducted thereon.
"Environmental Laws" shall mean (a) the following federal laws as they
may be cited, referenced, and amended from time to time: the Clean Air Act,
the Clean Water Act, the Comprehensive Environmental Response, Compensation
and Liability Act, the Endangered Species Act, the Hazardous Materials
Transportation Act of 1986, the Occupational Safety and Health Act, the Oil
Pollution Act of 1990, the Resource Conservation and Recovery Act of 1976,
the Safe Drinking Water Act, the Superfund Amendments and Reauthorization
Act, and the Toxic Substances Control Act; (b) any and all equivalent
environmental statutes of any state, as they may be cited, referenced and
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amended from time to time; (c) any rules or regulations promulgated under
or adopted pursuant to the above federal and state laws; and (d) any other
equivalent federal, state, or local statute or any requirement, rule,
regulation, code, ordinance, or order adopted pursuant thereto, including,
without limitation, those relating to the generation, transportation,
treatment, storage, recycling, disposal, handling, or release of Hazardous
Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder and
interpretations thereof.
"Event of Default" shall mean any of the events specified in Section
7.1.
"Existing Notes" shall mean the Note, as such term is defined in the
Existing Credit Agreement, in existence prior to the Closing Date.
"Existing Loan Documents" shall mean the Loan Documents, as such term
is defined in the Existing Credit Agreement, in existence prior to the
Closing Date.
"Existing Security Instruments" shall mean the Security Instruments,
as such term is defined in the Existing Credit Agreement, in existence
prior to the Closing Date.
"Financial Statements" shall mean statements of the financial
condition as at the point in time and for the period indicated and
consisting of at least a balance sheet and related statements of
operations, common stock and other stockholders' equity, and cash flows
and, when required by applicable provisions of this Agreement to be
audited, accompanied by the unqualified certification of a
nationally-recognized firm of independent certified public accountants or
other independent certified public accountants acceptable to the Lender and
footnotes to any of the foregoing, all of which shall be prepared in
accordance with GAAP consistently applied and in comparative form with
respect to the corresponding period of the preceding fiscal period.
"Floating Rate" shall mean an interest rate per annum equal to the
Index Rate from time to time in effect plus the Applicable Margin for
Tranche A Loans or Tranche B Loans, as the case may be, but in no event
exceeding the Highest Lawful Rate.
"GAAP" shall mean generally accepted accounting principles established
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants and in effect in the United States from time
to time.
"Governmental Authority" shall mean any nation, country, commonwealth,
territory, government, state, county, parish, municipality, or other
political subdivision and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
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"Guaranties" shall mean, collectively, the Guaranty of each Guarantor
dated the Closing Date, in each case guaranteeing the payment and
performance of the Obligations as provided therein, as each may be
ratified, amended, restated, or supplemented from time to time.
"Guarantors" shall mean Goodrich and any other Person hereafter
executing a guaranty of the Obligations.
"Hazardous Substances" shall mean flammables, explosives, radioactive
materials, hazardous wastes, asbestos, or any material containing asbestos,
polychlorinated biphenyls (PCBs), toxic substances or related materials,
petroleum, petroleum products, associated oil or natural gas exploration,
production, and development wastes, or any substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes," or "toxic
substances" under the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, the Superfund Amendments and Reauthorization
Act, as amended, the Hazardous Materials Transportation Act, as amended,
the Resource Conservation and Recovery Act, as amended, the Toxic
Substances Control Act, as amended, or any other Requirement of Law.
"Hedging Agreement" shall mean (a) any interest rate or currency swap,
rate cap, rate floor, rate collar, forward agreement, or other exchange or
rate protection agreement or any option with respect to any such
transaction and (b) any swap agreement, cap, floor, collar, exchange
transaction, forward agreement, or other exchange or protection agreement
relating to hydrocarbons or any option with respect to any such
transaction.
"Highest Lawful Rate" shall mean the maximum non-usurious interest
rate, if any (or, if the context so requires, an amount calculated at such
rate), that at any time or from time to time may be contracted for, taken,
reserved, charged, or received under applicable laws of the State of Texas
or the United States of America, whichever authorizes the greater rate, as
such laws are presently in effect or, to the extent allowed by applicable
law, as such laws may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than such laws now allow.
"Indebtedness" shall mean, as to any Person, without duplication, (a)
all liabilities (excluding reserves for deferred income taxes, deferred
compensation liabilities, and other deferred liabilities and credits) which
in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet, (b) all obligations of
such Person evidenced by bonds, debentures, promissory notes, or similar
evidences of indebtedness, (c) all other indebtedness of such Person for
borrowed money and capitalized leases, and (d) all obligations of others,
to the extent any such obligation is secured by a Lien on the assets of
such Person (whether or not such Person has assumed or become liable for
the obligation secured by such Lien).
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"Index Rate" shall mean, on any day, the prime rate as published in
The Wall Street Journal's "Money Rates" table for such day. If multiple
prime rates are quoted in such table, then the highest prime rate quoted
therein shall be the Index Rate. In the event that a prime rate is not
published in The Wall Street Journal's "Money Rates" table, the Lender will
choose a substitute Index Rate, for purposes of calculating the Floating
Rate, which is based on comparable information, until such time as a prime
rate is published in The Wall Street Journal's "Money Rates" tables.
"Insolvency Proceeding" shall mean application (whether voluntary or
instituted by another Person) for or the consent to the appointment of a
receiver, trustee, conservator, custodian, or liquidator of any Person or
of all or a substantial part of the Property of such Person, or the filing
of a petition (whether voluntary or instituted by another Person)
commencing a case under Title 11 of the United States Code, seeking
liquidation, reorganization, or rearrangement or taking advantage of any
bankruptcy, insolvency, debtor's relief, or other similar law of the United
States, the State of Texas, or any other jurisdiction.
"Insolvent" or "Insolvency" shall mean, with respect to any
Multiemployer Plan, that such Plan is insolvent within the meaning of such
term as used in Section 4245 of ERISA.
"Intellectual Property" shall mean patents, patent applications,
trademarks, tradenames, copyrights, technology, know-how, and processes.
"Investment" in any Person shall mean any stock, bond, note, or other
evidence of Indebtedness, or any other security of, or investment or
partnership interest in, such Person.
"Lafitte" shall mean Goodrich Petroleum Company - Lafitte, L.L.C., a
Louisiana limited liability company.
"Lafitte Debt" shall mean the Indebtedness under those certain
promissory notes in the original aggregate principal amount of $6,000,000
dated concurrently herewith executed by Lafitte payable to the order of the
noteholders listed on Exhibit A to the Collateral Agency Agreement (as such
Indebtedness may from time to time be renewed, extended, modified or
rearranged).
"Lafitte Membership Interests" shall mean all of the issued and
outstanding equity interests in and to Lafitte.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of such Property, whether
such interest is based on common law, statute, or contract, and including,
but not limited to, the lien or security interest arising from a mortgage,
ship mortgage, encumbrance, pledge, security agreement, conditional sale or
trust receipt, or a lease, consignment, or bailment for security purposes
(other than true leases or true consignments), liens of mechanics,
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materialmen, and artisans, maritime liens and reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting
Property which secure an obligation owed to, or a claim by, a Person other
than the owner of such Property (for the purpose of this Agreement, any
Person shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement, financing lease,
or other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security purposes), and the
filing or recording of any financing statement or other security instrument
in any public office.
"Limitation Period" shall mean any period while any amount remains
owing on the Note and interest on such amount, calculated at the applicable
interest rate, plus any fees or other sums payable under any Loan Document
and deemed to be interest under applicable law, would exceed the amount of
interest which would accrue at the Highest Lawful Rate.
"Loan" shall mean any loan made by the Lender to or for the benefit of
the Borrower pursuant to this Agreement.
"Loan Balance" shall mean, at any time, the outstanding principal
balance of the Note at such time.
"Loan Documents" shall mean this Agreement, the Note, the Guaranties,
the Security Instruments, and all other documents and instruments now or
hereafter delivered pursuant to the terms of or in connection with this
Agreement, the Note, the Guaranties, or the Security Instruments, and all
renewals and extensions of, amendments and supplements to, and restatements
of, any or all of the foregoing from time to time in effect.
"Material Adverse Effect" shall mean (a) any material adverse effect
on the business, operations, properties, condition (financial or
otherwise), or prospects of the Borrower, Lafitte or any Guarantor, (b) any
adverse effect upon the business operations, properties, condition
(financial or otherwise), or prospects of the Borrower, Lafitte or any
Guarantor which increases the risk that any of the Obligations will not be
repaid as and when due, or (c) any adverse effect upon the Collateral.
"Mortgaged Properties" shall mean all Oil and Gas Properties of the
Borrower subject to a perfected first-priority Lien in favor of the Lender,
subject only to Permitted Liens, as security for the Obligations.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Note" shall mean the promissory note of the Borrower dated
concurrently herewith payable to the order of the Lender in the original
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principal amount of $28,300,000, together with all renewals, extensions for
any period, increases, and rearrangements thereof.
"Obligations" shall mean, without duplication, (a) all Indebtedness
evidenced by the Note, (b) the obligation of the Borrower for the payment
of fees and expenses pursuant to the Loan Documents, (c) the obligations of
the Guarantors under the Guaranties, and (d) all other obligations and
liabilities of the Borrower or the Guarantors to the Lender, now existing
or hereafter incurred, under, arising out of or in connection with any Loan
Document, and to the extent that any of the foregoing includes or refers to
the payment of amounts deemed or constituting interest, only so much
thereof as shall have accrued, been earned and which remains unpaid at each
relevant time of determination.
"Oil and Gas Properties" shall mean fee, leasehold, or other interests
in or under mineral estates or oil, gas, and other liquid or gaseous
hydrocarbon leases with respect to Properties situated in the United States
or offshore from any State of the United States, including, without
limitation, overriding royalty and royalty interests, leasehold estate
interests, net profits interests, production payment interests, and mineral
fee interests, together with contracts executed in connection therewith and
all tenements, hereditaments, appurtenances, and Properties appertaining,
belonging, affixed, or incidental thereto.
"Pari Passu Debt" shall mean the Indebtedness under those certain
promissory notes in the original aggregate principal amount of $5,000,000
dated concurrently herewith executed by the Borrower payable to the order
of the noteholders listed on Exhibit A to the Collateral Agency Agreement
(as such Indebtedness may from time to time be renewed, extended, modified
or rearranged).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any entity succeeding to any
or all of its functions under ERISA.
"Permitted Liens" shall mean (a) Liens for taxes, assessments, or
other governmental charges or levies not yet due or which (if foreclosure,
distraint, sale, or other similar proceedings shall not have been
initiated) are being contested in good faith by appropriate proceedings,
and such reserve as may be required by GAAP shall have been made therefor,
(b) Liens in connection with workers' compensation, unemployment insurance
or other social security (other than Liens created by Section 4068 of
ERISA), old-age pension, or public liability obligations which are not yet
due or which are being contested in good faith by appropriate proceedings,
if such reserve as may be required by GAAP shall have been made therefor,
(c) Liens in favor of vendors, carriers, warehousemen, repairmen,
mechanics, workmen, materialmen, construction, or similar Liens arising by
operation of law in the ordinary course of business in respect of
obligations which are not yet due or which are being contested in good
faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, (d) Liens in favor of operators and
non-operators under joint operating agreements or similar contractual
arrangements arising in the ordinary course of the business to secure
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amounts owing, which amounts are not yet due or are being contested in good
faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, (e) Liens under production sales
agreements, division orders, operating agreements, and other agreements
customary in the oil and gas business for processing, producing, and
selling hydrocarbons securing obligations not constituting Indebtedness and
provided that such Liens do not secure obligations to deliver hydrocarbons
at some future date without receiving full payment therefor within 90 days
of delivery, and (f) easements, rights of way, restrictions, and other
similar encumbrances, and minor defects in the chain of title which are
customarily accepted in the oil and gas financing industry, none of which
interfere with the ordinary conduct of the business of the owner of the
relevant Property or materially detract from the value or use of the
Property to which they apply, and other Liens expressly permitted under the
Security Instruments.
"Person" shall mean an individual, corporation, partnership, trust,
unincorporated organization, government, any agency or political
subdivision of any government, or any other form of entity.
"Plan" shall mean, at any time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower, Lafitte, any
Guarantor, or any Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be)
an "employer" as defined in Section 3(5) of ERISA.
"Principal Office" shall mean the principal office of the Lender in
Houston, Texas, presently located at 24 Greenway Plaza, 14th Floor,
Houston, Texas 77046.
"Prohibited Transaction" shall have the meaning assigned to such term
in Section 4975 of the Code.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System, as the same may be amended or supplemented from
time to time.
"Regulatory Change" shall mean the passage, adoption, institution, or
modification of any federal, state, local, or foreign Requirement of Law
(including, without limitation, Regulation D), or any interpretation,
directive, or request (whether or not having the force of law) of any
Governmental Authority or monetary authority charged with the enforcement,
interpretation, or administration thereof, occurring after the Closing Date
and applying to a class of banks including the Lender.
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"Related Party" shall mean any of the Borrower, Lafitte, the
Guarantors, or the Subsidiaries of Goodrich. "Related Parties" shall mean
the Borrower, Lafitte, the Guarantors, and all Subsidiaries of Goodrich.
"Release of Hazardous Substances" shall mean any emission, spill,
release, disposal, or discharge, except in accordance with a valid permit,
license, certificate, or approval of the relevant Governmental Authority,
of any Hazardous Substance into or upon (a) the air, (b) soils or any
improvements located thereon, (c) surface water or groundwater, or (d) the
sewer or septic system, or the waste treatment, storage, or disposal system
servicing any Property of the Borrower, Lafitte or any Guarantor.
"Reorganization" shall mean, with respect to any Multiemployer Plan,
that such Plan is in reorganization within the meaning of such term in
Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. '2615.
"Requirement of Law" shall mean, as to any Person, any applicable law,
treaty, ordinance, order, judgment, rule, decree, regulation, or
determination of an arbitrator, court, or other Governmental Authority,
including, without limitation, rules, regulations, orders, and requirements
for permits, licenses, registrations, approvals, or authorizations, in each
case as such now exist or may be hereafter amended and are applicable to or
binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.
"Reserve Report" shall mean each report delivered to the Lender
pursuant to Section 5.4.
"Responsible Officer" shall mean, as to any Person, its President or
chief financial officer.
"Security Instruments" shall mean the Existing Security Instruments,
the security instruments executed and delivered in satisfaction of the
condition set forth in Section 3.1, and all other documents and instruments
at any time executed as security for all or any portion of the Obligations,
as such instruments may be amended, restated, or supplemented from time to
time.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
"Subordinated Debt" shall mean the Indebtedness under those certain
promissory notes in the original aggregate principal amount of $1,000,000
dated concurrently herewith executed by the Borrower payable to the order
of the noteholders listed on Exhibit A to the Collateral Agency Agreement
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(as such Indebtedness may from time to time be renewed, extended, modified
or rearranged).
"Subsidiary" shall mean, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation are at the
time owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
"Superfund Site" shall mean those sites listed on the Environmental
Protection Agency National Priority List and eligible for remedial action
or any comparable state registries or list in any state of the United
States.
"Tranche A Loan" shall mean, on any day, that portion of the unpaid
principal balance of the Note in excess of the Tranche B Loan.
"Tranche B Loan" shall mean, on any day, Nine Million Dollars
($9,000,000) minus any payments theretofore made on the Note which reduce
the unpaid principal balance of the Note below the amount of the Tranche A
Loan and minus any payments theretofore made on the Note which result from
application of asset sales proceeds as provided in Section 5.22 hereof.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of Texas.
I.3 Undefined Financial Accounting Terms. Undefined financial accounting
terms used in this Agreement shall be defined according to GAAP at the time in
effect.
I.4 References. References in this Agreement to Exhibit, Article, or
Section numbers shall be to Exhibits, Articles, or Sections of this Agreement,
unless expressly stated to the contrary. References in this Agreement to
"hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof,"
"hereunder" and words of similar import shall be to this Agreement in its
entirety and not only to the particular Exhibit, Article, or Section in which
such reference appears.
I.5 Articles and Sections. This Agreement, for convenience only, has been
divided into Articles and Sections; and it is understood that the rights and
other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
I.6 Number and Gender. Whenever the context requires, reference herein made
to the single number shall be understood to include the plural; and likewise,
the plural shall be understood to include the singular. Definitions of terms
defined in the singular or plural shall be equally applicable to the plural or
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singular, as the case may be, unless otherwise indicated. Words denoting sex
shall be construed to include the masculine, feminine and neuter, when such
construction is appropriate; and specific enumeration shall not exclude the
general but shall be construed as cumulative.
I.7 Incorporation of Exhibits. The Exhibits attached to this Agreement are
incorporated herein and shall be considered a part of this Agreement for all
purposes.
ARTICLE II
----------
TERMS OF FACILITY
-----------------
II.1 Revolving Line of Credit.
(a) Upon the terms and conditions and relying on the representations
and warranties contained in this Agreement, the Lender agrees, during the
Commitment Period, to make Loans to or for the benefit of the Borrower. Loans
shall be made in such amounts as the Borrower may request; provided, however, no
Loan shall be made in an amount exceeding the then existing Available
Commitment, and the Loan Balance shall not exceed at any time the lesser of the
Commitment Amount or the Borrowing Base then in effect. Loans shall be made in
immediately available funds at the Principal Office from time to time on any
Business Day designated by the Borrower in its Borrowing Request.
(b) Subject to the terms of this Agreement, during the Commitment
Period, the Borrower may borrow, repay, and reborrow any Tranche A Loan (but not
any Tranche B Loan). Each borrowing and prepayment of principal of Loans shall
be in an amount at least equal to $250,000. The Borrower and the Lender agree
pursuant to Chapter 346 ("Chapter 346") of the Texas Finance Code, that Chapter
346 (which relates to open-end line of credit revolving loan accounts) shall not
apply to this Agreement, the Note or any of the Obligations and that neither the
Note nor any of the Obligations shall be governed by Chapter 346 or subject to
its provisions in any manner whatsoever.
(c) The Loans shall be made and maintained at the Principal Office and
shall be evidenced by the Note.
II.2 Use of Loan Proceeds. (a) As of the Closing Date, indebtedness in the
amount of $28,300,000 is outstanding under the Existing Credit Agreement. Such
indebtedness shall be renewed, extended, and rearranged pursuant to the terms of
this Agreement, the Note, and the relevant Borrowing Request and shall for all
purposes be deemed a borrowing hereunder. Proceeds of all subsequent Loans shall
be used solely for the acquisition and development by the Borrower of Oil and
Gas Properties and for general corporate purposes of the Borrower and the
Guarantors.
II.3 Interest. Subject to the terms of this Agreement (including, without
limitation, Section 2.14), interest on the Loans shall accrue and be payable at
a rate per annum equal to the Floating Rate. Interest on all Loans shall be
computed on the basis of a year of 365/366 (as the case may be) days and actual
days elapsed (including the first day but excluding the last day) during the
period for which payable. Notwithstanding the foregoing, interest on past-due
principal and, to the extent permitted by applicable law, past-due interest,
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shall accrue at the Default Rate, computed on the basis of a year of 365/366 (as
the case may be) days and actual days elapsed (including the first day but
excluding the last day) during the period for which payable, and shall be
payable upon demand at any time as to all or any portion of such interest.
Interest provided for herein shall be calculated on unpaid sums actually
advanced and outstanding pursuant to the terms of this Agreement and only for
the period from the date or dates of such advances until repayment.
II.4 Repayment of Loans and Interest.
(a) Accrued and unpaid interest on each outstanding Loan shall be due
and payable monthly commencing on the first day of October, 1999, and continuing
on the first day of each calendar month thereafter while any Loan remains
outstanding, the payment in each instance to be the amount of interest which has
accrued and remains unpaid in respect of the relevant Loan. The Loan Balance,
together with all accrued and unpaid interest thereon, shall be due and payable
on the Commitment Termination Date.
(b) At the time of making each payment hereunder or under the Note,
the Borrower shall specify to the Lender the Loans or other amounts payable by
the Borrower hereunder to which such payment is to be applied. In the event the
Borrower fails to so specify, or if an Event of Default has occurred and is
continuing, the Lender may apply such payment as it may elect in its sole
discretion.
II.5 Outstanding Amounts. The Lender is irrevocably authorized by the
Borrower to attach to and make a part of the Note a ledger reflecting amounts
advanced to or paid by the Borrower and to attach to and make a part of the Note
a continuation of any such schedule of advances and payments, as and when
required. All Loans and all payments and prepayments made on account of the
principal thereof shall be reflected by an appropriate notation on such ledger
or any continuation thereof attached to the Note; provided, however, the failure
of the Lender to do so shall not relieve the Borrower of its liability hereunder
or under the Note or subject the Borrower to additional liability hereunder or
under the Note. The outstanding principal balance of the Note reflected by the
notations by the Lender on its records or ledger sheets affixed to the Note
shall be deemed rebuttably presumptive evidence of the principal amount owing on
the Note. The liability for payment of principal and interest evidenced by the
Note shall be limited to principal amounts actually advanced and outstanding
pursuant to this Agreement and interest on such amounts calculated in accordance
with this Agreement.
II.6 Time, Place, and Method of Payments. All payments required pursuant to
this Agreement, the Note, or any other Loan Document shall be made in lawful
money of the United States of America and in immediately available funds, shall
be deemed received by the Lender on the next Business Day following receipt if
such receipt is after 2:00 p.m., Houston, Texas, time on any Business Day, and
shall be made at the Principal Office. Except as provided to the contrary
herein, if the due date of any payment under any Loan Document would otherwise
fall on a day which is not a Business Day, such date shall be extended to the
next succeeding Business Day, and interest shall be payable for any principal so
extended for the period of such extension.
II.7 Mandatory Prepayments. If at any time the Loan Balance exceeds the
lesser of the Commitment Amount or the Borrowing Base then in effect, the
Borrower shall immediately prepay, or make arrangements acceptable to the Lender
for the prepayment of, the amount of such excess for application on the Loan
Balance.
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II.8 Voluntary Prepayments. Subject to applicable provisions of this
Agreement, the Borrower shall have the right at any time or from time to time to
prepay Loans; provided, however, that (a) the Borrower shall pay all accrued and
unpaid interest on the amounts prepaid, and (b) no such prepayment shall serve
to postpone the repayment when due of any Obligation.
II.9 Facility Fee. In addition to other amounts payable hereunder, the
Borrower shall pay to the Lender on the Closing Date a facility fee in the
amount of $157,500.
II.10 Engineering Fee. To compensate the Lender for the costs of evaluating
the Mortgaged Properties and reviewing the Reserve Reports, the Borrower shall
pay to the Lender on each January 1 and July 1 an engineering fee in the amount
of $7,500.
II.11 Commitment Fee; Reduction of Commitment Amount. To compensate the
Lender for maintaining funds available, the Borrower shall pay to the Lender a
commitment fee in the amount of one-half of one percent (2%) per annum,
calculated on the basis of a year of 365/366 (as the case may be) days and
actual days elapsed (including the first day but excluding the last day), on the
average daily amount of the Available Commitment. Such accrued commitment fees
shall be due and payable on the first day of October, 1999, the first day of
each third calendar month thereafter during the Commitment Period, and on the
Commitment Termination Date. The Borrower may, with 30 days' written notice to
the Lender, reduce the Commitment Amount (and any such reduction shall be
irrevocable).
II.12 Loans to Satisfy Obligations of Borrower. The Lender may, but shall
not be obligated to, make Loans for the benefit of the Borrower and apply
proceeds thereof to the satisfaction of any condition, warranty, representation,
or covenant of the Borrower or any Guarantor contained in this Agreement or any
other Loan Document. Such Loans shall be evidenced by the Note, shall bear
interest at the Default Rate, and shall be payable upon demand.
II.13 Security Interest in Accounts; Right of Offset. As security for the
payment and performance of the Obligations, the Borrower hereby transfers,
assigns, and pledges to the Lender and grants to the Lender a security interest
in all funds of the Borrower now or hereafter or from time to time on deposit
with the Lender, with such interest of the Lender to be retransferred,
reassigned, and/or released by the Lender, as the case may be, at the expense of
the Borrower upon payment in full and complete performance of all Obligations.
All remedies as secured party or assignee of such funds shall be exercisable by
the Lender upon the occurrence of any Event of Default, regardless of whether
the exercise of any such remedy would result in any penalty or loss of interest
or profit with respect to any withdrawal of funds deposited in a time deposit
account prior to the maturity thereof. Furthermore, the Borrower hereby grants
to the Lender the right, exercisable at such time as any Obligation shall
mature, whether by acceleration of maturity or otherwise, of offset or banker's
lien against all funds of the Borrower now or hereafter or from time to time on
deposit with the Lender, regardless of whether the exercise of any such remedy
would result in any penalty or loss of interest or profit with respect to any
withdrawal of funds deposited in a time deposit account prior to the maturity
thereof. The provisions of this Section shall be subject to the terms and
provisions of the Collateral Agency Agreement.
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II.14 General Provisions Relating to Interest.
(a) It is the intention of the parties hereto to comply strictly with
all applicable usury laws. In this connection, there shall never be collected,
charged, or received on the sums advanced hereunder interest in excess of that
which would accrue at the Highest Lawful Rate.
(b) Notwithstanding anything herein or in the Note to the contrary,
during any Limitation Period, the interest rate to be charged on amounts
evidenced by the Note shall be the Highest Lawful Rate, and the obligation, if
any, of the Borrower for the payment of fees or other charges deemed to be
interest under applicable law shall be suspended. During any period of time
following a Limitation Period, to the extent permitted by applicable laws of the
State of Texas or the United States of America, the interest rate to be charged
hereunder shall remain at the Highest Lawful Rate until such time as there has
been paid to the Lender (i) the amount of interest in excess of that accruing at
the Highest Lawful Rate that the Lender would have received during the
Limitation Period had the interest rate remained at the otherwise applicable
rate, and (ii) all interest and fees otherwise payable to the Lender but for the
effect of such Limitation Period.
(c) If, under any circumstances, the aggregate amounts paid on the
Note or under this Agreement or any other Loan Document include amounts which by
law are deemed interest and which would exceed the amount permitted if the
Highest Lawful Rate were in effect, the Borrower stipulates that such payment
and collection will have been and will be deemed to have been, to the extent
permitted by applicable laws of the State of Texas or the United States of
America, the result of mathematical error on the part of the Borrower and the
Lender; and the Lender shall promptly refund the amount of such excess (to the
extent only of such interest payments in excess of that which would have accrued
and been payable on the basis of the Highest Lawful Rate) upon discovery of such
error by the Lender or notice thereof from the Borrower. In the event that the
maturity of any Obligation is accelerated, by reason of an election by the
Lender or otherwise, or in the event of any required or permitted prepayment,
then the consideration constituting interest under applicable laws may never
exceed the Highest Lawful Rate; and excess amounts paid to the Lender which by
law are deemed interest, if any, shall be credited by the Lender on the
principal amount of the Obligations, or if the principal amount of the
Obligations shall have been paid in full, refunded to the Borrower.
(d) All sums paid, or agreed to be paid, to the Lender for the use,
forbearance and detention of the proceeds of any advance hereunder shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full term hereof until paid in full so that the actual
rate of interest is uniform but does not exceed the Highest Lawful Rate
throughout the full term hereof.
(e) On each day, if any, that Chapter 1D establishes the Highest
Lawful Rate, the Highest Lawful Rate shall be the "weekly ceiling" (as defined
in '303 of the Texas Finance Code) for that day. The Lender may from time to
time, as to current and future balances, implement any other ceiling under the
Texas Finance Code or Chapter 1D by notice to the Borrower, if and to the extent
permitted by the Texas Finance Code or Chapter 1D. The term "Chapter 1D" shall
mean Chapter 1D of Title 79, Texas Rev. Civ. Stats. 1925, as amended.
II.15 Yield Protection.
(a) Without limiting the effect of the other provisions of this
Section (but without duplication), the Borrower shall pay to the Lender from
time to time on request such amounts as the Lender may determine are necessary
to compensate the Lender for any costs attributable to the maintenance by the
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Lender, pursuant to any Regulatory Change, of capital in respect of the
Commitment, such compensation to include, without limitation, an amount equal to
any reduction of the rate of return on assets or equity of the Lender to a level
below that which the Lender could have achieved but for such Regulatory Change.
(b) Determinations by the Lender for purposes of this Section of the
effect of any Regulatory Change on capital maintained, its costs or rate of
return, maintaining Loans, its obligation to make Loans, or on amounts
receivable by it in respect of Loans or such obligations, and the additional
amounts required to compensate the Lender under this Section shall be
conclusive, absent manifest error, provided that such determinations are made on
a reasonable basis. The Lender shall furnish the Borrower with a certificate
setting forth in reasonable detail the basis and amount of increased costs
incurred or reduced amounts receivable as a result of any such event, and the
statements set forth therein shall be conclusive, absent manifest error. The
Lender shall notify the Borrower, as promptly as practicable after the Lender
obtains knowledge of any Additional Costs or other sums payable pursuant to this
Section and determines to request compensation therefor, of any event occurring
after the Closing Date which will entitle the Lender to compensation pursuant to
this Section. Any compensation requested by the Lender pursuant to this Section
shall be due and payable to the Lender within five days of delivery of any such
notice by the Lender to the Borrower.
(c) The Lender agrees that it shall not request, and the Borrower
shall not be obligated to pay, any sums payable pursuant to this Section unless
similar additional costs and other sums payable are also generally assessed by
the Lender against other customers of the Lender similarly situated where such
customers are subject to documents providing for such assessment.
II.16 Power of Attorney. The Borrower hereby designates the Lender as its
agent and attorney-in-fact, to act in its name, place, and stead for the purpose
of completing and delivering any and all of the letters in lieu of transfer
orders delivered by the Borrower to the Lender pursuant to Section 3.1 or
Section 5.11, including, without limitation, completing any blanks contained in
such letters and attaching exhibits thereto describing the relevant Collateral.
The Borrower hereby ratifies and confirms all that the Lender shall lawfully do
or cause to be done by virtue of this power of attorney and the rights granted
with respect to such power of attorney. This power of attorney is coupled with
the interests of the Lender in the Collateral, shall commence and be in full
force and effect as of the Closing Date and shall remain in full force and
effect and shall be irrevocable so long as any Obligation remains outstanding or
unpaid or any Commitment exists. The powers conferred on the Lender by this
appointment are solely to protect the interests of the Lender under the Loan
Documents and shall not impose any duty upon the Lender to exercise any such
powers. The Lender shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers and shall not be responsible
to the Borrower or any other Person for any act or failure to act with respect
to such powers, except for gross negligence or willful misconduct.
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ARTICLE III
-----------
CONDITIONS
----------
The obligations of the Lender to enter into this Agreement and to make
Loans are subject to the satisfaction of the following conditions precedent:
III.1 Receipt of Loan Documents and Other Items. The Lender shall have no
obligation under this Agreement unless and until all matters incident to the
consummation of the transactions contemplated herein, including, without
limitation, the review by the Lender or its counsel of the title of the Borrower
to its Oil and Gas Properties, shall be satisfactory to the Lender, and the
Lender shall have received, reviewed, and approved the following documents and
other items, appropriately executed when necessary and, where applicable,
acknowledged by one or more authorized officers of the applicable Person or
Persons, all in form and substance satisfactory to the Lender and dated, where
applicable, of even date herewith or a date prior thereto and acceptable to the
Lender:
(a) multiple counterparts of this Agreement, as requested by the
Lender;
(b) the Note;
(c) the Guaranties;
(d) copies of the organizational documents and all amendments thereto
of the Borrower, Lafitte and each Guarantor, accompanied by a certificate issued
by the secretary or an assistant secretary of the Borrower, Lafitte or such
Guarantor, as the case may be, to the effect that each such copy is correct and
complete;
(e) certificates of incumbency and signatures of all officers of the
Borrower and each Guarantor who are authorized to execute Loan Documents on
behalf of such entities, each such certificate being executed by the secretary
or an assistant secretary of the Borrower or such Guarantor, as the case may be;
(f) copies of corporate resolutions approving the Loan Documents and
authorizing the transactions contemplated herein and therein, duly adopted by
the boards of directors of the Borrower and each Guarantor, accompanied by
certificates of the secretary or an assistant secretary of the Borrower or such
Guarantor, as the case may be, to the effect that such copies are true and
correct copies of resolutions duly adopted at a meeting or by unanimous consent
of the board of directors of the Borrower or such Guarantor, as the case may be,
and that such resolutions constitute all the resolutions adopted with respect to
such transactions, have not been amended, modified, or revoked in any respect,
and are in full force and effect as of the date of such certificate;
(g) multiple counterparts, as requested by the Lender, of the
following documents establishing Liens in favor of the Lender in and to the
Collateral:
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(i) Mortgage, Deed of Trust, Indenture, Security Agreement,
Assignment of Production, and Financing Statement from the Borrower
covering all Oil and Gas Properties of the Borrower and all
improvements, personal property, and fixtures related thereto, and
Financing Statements constituent thereto;
(ii) Security Agreements from Goodrich and Borrower covering the
Borrower Membership Interests, the Lafitte Membership Interests and
all other personal Property of Goodrich and Borrower, and Financing
Statements constituent thereto; and
(iii) undated letters, in form and substance satisfactory to the
Lender, from the Borrower to each purchaser of production and
disburser of the proceeds of production from or attributable to the
Mortgaged Properties, together with additional letters with the
addressees left blank, authorizing and directing the addressees to
make future payments attributable to production from the Mortgaged
Properties directly to the Lender;
(h) certificates evidencing the Lafitte Membership Interests and the
Borrower Membership Interests, with stock powers or transfer instruments, as the
case may be, endorsed in blank, and Federal Reserve Forms U-1 completed by the
Borrower;
(i) certificates dated as of a recent date from the Secretary of State
or other appropriate Governmental Authority evidencing the existence or
qualification and good standing of each of the Borrower, Lafitte and the
Guarantors in its jurisdiction of incorporation and in any other jurisdictions
where it does business;
(j) results of searches of the UCC Records of (i) the Secretary of
State of the States of Louisiana, Michigan and Texas, in the name of the
Borrower, (ii) of the Secretary of State of the States of Louisiana and Texas in
the name of Goodrich and (iii) of the Secretary of State of the States of
Louisiana and Texas in the name of Lafitte, each from a source acceptable to the
Lender and reflecting no Liens other than Permitted Liens and no Liens against
any Collateral;
(k) confirmation, acceptable to the Lender, of the title of the
Borrower to the Mortgaged Properties, free and clear of Liens other than
Permitted Liens;
(l) all operating, lease, sublease, royalty, sales, exchange,
processing, farmout, bidding, pooling, unitization, communitization, and other
agreements relating to the Mortgaged Properties requested by the Lender;
(m) engineering reports covering the Mortgaged Properties;
(n) the opinion of counsel to the Borrower, Lafitte and the Guarantors
acceptable to the Lender, in form and substance acceptable to the Lender;
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(o) certificates evidencing the insurance coverage required pursuant
to Section 5.20;
(p) copies, certified as trues, correct and complete, of the documents
evidencing, securing or otherwise relating to the Subordinated Debt, the Pari
Passu Debt and the Lafitte Debt, together with evidence satisfactory to the
Lender that the Borrower has received net proceeds advanced under the
Subordinated Debt of at least $850,000 and has received proceeds advanced under
the Pari Passu Debt of at least $4,250,000 and evidence that Lafitte has
received proceeds advanced under the Lafitte Debt of at least $6,000,000.
(q) evidence satisfactory to the Lender that the Borrower has received
[net] proceeds from the issuance of preferred stock, upon terms and conditions
satisfactory to the Lender, of at least $3,000,000;
(r) evidence satisfactory to the Lender that Lafitte has completed its
purchase of an undivided 49% interest in and to the Lafitte Field in Jefferson
Parish, Louisiana pursuant to that certain Letter Agreement dated May 20, 1999
among the Borrower and Goodrich, on the one hand, and Stone Energy Corporation,
on the other hand, and that all amounts currently due and payable in connection
with such purchase have been fully paid and satisfied;
(s) evidence satisfactory to the Lender that all accounts payable of
Goodrich, the Borrower and Lafitte which are more than sixty (60) days past
invoice have been fully paid and satisfied, except as the Lender may otherwise
approve in writing;
(t) receipt by the Lender of the facility fee required pursuant to
Section 2.9; and
(u) such other agreements, documents, instruments, opinions,
certificates, waivers, consents, and evidence as the Lender may reasonably
request.
III.2 Each Loan. In addition to the conditions precedent stated elsewhere
herein, the Lender shall not be obligated to make any Loan unless:
(a) the Borrower shall have delivered to the Lender a Borrowing
Request at least the requisite time prior to the requested date for the relevant
Loan; each statement or certification made in such Borrowing Request shall be
true and correct in all material respects on the requested date for such Loan;
(b) no Event of Default or Default shall exist or will occur as a
result of the making of the requested Loan;
(c) if requested by the Lender, the Borrower shall have delivered
evidence satisfactory to the Lender substantiating any of the matters contained
in this Agreement which are necessary to enable the Borrower to qualify for such
Loan;
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(d) the Lender shall have received, reviewed, and approved such
additional documents and items as described in Section 3.1 as may be requested
by the Lender with respect to such Loan;
(e) no event shall have occurred which, in the reasonable opinion of
the Lender, could have a Material Adverse Effect;
(f) each of the representations and warranties contained in this
Agreement shall be true and correct and shall be deemed to be repeated by the
Borrower as if made on the requested date for such Loan;
(g) the Guaranties and all of the Security Instruments shall be in
full force and effect and provide to the Lender the security intended thereby;
(h) neither the consummation of the transactions contemplated hereby
nor the making of such Loan shall contravene, violate, or conflict with any
Requirement of Law;
(i) each of the Borrower and the Guarantors shall hold full legal
title to the Collateral pledged by such entity and be the sole beneficial owner
thereof;
(j) the Borrower shall have paid all fees and expenses payable by the
Borrower hereunder for which invoices have been presented as of or prior to the
date of the relevant Loan, including, without limitation, estimated fees charged
by filing officers and other public officials incurred or to be incurred in
connection with the filing and recordation of any Security Instruments, for
which invoices have been presented as of or prior to the date of the requested
Loan; and
(k) all matters incident to the consummation of the transactions
hereby contemplated shall be satisfactory to the Lender.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Lender to enter into this Agreement and extend credit to the
Borrower, each of the Borrower and the Guarantors represents and warrants to the
Lender (which representations and warranties shall survive the delivery of the
Note) that:
IV.1 Due Authorization. The execution and delivery by the Borrower of this
Agreement and the borrowings hereunder, the execution and delivery by the
Borrower of the Note, the repayment of the Note and interest and fees provided
for in the Note and this Agreement, the execution and delivery of the Security
Instruments by the Borrower and the performance of all obligations of the
Borrower under the Loan Documents are within the power of the Borrower, have
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been duly authorized by all necessary corporate action by the Borrower, and do
not and will not (a) require the consent of any Governmental Authority, (b)
contravene or conflict with any Requirement of Law or the certificate or
articles of incorporation and bylaws or other organizational or governing
documents of the Borrower, (c) contravene or conflict with any indenture,
instrument, or other agreement to which the Borrower is a party or by which any
Property of the Borrower may be presently bound or encumbered, or (d) result in
or require the creation or imposition of any Lien in or upon any Property of the
Borrower other than as contemplated by the Loan Documents.
IV.2 Corporate Existence. Each Related Party is duly organized, legally
existing, and in good standing under the laws of its state of organization and
is duly qualified as a foreign entity and is in good standing in all
jurisdictions wherein the ownership of Property or the operation of its business
necessitates same, other than those jurisdictions wherein the failure to so
qualify will not have a Material Adverse Effect.
IV.3 Valid and Binding Obligations. All Loan Documents to which the
Borrower is a party, when duly executed and delivered by the Borrower, will be
the legal, valid, and binding obligations of such entity, enforceable against
the Borrower in accordance with their respective terms, subject, however, to the
effect of bankruptcy, insolvency, reorganization, moratorium, and similar laws
from time to time in effect relating to the rights and remedies of creditors and
to general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
IV.4 Security Instruments. The provisions of each Security Instrument are
effective to create in favor of the Lender, a legal, valid, and enforceable Lien
in the Collateral described therein, which Liens, assuming the possession by the
Lender of the certificates evidencing the Lafitte Membership Interests and the
Borrower Membership Interests, and the accomplishment of recording and filing in
accordance with applicable laws prior to the intervention of rights of other
Persons, shall constitute fully perfected first-priority Liens.
IV.5 Title to Assets. Each Related Party has good and indefeasible title to
all of its Properties, free and clear of all Liens except Permitted Liens.
IV.6 Scope and Accuracy of Financial Statements. The Financial Statements
of Goodrich as of December 31, 1998 and as of June 30, 1999 provided to the
Lender present fairly the financial position and results of operations and cash
flows of Goodrich and its Subsidiaries in accordance with GAAP as at the
relevant point in time or for the period indicated, as applicable. No event or
circumstance has occurred since June 30, 1999, which could reasonably be
expected to have a Material Adverse Effect.
IV.7 No Material Misstatements. No information, exhibit, statement, or
report furnished to the Lender by or at the direction of any Related Party in
connection with this Agreement contains any material misstatement of fact or
omits to state a material fact or any fact necessary to make the statements
contained therein not misleading as of the date made or deemed made.
IV.8 Liabilities, Litigation, and Restrictions. Other than as listed under
the heading "Liabilities" on Exhibit III, no Related Party has any liabilities,
direct, or contingent, which may materially and adversely affect its business or
operations or its ownership of any Collateral. Except as set forth under the
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heading "Litigation" on Exhibit III, no litigation or other action of any nature
affecting any Related Party is pending before any Governmental Authority or, to
the best knowledge of the Borrower, threatened against or affecting any Related
Party. No unusual or unduly burdensome restriction, restraint or hazard exists
by contract, Requirement of Law, or otherwise relative to the business or
operations of any Related Party or the ownership and operation of its Property
other than such as relate generally to Persons engaged in business activities
similar to those conducted by such Related Party.
IV.9 Authorizations; Consents. Except as expressly contemplated by this
Agreement, no authorization, consent, approval, exemption, franchise, permit, or
license of, or filing with, any Governmental Authority or any other Person is
required to authorize or is otherwise required in connection with the valid
execution and delivery by the Borrower or any Guarantor of the Loan Documents to
which it is a party or any instrument contemplated hereby, the repayment by the
Borrower of the Note and interest and fees provided in the Note and this
Agreement, or the performance by the Borrower or any Guarantor of its
Obligations.
IV.10 Compliance with Laws. Each Related Party and its Properties are in
compliance with all applicable Requirements of Law, including, without
limitation, Environmental Laws, the Natural Gas Policy Act of 1978, as amended,
and ERISA.
IV.11 ERISA. No Reportable Event has occurred with respect to any Single
Employer Plan, and each Single Employer Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. To the best knowledge of the Borrower, (a) no Reportable
Event has occurred with respect to any Multiemployer Plan, and (b) each
Multiemployer Plan has complied with and been administered in all material
respects with applicable provisions of ERISA and the Code. The present value of
all benefits vested under each Single Employer Plan (based on the assumptions
used to fund such Plan) did not, as of the last annual valuation date applicable
thereto, exceed the value of the assets of such Plan allocable to such vested
benefits. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan for which there is
any withdrawal liability. As of the most recent valuation date applicable to any
Multiemployer Plan, neither the Borrower nor any Commonly Controlled Entity
would become subject to any liability under ERISA if the Borrower or such
Commonly Controlled Entity were to withdraw completely from such Multiemployer
Plan. Neither the Borrower nor any Commonly Controlled Entity has received
notice that any Multiemployer Plan is Insolvent or in Reorganization. To the
best knowledge of the Borrower, no such Insolvency or Reorganization is
reasonably likely to occur. Based upon GAAP existing as of the date of this
Agreement and current factual circumstances, the Borrower has no reason to
believe that the annual cost during the term of this Agreement to the Borrower
and all Commonly Controlled Entities for post-retirement benefits to be provided
to the current and former employees of the Borrower and all Commonly Controlled
Entities under Plans which are welfare benefit plans (as defined in Section 3(1)
of ERISA) will, in the aggregate, have a Material Adverse Effect.
IV.12 Environmental Laws. Except as described on Exhibit III under the
heading "Environmental Matters:"
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(a) no Property of any Related Party is currently on or has ever been
on, or is adjacent to any Property which is on or has ever been on, any federal
or state list of Superfund Sites;
(b) no Hazardous Substances have been generated, transported, and/or
disposed of by any Related Party at a site which was, at the time of such
generation, transportation, and/or disposal, or has since become, a Superfund
Site;
(c) no Release of Hazardous Substances by any Related Party or from,
affecting, or related to any Property of any Related Party or adjacent to any
Property of any Related Party has occurred; and
(d) no Environmental Complaint has been received by any Related Party.
IV.13 Compliance with Federal Reserve Regulations. No transaction
contemplated by the Loan Documents is in violation of any regulations
promulgated by the Board of Governors of the Federal Reserve System, including,
without limitation, Regulations T, U, or X.
IV.14 Investment Company Act Compliance. No Related Party is or is directly
or indirectly controlled by or acting on behalf of any Person which is an
"investment company" or an "affiliated person" of an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
IV.15 Public Utility Holding Company Act Compliance. No Related Party is a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
IV.16 Proper Filing of Tax Returns; Payment of Taxes Due. Each Related
Party has duly and properly filed its United States income tax return and all
other tax returns which are required to be filed and has paid all taxes due
except such as are being contested in good faith and as to which adequate
provisions and disclosures have been made. The respective charges and reserves
on the books of each Related Party with respect to taxes and other governmental
charges are adequate.
IV.17 Refunds. Except as described on Exhibit III under the heading
"Refunds," no orders of, proceedings pending before, or other requirements of,
the Federal Energy Regulatory Commission, the Texas Railroad Commission, or any
Governmental Authority exist which could result in any Related Party being
required to refund any material portion of the proceeds received or to be
received from the sale of hydrocarbons from any of its Properties.
IV.18 Gas Contracts. Except as described on Exhibit III under the heading
"Gas Contracts," no Related Party (a) is obligated in any material respect by
virtue of any prepayment made under any contract containing a "take-or-pay" or
"prepayment" provision or under any similar agreement to deliver hydrocarbons
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produced from or allocated to any of its Properties at some future date without
receiving full payment therefor within 90 days of delivery, or (b) is subject to
or has produced gas, in any material amount, subject to, or owns Properties
subject to, balancing rights of third parties or balancing duties under
governmental requirements, except as to such matters for which such Related
Party has established monetary reserves adequate in amount to satisfy such
obligations and has segregated such reserves from other accounts.
IV.19 Intellectual Property. Each Related Party owns or is licensed to use
all Intellectual Property necessary to conduct all business material to its
condition (financial or otherwise), business, or operations as such business is
currently conducted. No claim has been asserted or is pending by any Person with
the respect to the use of any such Intellectual Property or challenging or
questioning the validity or effectiveness of any such Intellectual Property; and
neither the Borrower nor any Guarantor knows of any valid basis for any such
claim. The use of such Intellectual Property by the relevant Related Party does
not infringe on the rights of any Person, except for such claims and
infringements as do not, in the aggregate, give rise to any material liability
on the part of any Related Party.
IV.20 Casualties or Taking of Property. Except as disclosed on Exhibit III
under the heading "Casualties," since June 30, 1999, neither the business nor
any Property of any Related Party has been materially adversely affected as a
result of any fire, explosion, earthquake, flood, drought, windstorm, accident,
strike or other labor disturbance, embargo, requisition or taking of Property,
or cancellation of contracts, permits, or concessions by any Governmental
Authority, riot, activities of armed forces, or acts of God.
IV.21 Locations of Borrower, Lafitte and Guarantors. The principal place of
business and chief executive office of the Borrower, Lafitte and Guarantors is
located at 333 Texas Street, Suite 1375, Shreveport, Louisiana 71101 or at such
other location as the Borrower may have, by proper written notice hereunder,
advised the Lender, provided that (in the case of Borrower and Guarantors) such
other location is within a state in which appropriate financing statements from
the Borrower or the applicable Guarantor, as the case may be, in favor of the
Lender have been filed.
IV.22 Subsidiaries. Goodrich has no Subsidiaries except those described on
Exhibit III under the heading "Subsidiaries of Goodrich" and the Borrower has no
Subsidiaries except Lafitte and Lafitte has no Subsidiaries.
IV.23 Scope of Collateral; Property Owned by Lafitte. The Collateral
constitutes all of the real and personal Property owned by the Borrower or
Goodrich. Lafitte does not own any real or personal Property other than an
undivided 49% interest in and to the Lafitte Field, Jefferson Parish Louisiana.
IV.24 Ownership Interests in Goodrich. Henry Goodrich currently owns 19,781
shares of issued and outstanding stock of Goodrich, and Walter G. Goodrich
currently owns 207,044 shares of issued and outstanding stock of Goodrich
representing approximately 4.24% of Goodrich.
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ARTICLE V
---------
AFFIRMATIVE COVENANTS
---------------------
So long as any Obligation remains outstanding or unpaid or any Commitment
exists, the Borrower shall and shall cause each of its Subsidiaries to, and
Goodrich shall and shall cause each of its Subsidiaries, to:
V.1 Maintenance and Access to Records. Keep adequate records, in accordance
with GAAP, of all its transactions so that at any time, and from time to time,
its true and complete financial condition may be readily determined, and
promptly following the reasonable request of the Lender, make such records
available for inspection by the Lender and, at the expense of the Borrower,
allow the Lender to make and take away copies thereof.
V.2 Quarterly Financial Statements; Compliance Certificates. Deliver to the
Lender, on or before the 45th day after the close of each quarterly period of
each fiscal year of Goodrich, (a) a copy of the unaudited consolidated and
consolidating Financial Statements of Goodrich as at the close of such quarterly
period and from the beginning of such fiscal year to the end of such period,
such Financial Statements to be certified by the chief financial officer of
Goodrich as having been prepared in accordance with GAAP consistently applied
and as a fair presentation of the condition of Goodrich and its Subsidiaries,
subject to changes resulting from normal year-end audit adjustments, and (b) a
Compliance Certificate.
V.3 Annual Financial Statements; Compliance Certificates. Deliver to the
Lender, on or before the 120th day after the close of each fiscal year of
Goodrich, (a) a copy of the annual audited consolidated Financial Statements of
Goodrich, together with the audit report issued in connection therewith, (b) a
copy of the annual unaudited consolidating Financial Statements of Goodrich, and
(c) a Compliance Certificate.
V.4 Oil and Gas Reserve Reports.
(a) Deliver to the Lender no later than the last day of March of each
year during the term of this Agreement, engineering reports in form and
substance satisfactory to the Lender, certified by any nationally- or
regionally-recognized independent consulting petroleum engineers acceptable to
the Lender as fairly and accurately setting forth (i) the proven and producing,
shut-in, behind-pipe, and undeveloped oil and gas reserves (separately
classified as such) attributable to the Oil and Gas Properties of each of the
Related Parties (designated by entity) as of January 1 of the year for which
such reserve reports are furnished, (ii) the aggregate present value of the
future net income with respect to such Oil and Gas Properties, discounted at a
stated per annum discount rate of such reserves, (iii) projections of the annual
rate of production, gross income, and net income with respect to such reserves,
and (iv) information with respect to the "take-or-pay," "prepayment," and
gas-balancing liabilities of the Related Parties (designated by entity).
(b) Deliver to the Lender no later than the last day of August of each
year during the term of this Agreement, engineering reports in form and
substance satisfactory to the Lender prepared by or under the supervision of the
chief petroleum engineer or geologist of the Borrower evaluating the Oil and Gas
Properties of the Related Parties (designated by entity) as of July 1 of the
year for which such reserve reports are furnished and updating the information
provided in the reports pursuant to Section 5.4(a).
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(c) Deliver to the Lender, on or before the 45th day after the close
of each month, a report of monthly production of its Oil and Gas Properties,
setting forth production volumes for oil, gas, other hydrocarbons and water,
broken out by major fields or by major wells, in each case to the satisfaction
of the Lender.
(d) Each of the reports provided pursuant to clauses (a) and (b) of
this Section shall be submitted to the Lender and shall be in ARIES or other
compatible electronic format. Each of the reports provided pursuant to this
Section shall be accompanied by additional data concerning pricing, quantities
of production from the Oil and Gas Properties, volumes of production sold,
purchasers of production, gross revenues, expenses, and such other information
and engineering and geological data with respect thereto as the Lender may
reasonably request.
V.5 Accounts Payable/Receivable. Deliver to the Lender, on or before the
15th day after the close of each month, a report of accounts receivable and
accounts payable for the Borrower, Lafitte and Goodrich, including amounts due
for royalty payments. The information provided with respect to royalties may be
presented on a consolidated basis so long as any accrued and unpaid royalties
for the Kings Ridge Field, Lafourche Parish, Louisiana, shall be listed
separately with the corresponding amount. The report of accounts receivable
shall include an aging of total receivables which represent at least eighty
percent (80%) of total receivables (with the balance presented on a
consolidated, non-aged, basis).
V.6 Capital Expenditures. Deliver to the Lender, on or before the 45th day
after the close of each quarterly period of each fiscal year of Goodrich, (i) an
itemized capital expenditure budget for the Borrower and Goodrich for the next
quarterly period using a form acceptable to the Lender and (ii) a reconciliation
of the itemized capital expenditures budget for the quarterly period just ended
to the actual itemized capital expenditures incurred during such period. The
amount of such capital expenditure budget shall be subject to the approval of
the Lender and such approval shall be effective for a period of three months
from the date of such approval or until such time as a change is requested.
Within fifteen (15) days of receipt by the Lender of a proposed capital
expenditure budget for the following quarter, the Lender shall notify the
Borrower in writing of its acceptance or rejection of such budget. In the event
any such budget is rejected, the Borrower must submit revised capital
expenditure budgets until the Lender shall approve such a budget in writing.
Until such time as the Lender shall have indicated in writing its approval of a
capital expenditure budget for a particular quarter, the capital expenditure
budget for such quarter shall be zero dollars ($0.00).
V.7 Declining Additional Lafitte Operations. If Lafitte shall decline to
participate in any operations proposed by the operator of any of the Oil and Gas
Properties of Lafitte, the Lender shall be given written notice thereof within
five (5) Business Days thereafter.
V.8 Hedging Position. Deliver to the Lender, on or before the 15th day
after the close of each month, a report of the position of the Borrower, Lafitte
and Goodrich in respect of Hedging Agreements and of all Indebtedness with
respect to Hedging Agreements.
V.9 Title Opinions; Title Defects. Promptly upon the request of the Lender,
furnish to the Lender title opinions, in form and substance and by counsel
satisfactory to the Lender, or other confirmation of title acceptable to the
Lender, covering such Oil and Gas Properties of the Borrower as may be requested
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by the Lender; and promptly, but in any event within 30 days after notice by the
Lender of any defect, material in the opinion of the Lender in value, in the
title of the Borrower to any of its Oil and Gas Properties, clear such title
defects, and, in the event any such title defects are not cured in a timely
manner, pay all related costs and fees incurred by the Lender to do so.
V.10 Notices of Certain Events. Deliver to the Lender, immediately upon
having knowledge of the occurrence of any of the following events or
circumstances, a written statement with respect thereto, signed by a Responsible
Officer of the Borrower or Goodrich and setting forth the relevant event or
circumstance and the steps being taken with respect to such event or
circumstance:
(a) any Default or Event of Default;
(b) any default or event of default under any contractual obligation
of any Related Party, or any litigation, investigation, or proceeding between
any Related Party and any Governmental Authority which, in either case, if not
cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) any litigation or proceeding involving any Related Party as a
defendant or in which any Property of any Related Party is subject to a claim
and in which the amount involved is $500,000 or more and which is not covered by
insurance or in which injunctive or similar relief is sought;
(d) the receipt by any Related Party of any Environmental Complaint;
(e) any actual, proposed, or threatened testing or other investigation
by any Governmental Authority or other Person concerning the environmental
condition of, or relating to, any Property of any Related Party, or adjacent to
any Property of any Related Party following any allegation of a violation of any
Requirement of Law;
(f) any Release of Hazardous Substances by any Related Party or from,
affecting, or related to any Property of any Related Party, or adjacent to any
Property of any Related Party, or the violation of any Environmental Law, or the
revocation, suspension, or forfeiture of or failure to renew, any permit,
license, registration, approval, or authorization which could reasonably be
expected to have a Material Adverse Effect;
(g) any Reportable Event or imminently expected Reportable Event with
respect to any Plan; any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan; the institution of proceedings or the
taking of any other action by the PBGC, the Borrower or any Commonly Controlled
Entity or Multiemployer Plan with respect to the withdrawal from, or the
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termination, Reorganization or Insolvency of, any Single Employer Plan or
Multiemployer Plan; or any Prohibited Transaction in connection with any Plan or
any trust created thereunder and the action being taken by the Internal Revenue
Service with respect thereto;
(h) the change in identity or address of any Person remitting to the
Borrower proceeds from the sale of hydrocarbon production from or attributable
to any Mortgaged Property;
(i) any change in the senior management of the Borrower, Lafitte or
any Guarantor;
(j) the Borrower's or Goodrich=s acquisition or ownership of any
estate (fee simple or leasehold) of real or personal Property, wherever located,
which is not included in the Collateral; and
(k) any other event or condition which could reasonably be expected to
have a Material Adverse Effect.
V.11 Letters in Lieu of Transfer Orders; Division Orders. Promptly upon
request by the Lender at any time and from time to time, and without limitation
on the rights of the Lender pursuant to Section 2.16, execute such letters in
lieu of transfer orders, in addition to the letters signed by the Borrower and
delivered to the Lender in satisfaction of the condition set forth in Section
3.1(h) and/or division and/or transfer orders as are necessary or appropriate to
transfer and deliver to the Lender proceeds from or attributable to any
Mortgaged Property.
V.12 Additional Information. Furnish to the Lender, within five days after
any material report (other than financial statements) or other communication is
sent by any Related Party to its stockholders or filed by any Related Party with
the Securities and Exchange Commission or any successor or analogous
Governmental Authority, copies of such report or communication and, promptly
upon the request of the Lender, such additional financial or other information
concerning the assets, liabilities, operations, and transactions of any Related
Party as the Lender may from time to time request; and notify the Lender not
less than ten Business Days prior to the occurrence of any condition or event
that may change the proper location for the filing of any financing statement or
other public notice or recording for the purpose of perfecting a Lien in any
Collateral, including, without limitation, any change in name or the location of
the principal place of business or chief executive office of any Related Party;
and upon the request of the Lender, execute such additional Security Instruments
as may be necessary or appropriate in connection therewith.
V.13 Compliance with Laws. Comply with all applicable Requirements of Law,
including, without limitation, (a) the Natural Gas Policy Act of 1978, as
amended, (b) ERISA, (c) Environmental Laws, and (d) all permits, licenses,
registrations, approvals, and authorizations (i) related to any natural or
environmental resource or media located on, above, within, in the vicinity of,
related to or affected by any Property of any Related Party, (ii) required for
the performance of the operations of any Related Party, or (iii) applicable to
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the use, generation, handling, storage, treatment, transport, or disposal of any
Hazardous Substances; and cause all employees, crew members, agents,
contractors, subcontractors, and future lessees (pursuant to appropriate lease
provisions) of each Related Party, while such Persons are acting within the
scope of their relationship with such Related Party, to comply with all such
Requirements of Law as may be necessary or appropriate to enable such Related
Party to so comply.
V.14 Payment of Assessments and Charges. Pay all taxes, assessments,
governmental charges, rent, and other Indebtedness which, if unpaid, might
become a Lien against its Property, except any of the foregoing being contested
in good faith and as to which adequate reserve in accordance with GAAP has been
established or unless failure to pay would not have a Material Adverse Effect.
V.15 Maintenance of Corporate Existence and Good Standing. Maintain its
corporate existence or qualification and good standing in its jurisdictions of
incorporation and in all jurisdictions wherein the Property now owned or
hereafter acquired or business now or hereafter conducted necessitates same.
V.16 Further Assurances. Promptly cure any defects in the execution and
delivery of any of the Loan Documents and all agreements contemplated thereby,
and execute, acknowledge, and deliver such other assurances and instruments as
shall, in the opinion of the Lender, be necessary to fulfill the terms of the
Loan Documents.
V.17 Fees and Expenses.
(a) Upon request by the Lender, promptly pay all reasonable fees and
expenses of the Lender in connection with the preparation, negotiation,
syndication, execution, delivery, administration, and enforcement of this
Agreement and the other Loan Documents and any amendments, restatements, or
supplements thereto, the satisfaction of the conditions precedent set forth
herein, the filing and recordation of Security Instruments, and the consummation
of the transactions contemplated in the Loan Documents, including, without
limitation, fees and expenses of legal counsel.
(b) Upon request by the Lender, promptly pay (to the fullest extent
permitted by law) for all amounts reasonably expended, advanced, or incurred by
or on behalf of the Lender to satisfy any obligation of the Borrower or any
Guarantor under any of the Loan Documents; to collect the Obligations; to
enforce the rights of the Lender under any of the Loan Documents; and to protect
the Properties or business of the Borrower, the Lafitte Membership Interests and
the Guarantors, including, without limitation, the Collateral, which amounts
shall be deemed compensatory in nature and liquidated as to amount upon notice
to the Borrower by the Lender and which amounts shall include, but not be
limited to (i) all court costs, (ii) reasonable fees and expenses of legal
counsel, auditors and accountants, engineers, and environmental and insurance
consultants, (iii) fees and expenses incurred in connection with the
participation by the Lender as a member of the creditors' committee in a case
commenced under any Insolvency Proceeding, (iv) fees and expenses incurred in
connection with lifting the automatic stay prescribed in '362 Title 11 of the
United States Code, and (v) fees and expenses incurred in connection with any
action pursuant to '1129 Title 11 of the United States Code, all reasonably
incurred by the Lender in connection with the collection of any sums due under
the Loan Documents, together with interest at the per annum interest rate equal
to the Default Rate, calculated on a basis of a calendar year of 365/366 (as the
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case may be) days, counting the actual number of days elapsed, on each such
amount from the date of notification that the same was expended, advanced, or
incurred by the Lender until the date it is repaid to the Lender, with the
obligations under this Section surviving the non-assumption of this Agreement in
a case commenced under any Insolvency Proceeding and being binding upon the
Borrower and/or a trustee, receiver, custodian, or liquidator of the Borrower
appointed in any such case.
V.18 Operation of Oil and Gas Properties. Develop, maintain, and operate
its Oil and Gas Properties in a prudent and workmanlike manner in accordance
with industry standards.
V.19 Maintenance and Inspection of Properties. Maintain all of its tangible
Properties in good repair and condition, ordinary wear and tear excepted; make
all necessary replacements thereof and operate such Properties in a good and
workmanlike manner; and permit any authorized representative of the Lender to
visit and inspect, any tangible Property of any Related Party. So long as no
Event of Default shall have occurred and be continuing, such visits and
inspections shall be at the expense of the Lender. If an Event of Default has
occurred and is continuing, such visits and inspections shall be at the expense
of the Borrower.
V.20 Maintenance of Insurance. Maintain insurance with respect to its
Properties and businesses against such liabilities, casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
acceptable to the Lender and naming the Lender as loss payee, and, upon any
renewal of any such insurance and at other times upon request by the Lender,
furnish to the Lender evidence, satisfactory to the Lender, of the maintenance
of such insurance. The Lender shall have the right to collect, and the Borrower
hereby assigns to the Lender, any and all monies that may become payable under
any policies of insurance relating to business interruption or by reason of
damage, loss, or destruction of any of the Collateral. In the event of any
damage, loss, or destruction for which insurance proceeds relating to business
interruption or Collateral exceed $500,000, the Lender may, at its option, apply
all such sums or any part thereof received by it toward the payment of the
Obligations, whether matured or unmatured, application to be made first to
interest and then to principal, and shall deliver to the Borrower the balance,
if any, after such application has been made. In the event of any such damage,
loss, or destruction for which insurance proceeds are $500,000 or less, provided
that no Default or Event of Default has occurred and is continuing, the Lender
shall deliver any such proceeds received by it to the Borrower. In the event the
Lender receives insurance proceeds not attributable to Collateral or business
interruption, the Lender shall deliver any such proceeds to the Borrower.
V.21 Maintenance of Operating Accounts. Maintain its primary operating
banking accounts with the Lender.
V.22 Asset Sales Proceeds. Upon the sale of any Property of the Borrower or
Goodrich, 100% of the net proceeds from such sale shall be applied as follows
(subject, however, to the sharing requirements set forth in the Collateral
Agency Agreement to the same extent as if such proceeds were realized from a
foreclosure upon such Property):
(i) first, to reduce the Borrowing Base to the extent of the
allocated Borrowing Base value for such Property as decided by
the Lender in its sole discretion; and
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(ii) the remainder to be applied to the unpaid principal balance of
the Note.
V.23 Cash Collateral Account.
(a) The Borrower shall establish a cash collateral account with the
Lender, being account number 70744406 in the name of the Borrower ("Cash
Collateral Account"). The Borrower shall send notices to purchasers of
production representing a minimum of 90% of sales proceeds (based on average
over the prior six months) to begin immediately to remit via wire transfer the
proceeds from production into the above account. Such notices shall be in a form
acceptable to the Lender. Borrower will execute a Collateral Assignment of
Deposit Accounts and Security Agreement pledging the above account as well as
any other account with the Lender.
(b) The Borrower and the Lender acknowledge that the Collateral is
comprised, in part, of Borrower=s undivided interest in Oil and Gas Properties
and accordingly cash deposited in the Cash Collateral Account may include the
interests of other Persons ("Other Revenues"). The Lender agrees that if it
receives appropriate evidence that a part of such funds are Other Revenues, such
funds will be released to such Persons. The Lender shall not be liable, however,
for any actions by the Lender which are taken in compliance with the terms of
this Agreement and the Security Instruments with respect to the Other Revenues
in the Cash Collateral Account which are taken before the Lender received such
evidence that such funds are Other Revenues.
V.24 Indemnification. INDEMNIFY AND HOLD THE LENDER AND ITS SHAREHOLDERS,
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT, AND AFFILIATES AND
EACH TRUSTEE FOR THE BENEFIT OF THE LENDER UNDER ANY SECURITY INSTRUMENT
HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES,
FINES, PENALTIES, CHARGES, ADMINISTRATIVE AND JUDICIAL PROCEEDINGS AND ORDERS,
JUDGMENTS, REMEDIAL ACTIONS, REQUIREMENTS AND ENFORCEMENT ACTIONS OF ANY KIND,
AND ALL COSTS AND EXPENSES INCURRED IN CONNECTION THEREWITH (INCLUDING, WITHOUT
LIMITATION, ATTORNEYS' FEES AND EXPENSES), ARISING DIRECTLY OR INDIRECTLY, IN
WHOLE OR IN PART, FROM (A) THE PRESENCE OF ANY HAZARDOUS SUBSTANCES ON, UNDER,
OR FROM ANY PROPERTY OF ANY RELATED PARTY, WHETHER PRIOR TO OR DURING THE TERM
HEREOF, (B) ANY ACTIVITY CARRIED ON OR UNDERTAKEN ON OR OFF ANY PROPERTY OF ANY
RELATED PARTY, WHETHER PRIOR TO OR DURING THE TERM HEREOF, AND WHETHER BY ANY
RELATED PARTY, OR ANY PREDECESSOR IN TITLE, EMPLOYEE, AGENT, CONTRACTOR, OR
SUBCONTRACTOR OF ANY RELATED PARTY OR ANY OTHER PERSON AT ANY TIME OCCUPYING OR
PRESENT ON SUCH PROPERTY, IN CONNECTION WITH THE HANDLING, TREATMENT, REMOVAL,
STORAGE, DECONTAMINATION, CLEANUP, TRANSPORTATION, OR DISPOSAL OF ANY HAZARDOUS
SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR UNDER SUCH PROPERTY, (C) ANY
RESIDUAL CONTAMINATION ON OR UNDER ANY PROPERTY OF ANY RELATED PARTY, (D) ANY
CONTAMINATION OF ANY PROPERTY OR NATURAL RESOURCES ARISING IN CONNECTION WITH
THE GENERATION, USE, HANDLING, STORAGE, TRANSPORTATION OR DISPOSAL OF ANY
HAZARDOUS SUBSTANCES BY ANY RELATED PARTY, OR ANY EMPLOYEE, AGENT, CONTRACTOR,
OR SUBCONTRACTOR OF ANY RELATED PARTY WHILE SUCH PERSONS ARE ACTING WITHIN THE
SCOPE OF THEIR RELATIONSHIP WITH ANY RELATED PARTY, IRRESPECTIVE OF WHETHER ANY
OF SUCH ACTIVITIES WERE OR WILL BE UNDERTAKEN IN ACCORDANCE WITH APPLICABLE
REQUIREMENTS OF LAW, OR (E) THE PERFORMANCE AND ENFORCEMENT OF ANY LOAN
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DOCUMENT, OR ANY OTHER ACT OR OMISSION IN CONNECTION WITH OR RELATED TO ANY LOAN
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING, WITHOUT
LIMITATION, ANY OF THE FOREGOING IN THIS SECTION ARISING FROM NEGLIGENCE,
WHETHER SOLE OR CONCURRENT, ON THE PART OF THE LENDER OR ANY OF ITS
SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT, OR
AFFILIATES OR ANY TRUSTEE FOR THE BENEFIT OF THE LENDER UNDER ANY SECURITY
INSTRUMENT, BUT EXCLUDING ANY OCCURRENCE RESULTING FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF SUCH PERSONS; WITH THE FOREGOING INDEMNITY SURVIVING
SATISFACTION OF ALL OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
ARTICLE VI
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NEGATIVE COVENANTS
------------------
So long as any Obligation remains outstanding or unpaid or any Commitment
exists, the Borrower will not, and will not permit any of its Subsidiaries to,
and Goodrich will not, and will not permit any of its Subsidiaries to:
VI.1 Indebtedness; Contingent Obligations. Create, incur, assume, or suffer
to exist any Indebtedness or Contingent Obligation, whether by way of loan or
otherwise; provided, however, the foregoing restriction shall not apply to (a)
the Obligations, the Subordinated Debt, the Pari Passu Debt and the Lafitte
Debt, (b) unsecured accounts payable incurred in the ordinary course of
business, which are not unpaid in excess of 60 days beyond invoice date or are
being contested in good faith and as to which such reserve as is required by
GAAP has been made (accounts payable on extended terms shall not be allowed
under this exception), (c) performance guarantees and performance surety or
other bonds provided in the ordinary course of business, (d) Indebtedness with
respect to Hedging Agreements entered into by Lafitte and a third-party swap
counterparty, (e) Indebtedness with respect to Hedging Agreements (other than
those Hedging Agreements referred to in clause (d) above) entered into with a
Person acceptable to the Lender, provided that such Hedging Agreements relating
to hydrocarbons cover not more than 75% of the projected monthly production from
proved developed producing Oil and Gas Properties of the Borrower and Lafitte,
and provide for strike prices which, at the time any such Hedging Agreement is
entered into, are not less than the energy product pricing guidelines of the
Lender at such time, (f) performance guaranty of the plugging and abandonment
obligations owed by Lafitte to Stone Energy Corporation with respect to Oil and
Gas Properties in which Lafitte owns a working interest, and (g) trade credit
(including authorizations for expenditures with respect to Oil and Gas
Properties) incurred or operating leases entered into in the ordinary course of
business.
VI.2 Liens. Create, incur, assume, or suffer to exist any Lien on any of
its Properties, whether now owned or hereafter acquired; provided, however, the
foregoing restrictions shall not apply to Permitted Liens.
VI.3 Sales of Assets. Without the prior written consent of the Lender,
sell, transfer, or otherwise dispose of, in one or any series of transactions,
any stock of any Subsidiary, any Collateral, or any other assets, whether now
owned or hereafter acquired, or enter into any agreement to do so; provided,
however, the foregoing restriction shall not apply to (a) the sale of
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hydrocarbons or inventory in the ordinary course of business provided that no
contract for the sale of hydrocarbons shall obligate any Related Party to
deliver hydrocarbons produced from any Property at some future date without
receiving full payment therefor within 90 days of delivery, (b) the sale or
other disposition of Property destroyed, lost, worn out, damaged, or having only
salvage value or no longer used or useful in its business, or (c) the sale or
other disposition of other assets (excluding any stock of any Subsidiary) which
are not material to the operations of Goodrich and its Subsidiaries, taken as a
whole, provided that any mandatory prepayment required as a result thereof is
made at the time of such sale or disposition.
VI.4 Leasebacks. Enter into any agreement to sell or transfer any Property
and thereafter rent or lease as lessee such Property or other Property intended
for the same use or purpose as the Property sold or transferred.
VI.5 Loans; Advances; Investments. Make or agree to make or allow to remain
outstanding any loans or advances to or Investments in, or purchase or otherwise
acquire all or substantially all of the assets of any Person, or form any new
Subsidiaries; provided, however, the foregoing restrictions shall not apply to
(a) advances or extensions of credit in the form of accounts receivable incurred
in the ordinary course of business and upon terms common in the industry for
such accounts receivable, (b) advances to employees for the payment of expenses
in the ordinary course of business, (c) loans, advances, or Investments by any
Related Party other than the Borrower or any Guarantor to any other Related
Party, (d) loans, advances, or Investments by Lafitte to either the Borrower or
Goodrich, (e) Investments in the form of (i) debt securities issued or directly
and fully guaranteed or insured by the United States Government or any agency or
instrumentality thereof, with maturities of no more than one year, (ii)
commercial paper of a domestic issuer rated at the date of acquisition at least
P-2 by Moody's Investor Service, Inc. or A-2 by Standard & Poor's Corporation
and with maturities of no more than one year from the date of acquisition, or
(iii) repurchase agreements covering debt securities or commercial paper of the
type permitted in this Section, certificates of deposit, demand deposits,
eurodollar time deposits, overnight bank deposits and bankers' acceptances, with
maturities of no more than one year from the date of acquisition, issued by or
acquired from or through the Lender or any bank or trust company organized under
the laws of the United States or any state thereof and having capital surplus
and undivided profits aggregating at least $100,000,000, (f) other short-term
Investments similar in nature and degree of risk to those described in clause
(e) of this Section, or (g) the Investments described on Exhibit I under the
heading "Investments."
VI.6 Changes in Corporate Structure. Without the prior written consent of
the Lender, which will not be unreasonably withheld, enter into any transaction
of consolidation, merger, or amalgamation; liquidate, wind up, or dissolve (or
suffer any liquidation or dissolution).
VI.7 Dividends and Distributions. Declare, pay, or make, whether in cash or
other Property, any dividend or distribution on, any share of any class of its
capital stock or other equity interests at any time; provided, however, the
foregoing restrictions shall not apply to dividends or distributions by any
Related Party other than the Borrower or the Guarantors.
VI.8 Transactions with Affiliates. Directly or indirectly, enter into any
transaction (including the sale, lease, or exchange of Property or the rendering
of service) with any of its Affiliates, other than upon fair and reasonable
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<PAGE>
terms no less favorable than could be obtained in an arm's length transaction
with a Person which was not an Affiliate.
VI.9 Lines of Business. Expand, on its own or through any Subsidiary, into
any line of business other than those in which it is engaged as of the date
hereof.
VI.10 ERISA Compliance. Permit any Plan maintained by it or any Commonly
Controlled Entity to (a) engage in any Prohibited Transaction, (b) incur any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA, or (c) terminate in a manner which could result in the imposition of a
Lien on any Property of any Related Party pursuant to Section 4068 of ERISA; or
assume an obligation to contribute to any Multiemployer Plan; or acquire any
Person or the assets of any Person which has now or has had at any time an
obligation to contribute to any Multiemployer Plan.
VI.11 Consolidated Tangible Net Worth. Permit, as of the close of each
fiscal quarter ending on or after December 31, 1999, Consolidated Tangible Net
Worth at any time to be less than the sum of (i) $7,000,000, plus (ii) for each
fiscal quarter after March 31, 1999 with positive Consolidated Net Income, 50%
of the Consolidated Net Income of such fiscal quarter, plus (iii) 100% of all
cash equity proceeds of each offering transaction, net of expenses incurred in
connection therewith, after the date hereof; provided that cash equity proceeds
received from the noteholders of the Pari Passu Debt and the Subordinated Debt
to cure an existing default under this Section 6.11 shall not be included in
clause (iii) above.
VI.12 Debt Service Ratio. Permit, as of the close of each fiscal quarter
ending on or after December 31, 1999, the ratio of (a) the sum of EBITDA for
such fiscal quarter plus cash equity investments made to Goodrich or to the
Borrower during such fiscal quarter to (b) Debt Service for such fiscal quarter
to be less than 1.10 to 1.00.
VI.13 Subordinated Debt, Pari Passu Debt and Lafitte Debt. The Borrower
will not (and will not permit any other Related Party to) amend, modify or
obtain or grant a waiver of any provision of any document or instrument
evidencing the Subordinated Debt, the Lafitte Debt or the Pari Passu Debt. The
Borrower will not (and will not permit any other Related Party to) purchase,
redeem, retire or otherwise acquire for value, deposit any monies with any
Person with respect to or make any payment or prepayment of the principal of or
any other amount owing in respect of, any of the Subordinated Debt, the Pari
Passu Debt or the Lafitte Debt, except for payments expressly permitted under
the Subordination Agreement with respect to the Subordinated Debt and except for
payments (but not prepayments) of amounts due under the Pari Passu Debt or the
Lafitte Debt.
VI.14 Agreements Regarding Lafitte Field. Without the prior written consent
of the Lender, enter into any agreements with Stone Energy Corporation or any
other Person that sell, assign, transfer, dispose or otherwise affect any of
Lender=s or Lafitte=s interest in or relating to the Lafitte Field, Jefferson
Parish Louisiana.
VI.15 Capital Expenditures. Make capital expenditures in any quarter in
excess of the amount budgeted for such quarter under a capital expenditure
budget approved in writing by the Lender as provided for in Section 5.6 hereof.
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VI.16 Declining Additional Lafitte Operations. Decline to participate in
more than three (3) separate individual well operations proposed by any operator
of the Oil and Gas Properties of Lafitte which operations are thereafter assumed
by any holder of any of the Subordinated Debt, the Pari Passu Debt or the
Lafitte Debt, unless at the time of such declining (i) Lafitte does not have
cash available to fund such operations and (ii) the Lender has not given its
prior written consent to an advance of funds to Lafitte by Goodrich or the
Borrower to fund for such operations (which consent has been requested by
Lafitte at least ten (10) Business Days prior to such declining).
VI.17 General and Administrative Expenses. Permit, as of the close of each
fiscal quarter ending on or after December 31, 1999, general and administrative
expenses (including capitalized general and administrative expenses), on a
consolidated basis for Goodrich and its Subsidiaries, for any fiscal quarter to
exceed twenty percent (20%) of total consolidated revenues for Goodrich and its
Subsidiaries (excluding proceeds from asset sales and other non-recurring
revenues) for such fiscal quarter.
ARTICLE VII
-----------
EVENTS OF DEFAULT
-----------------
VII.1 Enumeration of Events of Default. Any of the following events shall
constitute an Event of Default:
(a default shall be made in the payment when due of any installment of
principal or interest under this Agreement or the Note or in the payment when
due of any fee or other sum payable under any Loan Document and, with respect to
the payment of interest only, such default shall continue for three days;
(b default shall be made by the Borrower or any Guarantor in the due
observance or performance of any of their respective obligations under the Loan
Documents, other than as described in Section 7.1(a) above or Section 7.1(c)
below, and with respect to default in the observance or performance of
obligations under Article V or under Section 6.11 only, such default shall
continue for 30 days after the earlier of notice thereof to the Borrower by the
Lender or knowledge thereof by the Borrower or any Guarantor;
(c default shall be made by the Borrower or any Guarantor at the end
of any fiscal quarter in the due observance or performance of obligations under
Section 6.12 only, such default shall continue beyond the earlier of (i) 45 days
following such fiscal quarter, and (ii) receipt by Lender of the disclaimer by
or notice from one or more holders of Pari Passu Debt or Subordinated Debt to
the effect that such holder or holders will not make cash equity investments in
Goodrich or the Borrower within the 45 days following such fiscal quarter in an
amount sufficient to comply with Section 6.12 for such fiscal quarter;
37
<PAGE>
(d any representation or warranty made by the Borrower or any
Guarantor in any of the Loan Documents proves to have been untrue in any
material respect or any representation, statement (including Financial
Statements), certificate, or data furnished or made to the Lender in connection
herewith proves to have been untrue in any material respect as of the date the
facts therein set forth were stated or certified;
(e default shall be made by any Related Party (as principal or
guarantor or other surety) in the payment or performance of any bond, debenture,
note, or other Indebtedness exceeding $100,000 or under any credit agreement,
loan agreement, indenture, promissory note, or similar agreement or instrument
executed in connection with any of the foregoing, and such default shall remain
unremedied for in excess of the period of grace, if any, with respect thereto;
(f the Borrower shall be unable to satisfy any condition or cure any
circumstance specified in Article III, the satisfaction or curing of which is
precedent to the right of the Borrower to obtain a Loan, and such inability
shall continue for a period in excess of 30 days;
(g any Related Party shall (i) apply for or consent to the appointment
of a receiver, trustee, or liquidator of it or all or a substantial part of its
assets, (ii) file a voluntary petition commencing an Insolvency Proceeding,
(iii) make a general assignment for the benefit of creditors, (iv) be unable, or
admit in writing its inability, to pay its debts generally as they become due,
or (v) file an answer admitting the material allegations of a petition filed
against it in any Insolvency Proceeding;
(h an order, judgment, or decree shall be entered against any Related
Party by any court of competent jurisdiction or by any other duly authorized
authority, on the petition of a creditor or otherwise, granting relief in any
Insolvency Proceeding or approving a petition seeking reorganization or an
arrangement of its debts or appointing a receiver, trustee, conservator,
custodian, or liquidator of it or all or any substantial part of its assets, and
such order, judgment, or decree shall not be dismissed or stayed within 30 days;
(i the levy against any significant portion of the Property of any
Related Party, or any execution, garnishment, attachment, sequestration, or
other writ or similar proceeding which is not permanently dismissed or
discharged within 30 days after the levy;
(j a final and non-appealable order, judgment, or decree shall be
entered against any Related Party for money damages and/or Indebtedness due in
an amount in excess of $500,000, and such order, judgment, or decree shall not
be dismissed or stayed within 30 days;
(k any Related Party shall have (i) concealed, removed, or diverted,
or permitted to be concealed, removed, or diverted, any part of its Property,
with intent to hinder, delay, or defraud its creditors or any of them, (ii) made
any transfer of its Property to or for the benefit of a creditor at a time when
other creditors similarly situated have not been paid, or (iii) shall have
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<PAGE>
suffered or permitted, while insolvent, any creditor to obtain a Lien upon any
of its Property through legal proceedings or distraint which is not vacated
within 30 days from the date thereof;
(l any Guaranty shall for any reason cease to be in full force and
effect or the Security Instruments shall for any reason not, or cease to, create
valid and perfected first-priority Liens against any or all of the real and
personal Property of Goodrich and the Borrower (including the Borrower
Membership Interests) and against all of the equity interests in and to Lafitte;
(m any payment of royalties on Oil and Gas Properties of any Related
Party shall not be made when due or any account payable of any Related Party
(except as the Lender may expressly agree in writing) shall not be paid within
sixty (60) days of invoice date; or
(n any Change of Control shall occur; or Henry Goodrich shall sell,
transfer, convey, encumber or otherwise dispose (except for transfers resulting
from the death of Henry Goodrich or entered into by Henry Goodrich for his
estate planning purposes) of more than fifty percent (50%) of the equity
interests currently owned by him in and to Goodrich; or Walter G. Goodrich shall
sell, transfer, convey, encumber or otherwise dispose (except for transfers
resulting from the death of Walter G. Goodrich or entered into by Walter G.
Goodrich for his estate planning purposes) of more than fifty percent (50%) of
the equity interests currently owned by him in and to Goodrich; or
(o any Person shall engage in any "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975 of the Code) involving any Plan; any
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan for which an excise tax is
due or would be due in the absence of a waiver; a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or a
trustee shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Lender, likely to result in the
termination of such Plan for purposes of Title IV of ERISA; any Single Employer
Plan shall terminate for purposes of Title IV of ERISA; the Borrower or any
Commonly Controlled Entity shall incur, or in the reasonable opinion of the
Lender, be likely to incur any liability in connection with a withdrawal from,
or the Insolvency or Reorganization of, a Multiemployer Plan; or any other event
or condition shall occur or exist with respect to a Plan and the result of such
events or conditions referred to in this Section 7.1(n) could subject the
Borrower or any Commonly Controlled Entity to any tax (other than an excise tax
under Section 4980 of the Code), penalty or other liabilities which taken in the
aggregate would have a Material Adverse Effect and any such circumstance shall
exist for in excess of 30 days.
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VII.2 Remedies.
(a Upon the occurrence of an Event of Default specified in Section
7.1(g) or Section 7.1(h), immediately and without notice, (i) all Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest, notice of protest, default, or dishonor, notice of intent to
accelerate maturity, notice of acceleration of maturity, or other notice of any
kind, except as may be provided to the contrary elsewhere herein, all of which
are hereby expressly waived by the Borrower; (ii) the Commitment shall
immediately cease and terminate unless and until reinstated by the Lender in
writing; and (iii) the Lender is hereby authorized at any time and from time to
time, without notice to the Borrower (any such notice being expressly waived by
the Borrower), to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) held by the Lender and any and all other
indebtedness at any time owing by the Lender to or for the credit or account of
the Borrower against any and all of the Obligations.
(b Upon the occurrence of any Event of Default other than those
specified in Section 7.1(g) or Section 7.1(h), (i) the Lender may, by notice to
the Borrower, declare all Obligations immediately due and payable, without
presentment, demand, protest, notice of protest, default, or dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity, or other
notice of any kind, except as may be provided to the contrary elsewhere herein,
all of which are hereby expressly waived by the Borrower; (ii) the Commitment
shall immediately cease and terminate unless and until reinstated by the Lender
in writing; and (iii) the Lender is hereby authorized at any time and from time
to time, without notice to the Borrower (any such notice being expressly waived
by the Borrower), to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) held by the Lender and any and all other
indebtedness at any time owing by the Lender to or for the credit or account of
the Borrower against any and all of the Obligations although such Obligations
may be unmatured.
(c Upon the occurrence of any Event of Default, the Lender may, in
addition to the foregoing in this Section, exercise any or all of its rights and
remedies provided by law or pursuant to the Loan Documents.
ARTICLE VIII
------------
MISCELLANEOUS
-------------
VIII.1 Transfers; Participations.
(a The Borrower may not assign any of its rights or obligations under
any Loan Document without the prior consent of the Lender.
(b The Lender may grant participations in the Obligations or any
portion thereof to any investment or commercial bank, savings and loan
institution, insurance company, trust company, or affiliate of the Lender (such
grantee, a "Participant"), provided that the Lender shall retain the exclusive
right and obligation to administer the Loans and the grant of any participation
shall not relieve the Lender of its obligations under this Agreement or under
any of the other Loan Documents. In addition, with the consent of the Borrower,
which will not be unreasonably withheld, the Lender may sell, transfer, or
assign the Obligations or any portion thereof to any financial institution (such
assignee, a "Transferee"). The Borrower agrees that each Transferee may exercise
40
<PAGE>
all rights (including, without limitation, rights of set-off) with respect to
the portion of the Obligations held by it as fully as if such Transferee were
the direct holder thereof, subject to any agreements between such Transferee and
the transferor to such Transferee, and the transferor to such Transferee shall
be relieved of its obligations under the Loan Documents to the extent such
obligations are assumed by such Transferee. The Lender may forward to each
Participant and Transferee and prospective Participant and Transferee all
documents and information relating to the Obligations, whether furnished by the
Borrower or otherwise obtained, as the Lender determines necessary or desirable.
(c Notwithstanding anything in this Section to the contrary, the
Lender may assign and pledge the Note or any interest therein to any Federal
Reserve Bank or the United States Treasury as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
operating circular issued by such Federal Reserve System and/or such Federal
Reserve Bank. No such assignment or pledge shall release the Lender from its
obligations hereunder.
(d Notwithstanding any other provisions of this Section, no transfer
or assignment of the interests or obligations of any Lender or grant of
participations therein shall be permitted if such transfer, assignment, or grant
would require the Borrower to file a registration statement with the Securities
and Exchange Commission or any successor or analogous Governmental Authority or
qualify the Loans under the "Blue Sky" laws of any state.
VIII.2 Survival of Representations, Warranties, and Covenants. All
representations and warranties of the Borrower and all covenants and agreements
herein made shall survive the execution and delivery of the Note and the
Security Instruments and shall remain in force and effect so long as any
Obligation is outstanding or any Commitment exists.
VIII.3 Notices and Other Communications. Except as to oral notices
expressly authorized herein, which oral notices shall be confirmed in writing,
all notices, requests, and communications hereunder shall be in writing
(including by telecopy). Unless otherwise expressly provided herein, any such
notice, request, demand, or other communication shall be deemed to have been
duly given or made when delivered by hand, or, in the case of delivery by mail,
two Business Days after deposited in the mail, certified mail, return receipt
requested, postage prepaid, or, in the case of telecopy notice, when receipt
thereof is acknowledged orally or by written confirmation report, addressed as
follows:
(a if to the Lender, to:
Compass Bank
24 Greenway Plaza, 14th Floor
Houston, Texas 77046
Attention: Energy Banking Group
Telecopy: (713) 968-8292
(b if to the Borrower, to:
Goodrich Petroleum Company, L.L.C.
333 Texas Street, Suite 1375
Shreveport, Louisiana 71101
Attention: Walter G. Goodrich
Telecopy: (318) 429-2296
41
<PAGE>
Any party may, by proper written notice hereunder to the others,
change the individuals or addresses to which such notices to it shall thereafter
be sent.
VIII.4 Parties in Interest. All covenants and agreements herein contained
by or on behalf of the Borrower, any Guarantor, or the Lender shall be binding
upon the Borrower, such Guarantor, or the Lender, as the case may be, and their
respective legal representatives, successors, and assigns.
VIII.5 Rights of Third Parties. All provisions herein are imposed solely
and exclusively for the benefit of the Borrower and the Lender and their
successors and assigns. No other Person (including, without limitation, Lafitte
and the Guarantors) shall have any right, benefit, priority, or interest
hereunder or as a result hereof or have standing to require satisfaction of
provisions hereof in accordance with their terms.
VIII.6 No Waiver; Rights Cumulative. No course of dealing on the part of
the Lender, its officers or employees, nor any failure or delay by the Lender
with respect to exercising any of its rights under any Loan Document shall
operate as a waiver thereof. The rights of the Lender under the Loan Documents
shall be cumulative and the exercise or partial exercise of any such right shall
not preclude the exercise of any other right. The making of any Loan shall not
constitute a waiver of any of the covenants, warranties, or conditions of the
Borrower contained herein. In the event the Borrower is unable to satisfy any
such covenant, warranty, or condition, the making of any Loan shall not have the
effect of precluding the Lender from thereafter declaring such inability to be
an Event of Default as hereinabove provided.
VIII.7 Survival Upon Unenforceability. In the event any one or more of the
provisions contained in any of the Loan Documents or in any other instrument
referred to herein or executed in connection with the Obligations shall, for any
reason, be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
of any Loan Document or of any other instrument referred to herein or executed
in connection with such Obligations.
VIII.8 Amendments; Waivers. Neither this Agreement nor any provision hereof
may be amended, waived, discharged, or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, waiver, discharge, or termination is sought.
VIII.9 Controlling Agreement. In the event of a conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control.
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VIII.10 Release by Borrower. The Borrower hereby releases and discharges
the Lender from all obligations, claims, losses, causes of action, and
liabilities, of whatsoever kind or nature, whether heretofore or hereafter
accruing, whether now known or unknown, arising under or in connection with any
Existing Loan Document or any act or omission under or in connection with any
Existing Loan Document; provided, however, nothing set forth in this Section
shall relieve the Lender from its obligations and liabilities under the Loan
Documents to which it is a party.
VIII.11 Governing Law. THIS AGREEMENT, THE NOTE, AND THE GUARANTIES AND ALL
ISSUES ARISING IN CONNECTION THEREWITH AND THE TRANSACTIONS CONTEMPLATED THEREBY
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS, WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW.
VIII.12 Jurisdiction and Venue. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO,
ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE SOLE
DISCRETION AND ELECTION OF THE LENDER, IN COURTS HAVING SITUS IN HOUSTON, HARRIS
COUNTY, TEXAS. THE BORROWER HEREBY SUBMITS TO THE JURISDICTION OF ANY LOCAL,
STATE, OR FEDERAL COURT LOCATED IN HOUSTON, HARRIS COUNTY, TEXAS, AND HEREBY
WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF
ANY LITIGATION BROUGHT AGAINST IT BY THE LENDER IN ACCORDANCE WITH THIS SECTION.
VIII.13 Waiver of Rights to Jury Trial. THE BORROWER AND THE LENDER HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY, AND UNCONDITIONALLY WAIVE
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, COUNTERCLAIM, OR
OTHER LITIGATION THAT RELATES TO OR ARISES OUT OF ANY OF THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS OF THE LENDER IN THE ENFORCEMENT OF
ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE A MATERIAL
INDUCEMENT FOR THE LENDER ENTERING INTO THIS AGREEMENT.
VIII.14 Entire Agreement. THIS AGREEMENT AMENDS, RESTATES, AND REPLACES THE
EXISTING CREDIT AGREEMENT AND CONSTITUTES THE ENTIRE AGREEMENT AMONG THE PARTIES
HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL SUPERSEDE ANY PRIOR
AGREEMENT AMONG THE PARTIES HERETO, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT HEREOF, INCLUDING, WITHOUT LIMITATION, THE EXISTING CREDIT AGREEMENT.
FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS
REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH
PARTIES.
VIII.15 Counterparts. For the convenience of the parties, this Agreement
may be executed in multiple counterparts and by different parties hereto in
separate counterparts, each of which for all purposes shall be deemed to be an
original and all of which together shall constitute one and the same Agreement.
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IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
BORROWER:
GOODRICH PETROLEUM COMPANY, L.L.C.
By:
----------------------------------
Walter G. Goodrich
President
LENDER:
COMPASS BANK
By:
----------------------------------
Dorothy Marchand Wilson
Senior Vice President
Joining in the execution hereof for the limited purpose of making the
representations, warranties, and covenants set forth in Articles IV, V, and VI
only:
GOODRICH PETROLEUM CORPORATION
By:
-----------------------------------
Walter G. Goodrich
President
44
<PAGE>
EXHIBIT I
[FORM OF BORROWING REQUEST]
Compass Bank
24 Greenway Plaza, 14th Floor
Houston, Texas 77046
Attention: Energy Banking Group
Re: Credit Agreement dated as of September 23, 1999, by and between
Goodrich Petroleum Company, L.L.C. and Compass Bank(as amended,
restated, or supplemented from time to time, the "Credit Agreement")
Ladies and Gentlemen:
Pursuant to the Credit Agreement, the Borrower hereby makes the requests
indicated below:
(a) Amount of new Loan: $
----------------------
(b) Requested funding date: , 199
---------------- ---
The undersigned certifies that [s]he is the [ ] of the
--------------
Borrower, has obtained all consents necessary, and as such is authorized to
execute this request on behalf of the Borrower. The undersigned further
certifies, represents, and warrants on behalf of the Borrower that no Default or
Event of Default exists, and the Borrower is entitled to receive the requested
borrowing under the terms and conditions of the Credit Agreement.
Each capitalized term used but not defined herein shall have the meaning
assigned to such term in the Credit Agreement.
Very truly yours,
GOODRICH PETROLEUM COMPANY, L.L.C.
By:
-------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
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EXHIBIT II
[FORM OF COMPLIANCE CERTIFICATE]
, 19
----------------------- ---
Compass Bank
24 Greenway Plaza, 14th Floor
Houston, Texas 77046
Attention: Energy Banking Group
Re: Credit Agreement dated as of September 23, 1999, by and between
Goodrich Petroleum Company, L.L.C. and Compass Bank (as amended,
restated, or supplemented from time to time, the "Credit Agreement")
Ladies and Gentlemen:
Pursuant to applicable requirements of the Credit Agreement, the
undersigned, as Responsible Officers of the Borrower and the Guarantors, hereby
certify to you the following information as true and correct as of the date
hereof or for the period indicated, as the case may be:
[1. To the best of the knowledge of the undersigned, no Default or Event
of Default exists as of the date hereof or has occurred since the date
of our previous certification to you, if any.]
[1. To the best of the knowledge of the undersigned, the following
Defaults or Events of Default exist as of the date hereof or have
occurred since the date of our previous certification to you, if any,
and the actions set forth below are being taken to remedy such
circumstances:]
2. The compliance of the Related Parties with the financial covenants of
the Credit Agreement, as of the close of business on , is evidenced by
the following:
(a) Section 6.11: Consolidated Tangible Net Worth
Required
--------
Not less than the sum of $7,000,000 plus 50% of Consolidated Net Income for
each positive fiscal quarter after March 31, 1999 plus 100% of cash equity
proceeds, net of expenses (other than certain cash equity proceeds curing a
prior default)
Actual
------
$
-------------------
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2
(b) Section 6.12: Debt Service Ratio
Required Actual
-------- ------
Not less than 1.10 to 1.00 to 1.0
-------
3. No Material Adverse Effect has occurred since the date of the
Financial Statements dated as of .
----------------------------
Each capitalized term used but not defined herein shall have the meaning
assigned to such term in the Credit Agreement.
Very truly yours,
GOODRICH PETROLEUM COMPANY, L.L.C.
By:
-------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
GOODRICH PETROLEUM CORPORATION
By:
-------------------------------------------
Name:
-------------------------------------------
Title:
-------------------------------------------
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EXHIBIT III
DISCLOSURES
Section 6.8 Liabilities -- NONE
-----------
Litigation -- See attached Schedule 1
Section 6.12 Environmental Matters -- None, except as reflected on Schedule I
---------------------
Section 6.17 Refunds -- NONE
-------
Section 6.18 Gas Contracts -- NONE
-------------
Section 6.20 Casualties -- NONE
----------
Section 6.22 Subsidiaries of Goodrich
Name State of Formation
---- ------------------
Goodrich Petroleum Company, L.L.C. Louisiana
Section 6.5 Investments
[NEED CURRENT LIST]
48
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