CREDIT AGREEMENT
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THIS CREDIT AGREEMENT is made and entered into this day of September,
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1999, by and between GOODRICH PETROLEUM COMPANY-LAFITTE, L.L.C., a Louisiana
limited liability company (the "Borrower"), and HAMBRECHT & QUIST GUARANTY
FINANCE, LLC, as agent for the Noteholders (hereinafter defined) (the
"Noteholder Agent"), and is joined in, for the limited purpose of making the
representations, warranties, and covenants set forth in Articles IV, V and VI
only, by GOODRICH PETROLEUM COMPANY, L.L.C., a Louisiana limited liability
company ("Goodrich-Louisiana").
WITNESSETH:
In consideration of the mutual covenants and agreements herein contained,
the Borrower and the Noteholder Agent hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this Credit Agreement, the terms
"Borrower," "Goodrich-Louisiana," and "Noteholder Agent," shall have the meaning
assigned to them hereinabove.
1.2 Additional Defined Terms. As used in this Credit Agreement, each of the
following terms shall have the meaning assigned thereto in this Section, unless
the context otherwise requires:
"Affiliate" shall mean any Person directly or indirectly controlling,
or under common control with, the Borrower and includes any Subsidiary of
the Borrower and any "affiliate" of the Borrower within the meaning of Reg.
ss.240.12b-2 of the Securities Exchange Act of 1934, as amended, with
"control," as used in this definition, meaning possession, directly or
indirectly, of the power to direct or cause the direction of management,
policies or action through ownership of voting securities, contract, voting
trust, or membership in management or in the group appointing or electing
management or otherwise through formal or informal arrangements or business
relationships.
"Agreement" shall mean this Credit Agreement, as it may be amended,
supplemented, or restated from time to time.
"Borrower Membership Interests" shall mean all of the membership
interests and other equity interests in and to the Borrower.
"Business Day" shall mean a day other than a day when commercial banks
are authorized or required to close in the State of Texas.
"Closing Date" shall mean September , 1999.
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"Code" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time.
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"Collateral" shall mean (a) the Goodrich-Louisiana Collateral, (b) the
Lafitte Collateral and (c) any other Property now or at any time used or
intended as security for the payment or performance of all or any portion
of the Obligations.
"Collateral Agency Agreement" shall mean that certain Collateral
Agency Agreement dated concurrently herewith executed by and among the
Noteholder Agent, Compass Bank, and Compass Bank, as Collateral Agent, as
it may be amended, supplemented, or restated from time to time.
"Commonly Controlled Entity" shall mean any Person which is under
common control with the Borrower or Goodrich-Louisiana within the meaning
of Section 4001 of ERISA.
"Compass Bank Debt" the "Obligations" of Goodrich-Louisiana to Compass
Bank, an Alabama state banking association, under that certain Credit
Agreement between Goodrich-Louisiana and Compass Bank.
"Compliance Certificate" shall mean each certificate, substantially in
the form attached hereto as Exhibit 3, executed by a Responsible Officer of
the Borrower and furnished to the Noteholder Agent from time to time in
accordance with the terms hereof.
"Consolidated Net Income" shall mean, for any period, the net income
of Goodrich and its Subsidiaries, on a consolidated basis, for such period,
determined in accordance with GAAP minus net income attributable to Lafitte
(except to the extent of cash distributions by Lafitte to the Borrower).
"Consolidated Tangible Net Worth" shall mean (a) total assets, as
would, in accordance with GAAP, be reflected on a consolidated balance
sheet of Goodrich and its Subsidiaries, exclusive of Intellectual Property,
experimental or organization expenses, franchises, licenses, permits and
other intangible assets, treasury stock, unamortized underwriter's debt
discount and expenses, and goodwill minus (b) total liabilities, as would,
in accordance with GAAP, be reflected on a consolidated balance sheet of
Goodrich and its Subsidiaries plus (c) the unpaid principal balance owed
under the Subordinated Notes.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends, or other obligations of any other Person (for purposes
of this definition, a "primary obligation ") in any manner, whether
directly or indirectly, including, without limitation, any obligation of
such Person, regardless of whether such obligation is contingent, (a) to
purchase any primary obligation or any Property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any primary obligation, or (ii) to maintain working
or equity capital of any other Person in respect of any primary obligation,
or otherwise to maintain the net worth or solvency of any other Person, (c)
to purchase Property, securities or services primarily for the purpose of
assuring the owner of any primary obligation of the ability of the Person
primarily liable for such primary obligation to make payment thereof, or
(d) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof, with the amount of any
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Contingent Obligation being deemed to be equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the
minimum reasonably anticipated liability in respect thereof as determined
by such Person in good faith.
"Debt Service" shall mean, for any period and with respect to
Indebtedness of Goodrich on a consolidated basis, the sum of all principal
payments made during such period on borrowed money Indebtedness plus all
interest expense paid in respect of borrowed money Indebtedness during such
period.
"Default" shall mean any event or occurrence which with the lapse of
time or the giving of notice or both would become an Event of Default.
"Default Rate" shall mean a per annum interest rate equal to eighteen
percent (18%), but in no event exceeding the Highest Lawful Rate.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"EBITDA" shall mean, for any period, (a) Consolidated Net Income for
such period plus (b) depreciation, amortization, depletion and other
non-cash expenses for such period deducted in the determination of
Consolidated Net Income minus (c) non-cash income for such period included
in the determination of Consolidated Net Income.
"Environmental Complaint" shall mean any written or oral complaint,
order, directive, claim, citation, notice of environmental report or
investigation, or other notice by any Governmental Authority or any other
Person with respect to (a) air emissions, (b) spills, releases, or
discharges to soils, any improvements located thereon, surface water,
groundwater, or the sewer, septic, waste treatment, storage, or disposal
systems servicing any Property of any Related Party, (c) solid or liquid
waste disposal, (d) the use, generation, storage, transportation, or
disposal of any Hazardous Substance, or (e) other environmental, health, or
safety matters affecting any Property of any Related Party or the business
conducted thereon.
"Environmental Laws" shall mean (a) the following federal laws as they
may be cited, referenced, and amended from time to time: the Clean Air Act,
the Clean Water Act, the Comprehensive Environmental Response, Compensation
and Liability Act, the Endangered Species Act, the Hazardous Materials
Transportation Act of 1986, the Occupational Safety and Health Act, the Oil
Pollution Act of 1990, the Resource Conservation and Recovery Act of 1976,
the Safe Drinking Water Act, the Superfund Amendments and Reauthorization
Act, and the Toxic Substances Control Act; (b) any and all equivalent
environmental statutes of any state, as they may be cited, referenced and
amended from time to time; (e) any rules or regulations promulgated under
or adopted pursuant to the above federal and state laws; and (d) any other
equivalent federal, state, or local statute or any requirement, rule,
regulation, code, ordinance, or order adopted pursuant thereto, including,
without limitation, those relating to the generation, transportation,
treatment, storage, recycling, disposal, handling, or release of Hazardous
Substances.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations thereunder and
interpretations thereof.
"Event of Default" shall mean any of the events specified in Section
7.1.
"Financial Statements" shall mean statements of the financial
condition as at the point in time and for the period indicated and
consisting of at least a balance sheet and related statements of
operations, common stock and other stockholders' equity, and cash flows
and, when required by applicable provisions of this Agreement to be
audited, accompanied by the unqualified certification of a
nationally-recognized firm of independent certified public accountants or
other independent certified public accountants acceptable to the Noteholder
Agent and footnotes to any of the foregoing, all of which shall be prepared
in accordance with GAAP consistently applied and in comparative form with
respect to the corresponding period of the preceding fiscal period.
"GAAP" shall mean generally accepted accounting principles established
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants and in effect in the United States from time
to time.
"Governmental Authority" shall mean any nation, country, commonwealth,
territory, government, state, county, parish, municipality, or other
political subdivision and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"Goodrich-Delaware" shall mean Goodrich Petroleum Corporation, a
Delaware Corporation.
"Goodrich-Louisiana Collateral" shall mean the collateral securing the
obligations of Goodrich-Louisiana to the Noteholders under and pursuant to
the Goodrich-Louisiana Credit Agreement.
"Goodrich-Louisiana Credit Agreement" shall mean the Credit Agreement
of even date herewith executed by Goodrich-Louisiana as the borrower, and
the Noteholder Agent as the agent for the Noteholders.
"Guaranty" shall mean the guaranty of the Guarantor guaranteeing the
payment and performance of the Obligations as provided herein, as the same
may be ratified, amended, restated, or supplemented from time to time.
"Guarantor" shall mean Goodrich-Louisiana.
"Hazardous Substances" shall mean flammables, explosives, radioactive
materials, hazardous wastes, asbestos, or any material containing asbestos,
polychlorinated biphenyls (PCBs), toxic substances or related materials,
petroleum, petroleum products, associated oil or natural gas exploration,
production, and development wastes, or any substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes," or "toxic
substances" under the Comprehensive Environmental Response, Compensation
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and Liability Act, as amended, the Superfund Amendments and Reauthorization
Act, as amended, the Hazardous Materials Transportation Act, as amended,
the Resource Conservation and Recovery Act, as amended, the Toxic
Substances Control Act, as amended, or any other Requirement of Law.
"Hedging Agreement" shall mean (a) any interest rate or currency swap,
rate cap, rate floor, rate collar, forward agreement, or other exchange or
rate protection agreement or any option with respect to any such
transaction and (b) any swap agreement, cap, floor, collar, exchange
transaction, forward agreement, or other exchange or protection agreement
relating to hydrocarbons or any option with respect to any such
transaction.
"Highest Lawful Rate" shall mean the maximum non-usurious interest
rate, if any (or, if the context so requires, an amount calculated at such
rate), that at any time or from time to time may be contracted for, taken,
reserved, charged, or received under applicable laws of the State of
Louisiana or the United States of America, whichever authorizes the greater
rate, as such laws are presently in effect or, to the extent allowed by
applicable law, as such laws may hereafter be in effect and which allow a
higher maximum non-usurious interest rate than such laws now allow.
"Indebtedness" shall mean, as to any Person, without duplication, (a)
all liabilities (excluding reserves for deferred income taxes, deferred
compensation liabilities, and other deferred liabilities and credits) which
in accordance with GAAP would be included in determining total liabilities
as shown on the liability side of a balance sheet, (b) all obligations of
such Person evidenced by bonds, debentures, promissory notes, or similar
evidences of indebtedness, (c) all other indebtedness of such Person for
borrowed money and capitalized leases, and (d) all obligations of others,
to the extent any such obligation is secured by a Lien on the assets of
such Person (whether or not such Person has assumed or become liable for
the obligation secured by such Lien).
"Insolvency Proceeding" shall mean application (whether voluntary or
instituted by another Person) for or the consent to the appointment of a
receiver, trustee, conservator, custodian, or liquidator of any Person, or
of all or a substantial part of the Property of such Person, or the filing
of a petition (whether voluntary or instituted by another Person)
commencing a case under Title 11 of the United States Code, seeking
liquidation, reorganization, or rearrangement or taking advantage of any
bankruptcy, insolvency, debtor's relief, or other similar law of the United
States, the State of Louisiana, or any other jurisdiction.
"Insolvent" or "Insolvency" shall mean, with respect to any
Multiemployer Plan, that such Plan is insolvent within the meaning of such
term as used in Section 4245 of ERISA.
"Intellectual Property" shall mean patents, patent applications,
trademarks, tradenames, copyrights, technology, know-how, and processes.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other that the owner of such Property, whether
such interest is based on common law, statute, or contract and including,
but not limited to, the lien or security interest arising from a mortgage,
ship mortgage, encumbrance, pledge, security agreement, conditional sale or
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trust receipt, or a lease, consignment, or bailment for security purposes
(other than true leases or true consignments), liens of mechanics,
materialmen, and artisans, maritime liens and reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions,
restrictions, leases, and other title exceptions and encumbrances affecting
Property which secure an obligation owed to, or a claim by, a Person other
than the owner of such Property (for the purpose of this Agreement, any
Person shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement, financing lease,
or other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security purposes), and the
filing or recording of any financing statement or other security instrument
in any public office.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Instruments, and all other documents and instruments now or hereafter
delivered pursuant to the terms of or in connection with this Agreement,
the Notes, or the Security Instruments, and all renewals and extensions of,
amendments and supplements to, and restatements of, any or all of the
foregoing from time to time in effect.
"Material Adverse Effect" shall mean (a) any material adverse effect
on the business, operations, properties, condition (financial or
otherwise), or prospects of the Borrower or Goodrich-Louisiana, (b) any
adverse effect upon the business operations, properties, condition
(financial or otherwise), or prospects of the Borrower or
Goodrich-Louisiana which increases the risk that any of the Obligations
will not be repaid as and when due, or (c) any adverse effect upon the
Collateral.
"Mortgaged Properties" shall mean all Oil and Gas Properties of the
Borrower subject to a perfected first-priority Lien in favor of the
Noteholder Agent, subject only to Permitted Liens, as security for the
Obligations.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
as defined in Section 4001(a)(3) of ERISA.
"Noteholder Agent" shall mean, initially and any time the
circumstances described in the following sentence do not apply, Hambrecht &
Quist Guaranty Finance, LLC. In the event (a) Compass Bank is no longer
acting as the Collateral Agent under the Collateral Agency Agreement, and
(b) some other person or entity is acting as the Collateral Agent under the
Collateral Agency Agreement, such other person or entity shall also act as
the Noteholder Agent hereunder, if willing to do so.
"Noteholders" shall mean the holders and owners of the Notes, and
their successors and assigns.
"Notes" shall mean those certain promissory notes in the aggregate
principal amount of $6,000,000 dated concurrently herewith executed by the
Borrower payable to the order of the Noteholders and issued to the
Noteholders (as the same may from time to time be renewed, extended,
modified or rearranged).
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"Obligations" shall mean, without duplication, (a) all Indebtedness
evidenced by the Notes, (b) the obligation of the Borrower for the payment
of fees and expenses pursuant to the Loan Documents, and (c) all other
obligations and liabilities of the Borrower to the Noteholders, now
existing or hereafter incurred, under, arising out of or in connection with
any Loan Document, and to the extent that any of the foregoing includes or
refers to the payment of amounts deemed or constituting interest, only so
much thereof as shall have accrued, been earned and which remains unpaid at
each relevant time of determination.
"Oil and Gas Properties" shall mean fee, leasehold, or other interests
in or under mineral estates or oil, gas, and other liquid or gaseous
hydrocarbon leases with respect to Properties situated in the United States
or offshore from any State of the United States, including, without
limitation, overriding royalty and royalty interests, leasehold estate
interests, net profits interests, production payment interests, and mineral
fee interests, together with contracts executed in connection therewith and
all tenements, hereditaments, appurtenances, and Properties appertaining,
belonging, affixed, or incidental thereto.
"Pari Passu Notes" shall mean those certain promissory notes in the
aggregate principal amount of $5,000,000.00, dated concurrently herewith
executed by Goodrich-Louisiana payable to the order of Noteholders and
issued by Goodrich-Louisiana to the Noteholders pursuant to the
Goodrich-Louisiana Credit Agreement (as the same may from time to time be
renewed, extended, modified or rearranged).
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any entity succeeding to any
or all of its functions under ERISA.
"Permitted Liens" shall mean (a) Liens for taxes, assessments, or
other governmental charges or levies not yet due or which (if foreclosure,
distraint, sale, or other similar proceedings shall not have been
initiated) are being contested in good faith by appropriate proceedings,
and such reserve as may be required by GAAP shall have been made therefor,
(b) Liens in connection with workers' compensation, unemployment insurance
or other social security (other than Liens created by Section 4068 of
ERISA), old-age pension, or public liability obligations which are not yet
due or which are being contested in good faith by appropriate proceedings,
if such reserve as may be required by GAAP shall have been made therefor,
(e) Liens in favor of vendors, carriers, warehousemen, repairmen,
mechanics, workmen, materialmen, construction, or similar Liens arising by
operation of law in the ordinary course of business in respect of
obligations which are not yet due or which are being contested in good
faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, (d) Liens in favor of operators and
non-operators under joint operating agreements or similar contractual
arrangements arising in the ordinary course of the business to secure
amounts owing, which amounts are not yet due or are being contested in good
faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, (e) Liens under production sales
agreements, division orders, operating agreements, and other agreements
customary in the oil and gas business for processing, producing, and
selling hydrocarbons securing obligations not constituting Indebtedness and
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provided that such Liens do not secure obligations to deliver hydrocarbons
at some future date without receiving full payment therefor within 90 days
of delivery, (f) easements, rights of way, restrictions, and other similar
encumbrances, and minor defects in the chain of title which are customarily
accepted in the oil and gas financing industry, none of which interfere
with the ordinary conduct of the business of the owner of the relevant
Property or materially detract from the value or use of the Property to
which they apply, and other Liens expressly permitted under the Security
Instruments, and (g) Liens on Oil and Gas Properties securing non-recourse
debt used to acquire such Oil and Gas Properties.
"Person" shall mean an individual, corporation, partnership, trust,
unincorporated organization, government, any agency or political
subdivision of any government, or any other form of entity.
"Plan" shall mean, at any time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or Goodrich-Delaware,
or any Commonly Controlled Entity is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an "employer"
as defined in Section 3(5) of ERISA.
"Prohibited Transaction" shall have the meaning assigned to such term
in Section 4975 of the Code.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"Release of Hazardous Substances" shall mean any emission, spill,
release, disposal, or discharge, except in accordance with a valid permit,
license, certificate, or approval of the relevant Governmental Authority,
of any Hazardous Substance into or upon (a) the air, (b) soils or any
improvements located thereon, (c) surface water or groundwater, or (d) the
sewer or septic system, or the waste treatment, storage, or disposal system
servicing any Property of the Borrower or Goodrich-Louisiana.
"Reorganization" shall mean, with respect to any Multiemployer Plan,
that such Plan is in reorganization within the meaning of such term in
Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty-day notice
period is waived under subsections .13, .14, .16, .18, .19 or .20 of PBGC
Reg. ss.2615.
"Requirement of Law" shall mean, as to any Person, any applicable law,
treaty, ordinance, order, judgment, rule, decree, regulation, or
determination of an arbitrator, court, or other Government Authority,
including, without limitation, rules, regulations, orders, and requirements
for permits, licenses, registrations, approvals, or authorizations, in each
case as such now exist or may be hereafter amended and are applicable to or
binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.
"Responsible Officer" shall mean, as to any Person, its President or
chief financial officer.
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"Security Instruments" shall mean the security instruments executed
and delivered in satisfaction of the conditions set forth in Section 3.1,
and all other documents and instruments at any time executed as security
for all or any portion of the Obligations, as such instruments may be
amended, restated, or supplemented from time to time.
"Single Employer Plan" shall mean any Plan which is covered by Title
IV of ERISA, but which is not a Multiemployer Plan.
"Subordinated Notes" shall mean those certain promissory notes in the
aggregate principal amount of $1,000,000.00, dated concurrently herewith
executed by Goodrich-Louisiana payable to the order of Noteholders and
issued by Goodrich-Louisiana to the Noteholders pursuant to the
Goodrich-Louisiana Credit Agreement (as the same may from time to time be
renewed, extended, modified or rearranged).
"Subsidiary" shall mean, as to any Person, a corporation of which
shares of stock having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation are at the
time owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
"Superfund Site" shall mean those sites listed on the Environmental
Protection Agency National Priority List and eligible for remedial action
or any comparable state registries or list in any state of the United
States.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of Louisiana.
1.3 Undefined Financial Accounting Terms. Undefined financial accounting
terms used in this Agreement shall be defined according to GAAP at the time in
effect.
1.4 References. References in this Agreement to Exhibit, Article, or
Section numbers shall be to Exhibits, Articles, or Sections of this Agreement,
unless expressly stated to the contrary. References in this Agreement to
"hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof,"
"hereunder" and words of similar import shall be to this Agreement in its
entirety and not only to the particular Exhibit, Article, or Section in which
such reference appears.
1.5 Articles and Sections. This Agreement, for convenience only, has been
divided into Articles and Sections; and it is understood that the rights and
other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
1.6 Number and Gender. Whenever the context requires, reference herein made
to the single number shall be understood to include the plural; and likewise,
the plural shall be understood to include the singular. Definitions of terms
defined in the singular or plural shall be equally applicable to the plural or
singular, as the case may be, unless otherwise indicated. Words denoting sex
shall be construed to include the masculine, feminine and neuter, when such
construction is appropriate; and specific enumeration shall not exclude the
general but shall be construed as cumulative. 1.7 Incorporation of Exhibits. The
Exhibits attached to this Agreement are incorporated herein and shall be
considered a part of this Agreement for all purposes.
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ARTICLE II
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TERMS OF FACILITY
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2.1 Purchase and Sale of Notes. Upon the terms and conditions and relying
on the representations and warranties contained in this Agreement, the
Noteholders agree to purchase from the Borrower and the Borrower agrees to issue
and sell to the Noteholders an aggregate principal amount of $6,000,000.00 of
the Notes, in the amounts for each Noteholder as set forth on the Schedule of
Noteholders, attached hereto as Exhibit 1.
2.2 Use of Proceeds from the Sale of the Notes. The net proceeds from the
sale of the Notes shall be used solely for the acquisition, development and
exploration by the Borrower of Oil and Gas Properties, for working capital and
for general corporate purposes of the Borrower.
2.3 Interest. Beginning as of the date of the Notes and continuing until
the outstanding principal balance is paid in full, interest will accrue on the
Notes at an annual rate of Eight Percent (8.0%). Interest will be computed on a
365/360 day basis compounding monthly; that is in each month 1/360 of the Eight
Percent (8.0%) annual interest rate, will be multiplied by (a) the sum of (i)
the outstanding principal balance and (ii) accumulated interest outstanding as
of the end of the prior month and (b) the actual number of days that the
principal was outstanding in such month.
2.4 Repayment of Principal and Interest.
2.4.1 Interest Accrual Period. Beginning as of the date of the Notes
and continuing through October 1, 2002 (the "Interest Accrual Period"), interest
shall accrue at an annual rate of Eight Percent (8.0%), compounding on the last
date of each calendar month as described above. If on October 1, 2002, the
common stock of Goodrich-Delaware has a closing price of at least $4.00 per
share, as adjusted pursuant to Section 2.6.2 hereof (the "First Benchmark Stock
Price"), then, at Borrower's option the Interest Accrual Period shall be
extended to October 1, 2003 (the "First Extension Option"). If Borrower
exercised the First Extension Option, and if on October 1, 2003, the common
stock of Goodrich-Delaware has a closing price of at least $5.00 per share, as
adjusted pursuant to Section 2.6.2 hereof (the "Second Benchmark Stock Price"),
then, at Borrower's option, the Interest Accrual Period shall be extended to
October 1, 2004 (the "Second Extension Option").
2.4.2 Principal Repayment Period. Beginning as of the end of the
Interest Accrual Period (initially October 1, 2002, but as may be adjusted
pursuant to paragraph (a) above), the sum of all principal and accrued interest
through the last day of the Interest Accrual Period shall be repaid in
twenty-four equal monthly installments beginning on the last day of the Interest
Accrual Period and continuing on the first day of the subsequent twenty-three
months. The period of time beginning on the last day of the Interest Accrual
Period and ending on the first day of the month that is twenty- three months
after the last day of the Interest Accrual Period shall be referred to as the
"Principal Repayment Period". For example, if the last day of the Interest
Accrual Period is October 1, 2002, the Principal Repayment Period shall be from
October 1, 2002 through September 1, 2004.
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2.4.3 Payment of Interest. During the Principal Repayment Period, all
interest that accrues beginning on the last day of the Interest Accrual Period
(initially October 1, 2002, but as may be adjusted by the First Extension
Option, or the Second Extension Option), shall be paid monthly on the first day
of each of the following months during the Principal Repayment Period.
2.5 Conversion of Principal and Accrued Interest. Beginning as of the date
of the Notes and continuing until all accrued interest and the outstanding
principal balance is paid in full, the Noteholders may, at their option pursuant
to the terms hereof, by delivering to the Borrower a Conversion Notice, as
defined in Section 2.5.2, elect to require the Borrower to convert all or part
of the accrued interest and outstanding principal that is owing into shares of
Goodrich-Delaware's common stock as follows:
2.5.1 Conversion. Some or all of the accrued interest and principal
amount outstanding shall be convertible into a number of shares of
Goodrich-Delaware's common stock, which number of shares shall be equal to the
quotient of (a) the total accrued interest and outstanding principal subject to
conversion divided by (b) the Conversion Price, as defined in Section 2.6 (the
"Conversion Option").
2.5.2 Conversion Notice. "Conversion Notice" shall mean the written
notice that a Noteholder may, at its option, give to the Borrower, notifying the
Borrower of the Noteholder's decision to exercise a Conversion Option to convert
some or all of the accrued interest and outstanding principal into shares of
Goodrich-Delaware's common stock. The Borrower will deliver to the Noteholder
the required shares of Goodrich-Delaware's common stock within five (5) business
days of receiving the Conversion Notice.
2.5.3 Minimum Conversion Amount. Each Conversion Notice given by a
Noteholder to Borrower shall be for no less that 10% of the total amount of
outstanding principal and accrued interest owing under the Note from Borrower to
the Noteholder at the time that the Conversion Notice is given.
2.6 Conversion Price.
2.6.1 Conversion Price. The "Conversion Price" as used herein shall
mean $4.00, as adjusted pursuant to Section 2.6.2 hereof.
2.6.2 Adjustment to Conversion Price.
2.6.2.1 Definitions. As used in this Section 2.6.2 the following
terms shall have the following respective meanings:
(a) "Common Stock" shall mean shares of the presently
authorized common stock of Goodrich-Delaware and any stock into which such
common stock may hereafter be exchanged.
(b) "Options" shall mean the rights, options or warrants to
subscribe for, purchase or otherwise acquire shares of Common Stock or
Convertible Securities.
(c) "Convertible Amounts" shall mean the aggregate dollar
amounts that are subject to conversion at any given time pursuant to the
Conversion Option.
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(d) "Convertible Securities" shall mean any evidence of
indebtedness, shares of stock or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
2.6.2.2 Adjustments to Conversion Price. The Conversion Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:
(a) Reclassification, Reorganization, Consolidation or
Merger. In the case of any reclassification of the Common Stock, or any
reorganization, consolidation or merger of Goodrich-Delaware with or into
another corporation (other than a merger or reorganization with respect to
which Goodrich-Delaware is the continuing corporation and which does not
result in any reclassification of the Common Stock), each share of Common
Stock theretofore issuable upon exercise of any Conversion Option, shall be
properly adjusted as to the number and kind of securities receivable upon
the exercise of any Conversion Option, such that the Noteholder shall
receive the number and kind of securities which a holder of Common Stock
would have been entitled to receive after the happening of any of the
events described in this subsection (a) had the conversion pursuant to any
Conversion Option been made immediately prior to the happening of such
event or the record date for such event, whichever is earlier. The
provisions of this subsection (a) shall similarly apply to successive
reclassifications, reorganizations, consolidations or mergers.
(b) Split, Subdivision or Combination of Shares. If
Goodrich-Delaware at any time prior to the Noteholder's exercise of any
Conversion Option shall split, subdivide or combine the Common Stock of
Goodrich-Delaware, the Conversion Price shall be proportionately decreased
in the case of a split or subdivision or proportionately increased in the
case of a combination. Any adjustment under this subsection (b) shall
become effective when the split, subdivision or combination becomes
effective.
(c) Stock Dividends. If Goodrich-Delaware at any time prior
to the Noteholder's exercise of any Conversion Option shall pay a dividend
with respect to Common Stock of Goodrich-Delaware payable in shares of
Common Stock, Options, or Convertible Securities, the Conversion Price
shall be adjusted, from and after the date of determination of the
shareholders entitled to receive such dividend or distributions, to that
price determined by multiplying the Conversion Price in effect immediately
prior to such date of determination by a fraction (i) the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution (including
Common Stock issuable upon exercise, conversion or exchange of any Option
or Convertible Securities issued as such dividend or distribution). If the
Options or Convertible Securities issued as such dividend or distribution
by their terms provide, with the passage of time or otherwise, for any
decrease in the consideration payable to Goodrich-Delaware, or any increase
by the number of shares issuable upon exercise, conversion or exchange
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thereof (by change of rate or otherwise), the Conversion Price shall, upon
any such decrease or increase becoming effective, be reduced to reflect
such decrease or increased to reflect such increase as if such decrease or
increase became effective immediately prior to the issuance of the Options
or Convertible Securities as the dividend or distribution. Any adjustment
under this subsection (c) shall become effective on the record date.
(d) Other Securities. In the event Goodrich-Delaware at any
time prior to the Noteholder's exercise of any Conversion Option makes, or
fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities
of Goodrich-Delaware other than shares of Common Stock, then, and in each
such event, provision shall be made so that the Noteholder shall receive,
upon exercise of any Conversion Option, in addition to the number of shares
of Common Stock receivable thereupon, the amount of securities of
Goodrich-Delaware which the Noteholder would have received had the
Convertible Amounts been exchangeable for such Common Stock on the date of
such event and had the Noteholder thereafter, during the period from the
date of such event to and including the date of exercise, retained such
securities receivable by the Noteholder as aforesaid during such period,
subject to all other adjustments called for during such period under this
Section 2.6.2.2 with respect to the rights of the Noteholder.
2.6.2.3 Other Adjustments. The First Benchmark Stock Price, the
Second Benchmark Stock Price, the Lafitte Conversion Benchmark and the Clawback
Price shall all be subject to adjustment in the same manner and to the same
extent as those adjustments made to the Conversion Price pursuant to Section
2.6.2.2 above.
2.6.3 Fractional Shares. Pursuant to the Conversion Options, no
fractions of shares of Common Stock shall be issued, but in lieu thereof
Borrower shall pay a cash adjustment to the Noteholder in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the then applicable Conversion Price; provided, however, that no payment will be
made in respect of such cash adjustments if the amount payable is less than
Twenty and No/100 Dollars ($20.00).
2.6.4 Reserving Shares. Goodrich-Delaware shall at all times reserve
and keep available out of its authorized and unissued Common Stock, solely for
the purpose of effecting the Conversion Options of the Noteholders, such number
of shares of Common Stock as shall from time to time be adjusted pursuant to the
Section 2.6.2 hereof.
2.6.5 Registration of Shares. Goodrich-Delaware shall file with the
SEC, within sixty (60) days following the date of Notes, a registration
statement on Form S-1 under the Securities Act of 1933, as amended, or such
other form that Goodrich-Delaware is eligible to use or that the SEC deems
appropriate (the "Registration Statement") for the registration of the resale by
the Noteholders of the common stock of Goodrich-Delaware issuable upon
conversion of the Notes ("Registrable Securities"). The Company shall use its
best efforts to have the Registration Statement declared effective by the SEC by
no later than ninety (90) days after the Date of Note hereof and to ensure that
the Registration Statement, and the underlying prospectus, remains in effect for
so long as any Registrable Securities are outstanding.
(a) Notwithstanding the foregoing, Goodrich-Delaware may defer
the filing of the Registration Statement until a date not later than sixty (60)
days after the time set forth above if Goodrich-Delaware or its subsidiaries are
engaged in confidential negotiations or other confidential business activities,
disclosure of which would be required in such Registration Statement (but would
not be required if such Registration Statement were not filed).
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(b) Notwithstanding the foregoing, if Goodrich-Delaware
determines in its good faith judgment that the filing of any supplement or
amendment to the Registration Statement in order to keep the Registration
Statement effective would require the disclosure of material information that
Goodrich-Delaware has a bona fide business purpose for preserving as
confidential, then upon written notice of such determination by
Goodrich-Delaware to the Noteholders, the obligation of Goodrich-Delaware to
supplement or amend the Registration Statement will be suspended until
Goodrich-Delaware notifies the Noteholders in writing that the reasons for
suspension of such obligations no longer exist and Goodrich-Delaware amends or
supplements the Registration Statement as may be required. The maximum number of
consecutive days during which Goodrich-Delaware may delay the filing of any such
supplement or amendment shall not exceed sixty (60) days.
2.6.6 Notice of Adjustments. Whenever the Conversion Price is adjusted
pursuant to Section 2.6.2 hereof, the Borrower shall promptly issue a notice
signed by its chief financial officer or chief executive officer stating, in
reasonable detail, the new Conversion Price as a result of each adjustment, a
brief statement of the facts requiring such adjustments and the computation
thereof, and the date such adjustments became effective, and the Borrower shall
mail (by first class mail, postage prepaid) to Noteholder at the Noteholder's
address a copy of such notice.
2.7 Alternative Conversion Option. Beginning as of October 1, 2002 and
continuing until all accrued interest and outstanding principal balance is paid
in full, each Noteholder may, at its option pursuant to the terms hereof, by
delivering to Borrower a Alternative Conversion Notice, as defined in Section
2.7.2, elect to require Borrower to convert all or part of the accrued interest
and outstanding principal that is owing into the Borrower's membership units as
follows:
2.7.1 Alternative Conversion. If after October 1, 2002, neither (a)
the common stock of Goodrich-Delaware has a closing price of at least $3.00 per
share nor (b) the net asset value per share of the common stock of
Goodrich-Delaware is at least $3.00 (calculated by valuing the oil and gas
reserves of Goodrich-Delaware on a consolidated basis at their SEC PV10% value,
and all other assets and liabilities in accordance with GAAP), both as adjusted
pursuant to Section 2.6.2 hereof (the "Lafitte Conversion Benchmark"); then the
accrued interest and principal amount outstanding, or any portion of it, shall
be convertible into the Borrower's membership units pursuant to the provisions
of this Section 2.7 (the "Alternative Conversion Option").
2.7.2 Alternative Conversion Notice. "Alternative Conversion Notice"
shall mean the written notice that a Noteholder may, at its option, give to
Borrower, notifying Borrower of the Noteholder's decision to exercise an
Alternative Conversion Option to convert all of the accrued interest and
outstanding principal into membership units of the Borrower. Borrower will
deliver the required membership units to the Noteholder's electing to
participate in the conversion, in accordance with Section 2.7.5, within five
business days of the end of the notice period provided in Section 2.7.5.
2.7.3 Defined Terms. As used in Section 2.7.4 the following terms
shall have the following respective meanings:
(a) "Aggregate Borrower's Convertible Debt Instruments" shall
mean all those Convertible Promissory Notes described on Exhibit.
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(b) "Total Borrower's Convertible Debt Amount" shall mean all
principal and accrued interest owing on the Aggregate Borrower's Convertible
Debt Instruments at any given time.
(c) "Value of Lafitte" shall mean 130% of the SEC PV-10 value of
Borrower's reserves, plus all other assets and less all liabilities of Borrower,
as determined by GAAP.
2.7.4 Conversion Rate. The accrued interest and principal amount
outstanding, or any portion of it, shall be convertible into a number of the
Borrower's membership units, which number of units shares shall be equal to the
quotient of (a) the total accrued interest and outstanding principal subject to
conversion divided by (b) the Total Borrower's Convertible Debt Amount, times
(c) the Adjustment Factor, as defined herein. The Adjustment Factor shall mean
100% less one half of the percentage by which the Value of Lafitte exceeds Total
Borrower's Convertible Debt Amount; provided that the Adjustment Factor shall
never be less than 50%.
2.7.5 Notice to Noteholders. Because the exercise of the Alternative
Conversion Option by any Noteholder may result in a less advantageous Adjustment
Factor for subsequent alternative conversions by other Noteholders, Borrower
shall notify all Noteholders of any exercise of the Alternative Conversion
Option. All Noteholders who then submit an Alternative Conversion Notice within
20 days shall have their conversions considered together pursuant to this
Article 2.7.
2.7.6 Termination of Alternative Conversion. In the event that either
of Goodrich-Delaware, Goodrich-Louisiana or Borrower shall file for protection,
or shall be petitioned into bankruptcy, under the United States Bankruptcy laws,
the Alternative Conversion Option shall automatically terminate and have no
further force or effect; provided, however, that the Alternative Conversion
Option shall not terminate if, (i) upon request of Lender, Compass Bank, at its
exclusive option and in its sole discretion, agrees that such conversion option
shall not terminate or, (ii) all obligations of Goodrich-Delaware,
Goodrich-Louisiana, and Borrower, if any, are indefeasibly paid, and the Credit
Agreement between Compass Bank and Goodrich-Louisiana of even date herewith has
been terminated.
2.8 Prepayment. Some or all of the outstanding principal and accrued
interest under the Notes may be prepaid at any time without penalty, pursuant to
the terms described herein (the "Prepayment Option"). Borrower may only exercise
the Prepayment Option, if after giving each Noteholder twenty (20) day's prior
written notice the Noteholder has not elected to exercise its Conversion Option
for such amount as Borrower wants to prepay.
2.9 Borrower's Option. If Borrower notifies a Noteholder that it wishes to
exercise its Prepayment Option for amounts that are not due for at least one
year, and the Noteholder then elects to use its Conversion Option for such
amounts, then Borrower or Goodrich-Delaware may elect to repurchase one half of
the Common Stock that the Noteholder received as a result of exercising such
Conversion Option at a price of $6.00 per share, as adjusted pursuant to Section
2.6 (the "Clawback Price"). This option shall not be assignable by Borrower or
Goodrich-Delaware to any other party.
2.10 Method of Payment. Borrower will pay the Noteholders principal and
interest that is not converted into shares of Goodrich-Delaware's common stock
pursuant to the Conversion Option, and any loan fees by check made payable to
the Noteholder drawn on a United States bank and for United States dollars, or
by wire transfer to an account of the Noteholder at the Noteholder's address
shown above or at such other place as the Noteholder may designate in writing.
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Unless otherwise agreed or required by applicable law, payments will be applied
first to any remaining amount of any unpaid collection costs and late charges,
then to accrued unpaid interest and then to any unpaid principal.
2.11 Note Register; Transfer and Substitution of Notes.
(a) The Borrower will keep at its principal office a register in which
the Borrower will provide for the registration of the Notes and the registration
of transfers of the Notes. The Borrower may treat any Person in whose name any
Note is registered on such register as the owner thereof for the purpose of
payment of the principal of and interest on such Note and for all other
purposes, including conversion of such Note under the terms hereof and any
notices provided for herein or required to be given herein.
(b) Upon receipt of evidence reasonably satisfactory to the Borrower
of the loss, theft, destruction or mutilation of a Note and, upon the delivery
to the Borrower of an indemnity bond in such reasonable amount as the Borrower
may determine or an unsecured indemnity agreement from the Noteholder whose Note
was lost, stolen, destroyed or mutilated in such form as may be reasonably
satisfactory to the Borrower, or upon the surrender of any partially mutilated
Note for cancellation, the Borrower will execute and deliver a new Note of like
tenor to such Noteholder. Any Note in lieu of which any such new Note has been
so executed and delivered by the Borrower shall not be deemed to be an
outstanding Note for any purpose under this Agreement.
ARTICLE III
-----------
CONDITIONS
----------
The obligations of the Noteholders to close the purchase and sale of the
Notes are subject to the satisfaction of the following conditions precedent:
3.1 Receipt of Loan Documents and Other Items. The Noteholders shall have
no obligation under this Agreement unless and until all matters incident to the
consummation of the transactions contemplated herein, shall be satisfactory to
the Noteholder Agent, and the Noteholder Agent shall have received, reviewed,
and approved the following documents and other items, appropriately executed
when necessary and, where applicable, acknowledged by one or more authorized
officers of the applicable Person or Persons, all in form and substance
satisfactory to the Noteholder Agent and dated, where applicable, of even date
herewith or a date prior hereto and acceptable to the Noteholder Agent:
(a) multiple counterparts of this Agreement, as requested by the
Noteholder Agent;
(b) the Notes;
(c) the Guaranty;
(d) copies of the organizational documents and all amendments thereto
of the Borrower and Goodrich-Louisiana, accompanied by a certificate issued by
the secretary or an assistant secretary of the Borrower or Goodrich-Louisiana,
as the case may be, to the effect that each such copy is correct and complete;
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(e) certificates of incumbency and signatures of all officers of
Borrower and Goodrich-Louisiana who are authorized to execute Loan Documents on
behalf of such entities, each such certificate being executed by the secretary
or an assistant secretary of the Borrower or Goodrich-Louisiana, as the case may
be;
(f) copies of corporate resolutions approving the Loan Documents and
authorizing the transactions contemplated herein and therein, duly adopted by
the management committee or board of directors of the Borrower and
Goodrich-Louisiana, accompanied by certificates of the secretary or an assistant
secretary of the Borrower or Goodrich-Louisiana, as the case may be, to the
effect that such copies are true and correct copies of resolutions duly adopted
at a meeting or by unanimous consent of the management committee or board of
directors of the Borrower and Goodrich-Louisiana, as the case may be, and that
such resolutions constitute all the resolutions adopted with respect to such
transactions, have not been amended, modified, or revoked in any respect, and
are in full force and effect as of the date of such certificate;
(g) multiple counterparts, as requested by the Noteholder Agent, of
the following documents establishing Liens in favor of the Noteholder Agent in
and to the Lafitte Collateral:
(i) Mortgage, Deed of Trust, Indenture, Security Agreement,
Assignment of Production, and Financing Statement from the Borrower
covering all Oil and Gas Properties of the Borrower and all improvements,
personal property, and fixtures related thereto, and Financing Statements
constituent thereto; and
(ii) Security Agreement from the Borrower covering all other
personal Property of the Borrower, and Financing Statements constituent
thereto;
(h) certificates dated as of a recent date from the Secretary of State
or other appropriate Governmental Authority evidencing the existence or
qualification and good standing of each of the Borrower and Goodrich-Louisiana
in its jurisdiction of incorporation and in any other jurisdictions where it
does business;
(i) results of searches of the UCC Records of (i) the Secretary of
State of the State of Louisiana in the name of the Borrower, and (ii) of the
Secretary of State of the States of Louisiana and Texas in the name of
Goodrich-Louisiana, each from a source acceptable to the Noteholder Agent and
reflecting no Liens other than Permitted Liens and no Liens against any
Collateral;
(j) the opinion of counsel to the Borrower and Goodrich-Louisiana
acceptable to the Noteholder Agent, in form and substance acceptable to the
Noteholder Agent;
(k) the execution of the Common Stock Warrant Purchase Agreement by
and between Goodrich-Delaware and the Noteholder Agent of even date herewith,
and the issuance and delivery of the Warrants (as defined therein) issuable
under the terms thereof; and
17
(l) such other agreements, documents, instruments, opinions,
certificates, waivers, consents, and evidence as the Noteholder Agent may
reasonably request.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Noteholders to enter into this Agreement and purchase the
Notes from the Borrower, the Borrower and, where indicated, Goodrich-Louisiana
represent and warrant to the Noteholders (which representations and warranties
shall survive the delivery of the Notes) that:
4.1 Due Authorization. The execution and delivery by the Borrower of this
Agreement and the borrowings hereunder, the execution and delivery by the
Borrower of the Notes, the repayment of the Notes and interest and fees provided
for in the Notes and this Agreement, the execution and delivery of the Security
Instruments by the Borrower and the performance of all obligations of the
Borrower under the Loan Documents are within the power of the Borrower, have
been duly authorized by all necessary limited liability company action by the
Borrower, and do not and will not (a) require the consent of any Governmental
Authority, (b) contravene or conflict with any Requirement of Law or the
certificate or articles of organization and operating agreement or other
organizational or governing documents of the Borrower, (c) contravene or
conflict with any indenture, instrument, or other agreement to which the
Borrower is a party or by which any Property of the Borrower may be presently
bound or encumbered, or (d) result in or require the creation or imposition of
any Lien in or upon any Property of the Borrower other than as contemplated by
the Loan Documents.
4.2 Corporate Existence. Each of the Borrower and Goodrich-Louisiana is
duly organized, legally existing, and in good standing under the laws of its
state of organization and is duly qualified as a foreign entity and is in good
standing in all jurisdictions wherein the ownership of Property or the operation
of its business necessitates same, other than those jurisdictions wherein the
failure to so qualify will not have a Material Adverse Effect.
4.3 Valid and Binding Obligations. All Loan Documents to which the Borrower
is a party, when duly executed and delivered by the Borrower, will be the legal,
valid, and binding obligations of such entity, enforceable against the Borrower
in accordance with their respective terms, subject, however, to the effect of
bankruptcy, insolvency, reorganization, moratorium, and similar laws from time
to time in effect relating to the rights and remedies of creditors and to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.4 Security Instruments. The provisions of each Security Instrument are
effective to create in favor of the Collateral Agent, a legal, valid, and
enforceable Lien in the Lafitte Collateral described therein, which Liens,
assuming the accomplishment of recording and filing in accordance with
applicable laws prior to the intervention of rights of other Persons, shall
constitute fully perfected first-priority Liens.
4.5 Title to Assets. Each of the Borrower and Goodrich-Louisiana has good
and indefeasible title to all of its Properties, free and clear of all Liens
except Permitted Liens.
4.6 Scope and Accuracy of Financial Statements. The Financial Statements of
Goodrich-Delaware as of December 31, 1998 and as of July 31, 1999 provided to
the Noteholder Agent present fairly the financial position and results of
operations and cash flows of Goodrich-Delaware and its Subsidiaries in
18
accordance with GAAP as at the relevant point in time or for the period
indicated, as applicable. No event or circumstance has occurred since June 30,
1999, which could reasonably be expected to have a Material Adverse Effect.
4.7 No Material Misstatements. No information, exhibit, statement, or
report furnished to the Noteholder Agent by or at the direction of the Borrower
or Goodrich-Louisiana in connection with this Agreement contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the statements contained therein not misleading as of the date made or
deemed made.
4.8 Liabilities, Litigation, and Restrictions. Other than as listed under
the heading "Liabilities" on Exhibit 2, neither the Borrower or
Goodrich-Louisiana has any liabilities, direct, or contingent, which may
materially and adversely affect its business or operations or its ownership of
any Collateral. Except as set forth under the heading "Litigation" on Exhibit 2,
no litigation or other action of any nature affecting the Borrower or
Goodrich-Louisiana is pending before any Governmental Authority or, to the best
knowledge of the Borrower, threatened against or affecting the Borrower or
Goodrich-Louisiana. No unusual or unduly burdensome restriction, restraint or
hazard exists by contract, Requirement of Law, or otherwise relative to the
business or operations of the Borrower or Goodrich-Louisiana or the ownership
and operation of its Property other than such as relate generally to Persons
engaged in business activities similar to those conducted by such party.
4.9 Authorizations and Consent. Except as expressly contemplated by this
Agreement, no authorization, consent, approval, exemption, franchise, permit, or
license of, or filing with, any Governmental Authority or any other Person is
required to authorize or is otherwise required in connection with the valid
execution and delivery by the Borrower or Goodrich-Louisiana of the Loan
Documents to which it is a party or any instrument contemplated hereby, the
repayment by the Borrower of the Notes and interest and fees provided in the
Notes and this Agreement, or the performance by the Borrower or
Goodrich-Louisiana of its Obligations.
4.10 Compliance with Laws. The Borrower and Goodrich-Louisiana and their
Properties are in compliance with all applicable Requirements of Law, including,
without limitation, Environmental Laws, the Natural Gas Policy Act of 1978, as
amended, and ERISA.
4.11 ERISA. No Reportable Event has occurred with respect to any Single
Employer Plan, and each Single Employer Plan has complied with and been
administered in all material respects in accordance with applicable provisions
of ERISA and the Code. To the best knowledge of the Borrower, (a) no Reportable
Event has occurred with respect to any Multiemployer Plan, and (b) each
Multiemployer Plan has complied with and been administered in all material
respects with applicable provisions of ERISA and the Code. The present value of
all benefits vested under each Single Employer Plan (based on the assumptions
used to fund such Plan) did not, as of the last annual valuation date applicable
thereto, exceed the value of the assets of such Plan allocable to such vested
benefits. Neither the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan for which there is
any withdrawal liability. As of the most recent valuation date applicable to any
Multiemployer Plan, neither the Borrower nor any Commonly Controlled Entity
would become subject to any liability under ERISA if the Borrower or such
Commonly Controlled Entity were to withdraw completely from such Multiemployer
Plan. Neither the Borrower nor any Commonly Controlled Entity has received
notice that any Multiemployer Plan is Insolvent or in Reorganization. To the
best knowledge of the Borrower, no such Insolvency or Reorganization is
19
reasonably likely to occur. Based upon GAAP existing as of the date of this
Agreement and current factual circumstances, the Borrower has no reason to
believe that the annual cost during the term of this Agreement to the Borrower
and all Commonly Controlled Entities for post-retirement benefits to be provided
to the current and former employees of the Borrower and all Commonly Controlled
Entities under Plans which are welfare benefit plans (as defined in Section 3(l)
of ERISA) will, in the aggregate, have a Material Adverse Effect.
4.12 Environmental Laws. Except as described on Exhibit 2 under the heading
"Environmental Matters:"
(a) no Property of the Borrower or Goodrich-Louisiana is currently on
or has ever been on, or is adjacent to any Property which is on or has ever been
on, any federal or state list of Superfund Sites;
(b) no Hazardous Substances have been generated, transported, and/or
disposed of by the Borrower or Goodrich-Louisiana at a site which was, at the
time of such generation, transportation, and/or disposal, or has since become, a
Superfund Site;
(c) no Release of Hazardous Substances by the Borrower or
Goodrich-Louisiana or from, affecting, or related to any of their Property or
adjacent to any of their Property has occurred; and
(d) no Environmental Complaint has been received by the Borrower or
Goodrich-Louisiana.
4.13 Investment Company Act Compliance. Neither the Borrower nor
Goodrich-Louisiana is or is directly or indirectly controlled by or acting on
behalf of any Person which is an "investment company" or an "affiliated person"
of an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
4.14 Public Utility Holding Company Act Compliance. Neither the Borrower
nor Goodrich-Louisiana is a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
4.15 Proper Filing of Tax Returns; Payment of Taxes Due. Each of the
Borrower and Goodrich-Louisiana has duly and properly filed its United States
income tax return and all other tax returns which are required to be filed and
has paid all taxes due except such as are being contested in good faith and as
to which adequate provisions and disclosures have been made. The respective
charges and reserves on the books of the Borrower and Goodrich-Louisiana with
respect to taxes and other governmental charges are adequate.
4.16 Refunds. Except as described on Exhibit 2 under the heading "Refunds,"
no orders of, proceedings pending before, or other requirements of, the Federal
Energy Regulatory Commission, the Texas Railroad Commission, or any Governmental
Authority exist which could result in the Borrower or Goodrich-Louisiana being
required to refund any material portion of the proceeds received or to be
received from the sale of hydrocarbons from any of its Properties.
4.17 Gas Contracts. Except as described on Exhibit 2 under the heading "Gas
Contracts," neither the Borrower nor Goodrich-Louisiana (a) is obligated in any
material respect by virtue of any prepayment made under any contract containing
a "take-or-pay" or "prepayment" provision or under any similar agreement to
deliver hydrocarbons produced from or allocated to any of its Properties at some
future date without receiving full payment therefor within 90 days of delivery,
20
or (b) is subject to or has produced gas, in any material amount, subject to, or
owns Properties subject to, balancing rights of third parties or balancing
duties under governmental requirements, except as to such matters for which such
party has established monetary reserves adequate in amount to satisfy such
obligations and has segregated such reserves from other accounts.
4.18 Intellectual Property. Each of the Borrower and Goodrich-Louisiana
owns or is licensed to use all Intellectual Property necessary to conduct all
business material to its condition (financial or otherwise), business, or
operations as such business is currently conducted. No claim has been asserted
or is pending by any Person with the respect to the use of any such Intellectual
Property or challenging or questioning the validity or effectiveness of any such
Intellectual Property; and neither the Borrower nor Goodrich-Louisiana knows of
any valid basis for any such claim. The use of such Intellectual Property by the
Borrower or Goodrich-Louisiana does not infringe on the rights of any Person,
except for such claims and infringements as do not, in the aggregate, give rise
to any material liability on the part of the Borrower or Goodrich-Louisiana.
4.19 Casualties or Taking of Property. Except as disclosed on Exhibit 2
under the heading "Casualties," since June 30, 1999, neither the business nor
any Property of the Borrower or Goodrich-Louisiana has been materially adversely
affected as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of Property, or cancellation of contracts, permits, or concessions by any
Governmental Authority, riot, activities of armed forces, or acts of God.
4.20 Locations of Borrower and Goodrich-Louisiana. The principal place of
business and chief executive office of the Borrower and Goodrich-Louisiana is
located at 333 Texas Street, Suite 1375, Shreveport, Louisiana 71101 or at such
other location as the Borrower may have, by proper written notice hereunder,
advised the Noteholder Agent, provided that (in the case of Borrower and
Goodrich-Louisiana) such other location is within a state in which appropriate
financing statements from the Borrower or Goodrich-Louisiana, as the case may
be, in favor of the Collateral Agent have been flied.
4.21 Scope of Collateral. The Collateral constitutes the only real or
personal Property owned by the Borrower or Goodrich-Louisiana.
ARTICLE V
---------
AFFIRMATIVE COVENANTS
---------------------
For so long as any Notes remain outstanding or unpaid, the Borrower and
Goodrich-Louisiana shall do the following:
5.1 Maintenance and Access to Records. Keep adequate records, in accordance
with GAAP, of all its transactions so that at any time, and from time to time,
its true and complete financial condition may be readily determined, and
promptly following the reasonable request of the Noteholder Agent, make such
records available for inspection by the Noteholder Agent and, at the expense of
the Borrower, allow the Noteholder Agent to make and take away copies thereof.
21
5.2 Quarterly Financial Statements. Deliver to the Noteholders, on or
before the 45th day after the close of each quarterly period of each fiscal year
of Goodrich-Delaware, (a) a copy of the unaudited consolidated and consolidating
Financial Statements of Goodrich-Delaware as at the close of such quarterly
period and from the beginning of such fiscal year to the end of such period,
such Financial Statements to be certified by the chief financial officer of
Goodrich-Delaware as having been prepared in accordance with GAAP consistently
applied and as a fair presentation of the condition of Goodrich-Delaware and its
Subsidiaries, subject to changes resulting from normal year-end audit
adjustments.
5.3 Annual Financial Statements. Deliver to the Noteholders, on or before
the 90th day after the close of each fiscal year of Goodrich-Delaware, (a) a
copy of the annual audited consolidated Financial Statements of
Goodrich-Delaware, together with the audit report issued in connection
therewith, (b) a copy of the annual unaudited consolidating Financial Statements
of Goodrich-Delaware, and (c) a Compliance Certificate.
5.4 Oil and Gas Reserve Report.
(a) Deliver to the Noteholder Agent no later than the last day of
March of each year during the term of this Agreement, engineering reports in
form and substance satisfactory to the Noteholder Agent, certified by any
nationally- or regionally-recognized independent consulting petroleum engineers
acceptable to the Noteholder Agent as fairly and accurately setting forth (i)
the proven and producing, shut-in, behind-pipe, and undeveloped oil and gas
reserves (separately classified as such) attributable to the Oil and Gas
Properties of the Borrower as of January 1 of the year for which such reserve
reports are furnished, (ii) the aggregate present value of the future net income
with respect to such Oil and Gas Properties, discounted at a stated per annum
discount rate of such reserves, (iii) projections of the annual rate of
production, gross income, and net income with respect to such reserves, and (iv)
information with respect to the "take-or-pay," "prepayment," and gas-balancing
liabilities of the Borrower.
(b) Deliver to the Noteholder Agent no later than the last day of
August of each year during the term of this Agreement, engineering reports in
form and substance satisfactory to the Noteholder prepared by or under the
supervision of the chief petroleum engineer or geologist of the Borrower
evaluating the Oil and Gas Properties of the Borrower as of July 1 of the year
for which such reserve reports are furnished and updating the information
provided in the reports pursuant to Section 5.4(a).
(c) Deliver to the Noteholder Agent, on or before the 45th day after
the close of each month, a report of monthly production of its Oil and Gas
Properties, setting forth production volumes for oil, gas, other hydrocarbons
and water, broken out by major fields or by wells.
(d) Each of the reports provided pursuant to this Section shall be
accompanied by additional data concerning pricing, quantities of production from
the Oil and Gas Properties, volumes of production sold, purchasers of
production, gross revenues, expenses, and such other information and engineering
and geological data with respect thereto and in such format as the Noteholder
Agent may reasonably request.
(e) In the event the Noteholder Agent has a reasonable concern as to
the ability of the Borrower to meet its obligations as they become due, then the
Borrower will provide to the Noteholder Agent such additional financial or other
information and reports, in such formats and at such times as the Noteholder may
reasonably request.
22
5.5 Notices of Certain Events. Deliver to the Noteholder Agent, immediately
upon having knowledge of the occurrence of any of the following events or
circumstances, a written statement with respect thereto, signed by a Responsible
Officer of the Borrower or Goodrich-Louisiana and setting forth the relevant
event or circumstance and the steps being taken with respect to such event or
circumstance:
(a) any Default or Event of Default;
(b) any default or event of default under any contractual obligation
of the Borrower or Goodrich-Louisiana, or any litigation, investigation, or
proceeding between the Borrower or Goodrich-Louisiana and any Governmental
Authority which, in either case, if not cured or if adversely determined, as the
case may be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding involving the Borrower or
Goodrich-Louisiana as a defendant or in which any Property of the Borrower or
Goodrich-Louisiana is subject to a claim and in which the amount involved is
$500,000 or more and which is not covered by insurance or in which injunctive or
similar relief is sought;
(d) the receipt by the Borrower or Goodrich-Louisiana of any
Environmental Complaint;
(e) any actual, proposed, or threatened testing or other investigation
by any Governmental Authority or other Person concerning the environmental
condition of, or relating to, any Property of the Borrower or
Goodrich-Louisiana, or adjacent to any Property of the Borrower or
Goodrich-Louisiana following any allegation of a violation of any Requirement of
Law;
(f) any Release of Hazardous Substances by the Borrower or
Goodrich-Louisiana from, affecting, or related to any Property of the Borrower
or Goodrich-Louisiana, or adjacent to any Property of the Borrower or
Goodrich-Louisiana, or the violation of any Environmental Law, or the
revocation, suspension, or forfeiture of or failure to renew, any permit,
license, registration, approval, or authorization which could reasonably be
expected to have a Material Adverse Effect;
(g) any Reportable Event or imminently expected Reportable Event with
respect to any Plan; any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan; the institution of proceedings or the
taking of any other action by the PBGC, the Borrower or any Commonly Controlled
Entity or Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Single Employer Plan or
Multiemployer Plan; or any Prohibited Transaction in connection with any Plan or
any trust created thereunder and the action being taken by the Internal Revenue
Service with respect thereto;
(h) the change in identity or address of any Person remitting to the
Borrower proceeds from the sale of hydrocarbon production from or attributable
to any Mortgaged Property;
(i) any change in the senior management of the Borrower or
Goodrich-Louisiana;
(j) the Borrower's or Goodrich-Louisiana's acquisition or ownership of
any estate (fee simple or leasehold) of real or personal Property, wherever
located, which is not included in the Collateral; and
23
(k) any other event or condition which could reasonably be expected to
have a Material Adverse Effect.
5.6 Letters in Lieu of Transfer Orders; Division Orders. Promptly upon
request by the Noteholder Agent at any time and from time to time, execute such
letters in lieu of transfer orders, in addition to the letters signed by the
Borrower and delivered to the Collateral Agent and/or division and/or transfer
orders as are necessary or appropriate to transfer and deliver to the Noteholder
Agent proceeds from or attributable to any Mortgaged Property.
5.7 Additional Information. Furnish to the Noteholder Agent within five
days after any material report (other than financial statements) or other
communication is sent by the Borrower or Goodrich-Louisiana to its stockholders
or filed by the Borrower or Goodrich-Louisiana with the Securities and Exchange
Commission or any successor or analogous Government Authority, copies of such
report or communication and, promptly upon the request of the Noteholder Agent,
such additional financial or other information concerning the assets,
liabilities, operations, and transactions of the Borrower or Goodrich-Louisiana
as the Noteholder Agent may from time to time request; and notify the Noteholder
Agent not less than ten Business Days prior to the occurrence of any condition
or event that may change the proper location for the filing of any financing
statement or other public notice or recording for the purpose of perfecting a
Lien in any Collateral, including, without limitation, any change in name or the
location of the principal place of business or chief executive office of the
Borrower or Goodrich-Louisiana; and upon the request of the Noteholder Agent,
execute such additional Security Instruments as may be necessary or appropriate
in connection therewith.
5.8 Compliance with Laws. Comply with all applicable Requirements of Law,
including, without limitation, (a) the Natural Gas Policy Act of 1978, as
amended, (b) ERISA, (c) Environmental Laws, and (d) all permits, licenses,
registrations, approvals, and authorizations (i) related to any natural or
environmental resource or media located on, above, within, in the vicinity of,
related to or affected by any Property of the Borrower or Goodrich-Louisiana,
(ii) required for the performance of the operations of the Borrower or
Goodrich-Louisiana, or (iii) applicable to the use, generation, handling,
storage, treatment, transport, or disposal of any Hazardous Substances; and
cause all employees, crew members, agents, contractors, subcontractors, and
future lessees (pursuant to appropriate lease provisions) of each of the
Borrower or Goodrich-Louisiana, while such Persons are acting within the scope
of their relationship with such party, to comply with all such Requirements of
Law as may be necessary or appropriate to enable such party to so comply.
5.9 Payment of Assessments and Charges. Pay all taxes, assessments,
governmental charges, rent, and other Indebtedness which, if unpaid, might
become a Lien against its Property, except any of the foregoing being contested
in good faith and as to which adequate reserve in accordance with GAAP has been
established or unless failure to pay would not have a Material Adverse Effect.
5.10 Maintenance of its Existence and Good Standing. Maintain its corporate
or limited liability company existence or qualification and good standing in its
jurisdictions of incorporation or organization and in all jurisdictions wherein
the Property now owned or hereafter acquired or business now or hereafter
conducted necessitates same.
5.11 Further Assurances. Promptly cure any defects in the execution and
delivery of any of the Loan Documents and all agreements contemplated thereby,
and execute, acknowledge, and deliver such other assurances and instruments as
24
may, in the opinion of the Noteholder Agent, be necessary to fulfill the terms
of the Loan Documents.
5.12 Fees and Expenses.
(a) Upon request by the Noteholder Agent, promptly pay all reasonable
fees and expenses of the Noteholder Agent in connection with the preparation,
negotiation, syndication, execution, delivery, administration, and enforcement
of this Agreement and the other Loan Documents and any amendments, restatements,
or supplements thereto, the satisfaction of the conditions precedent set forth
herein, the filing and recordation of Security Instruments, and the consummation
of the transactions contemplated in the Loan Documents, including, without
limitation, fees and expenses of legal counsel.
(b) Upon request by the Noteholder Agent, promptly pay (to the fullest
extent permitted by law) for all amounts reasonably expended, advanced, or
incurred by or on behalf of the Noteholders to satisfy any obligation of the
Borrower or Goodrich-Louisiana under any of the Loan Documents; to collect the
Obligations; to enforce the rights of the Noteholders under any of the Loan
Documents; and to protect the Properties or business of the Borrower and
Goodrich-Louisiana including, without limitation, the Collateral, which amounts
shall be deemed compensatory in nature and liquidated as to amount upon notice
to the Borrower by the Noteholder Agent and which amounts shall include, but not
be limited to (i) all court costs, (ii) reasonable fees and expenses of legal
counsel, auditors and accountants, engineers, and environmental and insurance
consultants, (iii) fees and expenses incurred in connection with the
participation by the Noteholder Agent as a member of the creditors' committee in
a case commenced under any Insolvency Proceeding, (iv) fees and expenses
incurred in connection with lifting the automatic stay prescribed in ss.362,
Title 11 of the United States Code, and (v) fees and expenses incurred in
connection with any action pursuant to ss.1129, Title 11 of the United States
Code, all reasonably incurred by the Noteholder Agent in connection with the
collection of any sums due under the Loan Documents, together with interest at
the per annum interest rate equal to the Default Rate, with the obligations
under this Section surviving the non-assumption of this Agreement in a case
commenced under any Insolvency Proceeding and being binding upon the Borrower
and/or a trustee, receiver, custodian, or liquidator of the Borrower appointed
in any such case.
5.13 Operation of Oil and Gas Properties. Develop, maintain, and operate
its Oil and Gas Properties in a prudent and workmanlike manner in accordance
with industry standards.
5.14 Maintenance and Inspection of Properties. Maintain all of its tangible
Properties in good repair and condition, ordinary wear and tear excepted; make
all necessary replacements thereof and operate such Properties in a good and
workmanlike manner; and permit any authorized representative of the Noteholder
Agent to visit and inspect any tangible Property of the Borrower or
Goodrich-Louisiana. So long as no Event of Default shall have occurred and be
continuing, such visits and inspections shall be at the expense of the
Noteholders. If an Event of Default has occurred and is continuing, such visits
and inspections shall be at the expense of the Borrower.
5.15 Maintenance of Insurance. Maintain insurance with respect to its
Properties and businesses against such liabilities, casualties, risks, and
contingencies as is customary in the relevant industry and sufficient to prevent
a Material Adverse Effect, all such insurance to be in amounts and from insurers
acceptable to the Noteholder Agent and naming the Noteholder Agent as loss
payee, and, upon any renewal of any such insurance and at other times upon
request by the Noteholder Agent furnish to the Noteholder Agent evidence,
satisfactory to the Noteholder Agent, of the maintenance of such insurance. The
Noteholder Agent shall have the right to collect, and the Borrower hereby
assigns to the Noteholder Agent, any and all monies that may become payable
under any policies of insurance relating to business interruption or by reason
of damage, loss, or destruction of any of the Collateral. In the event of any
25
damage, loss, or destruction for which insurance proceeds relating to business
interruption or Collateral exceed $500,000, the Noteholder Agent may, at its
option, apply all such sums or any part thereof received by it toward the
payment of the Obligations, whether matured or unmatured, application to be made
first to interest and then to principal, and shall deliver to the Borrower the
balance, if any, after such application has been made. In the event of any such
damage, loss, or destruction for which insurance proceeds are $500,000 or less,
provided that no Default or Event of Default has occurred and is continuing, the
Noteholder Agent shall deliver any such proceeds received by it to the Borrower.
In the event the Noteholder Agent receives insurance proceeds not attributable
to Collateral or business interruption, the Noteholder Agent shall deliver any
such proceeds to the Borrower.
5.16 Indemnification. INDEMNIFY AND HOLD THE NOTEHOLDERS AND THEIR
RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT AND AFFILIATES AND EACH TRUSTEE OR AGENT FOR THE BENEFIT OF
THE NOTEHOLDERS UNDER ANY SECURITY INSTRUMENT HARMLESS FROM AND AGAINST ANY AND
ALL CLAIMS, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES, CHARGES,
ADMINISTRATIVE AND JUDICIAL PROCEEDINGS AND ORDERS, JUDGMENTS, REMEDIAL ACTIONS,
REQUIREMENTS AND ENFORCEMENT ACTIONS OF ANY KIND, AND ALL COSTS AND EXPENSES
INCURRED IN CONNECTION THEREWITH (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES
AND EXPENSES), ARISING DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, FROM (A) THE
PRESENCE OF ANY HAZARDOUS SUBSTANCES ON, UNDER, OR FROM ANY PROPERTY OF THE
BORROWER OR GOODRICH-LOUISIANA, WHETHER PRIOR TO OR DURING THE TERM HEREOF, (B)
ANY ACTIVITY CARRIED ON OR UNDERTAKEN ON OR OFF ANY PROPERTY OF THE BORROWER OR
GOODRICH-LOUISIANA WHETHER PRIOR TO OR DURING THE TERM HEREOF, AND WHETHER BY
THE BORROWER OR GOODRICH-LOUISIANA OR ANY PREDECESSOR IN TITLE, EMPLOYEE, AGENT,
CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER OR GOODRICH-LOUISIANA OR ANY OTHER
PERSON AT ANY TIME OCCUPYING OR PRESENT ON SUCH PROPERTY, IN CONNECTION WITH THE
HANDLING, TREATMENT, REMOVAL, STORAGE, DECONTAMINATION, CLEANUP, TRANSPORTATION,
OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR
UNDER SUCH PROPERTY, (c) ANY RESIDUAL CONTAMINATION ON OR UNDER ANY PROPERTY OF
THE BORROWER OR GOODRICH-LOUISIANA, (D) ANY CONTAMINATION OF ANY PROPERTY OR
NATURAL RESOURCES ARISING IN CONNECTION WITH THE GENERATION, USE, HANDLING,
STORAGE, TRANSPORTATION OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES BY THE BORROWER
OR GOODRICH-LOUISIANA, OR ANY EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF
THE BORROWER OR GOODRICH-LOUISIANA WHILE SUCH PERSONS ARE ACTING WITHIN THE
SCOPE OF THEIR RELATIONSHIP WITH THE BORROWER OR GOODRICH-LOUISIANA,
IRRESPECTIVE OF WHETHER ANY OF SUCH ACTIVITIES WERE OR WILL BE UNDERTAKEN IN
ACCORDANCE WITH APPLICABLE REQUIREMENTS OF LAW, OR (E) THE PERFORMANCE AND
26
ENFORCEMENT OF ANY LOAN DOCUMENT, OR ANY OTHER ACT OR OMISSION IN CONNECTION
WITH OR RELATED TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING, WITHOUT LIMITATION, ANY OF THE FOREGOING IN THIS SECTION ARISING FROM
NEGLIGENCE, WHETHER SOLE OR CONCURRENT, ON THE PART OF THE NOTEHOLDERS OR ANY OF
THEIR RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT, OR AFFILIATES OR ANY TRUSTEE OR AGENT FOR THE BENEFIT OF THE
NOTEHOLDERS UNDER ANY SECURITY INSTRUMENT, BUT EXCLUDING ANY OCCURRENCE
RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PERSONS; WITH
THE FOREGOING INDEMNITY SURVIVING SATISFACTION OF ALL OBLIGATIONS AND THE
TERMINATION OF THIS AGREEMENT.
5.17 Distributions by Borrower. Borrower may, and shall, make distributions
in respect of the Lafitte Membership Interests, at the maximum level permitted
by law, so long as (a) Borrower's forecasted cash flow for the next twelve
months (net of any capital expenditures proposed by the operator of the Lafitte
Field) plus two times the Borrower's cash on hand exceeds the Borrower's
forecasted capital expenditures for the same twelve month period, and (b) the
SEC PV10% value of the Borrower's oil and gas reserves (net of the Obligations)
exceeds the Obligations by two times.
ARTICLE VI
----------
NEGATIVE COVENANTS
------------------
For so long as any Notes remain outstanding or unpaid, the Borrower will
not and Goodrich-Louisiana will not do any of the following:
6.1 Indebtedness; Contingent Obligations. Create, incur, assume, or suffer
to exist any Indebtedness or Contingent Obligation, whether by way of loan or
otherwise; provided, however, the foregoing restriction shall not apply to (a)
the Obligations, the Subordinated Notes, the Pari Passu Notes and the Compass
Bank Debt, (b) unsecured accounts payable incurred in the ordinary course of
business, which are not unpaid in excess of 60 days beyond invoice date or are
being contested in good faith and as to which such reserve as is required by
GAAP has been made, (e) performance guarantees and performance surety or other
bonds provided in the ordinary course of business, (d) Indebtedness with respect
to Hedging Agreements entered into with a Person acceptable to the Noteholder
Agent, provided that such Hedging Agreements relating to hydrocarbons cover not
more than 75% of the projected monthly production from proved developed
producing Oil and Gas Properties of the Borrower, (e) trade credit (including
authorizations for expenditures with respect to Oil and Gas Properties) incurred
or operating leases entered into in the ordinary course of business.
6.2 Liens. Create, incur, assume, or suffer to exist any Lien on any of its
Properties, whether now owned or hereafter acquired; provided, however, the
foregoing restrictions shall not apply to Permitted Liens.
6.3 Sales of Assets. Without the prior written consent of the Noteholder
Agent, sell, transfer, or otherwise dispose of, in one or any series of
transactions, any stock of any Subsidiary, any Collateral, or any other assets,
whether now owned or hereafter acquired, or enter into any agreement to do so;
provided, however, the foregoing restriction shall not apply to (a) the sale of
hydrocarbons or inventory in the ordinary course of business provided that no
contract for the sale of hydrocarbons shall obligate the Borrower to deliver
hydrocarbons produced from any Property at some future date without receiving
full payment therefor within 90 days of delivery, (b) the sale or other
disposition of Property destroyed, lost, worn out, damaged, or having only
salvage value or no longer used or useful in its business, (c) the sale or other
disposition of other assets (excluding any stock of any Subsidiary) which are
not material to the operations of the Borrower, taken as a whole, provided that
any mandatory prepayment required as a result thereof is made at the time of
such sale or disposition, or (d) Property representing less than ten percent
(10%) of the Borrower's total assets on a book value basis and on an SEC PV-10
basis.
27
6.4 Leasebacks. Enter into any agreement to sell or transfer any Property
and thereafter rent or lease as lessee such Property or other Property intended
for the same use or purpose as the Property sold or transferred.
6.5 Changes in Corporate Structure. Without the prior written consent of
the Noteholder Agent, which will not be unreasonably withheld, enter into any
transaction of consolidation, merger, or amalgamation; liquidate, wind up, or
dissolve (or suffer any liquidation or dissolution).
6.6 Transactions with Affiliates. Directly or indirectly, enter into any
transaction (including the sale, lease, or exchange of Property or the rendering
of service) with any of its Affiliates, other than upon fair and reasonable
terms no less favorable than could be obtained in an arm's length transaction
with a Person which was not an Affiliate.
6.7 Lines of Business. Expand, on its own or through any Subsidiary, into
any line of business other than those in which it is engaged as of the date
hereof.
6.8 ERISA Compliance. Permit any Plan maintained by it or any Commonly
Controlled Entity to (a) engage in any Prohibited Transaction, (b) incur any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA, or (c) terminate in a manner which could result in the imposition of a
Lien on any Property of the Borrower or Goodrich-Louisiana pursuant to Section
4068 of ERISA; or assume an obligation to contribute to any Multiemployer Plan;
or acquire any Person or the assets of any Person which has now or has had at
any time an obligation to contribute to any Multiemployer Plan.
6.9 Consolidated Net Worth. Permit, as of the close of any fiscal quarter
ending on or after December 31, 1999, Consolidated Tangible Net Worth to be less
than $7,000,000 plus 50% of positive Consolidated Net Income after March 31,
1999 and 100% of all cash equity proceeds, net of expenses incurred in
connection with any offering transaction after the date hereof.
6.10 Debt Service Ratio. Permit, as of the close of any fiscal quarter
ending on or after December 31, 1999, the ratio of (a) the sum of EBITDA for
such fiscal quarter plus cash equity investments made to Goodrich-Louisiana or
to the Borrower within 45 days after the end of such quarter to (b) Debt Service
for such fiscal quarter to be less than 1.10 to 1.00.
6.11 General and Administrative Expenses. Permit, as of the close of any
fiscal quarter ending on or after December 31, 1999, general and administrative
expenses (including capitalized general and administrative expenses), on a
consolidated basis for Goodrich-Delaware and its Subsidiaries, to exceed twenty
percent (20%) of total consolidated revenues for Goodrich-Delaware and its
Subsidiaries (excluding proceeds from asset sales and other non-recurring
revenues) for such period.
ARTICLE VII
-----------
EVENTS OF DEFAULT
-----------------
7.1 Enumeration of Events of Default. Any of the following events shall
constitute an Event of Default:
28
(a) default shall be made in the payment when due of any installment
of principal or interest under this Agreement or the Notes or in the payment
when due of any fee or other sum payable under any Loan Document and, with
respect to the payment of interest only, such default shall continue for three
days;
(b) default shall be made by the Borrower or Goodrich-Louisiana in the
due observance or performance of any of their respective obligations under the
Loan Documents, other than as described in Section 7.1(a), and with respect to
default in the observance or performance of obligations under Article V and
under Sections 6.9, 6.10 and 6.11, such default shall continue for 30 days after
notice thereof to the Borrower by the Noteholder Agent;
(c) any representation or warranty made by the Borrower or
Goodrich-Louisiana in any of the Loan Documents proves to have been untrue in
any material respect or any representation, statement (including Financial
Statements), certificate, or data furnished or made to the Noteholder Agent in
connection herewith proves to have been untrue in any material respect as of the
date the facts therein set forth were stated or certified;
(d) default shall be made by the Borrower or Goodrich-Louisiana (as
principal or guarantor or other surety) in the payment or performance of any
bond, debenture, note, or other Indebtedness exceeding $100,000 or under any
credit agreement, loan agreement, indenture, promissory note, or similar
agreement or instrument executed in connection with any of the foregoing, and
such default shall remain unremedied for in excess of the period of grace, if
any, with respect thereto;
(e) the Borrower or Goodrich-Louisiana shall (i) apply for or consent
to the appointment of a receiver, trustee, or liquidator of it or all or a
substantial part of its assets, (ii) file a voluntary petition commencing an
Insolvency Proceeding, (iii) make a general assignment for the benefit of
creditors, (iv) be unable, or admit in writing its inability, to pay its debts
generally as they become due, or (v) file an answer admitting the material
allegations of a petition filed against it in any Insolvency Proceeding;
(f) an order, judgment, or decree shall be entered against the
Borrower or Goodrich-Louisiana by any court of competent jurisdiction or by any
other duly authorized authority, on the petition of a creditor or otherwise,
granting relief in any Insolvency Proceeding or approving a petition seeking
reorganization or an arrangement of its debts or appointing a receiver, trustee,
conservator, custodian, or liquidator of it or all or any substantial part of
its assets, and such order, judgment, or decree shall not be dismissed or stayed
within 30 days;
(g) the levy against any significant portion of the Property of the
Borrower or Goodrich-Louisiana, or any execution, garnishment, attachment,
sequestration, or other writ or similar proceeding which is not permanently
dismissed or discharged within 30 days after the levy;
(h) a final and non-appealable order, judgment, or decree shall be
entered against the Borrower or Goodrich-Louisiana for money damages and/or
Indebtedness due in an amount in excess of $500,000, and such order, judgment or
decree shall not be dismissed or stayed within 30 days;
29
(i) the Borrower or Goodrich-Louisiana shall have (i) concealed,
removed, or diverted, or permitted to be concealed, removed, or diverted, any
part of its Property, with intent to hinder, delay, or defraud its creditors or
any of them, (ii) made any transfer of its Property to or for the benefit of a
creditor at a time when other creditors similarly situated have not been paid,
or (iii) shall have suffered or permitted, while insolvent, any creditor to
obtain a Lien upon any of its Property through legal proceedings or distraint
which is not vacated within 30 days from the date thereof;
(j) the Security Instruments shall for any reason not, or cease to,
create valid and perfected first-priority Liens against all of the Lafitte
Collateral;
(k) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan;
any "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan for which an excise
tax is due or would be due in the absence of a waiver; a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Noteholder Agent,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA; any Single Employer Plan shall terminate for purposes of Title IV of
ERISA; the Borrower or any Commonly Controlled Entity shall incur, or in the
reasonable opinion of the Noteholder Agent, be likely to incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan; or any other event or condition shall occur or exist with
respect to a Plan and the result of such events or conditions referred to in
this Section 7.1(k) could subject the Borrower or any Commonly Controlled Entity
to any tax (other than an excise tax under Section 4980 of the Code), penalty or
other liabilities which taken in the aggregate would have a Material Adverse
Effect and any such circumstance shall exist for in excess of 30 days; or
(l) any payment of royalties on Oil and Gas Properties of the Borrower
shall not be paid when due or any account payable of the Borrower (except as the
Noteholder Agent may expressly agree in writing) shall not be paid within sixty
(60) days of invoice date.
7.2 Remedies.
(a) Upon the occurrence of an Event of Default specified in Sections
7.1(f) or 7.1(g), immediately and without notice, (i) all Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest, notice of protest, default, or dishonor, notice of intent to accelerate
maturity, notice of acceleration of maturity, or other notice of any kind,
except as may be provided to the contrary elsewhere herein, all of which are
hereby expressly waived by the Borrower.
(b) Upon the occurrence of any Event of Default other than those
specified in Sections 7.1(f) or 7.1(g), (i) the Noteholder Agent may, by notice
to the Borrower, declare all Obligations immediately due and payable, without
presentment, demand, protest, notice of protest, default, or dishonor, notice of
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intent to accelerate maturity, notice of acceleration of maturity, or other
notice of any kind, except as may be provided to the contrary elsewhere herein,
all of which are hereby expressly waived by the Borrower.
(c) Upon the occurrence of any Event of Default, the Noteholder Agent
may, in addition to the foregoing in this Section, exercise any or all of its
rights and remedies provided by law or pursuant to the Loan Documents.
ARTICLE VIII
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MISCELLANEOUS
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8.1 Survival of Representations, Warranties, and Covenants. All
representations and warranties of the Borrower and all covenants and agreements
herein made shall survive the execution and delivery of the Note and the
Security Instruments and shall remain in force and effect so long as any
Obligation is outstanding.
8.2 Notices and Other Communications. Except as to oral notices expressly
authorized herein, which oral notices shall be confirmed in writing, all
notices, requests, and communications hereunder shall be in writing (including
by telecopy). Unless otherwise expressly provided herein, any such notice,
request, demand, or other communication shall be deemed to have been duly given
or made when delivered by hand, or, in the case of delivery by mail, two
Business Days after deposited in the mail, certified mail, return receipt
requested, postage prepaid, or, in the case of telecopy notice, when receipt
thereof is acknowledged orally or by written confirmation report, addressed as
follows:
(a) if to the Noteholder Agent, to:
Hambrecht & Quist Guaranty Finance, LLC
One Bush Street
San Francisco, California 94104
Attention: Lorraine Nield
(415)439-3804 (telecopy)
(b) if to the Borrower, to:
Goodrich Petroleum Company-Lafitte, L.L.C.
333 Texas Street, Suite 1375
Shreveport, Louisiana 71101
Attention: Walter G. Goodrich
Telecopy: (318)429-2296
(c) if to a Noteholder, to:
the Noteholder's address or telecopy number shown on Exhibit 1
Any party may, by proper written notice hereunder to the others, change the
individuals or addresses to which such notices to it shall thereafter be sent.
8.3 Parties in Interest. All covenants and agreements herein contained by
or on behalf of the Borrower, Goodrich-Louisiana or the Noteholders shall be
binding upon the Borrower, Goodrich-Louisiana or the Noteholders, as the case
may be, and their respective legal representatives, agents, successors, and
assigns.
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8.4 Rights of Third Parties. All provisions herein are imposed solely and
exclusively for the benefit of the Borrower and the Noteholders and their
successors and assigns. No other Person shall have any right, benefit, priority,
or interest hereunder or as a result hereof or have standing to require
satisfaction of provisions hereof in accordance with their terms.
8.5 No Waiver, Rights Cumulative. No course of dealing on the part of the
Noteholders, the Noteholder Agent, their respective officers or employees, nor
any failure or delay by the foregoing with respect to exercising any rights
under any Loan Document shall operate as a waiver thereof. The rights of the
Noteholders under the Loan Documents shall be cumulative and the exercise or
partial exercise of any such right shall not preclude the exercise of any other
right.
8.6 Survival Upon Unenforceability. In the event any one or more of the
provisions contained in any of the Loan Documents or in any other instrument
referred to herein or executed in connection with the Obligations shall, for any
reason, be held to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other provision
of any Loan Document or of any other instrument referred to herein or executed
in connection with such Obligations.
8.7 Amendments; Waivers. Neither this Agreement nor any provision hereof
may be amended, waived, discharged, or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, waiver, discharge, or termination is sought.
8.8 Controlling Agreement. In the event of a conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control.
8.9 Governing Law. THIS AGREEMENT, THE NOTES, AND THE GUARANTY AND ALL
ISSUES ARISING IN CONNECTION THEREWITH AND THE TRANSACTIONS CONTEMPLATED THEREBY
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
LOUISIANA, WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF
LAW.
8.10 Jurisdiction and Venue. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO,
ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE SOLE
DISCRETION AND ELECTION OF THE NOTEHOLDER AGENT IN COURTS HAVING SITUS IN
SHREVEPORT, LOUISIANA. THE BORROWER HEREBY SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE, OR FEDERAL COURT LOCATED IN SHREVEPORT, LOUISIANA AND HEREBY
WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF
ANY LITIGATION BROUGHT AGAINST IT BY THE NOTEHOLDERS, THE NOTEHOLDER AGENT OR
THE COLLATERAL AGENT IN ACCORDANCE WITH THIS SECTION.
8.11 Waiver of Rights to Jury Trial. THE BORROWER, THE NOTEHOLDERS AND THE
NOTEHOLDER AGENT HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY, AND
UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT RELATES TO OR ARISES OUT OF
ANY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS OF THE
NOTEHOLDERS, THE NOTEHOLDER AGENT OR THE COLLATERAL AGENT IN THE ENFORCEMENT OF
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ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE A MATERIAL
INDUCEMENT FOR THE NOTEHOLDERS ENTERING INTO THIS AGREEMENT.
8.12 Entire Agreement. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL SUPERSEDE
ANY PRIOR AGREEMENT AMONG THE PARTIES HERET0 WHETHER WRITTEN OR ORAL, RELATING
TO THE SUBJECT HEREOF. FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER
WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE
PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
8.13 Counterparts. For the convenience of the parties, this Agreement may
be executed in multiple counterparts and by different parties hereto in separate
counterparts, each of which for all purposes shall be deemed to be an original
and all of which together shall constitute one and the same Agreement.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
BORROWER:
GOODRICH PETROLEUM COMPANY-LAFITTE, L.L.C.
By:
---------------------------------------
Walter G. Goodrich, President
GOODRICH-LOUISIANA:
GOODRICH PETROLEUM COMPANY, L.L.C.
(Joining for the limited purpose of making the representations, warranties and
covenants set forth in Articles IV, V and VI hereinabove.)
By:
---------------------------------------
Walter G. Goodrich, President
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NOTEHOLDER AGENT:
HAMBRECHT & QUIST GUARANTY FINANCE, LLC
By:
-------------------------------------
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EXHIBIT 1
SCHEDULE OF NOTEHOLDERS
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EXHIBIT 2
DISCLOSURES
Section 4.8 "Liabilities" --None.
Section 4.8 "Litigation" --See attached Schedule 1.
Section 4.12 "Environmental Matters" --None, except as disclosed on Schedule 1
Section 4.16 "Refunds" --None.
Section 4.17 "Gas Contracts" --None.
Section 4.19 "Casualties" --None.
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EXHIBIT 3
FORM OF COMPLIANCE CERTIFICATE
37