CREDIT AGREEMENT
BETWEEN
GOODRICH PETROLEUM COMPANY, L.L.C.
AND
COMPASS BANK
September 23, 1999
REVOLVING LINE OF CREDIT
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
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
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
LIST OF EXHIBITS
Exhibit I - Form of Borrowing Request
Exhibit II - Form of Compliance Certificate
Exhibit III - Disclosures
CREDIT AGREEMENT
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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
5
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,
8
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
10
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
12
(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
13
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,
14
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.
15
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.
16
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
17
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:
19
(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;
20
(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;
21
(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
22
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
23
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:"
24
(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
25
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.
26
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).
27
(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
28
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
29
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
30
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
31
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
32
(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
33
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
----------
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
34
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
35
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.
36
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
(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
38
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.
39
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
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
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.
42
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.
43
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
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:
-------------------------------------------
45
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
------
$
-------------------
46
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:
-------------------------------------------
47
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