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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(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.
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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.
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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.
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