Document:

exv10w1

 

Exhibit 10.1

ASSET PURCHASE AGREEMENT

      This ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of April 15, 2005
by and among INTEGRATED ELECTRICAL SERVICES, INC., a Delaware corporation (the “Parent”), CANOVA
ELECTRICAL CONTRACTING, INC., a Delaware corporation (the “Company”), IES ACQUISITION CO., INC., a
Pennsylvania corporation (the “Buyer”), and JAMES J. CANOVA, an individual and resident of the
Commonwealth of Pennsylvania (“Guarantor”)

WITNESSETH:

      WHEREAS, the Parent owns, either directly or indirectly, all of the issued and outstanding
capital stock of the Company, which is engaged in the electrical construction and services business
(the “Business”);

      WHEREAS, the Parent and the Company desire to sell to the Buyer substantially all of the
Company’s assets, which are more fully described in Section 1.1 hereof, and the Buyer
desires to acquire such assets in consideration of the payment by the Buyer of the purchase price
and the assumption by the Buyer of the liabilities provided for herein, all upon the terms and
subject to the conditions hereinafter set forth;

      WHEREAS, Guarantor is the President and owner of the Buyer and has agreed to personally
guarantee to the Parent and the Company the Buyer’s performance of all representations, warranties,
covenants, agreements and conditions set forth herein;

      NOW, THEREFORE, for and in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions of the parties contained herein,
it is hereby agreed as follows:

1. PURCHASE AND SALE OF ASSETS.

      1.1 Transfer of Assets. On the terms and subject to the conditions set forth in this
Agreement, on the Closing Date (as defined in Section 2.1 hereof), the Company shall sell,
convey, assign, transfer and deliver to the Buyer, and the Buyer shall purchase and acquire from
the Company (except as provided in Section 1.2 hereof) all of the assets, rights and properties of
the Parent or the Company set forth on Schedule 1.1. The assets described in this
Section 1.1 as being sold, conveyed, assigned, transferred and delivered to the Buyer
hereunder are sometimes hereinafter referred to collectively as the “Assets”.

      1.2 Excluded Assets. It is expressly understood and agreed that the Assets shall not
include the following (such assets are hereinafter referred to collectively as the “Excluded
Assets”):

      (a) Cash and cash equivalents or similar type investments, such as certificates of
deposit, Treasury bills and other marketable securities;

      (b) Claims for refunds of taxes and other governmental charges to the extent such
refunds relate to periods ending on or prior to the Closing Date;

 

 

      (c) Any asset, tangible or intangible, which is not freely transferable without the
consent of a third party, upon the failure to obtain such consent (subject, however, to the
provisions of Section 4.3 below);

      (d) The original corporate minute books, stock books, financial records, tax returns,
personnel and payroll records and corporate policies and procedures manuals of the Company
and other records required by applicable laws to be retained;

      (e) Any contract or agreement, whether written or oral, between the Company and IES
Contractors, Inc.; and

      (f) Any asset not set forth on Schedule 1.1;

      1.3 Instruments of Conveyance and Transfer.

      (a) At the Closing, the Buyer, the Company and the Parent shall enter into a Bill of
Sale, Assignment and Assumption Agreement in the form attached hereto as Exhibit A,
transferring to the Buyer good and indefeasible title to all of the tangible personal
property included in the Assets, subject only to Permitted Encumbrances.

      (b) At the Closing, the Buyer and the Parent shall deliver such other instruments of
transfer and assignment in respect of the Assets as the Buyer shall reasonably require and
as shall be consistent with the terms and provisions of this Agreement.

      (c) At the Closing, the Buyer shall, and shall cause the Transferred Employees (as
hereinafter defined) to, resign as officers and directors of the Company and any other
affiliates of the Parent.

      1.4 Further Assurances. From time to time after the Closing, the Parent and the
Company will execute and deliver, or cause to be executed and delivered, without further
consideration, such other instruments of conveyance, assignment, transfer and delivery and will
take such other actions as the Buyer may reasonably request in order to more effectively transfer,
convey, assign and deliver to the Buyer, and to place the Buyer in possession and control of any of
the Assets or to enable the Buyer to exercise and enjoy all rights and benefits of the Company with
respect thereto.

      1.5 Liabilities. On the Closing Date, the Buyer will assume and agree to pay and
discharge all liabilities of the Company, known or unknown, absolute or contingent (the “Assumed
Liabilities”) other than the liabilities set forth on Schedule 1.5 (the “Retained
Liabilities”), which shall be retained by the Parent or the Company, respectively.

      1.6 Expenses: Consents and Taxes. The Buyer shall pay, or cause to be paid (i) all
costs and expenses of obtaining all consents of third parties for the assignment of any of the
Assets, and (ii) all transfer, stamp, sales, use or other similar taxes or duties payable in
connection with the sale and transfer of the Assets to the Buyer.

2

 

2. CLOSING; PURCHASE PRICE.

      2.1 Closing Date. The consummation of the transactions contemplated in this Agreement
(the “Closing”) shall take place at the offices of Gardere Wynne Sewell LLP, 1000 Louisiana, Suite
3400, Houston, Texas at 10:00 a.m., Central time, April 15, 2005 (the “Closing Date”)
contemporaneously with the execution of this Agreement or at such other place and time as the
parties hereto may mutually agree.

      2.2 Purchase Price. The aggregate purchase price for the Assets shall be $1,665,000
(the “Purchase Price”), subject to adjustment pursuant to Section 2.3 below, plus the
Buyer’s assumption of the Assumed Liabilities pursuant to Section 1.5 above. The Purchase
Price shall be payable by the Buyer at the Closing to the Company in immediately available funds by
confirmed wire transfer to a bank account to be designated by the Company.

      2.3 Cash Reconciliation. Within 60 days following the Closing Date, the Company shall
prepare and deliver to the Buyer a schedule setting forth, for the period commencing on January 1,
2005, and ending as of the Closing, (a) the cash disbursements funded by the Company, the Parent or
any of their affiliates for the benefit of the Company, to include those made in the ordinary
course to trade vendors and those made in the ordinary course for Company employee benefit plans
(the “Disbursements”), and (b) the cash deposits made by the Company (the “Deposits”). Within
three business days following the Buyer’s receipt of such schedule, (i) the Buyer shall remit to
the Company in immediately available funds, the amount by which the Disbursements exceed the
Deposits, if any; or (ii) the Company shall remit to the Buyer, in like manner and within such
period, the amount by which Deposits exceed the Disbursements, if any. Disbursements shall include,
but not be limited to, actual cash amounts paid by the Company or the Parent on behalf of the
Company with respect to pre-Closing periods, including (i) amounts paid after December 31, 2004 for
checks issued by the Company or Parent on behalf of the Company on or before December 31, 2004 that
had not cleared the banks on December 31, 2004, which amounts were reflected on the December 31,
2004 balance sheet as negative cash amounts, (ii) checks issued by the Company or Parent on behalf
of the Company subsequent to December 31, 2004, but before the Closing that have not cleared the
banks as of the Closing, (iii) workers compensation, general liability, auto insurance, health and
similar insurance premiums paid by the Parent on behalf of the Company with respect to periods
prior to the Closing, whether accrued prior to or after the Closing, and (iv) other amounts paid by
the Company or by the Parent on behalf of the Company with respect to periods prior to the Closing,
but for which invoices are received or accruals are made after the Closing Date. Deposits shall
include, but not be limited to, actual cash amounts received by the Company or the Parent on behalf
of the Company subsequent to December 31, 2004, but before the Closing that have not been reflected
in the Company’s accounts as of the Closing. Disbursements and Deposits will be accounted for in
accordance with Parent’s accounting practices consistent with past periods.

      2.4 Purchase Price Allocation. As soon as practicable after the Closing Date, the
Company and the Buyer shall jointly attempt to agree to and prepare IRS Form 8594 to report the
allocation of the Purchase Price among the Assets. Each party hereto agrees not to assert, in
connection with any tax return, tax audit or similar proceeding, any allocation that differs from
that set forth in such Form 8594. If the Company and the Buyer cannot reach agreement as to the

3

 

allocation of the Purchase Price among the Assets, the parties agree to allocate the Purchase
Price among the Assets for all purposes (including financial accounting and tax purposes)
independently.

3. REPRESENTATIONS AND WARRANTIES.

      3.1 Representations and Warranties of the Company and the Parent. The Company and the
Parent represent and warrant to the Buyer as follows:

      (a) Organization, Authority and Qualification of the Company. The Company is a
corporation duly organized and validly existing under the laws of the State of Delaware and
the Company has full corporate power and authority to own or lease its properties and to
carry on its business in such state. The Company has the full corporate power and authority
to execute, deliver and perform this Agreement, and this Agreement has been duly and validly
executed and delivered by the Company and constitutes the valid and legally binding
obligation of the Company, subject to general equity principles, enforceable in accordance
with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting the rights of creditors generally.

      (b) No Violation. The Company is not in default under or in violation of its Articles
of Incorporation or Bylaws.

      (c) Title to Properties; Absence of Liens and Encumbrances. The Company owns good and
indefeasible title to the Assets, free and clear of all claims, liens, security interests,
charges, leases, encumbrances, licenses or sublicenses and other restrictions of any kind
and nature, other than the claims, liens, security interests, charges, leases, encumbrances,
licenses or sublicenses either included among the Assumed Liabilities or specifically set
forth on Schedule 3.1(c) hereto (“Permitted Encumbrances”).

      3.2 Representations and Warranties of the Buyer. The Buyer and Guarantor, jointly and
severally, represent and warrant to the Parent and the Company as follows:

      (a) Organization, Authority and Qualification of the Buyer. The Buyer is a corporation
duly organized and validly existing under the laws of the Commonwealth of Pennsylvania and
the Buyer has full corporate power and authority to own or lease its properties and to carry
on its business in such state. The Buyer has the full corporate power and authority to
execute, deliver and perform this Agreement, and this Agreement has been duly and validly
executed and delivered by the Buyer and constitutes the valid and legally binding obligation
of the Buyer, subject to general equity principles, enforceable in accordance with its
terms, except as the same may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally.

      (b) No Violation. The Buyer is not in default under or in violation of its Articles of
Incorporation or Bylaws.

      (c) Certain Fees. The Buyer has not employed any broker or finder or incurred any
other liability for any brokerage fees, commissions or finders’ fees in connection with the
transactions contemplated hereby.

4

 

      (d) Financial Information. The financial and management reports (including, without
limitation, WIP schedules) heretofore delivered or made by Buyer, Guarantor or the Company
to the Parent are true and correct in all material respects and do not omit to state any
fact necessary to make any of them, in light of the circumstances in which made, not
misleading. All executed change orders have been recorded, all agreed change orders have
been executed or are listed on Schedule 3.2(d), and all checks and cash received by
the Company and its affiliates have been deposited.

      3.3 No Warranty. The Buyer and the Guarantor acknowledge that the Guarantor, through
previous ownership and/or management of the Company, is familiar with the Assets and the operations
of the Company, and has access to any information pertaining thereto and has made such information
available to Buyer. Neither the Company nor the Parent, nor any of their respective directors,
officers, employees, agents or representatives has made, or shall be deemed to have made, and no
such person shall be liable for, or bound in any manner by, and Buyer and the Guarantor have not
relied upon and will not rely upon, any express or implied representations, warranties, guaranties,
promises or statements pertaining to the Business or Assets except as specifically provided in this
Section 3. The Buyer and the Guarantor acknowledge that in making the decision to enter
into this Agreement and to consummate the transactions contemplated hereby, they have relied solely
on the basis of their own independent investigation of the Business and the Assets and upon the
express written representations, warranties and covenants in this Agreement. Without diminishing
the scope of the express written representations, warranties and covenants of the Company and the
Parent in this Agreement and without affecting or impairing their right to rely thereon, the Buyer
and the Guarantor acknowledge that (a) they have not relied, in whole or in part, on any
information contained in documents, materials or other information provided to them by, or on
behalf of, Company or the Parent, and (b) neither Company nor the Parent is making any
representations or warranties with respect to (i) any such documents, materials or other
information, other than, in each case, as set forth in this Agreement or (ii) the value, condition,
merchantability, marketability, profitability, suitability or fitness for a particular use or
purpose of the Assets. ACCORDINGLY, THE ASSETS ARE BEING TRANSFERRED “AS IS, WHERE IS.” EXCEPT
FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 3.1 OF THIS AGREEMENT, THE
COMPANY AND PARENT MAKE ABSOLUTELY NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED,
REGARDING THE ASSETS, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THE ABILITY OF THE COMPANY TO ASSIGN THE ASSETS, OR OBTAIN
CONSENTS TO ANY ASSIGNMENT.

4. COVENANTS; ACTION SUBSEQUENT TO CLOSING.

      4.1 Access to Books and Records. Until the sixth anniversary of the Closing Date, the
Parent and the Company shall afford, and will cause its affiliates to afford, to the Buyer, its
counsel, accountants and other authorized representatives, during normal business hours, reasonable
access to the books, records and other data of the Company and the Business with respect to periods
ending on or prior to the Closing Date to the extent that such access may be reasonably required by
the Buyer to facilitate (i) the investigation, litigation and final disposition of any claims which
may have been or may be made against the Buyer in connection with the Business or (ii) for any
other reasonable business purpose. Following the Closing, the Buyer shall prepare, on behalf of
the

5

 

Company, all regularly prepared financial reports and statements for periods up to and
including the Closing Date, shall deliver such reports to the Parent on or before May 15, 2005, and
shall sign a “Representation Compliance Letter” with respect to all such financial reports and
statements, and shall cooperate with and provide assistance to the Parent and the Company in their
financial and tax reporting obligations for the periods up to and including the Closing Date.

      4.2 Mail. The Parent and the Company authorize and empower the Buyer on and after the
Closing Date to receive and open all mail received by the Buyer relating to the Business or the
Assets and to deal with the contents of such communications in any proper manner. The Parent and
the Company shall promptly deliver to the Buyer any mail or other communication received by them
after the Closing Date pertaining to the Business or the Assets. The Buyer shall promptly deliver
to the Parent any mail or other communication received by it after the Closing Date pertaining to
the Excluded Assets or Retained Liabilities, and any cash, checks or other instruments of payment
in respect of the Excluded Assets. As soon as is practicable after the Closing Date, and in no
event more than ten days thereafter, the Buyer shall mail to its customers and vendors a notice of
the sale in the form provided by the Parent, with such changes thereto as Buyer and Parent shall
agree.

      4.3 No Consent Contracts. To the extent that any contract of the Company included in
the Assets may not be assigned without the consent of any third party, and such consent is not
obtained prior to Closing (such contracts referred to as “No Consent Contracts”), this Agreement
and any assignment executed at Closing pursuant hereto shall not constitute an assignment thereof,
but to the extent permitted by law shall constitute an equitable assignment by the Company and
assumption by the Buyer of the Company’s rights and obligations under the applicable No Consent
Contract, with the Company making available to the Buyer the benefits thereof and the Buyer
performing the obligations thereunder on the Company’s behalf.

      4.4 Preparation and Filing of Certain Tax Forms. The Buyer shall prepare and timely
submit to Parent for signature and timely filing all Forms W-2, 940, 941 and 1099 with all
appropriate Governmental Entities, including without limitation any summary schedules and
transmittal forms, as well as any similar filings required by any state or local Governmental
Entity, with respect to all wages and other reportable payments or any sales tax liability for the
calendar year 2004 and for the partial year in 2005 ending on the Closing Date. As used herein,
“Governmental Entity” means any court or tribunal in any jurisdiction (domestic or foreign) or any
public, governmental or regulatory body, agency, department, commission, board, bureau or other
authority or instrumentality, domestic or foreign. The Buyer shall pay all administrative amounts
owed as a result of or otherwise related to such filings with the exception of any tax, interest,
or penalties associated with periods prior to the Closing. The Company will pay, on or before they
become due, any employment taxes withheld by it which have not been previously paid. The Buyer,
Parent and the Company shall cooperate in making all such filings and shall make available to the
others such information as any of them requires to assure such filings are made on a timely and
accurate basis.

      4.5 The Parent Name and Logos. As soon as practicable (but in any event within 90
days) after the Closing Date, the Buyer, at its expense, shall remove all of the Parent and its
affiliates’ names and logos from all of the Assets. Except as specifically provided in Section
1, nothing in this Agreement shall constitute a license or authorization for the Buyer to use
in any

6

 

manner any name, logo or mark owned by or licensed to the Company, the Parent or their
respective affiliates which bears any reference to IES or any subsidiary of IES other than the
Company. The names “Canova” and “Canova Electrical Contracting” shall become the exclusive
property of the Buyer following the Closing and shall not be used by the Company, Parent or their
respective affiliates; provided that Parent will be given a reasonable period of time (not to
exceed 90 days) to change the Company’s name after the Closing Date.

      4.6 Leased Assets. At the Closing, the Buyer, at its expense, shall pay off or
refinance the leases on the vehicles listed on Schedule 4.6 attached hereto, and in
connection therewith shall obtain the release of Parent and the Company for all liability under
such vehicle leases. As soon as practicable (but in any event within 90 days) after the Closing
Date, the Buyer, at its expense, shall pay off or refinance the leases on the other assets listed
on Schedule 4.6 attached hereto, and in connection therewith shall obtain the release of
Parent and the Company for all liability under such leases.

      4.7 Chubb Bonds. Buyer agrees that at the Closing it shall execute and deliver to the
Federal Insurance Company and its subsidiary or affiliated insurers and any applicable co-sureties
(collectively, “Federal”), a General Agreement of Indemnity in the form attached as Exhibit
B, pursuant to which Buyer and Guarantor agree to (i) indemnify Federal with respect to the
performance and completion of the bonded obligations as set forth therein; and (ii) replace within
ninety (90) days the bonds identified as Cancelable Bonds therein. If, after the Closing, the
amount of Bonded Obligations is increased due to the issuance of a rider, supplement or amendment
to an existing bond, then Buyer will pay Parent $15 per $1,000 of increase to reimburse Parent for
the additional premium it will incur plus handling charges. Buyer further agrees to continue to
provide to Federal monthly written reports (with a copy to the Parent) as to the progress of the
completion of the bonded jobs. Buyer and Guarantor further agree to provide, from time to time and
at the request of the Parent, a certificate or certificates certifying that the Cancelable Bonds
have been replaced, and as to such other matters concerning the performance by the Buyer of its
post-closing obligations under this Agreement as Parent shall request.

      4.8 Retained Claims. The Company shall retain liability for certain insured claims as
set forth in Schedule 1.5, paragraph 5 (the “Retained Claims”). The Buyer and the Guarantor
agree to cooperate with the Company and the Parent in the defense of the Retained Claims and to
make available the Buyer’s personnel and facilities for that purpose. The Company shall retain as
Excluded Assets and not transfer to the Buyer all books and records associated with the Retained
Claims, as well as any reserves established on the books of the Company for the Retained Claims,
which reserves shall be paid in cash by the Buyer to the Company at Closing.

5. INDEMNIFICATION.

      5.1 Survival. The representations and warranties of the Company, the Parent, the
Buyer and the Guarantor contained in this Agreement, any schedules delivered by or on behalf of the
Company and the Buyer pursuant to this Agreement, or in any certificate, instrument, agreement or
other writing delivered by or on behalf of the Company, the Parent, the Buyer or the Guarantor
pursuant to this Agreement shall survive the consummation of the transactions contemplated herein;
provided that all such representations and warranties of the Company and the Parent shall be of no

7

 

further force and effect, and no claim for indemnification by the Buyer pursuant to this
Section 5 may be brought for any reason, after the expiration of twenty-four (24) months
from the Closing Date (the “Survival Period”), except for the representations and warranties
contained in Section 3.1(c), which shall survive indefinitely. Anything to the contrary
notwithstanding, a claim for indemnification which is made but not resolved prior to the expiration
of the Survival Period may be pursued and resolved after such expiration.

      5.2 Indemnification by the Company.

      (a) In accordance with and subject to the provisions of this Section 5, the
Company and the Parent shall indemnify and hold harmless the Buyer from and against and in
respect of any and all loss, damage, diminution in value, liability, cost and expense,
including reasonable attorneys’ fees and amounts paid in settlement (collectively, the
“Buyer Indemnified Losses”), suffered or incurred by the Buyer by reason of, or arising out
of (i) any misrepresentation or breach of representation or warranty of the Company or the
Parent contained in this Agreement, or in any schedules delivered to the Buyer by or on
behalf of the Company or the Parent pursuant to this Agreement; (ii) the breach of any
covenant or agreement of the Company or the Parent contained in this Agreement; or (iii) the
Retained Liabilities.

      (b) The Company and the Parent shall reimburse the Buyer on demand for any Buyer
Indemnified Losses suffered by the Buyer with respect to matters other than claims, actions
or demands brought, made or instituted by a third party (“Third Party Claims”). With
respect to Third Party Claims, the Company and the Parent shall reimburse the Buyer on
demand for any Buyer Indemnified Losses suffered by the Buyer, based on the judgment of any
court of competent jurisdiction or pursuant to a bona fide compromise or settlement in
respect of any Buyer Indemnified Losses. The Company and the Parent shall have the
opportunity to defend at their expense any claim, action or demand for which the Buyer
claims indemnity against the Company or the Parent; provided that: (i) the defense is
conducted by reputable counsel; (ii) the defense is expressly assumed in writing within
twenty (20) days after written notice of the claim, action or demand is delivered to the
Company and the Parent; and (iii) counsel for the Buyer may participate at all times and in
all proceedings (formal and informal) relating to the defense, compromise and settlement of
the claim, action or demand at the expense of the Buyer.

      5.3 Indemnification by the Buyer.

      (a) In accordance with and subject to the provisions of this Section 5, the
Buyer and Guarantor shall, jointly and severally, indemnify and hold harmless the Company,
the Parent and their respective affiliates (for purposes of this Section 5, the
“Company Indemnitees”) from and against and in respect of any and all loss, damage,
diminution in value, liability, cost and expense, including reasonable attorneys’ fees and
amounts paid in settlement (collectively, the “Company Indemnified Losses”), suffered or
incurred by the Company Indemnitees by reason of, or arising out of (i) any
misrepresentation or breach of representation or warranty of the Buyer or Guarantor
contained in this Agreement, or in any schedules delivered to the Company or the Parent by
or on behalf of the Buyer or Guarantor pursuant to this Agreement; (ii) or the breach of any
covenant or agreement of the Buyer or

8

 

Guarantor contained in this Agreement; (iii) the Assumed Liabilities, including,
without limitation, any liability to sureties with respect to bonded jobs; or (iv) the
operation of the Business following the Closing, including, but not limited to, any claims
made by Transferred Employees concerning COBRA, the WARN Act, unemployment claim liability,
or any similar matters as a result of the termination by Buyer of the Transferred Employees.

      (b) The Buyer and the Guarantor, jointly and severally (the “Buyer Indemnifying
Parties”), shall reimburse the Company Indemnitees on demand for any Company Indemnified
Losses suffered by the Company Indemnitees with respect to matters other than Third Party
Claims. With respect to Third Party Claims, the Buyer Indemnifying Parties shall reimburse
the Company Indemnitees on demand for any Company Indemnified Losses suffered by the Company
Indemnitees, based on the judgment of any court of competent jurisdiction or pursuant to a
bona fide compromise or settlement in respect of any Company Indemnified Losses. The Buyer
Indemnifying Parties shall have the opportunity to defend at their expense any claim, action
or demand for which the Company Indemnitees claim indemnity against the Buyer Indemnifying
Parties; provided that: (i) the defense is conducted by reputable counsel; (ii) the defense
is expressly assumed in writing within twenty (20) days after written notice of the claim,
action or demand is delivered to the Buyer Indemnifying Parties; and (iii) counsel for the
Company and the Parent may participate at all times and in all proceedings (formal and
informal) relating to the defense, compromise and settlement of the claim, action or demand
at the expense of the Company and the Parent.

      5.4 Limitation and Payment on Claims. No claim shall be brought under this
Section 5 for breach of any representation or warranty, and no party hereto shall be
entitled to receive any payment with respect thereto, until such time as, and only to the extent
that, the aggregate amount of such claim(s) that such party has equals or exceeds $100,000 (the
“Deductible”); provided, however, that the Deductible shall not apply to any obligations under
Section 2.3. Anything to the contrary notwithstanding, the Company and the Parent shall
not be liable under this Section 5 for Buyer Indemnified Losses in excess of the Purchase
Price.

      5.5 Sole Remedy. The sole remedy of the Company, the Parent and the Buyer
Indemnifying Parties for breach of the representations and warranties set forth in Section
3 shall be pursuant to this Section 5.

6. DISPUTE RESOLUTION.

      6.1 Arbitration.

      (a) Any controversy, dispute or claim arising out of or relating in any way to this
Agreement or the other agreements contemplated by this Agreement or the transactions arising
hereunder (including the validity, interpretation or applicability of this Section
6.1) shall be settled exclusively by final and binding arbitration in Houston, Texas.
Such arbitration will apply the laws of the State of Texas and the commercial arbitration
rules of AAA to resolve the dispute, and will be administered by the AAA.

9

 

      (b) Written notice of arbitration must be given within one year after the notifying
party has knowledge of accrual of the claim on which the notice is based. If the claiming
party fails to give notice of arbitration within that time, the claim shall be deemed to be
waived and shall be barred from either arbitration or litigation.

      (c) Such arbitration shall be conducted by one independent and impartial arbitrator to
be selected by mutual agreement of the parties, if possible. If the parties fail to reach
agreement regarding appointment of an arbitrator within thirty (30) days following receipt
by one party of the other party’s notice of arbitration, the arbitrator shall be selected
from a list or lists of proposed arbitrators submitted by AAA. Unless the parties agree
otherwise, the arbitrator shall be a licensed attorney with at least ten years of experience
in the practice of law. The selection process shall be that which is set forth in the AAA
commercial arbitration rules then prevailing, except that (A) the number of preemptory
strikes shall not be limited and (B), if the parties fail to select an arbitrator from one
or more lists, AAA shall not initially have the power to make an appointment but shall
continue to submit additional lists until an arbitrator has been selected, but if no such
arbitrator is selected within sixty (60) days after the receipt of the first notice of
arbitration, the AAA shall have the power to make an appointment and shall promptly do so.
Initially, however, promptly following its receipt of a request to submit a list of proposed
arbitrators, AAA shall convene the parties in person or by telephone and attempt to
facilitate their selection of an arbitrator by agreement. If the arbitrator should die,
withdraw or otherwise become incapable of serving, a replacement shall be selected and
appointed in a like manner.

      (d) The arbitrator shall render an opinion setting forth findings of fact and
conclusions of law with the reasons therefor stated. A transcript of the evidence adduced
at the hearing shall be made and shall, upon request, be made available to either party.
The fees and expenses of the arbitrator shall be shared equally by the parties and advanced
by them from time to time as required; provided that at the conclusion of the arbitration,
the arbitrator may award costs and expenses (including the costs of the arbitration
previously advanced and the fees and expenses of attorneys, accountants and other experts).
No pre-arbitration discovery shall be permitted, except that the arbitrator shall have the
power in his or her sole discretion, on application by either party, to order
pre-arbitration examination of the witnesses and documents that the other party intends to
introduce in its case-in-chief at the arbitration hearing. The arbitrator shall render his
or her opinion and/or award within ninety (90) days of the conclusion of the arbitration
hearing. The arbitrator shall not be empowered to award to either party any punitive
damages in connection with any dispute between them arising out of or relating in any way to
this Agreement or the other agreements contemplated hereby or the transactions arising
hereunder or thereunder, and each party hereby irrevocably waives any right to recover such
damages. The arbitration hearings and award shall be maintained in confidence.

Notwithstanding anything to the contrary provided in this Section 6.1 and without prejudice
to the above procedures, either party may apply to any court of competent jurisdiction for
temporary injunctive or other provisional judicial relief if such action is necessary to avoid
irreparable damage or to preserve the status quo until such time as the arbitrator is selected and
available to hear such party’s request for temporary relief. The award rendered by the arbitrator
shall be final and not subject to judicial review and judgment thereon may be entered in any court
of competent jurisdiction.

10

 

7. EMPLOYEE MATTERS.

      7.1 Hiring.

      (a) The Buyer shall hire (subject to each employee’s agreement), effective as of the
Closing Date, all of the employees of the Company on the day immediately prior to the
Closing Date, active or inactive (such employees being hereafter referred to as the
“Transferred Employees”) at a comparable job and at a rate of pay not less than each such
Transferred Employee’s pay as of the Closing Date. Upon request of the Buyer, the Company
shall provide the Buyer reasonable access to data (including computer data) regarding the
ages, dates of hire, compensation and job description of the Transferred Employees.

      (b) The Buyer shall assume and be responsible for any severance costs associated with
the termination of the Transferred Employees’ employment with the Company. The Buyer shall
discharge all liabilities and claims based on occurrences or conditions first occurring or
commencing on or after the Closing Date with respect to Transferred Employees arising out of
their employment with the Buyer after the Closing Date, including, but not limited to, any
claims arising out of any employee benefit plan, policy, program or arrangement maintained
at any time by the Buyer (a “Buyer Plan” or collectively, the “Buyer Plans”), except Buyer
shall not assume any liabilities with respect to the WARN Act or COBRA benefits for any
terminations occurring prior to the Closing Date (unless provided otherwise by law or
pursuant to applicable regulations) nor shall the Company or the Parent be liable under the
WARN Act, COBRA, or state unemployment claims law for any Transferred Employee terminated by
Buyer after the Closing.

      (c) At Closing, the Buyer shall establish and make available a group medical plan for
the Transferred Employees and their dependents that is substantially similar to the group
medical plan available to the Transferred Employees immediately prior to Closing. The Buyer
shall credit the Transferred Employees with all service of the Transferred Employees
recognized under the employee benefit plans, policies, programs, or arrangements maintained
by the Parent or the Company (the “Parent Plans”) as service with the Buyer for purposes of
eligibility to participate, vesting and levels of benefits available, under all Buyer Plans.
The Buyer shall waive any coverage waiting period, pre-existing condition and
actively-at-work requirements under the Buyer Plans for the Transferred Employees and shall
provide that any expenses incurred before the Closing Date by a Transferred Employee (and
his or her dependents) during the calendar year of the Closing shall be taken into account
for purposes of satisfying the applicable deductible, coinsurance and maximum out-of-pocket
provisions, and applicable annual and/or lifetime maximum benefit limitations of the Buyer
Plans. The Buyer Plans shall not require contributions by Transferred Employees at a rate
that exceeds the rate in effect for other similarly situated employees of the Buyer. Any
reports or other information provided to Buyer by the Company or the Parent in connection
with Buyer performing his obligations under this Section 7.1(c) shall be at the sole
expense of the Buyer.

11

 

      7.2 Benefits. Except as provided in Section 7.1(b), the Buyer shall be
responsible for the payment of all amounts of wages, bonuses and other remuneration (including
discretionary benefits and bonuses) payable to the Transferred Employees of the Company accrued
with respect to periods on or prior to the Closing (except for any employment taxes actually
withheld by the Company) together with amounts payable to such employees in connection with events
occurring on or prior to the Closing. In addition, the Buyer shall be responsible for:

      (a) all vacation pay and pay for other compensated absences earned or accrued by the
Transferred Employees as of the close of business on the Closing Date to the appropriate
employee, including any related payroll burden (FICA and other pension or other employee
benefit plan contributions and employment taxes) with respect thereto to the appropriate
Governmental Entity or other person, to the extent such pay has been accrued on the books of
the Company at such close of business, based upon the remuneration of such employees
normally used in computing such pay for other compensated absences; and

      (b) amounts accrued under the Integrated Electrical Services, Inc. 401(k) Retirement
Savings Plan (the “Parent 401(k) Plan”) for the Transferred Employees as of the Closing Date
but not yet transferred to the trustee of the Parent 401(k) Plan, including without
limitation, the accrued match, accrued payroll deductions representing elective deferrals,
loan repayments and accrued profit sharing contribution, if any.

      7.3 Parent 401(k) Plan. The Company, the Parent and the Buyer agree that, as soon as
practicable after Closing, but in any event within 90 days of the Closing Date, the account
balances in the Parent 401(k) Plan of the Transferred Employees shall be transferred to a qualified
401(k) retirement savings plan established by the Buyer (the “Buyer’s 401(k) Plan”) in accordance
with Section 414(l) of the Internal Revenue Code of 1986, as amended (the “Code”), and the
regulations promulgated thereunder. In connection with such transfer, the following provisions
shall apply:

      (a) The account balances of the Transferred Employees transferred to the Buyer’s 401(k)
Plan shall be subject to the provisions of the Buyer’s 401(k) Plan effective as of the date
of transfer; provided, however that the Buyer’s 401(k) Plan shall continue any benefits
under the Parent 401(k) Plan as required under Section 411(d)(6) of the Code; and

      (b) The outstanding loan of any Transferred Employee shall not be in default as a
result of the Transferred Employee’s termination of employment with the Parent or the
Company, but such loan shall be transferred to the Buyer’s 401(k) Plan in accordance with
(a) above.

The Buyer shall provide acceptable evidence to the Parent that the Buyer’s 401(k) Plan meets the
requirements of Section 401(a) of the Code prior to the date of such transfer. The Buyer, the
Parent and the Company agree to take whatever action, including but not limited to plan amendments
and resolutions, to effectuate the transfer of the Transferred Employee’s account balances
according to this section from the Parent 401(k) Plan to the Buyer’s 401(k) Plan.

Notwithstanding the foregoing, nothing in this Section 7 shall be deemed or construed to
give rise to any rights, claims, benefits, or causes of action to any Transferred Employee or third
party whatsoever (including any Governmental Entity).

12

 

8. MISCELLANEOUS.

      8.1 Notices. All notices and communications required or permitted hereunder shall be
in writing and may be given by (a) depositing the same in the United States mail, addressed to the
party to be notified, postage prepaid and registered or certified with return receipt requested,
(b) by delivering the same in person to an officer or agent of such party, or (c) overnight
delivery service. Such notice shall be deemed received on the date (i) on which it is actually
received if sent by overnight delivery service or hand delivery, or (ii) on the third business day
following the date on which it is mailed. For purposes of notice, the addresses of the parties
hereto shall be:

If to the Parent or the Company:

Integrated Electrical Services, Inc.

1800 West Loop South, Suite 500

Houston, Texas 77027

Attention: Chief Financial Officer

With a copy to:

Integrated Electrical Services, Inc.

1800 West Loop South, Suite 500

Houston, Texas 77027

Attention: Chief Legal Officer

If to the Buyer or Guarantor:

535 Fifth Avenue

East McKeesport, PA 15035

Attention: James J. Canova

With a copy to:

J. Michael Ewing, Esq.

Hergenroeder Rega and Sommer, L.L.C.

Centre City Tower, Suite 1700

650 Smithfield Street

Pittsburgh, PA 15222

or such other address as any party hereto shall specify pursuant to this Section 8.1 from
time to time.

      8.2 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, and all of which together shall constitute one and the same
instrument.

      8.3 Governing Law. The validity and effect of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas, without regard to its
conflicts of laws rules.

13

 

      8.4 Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective permitted heirs, successors and assigns.
Neither the Company, the Parent, the Buyer nor the Guarantor may assign, delegate or otherwise
transfer any of their rights or obligations under this Agreement without the written consent by
each other party hereto.

      8.5 Partial Invalidity and Severability. All rights and restrictions contained herein
may be exercised and shall be applicable and binding only to the extent that they do not violate
any applicable laws and are intended to be limited to the extent necessary to render this Agreement
legal, valid and enforceable. If any term of this Agreement, or part thereof, not essential to the
commercial purpose of this Agreement shall be held to be illegal, invalid or unenforceable by a
forum of competent jurisdiction, it is the intention of the parties that the remaining terms
hereof, or part thereof, shall constitute their agreement with respect to the subject matter
hereof, and all such remaining terms, or parts thereof, shall remain in full force and effect. To
the extent legally permissible, any illegal, invalid or unenforceable provision of this Agreement
shall be replaced by a valid provision which will implement the commercial purpose of the illegal,
invalid or unenforceable provision.

      8.6 Waiver. Any term or condition of this Agreement may be waived at any time by the
party which is entitled to the benefit thereof, but only if such waiver is evidenced by a writing
signed by such party. No failure on the part of any party hereto to exercise, and no delay in
exercising, any right, power or remedy created hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or remedy by either party preclude any
other or further exercise thereof or the exercise of any other right, power or remedy. No waiver
by either party hereto of any breach of or default in any term or condition of this Agreement shall
constitute a waiver of or assent to any succeeding breach of or default in the same or any other
term or condition hereof.

      8.7 Headings. The headings of particular provisions of this Agreement are inserted
for convenience only and shall not be construed as a part of this Agreement or serve as a
limitation or expansion on the scope of any term or provision of this Agreement.

      8.8 Entire Agreement; Amendments. This Agreement supersedes all prior discussions and
agreements between the parties with respect to the subject matter hereof (including without
limitation any letters of intent executed by the parties), and this Agreement contains the sole and
entire agreement between the parties with respect to the matters covered hereby. This Agreement
shall not be altered or amended except by an instrument in writing signed by or on behalf of the
party against whom enforcement is sought.

      8.9 Disclosure of Agreement Terms. Neither Buyer nor the Guarantor shall disclose the
terms and conditions of this Agreement to any person or entity without the prior written consent of
an executive officer of the Parent or as required by applicable law or an order from a court or
administrative body of competent jurisdiction (but only to the extent so required and only after
giving reasonable prior notice to the Company and the Parent and cooperating with the Company and
the Parent in any efforts to legally oppose such disclosure). The foregoing notwithstanding, the
Buyer and the Guarantor shall be permitted to make such disclosures to their accountants, lawyers,

14

 

financial institutions, lending sources, senior employees and related parties as may be
appropriate, provided that such parties are bound by the foregoing nondisclosure provisions.

      8.10 Number and Gender. Where the context requires, the use of the singular form
herein shall include the plural, the use of the plural shall include the singular, and the use of
any gender shall include any and all genders.

[Remainder of page intentionally left blank]

15

 

      IN WITNESS WHEREOF, this Agreement has been executed effective as of the date set forth above.

	 	 	 	 	 
	 	PARENT:

INTEGRATED ELECTRICAL SERVICES, INC.

 	 
	 	By:  	/s/ David A. Miller 	 
	 	Name:  	David A. Miller 	 
	 	Title:  	Senior Vice President 	 
	 

	 	 	 	 	 
	 	COMPANY:

CANOVA ELECTRICAL CONTRACTING, INC.

 	 
	 	By:  	/s/ Herbert R. Allen
 	 
	 	Name:  	Herbert R. Allen 	 
	 	Title:  	Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	BUYER:

IES ACQUISITION CO., INC.

 	 
	 	By:  	/s/ James J. Canova
 	 
	 	 	James J. Canova, President 	 
	 

	 	 	 	 	 
	 	GUARANTOR:

 	 
	 	/s/ James Canova
 	 
	 	JAMES CANOVA 	 
	 	 	 
	 

16

 

EXHIBIT A

BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT

      This BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT (“Bill of Sale”) is entered into as of
the 15th day of April 2005, by and among INTEGRATED ELECTRICAL SERVICES, INC., a
Delaware corporation (the “Parent”), CANOVA ELECTRICAL CONTRACTING, INC., a Delaware corporation
(the “Company”) and IES ACQUISITION CO., INC., a Pennsylvania corporation (the “Buyer”).

RECITALS

      WHEREAS, pursuant to the terms of that certain Asset Purchase Agreement (the “Purchase
Agreement”) dated as of even date herewith by and among the Buyer, the Parent, the Company, and
James J. Canova, individual, the Company and the Parent agreed to convey the Assets to the Buyer
and the Buyer agreed to assume the Assumed Liabilities. In order to evidence such conveyance and
assumption, the parties desire to enter into this Bill of Sale.

      WHEREAS, all capitalized terms used herein but not defined herein shall have the meanings
ascribed to them in the Purchase Agreement.

ASSIGNMENT

      NOW, THEREFORE, for and in consideration of the mutual covenants, agreements, and benefits
contained herein, the sum of TEN DOLLARS ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the Parent do hereby
BARGAIN, GRANT, SELL, CONVEY, TRANSFER, DELIVER and ASSIGN unto Buyer all the Assets.

      The Assets are hereby conveyed free and clear of all encumbrances other than the Permitted
Encumbrances.

      TO HAVE AND TO HOLD the Assets unto the Buyer and its successors and assigns forever; and the
Company and the Parent do hereby bind themselves and their successors and assigns to WARRANT AND
FOREVER DEFEND title to the Assets in accordance with the terms and provisions of the Purchase
Agreement.

      The Buyer, upon execution below, accepts this Bill of Sale, and to the extent provided for in
the Purchase Agreement, hereby assumes the Assumed Liabilities, but no others.

      This assignment shall be binding upon and shall inure to the benefit of the parties hereto and
their respective permitted successors and assigns.

 

 

      This Bill of Sale may be executed in any number of counterparts, and each counterpart shall
for all purposes be deemed to be an original.

      This Bill of Sale is subject to all terms and conditions contained in the Purchase Agreement
and nothing herein shall be deemed to alter, amend, or supersede the Purchase Agreement, the terms
of which shall in all respects be controlling.

[Remainder of page intentionally left blank]

2

 

      IN WITNESS WHEREOF, the parties hereto have executed this Bill of Sale effective as of the
date set forth above.

	 	 	 	 	 
	 	PARENT:

INTEGRATED ELECTRICAL SERVICES, INC.

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

	 	 	 	 	 
	 	COMPANY:

CANOVA ELECTRICAL CONTRACTING, INC.

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

	 	 	 	 	 
	 	BUYER:

IES ACQUISITION CO., INC.

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

3

 

EXHIBIT B

FORM OF GENERAL AGREEMENT OF INDEMNITY

 

CHUBB GROUP OF INSURANCE COMPANIES

	 	 	 
	

	 	15 Mountain View Road, P.O. Box 1615, Warren, New Jersey 07061-1615

GENERAL AGREEMENT OF INDEMNITY

     WHEREAS, the undersigned (hereinafter individually and collectively called “Indemnitor”)
desires FEDERAL INSURANCE COMPANY or any of its subsidiary or affiliated insurers (hereinafter
called “Company”) to execute bonds including undertakings and other like obligations (hereinafter
referred to as bond or bonds) on its behalf and also desires the execution of bonds on behalf of
individuals, partnerships, corporations, limited liability companies or any other similarly
unincorporated associations of members (hereinafter called “Affiliates”).

     WHEREAS, from time to time the Indemnitor may be a participant in joint ventures with others,
and bonds will be required on behalf of the Indemnitor along with the other participants in such
joint ventures.

     WHEREAS, Indemnitor is the successor-in-interest to CANOVA ELECTRICAL CONTRACTING, INC., a
Delaware corporation (along with any other affiliate or related entity whose assets have been or
will be assigned to Indemnitor hereinafter individually and collectively called “Seller”) as the
assignee of all bonded contract obligations, which Indemnitor has expressly assumed without
reservation.

     NOW, THEREFORE, in consideration of the Company executing said bond or bonds, and the
undersigned Indemnitor hereby requests the execution thereof, and in consideration of the consent
of Company to the assignment and assumption of the bonded obligations formerly undertaken by the
Seller, as well as the sum of One Dollar paid to the Indemnitor by said Company, the receipt
whereof is hereby acknowledged, the Indemnitor, being benefited by the execution and delivery of
said bond or bonds, including, without limitation all Bonds previously issued prior to the date of
this Agreement for the Seller, the bonded obligations of which have been expressly assumed without
reservation by Indemnitor(s) and as to which Indemnitor(s) have agreed, and do hereby agree, to
assume full responsibility for work in place as well as the prompt and proper performance and
completion of all such bonded obligations, including, without limitation those bonded obligations
listed on Exhibit A attached hereto, hereby agrees that it will at all times jointly and severally
indemnify and save harmless said Company from and against any and all loss, cost, damage or
expense, including court costs and attorneys’ fees, which it shall at any time incur by reason of
its execution and/or delivery of said bond or bonds or its payment of any claim or liability
thereunder and will place the said Company in funds to meet all its liability under said bond or
bonds promptly on request and before it may be required to make any payment thereunder and that the
voucher or other evidence of payment by said Company of any such loss, cost, damage, expense,
claim, or liability shall be prima facie evidence of the fact and amount of the Indemnitor’s
liability to said Company under this Agreement.

     IT IS UNDERSTOOD AND AGREED that with respect to any bonds on behalf of the Indemnitor
participating in a joint venture that if specific application is filed with the Company for such
bonds the liability of the Indemnitor to the Company with respect to such joint venture bonds shall
be limited to the amount expressly set forth in said application.

     IT IS UNDERSTOOD AND AGREED that all of the terms, provisions, and conditions of this
Agreement shall be extended to and for the benefit not only of the Company either as a direct
writing company or as a co-surety or reinsurer but also for the benefit of any surety or insurance
company or companies with which the Company may participate as a co-surety or reinsurer and also
for the benefit of any other company which may execute any bond or bonds at the request of the
Company on behalf of the Indemnitor.

     IT IS UNDERSTOOD AND AGREED that this Agreement is in addition to all other rights and
agreements which Company may have or be a party to in connection with Bonds previously issued for
the benefit of Seller and that the assumption of responsibility therefor by Indemnitors as herein
provided shall not constitute a waiver or release by Company of any rights Company may have to seek
and recover indemnity from third parties having liability in connection with the issuance of such
Bonds including, but not limited to, the obligations and liabilities of Integrated Electrical
Services, Inc., Canova Electrical Contracting, Inc., or their affiliates.

     IT IS UNDERSTOOD AND AGREED that, notwithstanding anything herein to the contrary,
Indemnitor’s agreements, covenants, and all obligations under this General Agreement of Indemnity
is limited to (1) the obligations assumed by Indemnitor under the Asset Purchase Agreement
(“APA”), which obligations include, without limitation, all warranty, latent defect, payment bond
and other obligations relating to the bonds listed on Exhibit A (the “Assumed Obligations”) by and
among Integrated Electrical Services, Inc. (“IES”), Canova Electrical Contracting, Inc., IES
Acquisition Co., Inc., and James J. Canova, and (2) Company’s obligations under the bonds listed on
Exhibit A attached hereto. Furthermore, Indemnitor has acknowledged and agreed that Indemnitor’s
obligation to perform or otherwise discharge the Assumed Obligations is secured by certain assets
acquired by Indemnitor under the APA (the “Collateral”), said Collateral acquired subject to that
certain Underwriting, Continuing Indemnity, and Security Agreement dated as of January 14, 2005,
executed by and among Company, IES, and certain IES affiliates, including Canova Electrical
Contracting, Inc.

     IT IS FURTHER UNDERSTOOD AND AGREED that the Indemnitor, its heirs, successors and assigns are
jointly and severally bound by the foregoing conditions of this Agreement.

 

 

     IN WITNESS WHEREOF the Indemnitor has signed this instrument this, the ___day of
___, 2005.

	 	 	 
	WITNESS:

	 	IES ACQUISITION CO., INC., a Pennsylvania corporation
	 
	 	 
	                                                            

	 	By:                                                             
	 
	 	 
	

	 	Its:                                                             
	 
	 	 
	WITNESS:

	 	JAMES J. CANOVA
	 
	 	 
	                                                            

	 	                                                                                

CORPORATE ACKNOWLEDGMENT

STATE OF                                         

COUNTY OF                                         

     On this ___day of ___, 2005, before me personally came
___to me known, who, being by me duly sworn, did depose and say that he resides
in the State of ___; and that he is the ___of IES ACQUISITION CO.,
INC., a Pennsylvania corporation, the corporation described in and which executed the foregoing
instrument; that he knows the corporate seal of said Corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order and authority of the Board of
Directors of said Corporation; and that he signed his name thereto by like order and authority.

	 	 	 
	(SEAL)

	 	                                                                                

NOTARY PUBLIC

My commission expires:

                                                                                

INDIVIDUAL ACKNOWLEDGMENT

STATE OF                                         

COUNTY OF                                         

     On this ___day of ___, 2005, before me personally came JAMES J.
CANOVA, to me known, who, being by me duly sworn, did depose and say that he resides in the State
of North Carolina; and that he executed the foregoing instrument for the purposes therein
contained.

	 	 	 
	(SEAL)

	 	                                                                                

NOTARY PUBLIC

My commission expires:exv10w1

 

EXHIBIT 10.1

EXECUTION COPY

CREDIT AGREEMENT

between

GOODRICH PETROLEUM COMPANY, L.L.C.

Borrower

BNP PARIBAS

Agent

and

CERTAIN LENDERS

November 9, 2001,

as Amended and Restated on February 25, 2005

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 ARTICLE I	 	 	 	 
	 
	 	DEFINITIONS AND TERMS	 	 	 	 
	Section 1.1
	 	Definitions	 	 	1	 
	Section 1.2
	 	Classes and Types of Borrowings	 	 	15	 
	Section 1.3
	 	Time References	 	 	15	 
	Section 1.4
	 	Other References	 	 	15	 
	Section 1.5
	 	Accounting Principles	 	 	16	 
	 
	 	 	 	 	 	 
	 
	 	 ARTICLE II	 	 	 	 
	 
	 	COMMITMENT	 	 	 	 
	 
	 	 	 	 	 	 
	Section 2.1
	 	Revolving Facility	 	 	16	 
	Section 2.2
	 	Term Facility	 	 	16	 
	Section 2.3
	 	Borrowing Procedure	 	 	17	 
	Section 2.4
	 	Letters of Credit	 	 	18	 
	Section 2.5
	 	Borrowing Notices and LC Requests	 	 	21	 
	Section 2.6
	 	Termination	 	 	21	 
	Section 2.7
	 	Borrowing Base and Total PV Determinations	 	 	22	 
	 
	 	 	 	 	 	 
	 
	 	 ARTICLE III	 	 	 	 
	 
	 	TERMS OF PAYMENT	 	 	 	 
	 
	 	 	 	 	 	 
	Section 3.1
	 	Notes and Payments	 	 	23	 
	Section 3.2
	 	Interest and Principal Payments	 	 	24	 
	Section 3.3
	 	Interest Options	 	 	24	 
	Section 3.4
	 	Quotation of Rates	 	 	25	 
	Section 3.5
	 	Default Rate	 	 	25	 
	Section 3.6
	 	Interest Recapture	 	 	25	 
	Section 3.7
	 	Interest Calculations	 	 	25	 
	Section 3.8
	 	Maximum Rate	 	 	25	 
	Section 3.9
	 	Interest Periods	 	 	26	 
	Section 3.10
	 	Conversions	 	 	26	 
	Section 3.11
	 	Order of Application	 	 	26	 
	Section 3.12
	 	Sharing of Payments, Etc.	 	 	27	 
	Section 3.13
	 	Offset	 	 	27	 
	Section 3.14
	 	Booking Borrowings	 	 	27	 
	Section 3.15
	 	Basis Unavailable for LIBOR Rate	 	 	28	 
	Section 3.16
	 	Additional Costs	 	 	28	 
	Section 3.17
	 	Change in Laws	 	 	29	 
	Section 3.18
	 	Funding Loss	 	 	29	 
	Section 3.19
	 	Foreign Lenders, Participants, and Assignees	 	 	29	 

 i

 

	 	 	 	 	 	 	 
	 
	 	ARTICLE IV	 	Page
	 
	 	 FEES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 4.1
	 	Treatment of Fees	 	 	30	 
	Section 4.2
	 	Fees to Agent and Affiliates	 	 	30	 
	Section 4.3
	 	LC Fees	 	 	30	 
	Section 4.4
	 	Revolving Commitment Fee	 	 	30	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE V	 	 	 	 
	 
	 	  SECURITY	 	 	 	 
	 
	 	 	 	 	 	 
	Section 5.1
	 	Guaranty	 	 	31	 
	Section 5.2
	 	Collateral	 	 	31	 
	Section 5.3
	 	Collateral Account	 	 	31	 
	Section 5.4
	 	Further Assurances	 	 	32	 
	Section 5.5
	 	Release of Collateral	 	 	33	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE VI	 	 	 	 
	 
	 	CONDITIONS PRECEDENT	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE VII	 	 	 	 
	 
	 	REPRESENTATIONS AND WARRANTIES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 7.1
	 	Purpose and Regulation U	 	 	33	 
	Section 7.2
	 	Corporate Existence, Good Standing, and Authority	 	 	34	 
	Section 7.3
	 	Subsidiaries and Names	 	 	34	 
	Section 7.4
	 	Authorization and Contravention	 	 	34	 
	Section 7.5
	 	Binding Effect	 	 	35	 
	Section 7.6
	 	Financials and Existing Debt	 	 	35	 
	Section 7.7
	 	[Reserved]	 	 	35	 
	Section 7.8
	 	Solvency	 	 	35	 
	Section 7.9
	 	Litigation	 	 	35	 
	Section 7.10
	 	Taxes	 	 	35	 
	Section 7.11
	 	Environmental Matters	 	 	35	 
	Section 7.12
	 	Employee Plans	 	 	36	 
	Section 7.13
	 	Properties; Liens	 	 	36	 
	Section 7.14
	 	Government Regulations	 	 	37	 
	Section 7.15
	 	Transactions with Affiliates	 	 	37	 
	Section 7.16
	 	Debt	 	 	37	 
	Section 7.17
	 	Leases	 	 	37	 
	Section 7.18
	 	Labor Matters	 	 	38	 
	Section 7.19
	 	Intellectual Property	 	 	38	 
	Section 7.20
	 	Full Disclosure	 	 	38	 
	Section 7.21
	 	Estimated Oil and Gas Reserves	 	 	38	 
	Section 7.22
	 	Working Interest	 	 	38	 
	Section 7.23
	 	Net Revenue Interest	 	 	39	 
	Section 7.24
	 	Burdensome Contracts	 	 	39	 
	Section 7.25
	 	Regulatory Defects	 	 	39	 
	Section 7.26
	 	Agreements Affecting Mineral Interests	 	 	39	 
	Section 7.27
	 	Locations of Business, Offices	 	 	39	 

 ii

 

	 	 	 	 	 	 	 
	 
	 	  ARTICLE VIII	 	Page
	 
	 	 AFFIRMATIVE COVENANTS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 8.1
	 	Certain Items Furnished	 	 	40	 
	Section 8.2
	 	Use of Credit	 	 	42	 
	Section 8.3
	 	Books and Records	 	 	42	 
	Section 8.4
	 	Inspections	 	 	42	 
	Section 8.5
	 	Taxes	 	 	42	 
	Section 8.6
	 	Payment of Obligation	 	 	42	 
	Section 8.7
	 	Expenses	 	 	43	 
	Section 8.8
	 	Maintenance of Existence, Assets, and Business	 	 	43	 
	Section 8.9
	 	Insurance	 	 	43	 
	Section 8.10
	 	Environmental Matters	 	 	43	 
	Section 8.11
	 	Subsidiaries	 	 	44	 
	Section 8.12
	 	Indemnification	 	 	44	 
	Section 8.13
	 	Operations and Properties	 	 	45	 
	Section 8.14
	 	Leases	 	 	45	 
	Section 8.15
	 	Development and Maintenance	 	 	45	 
	Section 8.16
	 	Maintenance of Liens	 	 	45	 
	Section 8.17
	 	Farmout Agreement	 	 	45	 
	 
	 	 	 	 	 	 
	 
	 	 ARTICLE IX	 	 	 	 
	 
	 	 NEGATIVE COVENANTS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 9.1
	 	Payroll Taxes	 	 	46	 
	Section 9.2
	 	Debt	 	 	46	 
	Section 9.3
	 	Letters of Credit	 	 	46	 
	Section 9.4
	 	Liens	 	 	46	 
	Section 9.5
	 	Employee Plans	 	 	46	 
	Section 9.6
	 	Transactions with Affiliates	 	 	46	 
	Section 9.7
	 	Compliance with Laws and Documents	 	 	47	 
	Section 9.8
	 	Loans, Advances, and Investments	 	 	47	 
	Section 9.9
	 	Distributions	 	 	47	 
	Section 9.10
	 	Disposition of Assets	 	 	47	 
	Section 9.11
	 	Mergers, Consolidations, and Dissolutions	 	 	47	 
	Section 9.12
	 	Assignment	 	 	47	 
	Section 9.13
	 	Fiscal Year and Accounting Methods	 	 	48	 
	Section 9.14
	 	New Businesses	 	 	48	 
	Section 9.15
	 	Government Regulations	 	 	48	 
	Section 9.16
	 	Strict Compliance	 	 	48	 
	Section 9.17
	 	Alteration of Material Agreements	 	 	48	 
	Section 9.18
	 	Operating Agreements	 	 	48	 
	Section 9.19
	 	Burdensome Contracts	 	 	48	 
	Section 9.20
	 	Hedging	 	 	48	 
	 
	 	 	 	 	 	 
	 
	 	  ARTICLE X	 	 	 	 
	 
	 	 FINANCIAL COVENANTS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 10.1
	 	Current Ratio	 	 	49	 
	Section 10.2
	 	Interest Coverage	 	 	49	 

 iii

 

	 	 	 	 	 	 	 
	 
	 	 	 	Page
	Section 10.3
	 	Tangible-Net Worth	 	 	49	 
	Section 10.4
	 	Total PV to Total Debt Ratio	 	 	49	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE XI	 	 	 	 
	 
	 	 DEFAULT	 	 	 	 
	 
	 	 	 	 	 	 
	Section 11.1
	 	Payment of Obligation	 	 	49	 
	Section 11.2
	 	Covenants	 	 	50	 
	Section 11.3
	 	Debtor Relief	 	 	50	 
	Section 11.4
	 	Judgments and Attachments	 	 	50	 
	Section 11.5
	 	Government Action	 	 	50	 
	Section 11.6
	 	Misrepresentation	 	 	50	 
	Section 11.7
	 	Change of Control	 	 	50	 
	Section 11.8
	 	Other Funded Debt	 	 	50	 
	Section 11.9
	 	SEC Reporting Requirements	 	 	51	 
	Section 11.10
	 	Validity and Enforceability	 	 	51	 
	Section 11.11
	 	LCs	 	 	51	 
	 
	 	 	 	 	 	 
	 
	 	 ARTICLE XII	 	 	 	 
	 
	 	 RIGHTS AND REMEDIES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 12.1
	 	Remedies Upon Default	 	 	51	 
	Section 12.2
	 	Company Waivers	 	 	52	 
	Section 12.3
	 	Performance by Agent	 	 	52	 
	Section 12.4
	 	Not in Control	 	 	52	 
	Section 12.5
	 	Course of Dealing	 	 	52	 
	Section 12.6
	 	Cumulative Rights	 	 	53	 
	Section 12.7
	 	Application of Proceeds	 	 	53	 
	Section 12.8
	 	Certain Proceedings	 	 	53	 
	Section 12.9
	 	Expenditures by Lenders	 	 	53	 
	Section 12.10
	 	Diminution in Value of Collateral	 	 	53	 
	 
	 	 	 	 	 	 
	 
	 	 ARTICLE XIII	 	 	 	 
	 
	 	 AGENT AND LENDERS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 13.1
	 	Agent	 	 	53	 
	Section 13.2
	 	Expenses	 	 	55	 
	Section 13.3
	 	Proportionate Absorption of Losses	 	 	55	 
	Section 13.4
	 	Delegation of Duties; Reliance	 	 	55	 
	Section 13.5
	 	Limitation of Agent’s Liability	 	 	56	 
	Section 13.6
	 	Default	 	 	57	 
	Section 13.7
	 	Collateral Matters	 	 	57	 
	Section 13.8
	 	Limitation of Liability	 	 	57	 
	Section 13.9
	 	Relationship of Lenders	 	 	58	 
	Section 13.10
	 	Benefits of Agreement	 	 	58	 
	 
	 	 	 	 	 	 
	 
	 	  ARTICLE XIV	 	 	 	 
	 
	 	  MISCELLANEOUS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 14.1
	 	Nonbusiness Days	 	 	58	 
	Section 14.2
	 	Communications	 	 	58	 

 iv

 

	 	 	 	 	 	 	 
	 
	 	 	 	Page
	Section 14.3
	 	Form and Number of Documents	 	 	58	 
	Section 14.4
	 	Exceptions to Covenants	 	 	58	 
	Section 14.5
	 	Survival	 	 	58	 
	Section 14.6
	 	Governing Law	 	 	59	 
	Section 14.7
	 	Invalid Provisions	 	 	59	 
	Section 14.8
	 	Amendments, Consents, Conflicts, and Waivers	 	 	59	 
	Section 14.9
	 	Multiple Counterparts	 	 	60	 
	Section 14.10
	 	Parties	 	 	60	 
	Section 14.11
	 	VENUE, SERVICE OF PROCESS, AND JURY TRIAL	 	 	61	 
	Section 14.12
	 	ENTIRETY	 	 	62	 
	Section 14.13
	 	USA Patriot Act Notice	 	 	62	 

 SCHEDULES AND EXHIBITS 

	 	 	 	 	 
	Schedule 2
	 	–	 	Lenders and Commitments
	Schedule 6
	 	–	 	Closing Documents
	Schedule 7.3
	 	–	 	Companies and Names
	Schedule 7.9
	 	–	 	Litigation
	Schedule 7.11
	 	–	 	Environmental Matters
	Schedule 7.15
	 	–	 	Affiliate Transactions
	Schedule 9.2
	 	–	 	Permitted Debt
	Schedule 9.4
	 	–	 	Permitted Liens
	Schedule 9.8
	 	–	 	Permitted Loans, Advances, and Investments
	 
	Exhibit A-1
	 	–	 	Revolving Note
	Exhibit A-2
	 	–	 	Term Note
	Exhibit B
	 	–	 	Form of Production Report
	Exhibit C-1
	 	–	 	Borrowing Request
	Exhibit C-2
	 	–	 	Conversion Notice
	Exhibit C-3
	 	–	 	LC Request
	Exhibit C-4
	 	–	 	Compliance Certificate
	Exhibit D
	 	–	 	Opinion of Counsel  to Companies
	Exhibit E
	 	–	 	Assignment and Assumption Agreement

 v

 

CREDIT AGREEMENT

     THIS AGREEMENT dated as of November 9, 2001, as amended and restated on February 25, 2005, is
between GOODRICH PETROLEUM COMPANY, L.L.C., a Louisiana limited liability company
(“Borrower”), Lenders (defined below), and BNP PARIBAS, a foreign banking corporation
organized under the laws of the Republic of France, as agent for Lenders.

R E C I T A L S

     A. Borrower, Compass Bank, N.A., as agent (in such capacity, “Prior Agent”), for
itself and Bank One, Texas, National Association (the “Prior Lenders”), Goodrich Petroleum
Corporation and Goodrich Petroleum Company – Lafitte, L.L.C., entered into that certain Credit
Agreement dated January 31, 2001, (such Credit Agreement, as the same may have been heretofore
amended, is herein referred to as the “Prior Credit Agreement”).

     B. Pursuant to the Compass Assignment (hereinafter defined), Prior Agent and the Prior
Lenders, among other matters, assigned all indebtedness, obligations and liens under the Prior
Credit Agreement and the other Loan Documents (as defined in the Prior Credit Agreement) to Agent
and the Lenders.

     C. The Prior Credit Agreement was amended and restated on November 9, 2001, and was further
amended pursuant to the First Amendment to Credit Agreement dated as of March 8, 2002 and the
Second Amendment to Credit Agreement dated as of December 22, 2003 (the Prior Credit Agreement, as
so amended and restated and subsequently amended, the “Existing Credit Agreement”).

     D. Borrower, Lenders and Agent have agreed to amend and restate the Existing Credit Agreement
in its entirety as set forth below.

     ACCORDINGLY, for adequate and sufficient consideration, Borrower, Lenders, and Agent agree
that the Existing Credit Agreement is hereby amended and restated, in its entirety, as follows:

ARTICLE I

DEFINITIONS AND TERMS

     Section 1.1 Definitions. As used in the Loan Documents:

     “Additional Term Borrowing” is defined in Section 2.2(b).

     “Affiliate” of a Person means any other individual or entity who directly or
indirectly controls, is controlled by, or is under common control with that Person. For purposes
of this definition (a) “control,” “controlled by,” and “under common control with” mean possession,
directly or indirectly, of power to direct or cause the direction of management or policies
(whether through ownership of voting securities or other interests, by contract, or otherwise) and
(b) the Companies are “Affiliates” of each other.

1

 

     “Agent” means, at any time, BNP Paribas, a foreign banking corporation organized under
the laws of the Republic of France — or its successor appointed under Article XIII — acting as
“agent” for Lenders under the Loan Documents.

     “Applicable Margin” means, for any day, a margin of interest over the Base Rate or the
LIBOR Rate, as the case may be, that is applicable when the Base Rate or LIBOR Rate, as applicable,
is determined under this agreement.

     (a) For purposes of determining the Applicable Margin for Revolving Borrowings, the following
rules shall apply:

          (i) The Applicable Margin is subject to adjustment (upwards or downwards, as appropriate) on
any day without notice to Borrower or any other Person based on the ratio of the Revolving
Commitment Usage to the Borrowing Base, as stated in the table below.

          (ii) For purposes of the definition of “Applicable Margin”, the ratio of the Revolving
Commitment Usage to the Borrowing Base is determined as of each day by dividing the Revolving
Commitment Usage for such day by the Borrowing Base in effect on such day.

          (iii) If Borrower fails to timely furnish to Agent any Financials and related Compliance
Certificate as required by this agreement, then the maximum Applicable Margin shall apply from the
date those Financials and related Compliance Certificate are required to be delivered and remain in
effect until Borrower furnishes them to Agent.

     For all Revolving Borrowings:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	APPLICABLE	 	 	APPLICABLE	 
	 	 	 	 	MARGIN FOR	 	 	MARGIN FOR	 
	 	RATIO OF REVOLVING	 	 	BASE-RATE	 	 	LIBOR-RATE	 
	 	COMMITMENT USAGE TO	 	 	REVOLVING	 	 	REVOLVING	 
	 	THE BORROWING BASE	 	 	BORROWINGS	 	 	BORROWINGS	 
	 	less than or equal to 25%

	 	 	 	0.00	%	 	 	 	1.50	%	 
	 	greater than or equal to 25% but less than 50%

	 	 	 	0.00	%	 	 	 	1.75	%	 
	 	greater than or equal to 50% but less than 90%

	 	 	 	0.25	%	 	 	 	2.00	%	 
	 	greater than or equal to 90%

	 	 	 	0.50	%	 	 	 	2.50	%	 
	 

     (b) The Applicable Margin for Term Borrowings is 5.00%.

     “Applicable Percentage” means, for any day, a revolving commitment fee percentage
applicable under Section 4.4, equal to 0.375%.

     “Assignee” is defined in Section 14.10(c).

     “Assignments” is defined in Section 14.10(c).

2

 

     “Base Rate” means, for any day, the greater of either (a) the annual interest rate
most recently announced by BNP Paribas as its prime rate or base rate of interest (which may not
necessarily represent the lowest or best rate actually charged to any customer) in effect at its
principal office in New York, New York, automatically fluctuating upward and downward as specified
in each announcement without special notice to Borrower or any other Person or (b) the sum of the
Federal-Funds Rate plus 0.5%.

     “Base-Rate Borrowing” means a Borrowing bearing interest at the sum of the Base Rate
plus the Applicable Margin.

     “Borrower” is defined in the preamble to this agreement.

     “Borrowing” means any amount disbursed under the Loan Documents by one or more Lenders
to or on behalf of Borrower under the Loan Documents, either as an original disbursement of funds,
a renewal, extension, or continuation of an amount outstanding, or a payment under an LC.

     “Borrowing Base” shall mean the loan value of the Mineral Interests as Lenders
determine, in their sole discretion, from time to time pursuant to Section 2.7.

     “Borrowing-Base Deficiency” means any amount by which the limitation in Section 2.1(c)
is exceeded, whether because the Revolving Commitments have been fully or partially terminated or
canceled, the Borrowing Base has been reduced or for any other reason.

     “Borrowing Date” is defined in Section 2.3(a).

     “Borrowing Request” means a request, subject to Section 2.3(a) and (b), substantially
in the form of Exhibit C-1.

     “Business Day” means any day, other than a Saturday or Sunday or legal holiday, on
which (i) commercial banks generally are open for business in New York, New York and Houston, Texas
and (ii) in the case of LIBOR-Rate Borrowings, dealings in eurodollar deposits are generally
carried out in the London interbank eurodollar market.

     “Capital Lease” means any capital lease or sublease that is required by GAAP to be
capitalized on a balance sheet.

     “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. §§9601 et seq.

     “Change of Control” means the occurrence of any of the following events: (a) any
Person or two or more Persons, other than Goodrich or any Affiliate of Goodrich, acting as a group
shall acquire beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Exchange Act, and including holding proxies to vote for the election of
directors other than proxies held by Goodrich’s management or their designees to be voted in favor
of persons nominated by Goodrich’s Board of Directors) of fifty percent (50%) or more of the
outstanding voting securities of Goodrich, measured by voting power (including both ordinary shares
and any preferred stock or other equity securities entitling the holders thereof to

3

 

vote with the holders of common stock in elections for directors of Goodrich), (b) Goodrich
shall fail beneficially to own, directly or indirectly, 100% of the outstanding shares of voting
capital stock of any of the other Restricted Companies on a fully-diluted basis or (c) 50% or more
of the directors of Goodrich shall consist of Persons not nominated by Goodrich’s Board of
Directors (not including as Board nominees any directors which the Board is obligated to nominate
pursuant to shareholders agreements, voting trust arrangements or similar arrangements).

     “Class” is defined in Section 1.2.

     “Closing Date” means February 25, 2005.

     “Code” means the Internal Revenue Code of 1986.

     “Collateral” is defined in Section 5.2.

     “Collateral Documents” is defined in Section 5.2.

     “Commitment” shall mean, in respect of any Lender, the sum of its Revolving Credit
Commitment and its Term Commitment.

     “Commitment Percentage” means, for any Lender, the proportion (stated as a percentage)
that its Commitment bears to the total Commitments of all Lenders.

     “Commitment Usage” means, at any time and without duplication, the sum of (a) the
Revolving Principal Debt plus (b) the LC Exposure plus (c) the Term Principal Debt.

     “Companies” means, at any time, Goodrich and each of its Subsidiaries.

     “Compass Assignment” shall mean that certain Assignment of Notes, Documents and Liens
dated as of November 9, 2001, executed by Prior Agent and Prior Lenders, in favor of Agent, for the
benefit of the Lenders, as the same may be from time to time modified, amended or supplemented.

     “Compliance Certificate” means a certificate substantially in the form of Exhibit
D-4 and signed by a Responsible Officer.

     “Conversion Notice” means a request, subject to Section 3.10, substantially in the
form of Exhibit D-2.

     “Current Financials”, unless otherwise specified means either (i) the Companies’
consolidated Financials for the year ended December 31, 2003, together with the Companies’
Financials for the nine (9) months ended on September 30, 2004 or (ii) at any time after annual
Financials are first delivered under Section 8.1, the Companies’ annual Financials then most
recently delivered to Lenders under Section 8.1(a), together with the Companies’ quarterly
Financials then most recently delivered to Lenders under Section 8.1(b).

     “Debt” means — for any person, at any time, and without duplication — the sum of (a)
all obligations required by GAAP to be classified upon that Person’s balance sheet as liabilities,
(b)

4

 

liabilities secured (or for which the holder of such liabilities has an existing Right,
contingent or otherwise, to be so secured) by any Lien existing on property owned or acquired by
that Person, (c) obligations that have been (or under GAAP should be) capitalized for financial
reporting purposes, (d) all obligations under synthetic leases plus (e) all guaranties,
endorsements, and other contingent obligations for Debt of others.

     “Debtor Laws” means the Bankruptcy Code of the United States of America and all other
applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments, or similar Laws affecting creditors’ Rights.

     “Default” is defined in Article XI.

     “Default Rate” means, for any day, an annual interest rate equal from day to day to
the lesser of either (a) (i) with respect to any LIBOR-Rate Borrowing, the then existing
LIBOR-Rate, plus the Applicable Margin plus 2.00%, (ii) with respect to any Base-Rate
Borrowing, the then existing Base Rate plus the Applicable Margin, plus 2.00% and (iii)
with respect to any other portion of the Obligation, the then existing Base Rate plus 2.50% or (b)
the Maximum Rate.

     “Determining Lenders” means, at any time, any combination of Lenders holding (directly
or indirectly) at least either (a) 66 2/3% of the total Commitments while there is no Principal
Debt or LC Exposure or (b) 66 2/3% of the Principal Debt plus the LC Exposure while there is any
Principal Debt or LC Exposure.

     “Distribution” means, with respect to any shares of any capital stock or other equity
securities issued by a Person (a) the retirement, redemption, purchase, or other acquisition for
value of those securities, (b) the declaration or payment of any dividend on or with respect to
those securities, (c) any loan or advance by that Person to, or other investment by that Person in,
the holder of any of those securities and (d) any other payment by that Person with respect to
those securities.

     “EBITDAX” means for any Person, for any period, and without duplication — the sum of
(a) Net Income, minus extraordinary items, plus to the extent actually deducted in calculating Net
Income, Interest Expense and income Taxes plus (b) to the extent actually deducted in calculating
Net Income, depreciation, depletion, amortization and exploration expenses.

     “Employee Plan” means an employee-pension-benefit plan covered by Title IV of ERISA
and established or maintained by any Company.

     “Environmental Indemnity Agreement” means any agreement (including, without
limitation, insurance policies), in form and substance satisfactory to Agent, by which a Restricted
Company or Predecessor is entitled to receive reimbursement or other payment on account of any
Environmental Liability other than any agreements (a) in the nature of environmental consulting or
engineering agreements for professional services or (b) the terms of which preclude that Company or
Predecessor from asserting a claim for reimbursement or other payment on account of any
Environmental Liability.

5

 

     “Environmental Investigation” means any health, safety, or environmental site
assessment, investigation, study, review, audit, compliance audit, or compliance review conducted
at any time or from time to time — whether at the request of Agent or any Lender, upon the order
or request of any Tribunal, or at the voluntary instigation of any Company — concerning any Real
Property or the business operations or activities of any Company, including, without limitation (a)
air, soil, groundwater, or surface-water sampling and monitoring, (b) repair, cleanup, remediation,
or detoxification, (c) preparation and implementation of any closure, remedial, spill, emergency,
or other plans and (d) any health, safety, or environmental compliance audit or review.

     “Environmental Law” means any applicable Law that relates to (a) the condition of air,
ground or surface water, soil, or other environmental media, (b) the environment or natural
resources, (c) safety or health or (d) the regulation of any contaminants, wastes, and Hazardous
Substances, including, without limitation, CERCLA, OSHA, the Hazardous Materials Transportation Act
(49 U.S.C. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.),
the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. § 136 et seq.), the Emergency Planning and Community Right-to-Know Act
(42 U.S.C. § 11001 et seq.), the Safe Drinking Water Act (42 U.S.C. § 201 and § 300f et seq.), the
Rivers and Harbors Act (33 U.S.C. § 401 et seq.), the Oil Pollution Act (33 U.S.C. § 2701 et seq.),
analogous state and local Laws, and any analogous future enacted or adopted Law or (c) to the
Release or threatened Release of Hazardous Substances.

     “Environmental Liability” means any liability, loss, fine, penalty, charge, lien,
damage, cost, or expense of any kind that results directly or indirectly, in whole or in part (a)
from the violation of any Environmental Law, (b) from the Release or threatened Release of any
Hazardous Substance, (c) from removal, remediation, or other actions in response to the Release or
threatened Release of any Hazardous Substance, (d) from actual or threatened damages to natural
resources, (e) from the imposition of injunctive relief or other orders, (f) from personal injury,
death, or property damage which occurs as a result of any Company’s use, storage, handling, or the
Release or threatened Release of a Hazardous Substance or (g) from any Environmental Investigation
performed at, on, or for any Real Property (including without limitation, the Leases and the
Mineral Interests).

     “Environmental Permit” means any permit, license, or other authorization from any
Tribunal that is required under any Environmental Law for the lawful conduct of any business,
process, or other activity.

     “Environmental Report” means any written or verbal report memorializing any
Environmental Investigation.

     “ERISA” means the Employee Retirement Income Security Act of 1974.

     “Existing Preferred Stock” means the Goodrich Series A Preferred Stock currently
traded on the NASDAQ Small Cap market.

6

 

     “Farmout Agreement” means that certain letter agreement re: Bethany-Longstreet Field
Caddo and DeSoto Parishes Louisiana, dated June 10, 2003, among Faulconer Energy Corporation,
Faulconer Energy Limited Partnership, and the Borrower, as the same may from time to time be
amended, modified, supplemented or restated.

     “Federal-Funds Rate” means, for any day, the annual rate (rounded upwards, if
necessary, to the nearest 0.01%) determined (which determination is conclusive and binding, absent
manifest error) by Agent to be equal to (a) the weighted average of the rates on overnight
federal-funds transactions with member banks of the Federal Reserve System arranged by
federal-funds brokers on that day, as published by the Federal Reserve Bank of New York on the next
Business Day or (b) if those rates are not published for any day, the average of the quotations at
approximately 10:00 a.m. received by Agent from three federal-funds brokers of recognized standing
selected by Agent in its sole discretion.

     “Financials” of a Person means balance sheets, profit and loss statements,
reconciliations of capital and surplus, and statements of cash flow prepared (a) according to GAAP
(subject to year end audit adjustments with respect to interim Financials) and (b) except as stated
in Section 1.5, in comparative form to prior year-end figures or corresponding periods of the
preceding fiscal year or other relevant period, as applicable.

     “Funded Debt” means for any Person, at any time and without duplication — the sum of
(a) the balance of any obligation for borrowed money, plus (b) the total amount capitalized on the
balance sheet of that Person with respect to Capital Leases.

     “Funding Loss” means any loss, expense, or reduction in yield that any Lender
reasonably incurs because (a) Borrower fails or refuses (for any reason whatsoever other than a
default by Agent or that Lender claiming that loss, expense, or reduction in yield) to take any
LIBOR-Rate Borrowing that it has requested under this agreement or (b) Borrower prepays or pays any
LIBOR-Rate Borrowing or converts any LIBOR-Rate Borrowing to a Borrowing of another Type, in each
case, other than on the last day of the applicable Interest Period.

     “GAAP” means generally accepted accounting principles of the Accounting Principles
Board of the American Institute of Certified Public Accountants and the Financial Accounting
Standards Board that are applicable from time to time.

     “Goodrich” means Goodrich Petroleum Corporation, a Delaware corporation.

     “Hazardous Substance” means (a) any substance that is reasonably expected to require,
removal, remediation, or other response under any Environmental Law, (b) any substance that is
designated, defined or classified as a hazardous waste, hazardous material, pollutant, contaminant,
explosive, corrosive, flammable, infectious, carcinogenic, mutagenic, radioactive, dangerous, or
toxic or hazardous substance under any Environmental Law, including, without limitation, any
hazardous substance within the meaning of § 101(14) of CERCLA, (c) petroleum, oil, gasoline,
natural gas, fuel oil, motor oil, waste oil, diesel fuel, jet fuel, and other petroleum
hydrocarbons, (d) asbestos and asbestos-containing materials in any form, (e) polychlorinated
biphenyls, (f) urea formaldehyde foam or (g) any substance the presence of which on any Real
Property (including, without limitation, the Leases and the Mineral Interests) either (i) poses or

7

 

threatens to pose a hazard to the health or safety of persons or to the environment or (ii)
could constitute a health or safety hazard to persons or the environment if it emanated or migrated
from the Real Property (including, without limitation, the Leases and the Mineral Interests).

     “Initial Term Borrowing” is defined in Section 2.2(a).

     “Interest Expense” means — for any Person, for any period, and without duplication —
all interest on Debt, whether paid in cash or accrued as a liability and payable in cash during
that period, including, without limitation, the interest component of Capital Leases and any
premium or penalty for repayment, redemption, or repurchase of Debt.

     “Interest Period” is determined under Section 3.9.

     “Issuing Lender” means Agent, or any of its Affiliates, that issues an LC under this
agreement.

     “Laws” means all applicable statutes, laws, treaties, ordinances, rules, regulations,
orders, writs, injunctions, decrees, judgments, opinions, and interpretations of any Tribunal.

     “LC” means a documentary or standby letter of credit issued for the account of
Borrower by an Issuing Lender under this agreement and under an LC Agreement.

     “LC Agreement” means a letter of credit application and agreement (in form and
substance satisfactory to Agent) submitted and executed by Borrower to the Issuing Lender for an LC
for the account of Borrower.

     “LC Exposure” means, without duplication, the sum of (a) the total face amount of all
undrawn and uncancelled LCs plus (b) the total unpaid reimbursement obligations of Borrower under
drawings under any LC.

     “LC Request” means a request substantially in the form of Exhibit D-3.

     “LC Subfacility” means a subfacility of the Revolving Facility for the issuance of
LCs, as described in Section 2.4, under which the LC Exposure (a) may never collectively exceed
$10,000,000 and (b) together with Revolving Principal Debt may never exceed the lesser of either
(i) the total Revolving Commitments or (ii) the Borrowing Base.

     “Leases” shall have the meaning assigned to it in Section 7.17.

     “Lender Lien” means any present or future first-priority Lien (provided that
applicable Permitted Liens may exist, however, no intention to subordinate the first priority Lien
granted in favor of Agent for the benefit of Lenders is to be hereby implied or expressed by the
permitted existence of such Permitted Liens) securing the Obligation and assigned, conveyed, or
granted to or created in favor of Agent for the benefit of Lenders.

     “Lenders” means the financial institutions — including, without limitation, Agent
(possibly acting through one or more of its Affiliates for LCs) in respect of its share of
Borrowings and LCs — named on Schedule 2 or on the most-recently-amended Schedule
2, if

8

 

any, delivered by Agent under this agreement, and, subject to this agreement, their respective
successors and permitted assigns (but not any Participant who is not otherwise a party to this
agreement).

     “LIBOR Rate” means, for a LIBOR-Rate Borrowing and for the relevant Interest Period,
the annual interest rate (rounded upward, if necessary, to the nearest 0.01%) equal to the quotient
obtained by dividing (a) the rate displayed on page 3750 on the Teleratesystem Incorporated Service
(or such other page as may replace such page on such service) at approximately 11:00 a.m. London
time two Business Days before the first day of that Interest Period in an amount comparable to that
LIBOR-Rate Borrowing and having a maturity approximately equal to that Interest Period, by (b) one
minus the Reserve Requirement (expressed as a decimal) applicable to the relevant Interest Period.

     “LIBOR-Rate Borrowing” means a Borrowing bearing interest at the sum of the LIBOR Rate
plus the Applicable Margin.

     “Lien” means any lien, mortgage, security interest, pledge, assignment, charge, title
retention agreement, or encumbrance of any kind and any other arrangement for a creditor’s claim to
be satisfied from assets or proceeds prior to the claims of other creditors or the owners.

     “Litigation” means any action by or before any Tribunal.

     “Loan Documents” means (a) this agreement, certificates and reports delivered under
this agreement, and exhibits and schedules to this agreement, (b) the Notes, Collateral Documents,
and all other agreements, documents, and instruments in favor of Agent or Lenders (or Agent on
behalf of Lenders) ever delivered under this agreement or otherwise delivered in connection with
all or any part of the Obligation (other than Assignments but including the Compass Assignment),
(c) all LCs and LC Agreements, (d) the letter agreement described in Section 4.2, (e) the
Subordination Agreement and (f) all renewals, extensions, and restatements of, and amendments and
supplements to, any of the foregoing.

     “Material Adverse Event” means any circumstance or event that, individually or
collectively, is reasonably expected to result in any (a) material impairment of (i) the ability of
Borrower to perform any of its payment or other material obligations under any Loan Document, (ii)
the Restricted Companies as a whole to perform any of their payment or other material obligations
under any Loan Document or (iii) the ability of Agent or any Lender to enforce any of those
obligations or any of their respective Rights under the Loan Documents, (b) material and adverse
effect on the financial condition of the Companies as a whole as represented to Lenders in the
Current Financials most recently delivered before the date of this agreement or (c) Default or
Potential Default.

     “Maximum Amount” and “Maximum Rate” respectively mean, for a Lender, the
maximum non-usurious amount and the maximum non-usurious rate of interest that, under applicable
Law, that Lender is permitted to contract for, charge, take, reserve, or receive on the Obligation.

     “Mineral Interests” shall mean all present and future rights, titles and interests
that Borrower or any other Company may now have or hereafter acquire in and to all (i) oil, gas

9

 

and/or mineral leases, royalty and overriding royalty interests, production payments, farm-out
agreements, net profit interests and mineral fee interests, (ii) present and future unitization,
communication and pooling arrangements (and all properties covered and units created thereby),
whether arising by contract or operation of law, which now or hereafter include all or any part of
the foregoing and (iii) lands now or hereafter subject to any of the foregoing.

     “Mortgaged Properties” shall mean all of Mineral Interests described in the Collateral
Documents and all related personal property and rights to payments or proceeds thereon or
therefrom, and all other properties in which Borrower or any other Company has heretofore granted
or purported to grant or hereinafter grants or purports to grant to Agent, for the benefit of the
Lenders, a Lender Lien (including, without limitation, those assigned to Agent by Prior Agent and
the Prior Lenders pursuant to, among other things, the Compass Assignment) in accordance with
Section 5.2, in order to secure the Notes and the Obligation.

     “Multiemployer Plan” means a multiemployer plan as defined in Sections 3(37) or
4001(a)(3) of ERISA or Section 414(f) of the Code to which any Company (or any Person that, for
purposes of Title IV of ERISA, is a member of Borrower’s controlled group or is under common
control with Borrower within the meaning of Section 414 of the Code) is making, or has made, or is
accruing, or has accrued, an obligation to make contributions.

     “Net Income” of any Person means that Person’s profit or loss after deducting its Tax
expense.

     “Notes” means the Revolving Notes and the Term Notes.

     “Obligation” means all present and future (a) Debts, liabilities, and obligations of
any Company to Agent or any Lender and related to any Loan Document, whether principal, interest,
fees, costs, attorneys’ fees, or otherwise, (b) any Debts, liabilities, or obligations owed by any
Company to any Lender or its one or more Affiliates under any Swap Agreement and (c) renewals,
extensions, and modifications of any of the foregoing.

     “Option Interest” shall have the meaning assigned to such term in the Subordinated
Loan Agreement.

     “OSHA” means the Occupational Safety and Health Act of 1970, 29 U.S.C. § 651 et seq.

     “Participant” is defined in Section 14.10(b).

     “PBGC” means the Pension Benefit Guaranty Corporation.

     “PDP PV” means the PV of Proved Developed Producing Reserves of Borrower and the other
Companies as described in the most recently delivered Reserve Report.

     “Permitted Debt” means Debt described on Schedule 9.2.

     “Permitted Liens” means the Liens described on Schedule 9.4.

     “Person” means any individual, entity, or Tribunal.

10

 

     “Potential Default” means any event’s occurrence or any circumstance’s existence that
would — upon any required notice, time lapse, or both — become a Default.

     “Predecessor” means any Person for whose obligations and liabilities any Company is
reasonably expected to be liable as the result of any merger, de facto merger, stock purchase,
asset purchase or divestiture, combination, joint venture, investment, reclassification, or other
similar business transaction.

     “Principal Debt” means, at any time, the unpaid principal balance of all Borrowings.

     “Pro Rata” and “Pro Rata Part” mean, at any time and for any Lender, the
proportion (stated as a percentage) that (i) its Commitment bears to the total Commitments of all
Lenders, and (ii) if the Commitments have terminated, the Commitment Usage owed to it bears to the
total Commitment Usage owed to all Lenders.

     “Proved Reserves” means “Proved Reserves” as defined in the Definitions for Oil and
Gas Reserves (in this paragraph, the “Definitions”) promulgated by the Society of Petroleum
Engineers (or any generally recognized successor) as in effect at the time in question.
“Proved Developed Producing Reserves” means Proved Reserves which are categorized as both
“Developed” and “Producing” in the Definitions.

     “PV” means, with respect to any Proved Reserves expected to be produced from any
Mineral Interests, the net present value, discounted at 9% per annum, of the future net revenues
expected to accrue to Borrower’s and the other Companies’ collective interests in such reserves
during the remaining expected economic lives of such reserves. PV means, with respect to
Borrower’s and the other Companies’ separate interests in such Proved Reserves, the net present
value, discounted at 9% per annum, of the future net revenues expected to accrue to such separate
interests in such reserves during the remaining expected economic lives of such reserves. Each
calculation of such expected future net revenues shall be made in accordance with the then existing
standards of the Society of Petroleum Engineers, provided that in any event (a) appropriate
deductions shall be made for severance and ad valorem taxes, and for operating, gathering,
transportation and marketing costs required for the production and sale of such reserves, (b)
appropriate adjustments shall be made for hedging operations, provided that Swap Agreements with
non-investment grade counterparties shall not be taken into account to the extent that such Swap
Agreements improve the position of or otherwise benefit Borrower or any of the other Companies, (c)
the pricing assumptions used in determining PV for any particular reserves shall be based upon the
following price decks: (i) for natural gas, $5.00 per mcf, provided that (A) if the quotation for
deliveries of natural gas for each such year from the New York Mercantile Exchange for Henry Hub is
less than $5.00 per mcf, such lesser price shall be used and (B) with respect to quotations for
calendar years after the fifth calendar year, the quotation for the fifth calendar year shall be
applied and (ii) for crude oil, $30 per barrel, provided that (A) if the quotation for deliveries
of crude oil for each such calendar year from the New York Mercantile Exchange for Cushing,
Oklahoma is less than $30 per barrel, such lesser price shall be used and (B) with respect to
quotations for calendar years after the fifth calendar year, the quotation for the fifth calendar
year shall be applied and (d) the cash-flows derived from the pricing assumptions set forth in
clauses (b) and (c) above shall be further adjusted to account for the historical basis
differentials for each month during the preceding 12-month

11

 

period calculated by comparing realized crude oil and natural gas prices to Cushing, Oklahoma
and Henry Hub NYMEX prices for each month during such period.

     “Real Property” means any land, buildings, fixtures, and other improvements to land
now or in the future directly or indirectly owned by any Restricted Company, leased to or otherwise
operated by any Restricted Company, or subleased by any Restricted Company to any other Person.

     “Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping, disposal, migrating, or other movement into
the air, ground or surface water, or soil.

     “Representatives” means representatives, officers, directors, employees, accountants,
attorneys, and agents.

     “Reserve Report” means each report delivered to Agent by Borrower pursuant to Section
8.1(c).

     “Reserve Requirement” means, for any LIBOR-Rate Borrowing and for the relevant
Interest Period, the total reserve requirements (including all basic, supplemental, emergency,
special, marginal, and other reserves required by applicable Law) applicable to eurocurrency
fundings or liabilities as of the first day of that Interest Period.

     “Responsible Officer” means Borrower’s chairman, president, chief executive officer,
or chief financial officer.

     “Restricted Company” means Goodrich, Borrower and each other Subsidiary of Goodrich
other than any Subsidiary that has no assets except its corporate name and conducts no operations.

     “Revolving Borrowing” means a revolving Borrowing made by the Lenders to Borrower
pursuant to Section 2.1.

     “Revolving Commitment” means, at any time and for any Lender, the amount stated beside
that Lender’s name on the most-recently amended Schedule 2 (which amount is subject to
reduction and cancellation as provided in this agreement).

     “Revolving Commitment Percentage” means, for any Lender, the proportion (stated as a
percentage) that its Revolving Commitment bears to the total Revolving Commitments of all Lenders.

     “Revolving Commitment Usage” means, at any time and without duplication, the sum of
(a) the Revolving Principal Debt plus (b) the LC Exposure.

     “Revolving Facility” means the revolving credit facility in the amount of the total
Revolving Commitments of the Lenders to make advances and issue letters of credit in accordance
with the terms and conditions of this agreement and includes the LC Subfacility.

12

 

     “Revolving Notes” means the promissory notes of Borrower described in Section 3.1(a)
and being in the form of Exhibit A-1 hereto, together with all amendments, modifications,
replacements, extensions and rearrangements thereof.

     “Revolving Principal Debt” means, at any time, the unpaid principal balance of all
Revolving Borrowings.

     “Revolving Pro Rata” and “Revolving Pro Rata Part” mean, at any time and for
any Lender, the proportion (stated as a percentage) that (i) its Revolving Commitment bears to the
total Revolving Commitments of all Lenders, and (ii) if the Revolving Commitments have terminated,
the Revolving Commitment Usage owed to it bears to the total Revolving Commitment Usage owed to all
Lenders.

     “Rights” means rights, remedies, powers, privileges, and benefits.

     “Solvent” means, as to any Person, that (a) the aggregate fair market value of its
assets exceeds its liabilities, (b) it has sufficient cash flow to enable it to pay its Debts as
they mature, and (c) it does not have unreasonably small capital to conduct its businesses.

     “Stated-Termination Date” means February 25, 2008.

     “Subordinated Debt” means all of the Obligations (as defined in the Subordinated Loan
Agreement) of Borrower to the Subordinated Lender pursuant to the terms and conditions of the
Subordinated Loan Agreement.

     “Subordinated Lender” means Malloy Energy Company, L.L.C., a Delaware limited
liability company and its permitted successors and assigns.

     “Subordinated Loan Agreement” means that certain Loan Agreement dated as of March 8,
2002, among Borrower and the Subordinated Lender, as the same may be modified or amended from time
to time to the extent permitted under this agreement.

     “Subordination Agreement” means that certain Subordination and Intercreditor Agreement
dated as of March 8, 2002, among Borrower, Agent, and the Subordinated Lender, as the same may be
modified or amended from time to time.

     “Subsidiary” of any Person means any entity of which more than 50% (in number of
votes) of the stock (or equivalent interests) is owned of record or beneficially, directly or
indirectly, by that Person.

     “Swap Agreement” means any present or future, whether master or single, agreement,
document, or instrument providing for — or constituting an agreement to enter into — an
interest-rate, basis, credit default, or commodity swap; forward-rate arrangement; commodity
option; equity or equity-index swap or option; bond or interest-rate option;
forward-foreign-exchange arrangement; rate-cap, -collar, or -floor arrangement; currency- or
cross-currency-swap arrangement; swaption; currency-option; or any similar arrangement.

13

 

     “Tangible-Net Worth” means — at any time and for any Person — the sum of (i) its
stockholders’ equity, plus (ii) amounts excluded from stockholders’ equity under GAAP relating to
the establishment of an employee stock ownership plan, minus (iii) the total (without duplication
of deductions already made in arriving at stockholders’ equity) of the book value of all assets
that would be treated as intangible assets under GAAP, including, without limitation, goodwill,
trademarks, trade names, copyrights, patents, and unamortized debt discount and expense.

     “Taxes” means, for any Person, taxes, assessments, or other governmental charges or
levies imposed upon it, its income, or any of its properties, franchises, or assets.

     “Term Availability Period” means the period from and including the Closing Date to but
excluding the first anniversary of the Closing Date.

     “Term Borrowing” means a term Borrowing made by the Lenders to Borrower pursuant to
Section 2.2.

     “Term Commitment” means, at any time and for any Lender, the amount stated beside that
Lender’s name on the most-recently amended Schedule 2 (which amount is subject to reduction
and cancellation as provided in this agreement).

     “Term Commitment Percentage” means, for any Lender, the proportion (stated as a
percentage) that its Term Commitment bears to the total Term Commitments of all Lenders.

     “Term Facility” means the term loan facility in the amount of the total Term
Commitments of the Lenders to make advances in accordance with the terms and conditions of this
agreement.

     “Term Notes” means the promissory notes of Borrower described in Section 3.1(a) and
being in the form of Exhibit A-2 hereto, together with all amendments, modifications,
replacements, extensions and rearrangements thereof.

     “Term Principal Debt” means, at any time, the unpaid principal balance of all Term
Borrowings.

     “Term Pro Rata” and “Term Pro Rata Part” mean, at any time and for any Lender,
the proportion (stated as a percentage) that (i) its Term Commitment bears to the total Term
Commitments of all Lenders, and (ii) if the Term Commitments have terminated, the Term Principal
Debt owed to it bears to the total Term Principal owed to all Lenders.

     “Termination Date” means the earlier of either (a) the Stated-Termination Date or (b)
the effective date that Lenders’ commitments to lend and issue LCs under this agreement are fully
canceled or terminated.

     “Total Debt” means, with respect to Borrower and each other Restricted Company, the
sum of the following (without duplication): (a) all Funded Debt and obligations evidenced by
bonds, bankers’ acceptances, debentures, notes or other similar instruments of such Persons; (b)
all Debt secured (or for which the holder of such Debt has an existing Right, contingent or

14

 

otherwise, to be so secured) by any Lien existing on property owned or acquired by such
Persons; (c) all obligations of such Persons (whether contingent or otherwise) in respect of
letters of credit, surety or other bonds and similar instruments; and (d) all Debt of others
guaranteed by such Persons or in which such Persons otherwise assures a creditor against loss of
the Debt (howsoever such assurance shall be made) to the extent of the lesser of the amount of such
Debt and the maximum stated amount of such guarantee or assurance against loss.

     “Total PV” means at any time an amount determined in accordance with Section 2.7. No
category of reserves other than Proved Reserves shall be taken into account in determining Total PV
and at least 80% of Total PV must be comprised of PDP PV.

     “Tribunal” means any (a) local, state, territorial, federal, or foreign judicial,
executive, regulatory, administrative, legislative, or governmental agency, board, bureau,
commission, department, or other instrumentality, (b) private arbitration board or panel or (c)
central bank.

     “Type” is defined in Section 1.2.

     Section 1.2 Classes and Types of Borrowings. Borrowings hereunder are distinguished by
“Class” and by “Type”. The “Class” of a Borrowing (or of a Commitment to make such a Borrowing)
refers to the determination whether such Borrowing is a Term Borrowing or a Revolving Borrowing,
each of which constitutes a Class. The “Type” of a Borrowing refers to the determination whether
such Borrowing is a LIBOR-Rate Borrowing or a Base-Rate Borrowing. Identification of a Borrowing
by both Class and Type (e.g., a “LIBOR-Rate Revolving Borrowing”) indicates that such Borrowing is
both a LIBOR-Rate Borrowing and a Revolving Borrowing.

     Section 1.3 Time References. Unless otherwise specified, in the Loan Documents (a) time
references (e.g., 11:00 a.m.) are to time in New York, New York and (b) in calculating a period
from one date to another, the word “from” means “from and including” and the word “to” or “until”
means “to but excluding.”

     Section 1.4 Other References. Unless otherwise specified, in the Loan Documents (a) where
appropriate, the singular includes the plural and vice versa, and words of any gender include each
other gender, (b) heading and caption references may not be construed in interpreting provisions,
(c) monetary references are to currency of the United States of America, (d) section, paragraph,
annex, schedule, exhibit, and similar references are to the particular Loan Document in which they
are used, (e) references to “telecopy,” “facsimile,” “fax,” or similar terms are to facsimile or
telecopy transmissions, (f) references to “including” mean including without limiting the
generality of any description preceding that word, (g) the rule of construction that references to
general items that follow references to specific items are limited to the same type or character of
those specific items is not applicable in the Loan Documents, (h) references to any Person include
that Person’s heirs, personal representatives, successors, trustees, receivers, and permitted
assigns, (i) references to any Law include every amendment or supplement to it, rule and regulation
adopted under it, and successor or replacement for it and (j) references to any Loan Document or
other document include every renewal and extension of it, amendment and supplement to it, and replacement or
substitution for it.

15

 

     Section 1.5 Accounting Principles. Unless otherwise specified, in the Loan Documents (a)
GAAP determines all accounting and financial terms and compliance with financial covenants, (b)
GAAP in effect on the date of this agreement determines compliance with financial covenants, (c)
otherwise, all accounting principles applied in a current period must be comparable in all material
respects to those applied during the preceding comparable period, and (d) while Goodrich has any
consolidated Subsidiaries (i) all accounting and financial terms and compliance with reporting
covenants must be on a consolidating and consolidated basis, as applicable and (ii) compliance with
financial covenants must be on a consolidated basis.

ARTICLE II

COMMITMENT

     Subject to the provisions in the Loan Documents, each Lender severally but not jointly agrees
to extend credit to Borrower under this agreement in accordance with the following provisions.

     Section 2.1 Revolving Facility. Subject to the terms and conditions of this agreement,
each Lender severally but not jointly agrees to lend to Borrower an amount equal to that Lender’s
Revolving Commitment Percentage of requested Revolving Borrowings under the Revolving Facility,
which Borrower may borrow, repay, and reborrow under this agreement subject to the following
conditions:

               (a) Each Revolving Borrowing may only occur on a Business Day on or after the Closing Date and
before the Termination Date;

               (b) Each Revolving Borrowing may only be $500,000 or a greater integral multiple of $100,000
if a Base-Rate Revolving Borrowing or $1,000,000 or a greater integral multiple of $500,000 if a
LIBOR-Rate Revolving Borrowing; and

               (c) The Revolving Commitment Usage may never exceed at any time, the lesser of either the
total Revolving Commitments or the Borrowing Base.

     Section 2.2 Term Facility.

               (a) Subject to the terms and conditions of this agreement, each Lender severally but not
jointly agrees to lend to Borrower on the Closing Date an amount equal to that Lender’s Term
Commitment Percentage (in an amount not to exceed such Lender’s Term Commitment then in effect) of
an aggregate principal amount equal to $7,500,000 (the “Initial Term Borrowing”).

               (b) In addition, Borrower may at any time during the Term Availability Period request by
notice to Agent in accordance with Section 2.3(b)(ii) that the Lenders lend to Borrower up to two
additional separate single advance Term Borrowings each in the principal amount of $3,750,000 (each
such Term Borrowing being an “Additional Term Borrowing”). Each Lender shall have sixty
(60) days from the date of receipt of any Borrowing Request for an Additional Term Borrowing to
agree to fund or decline to fund the Additional Term Borrowing subject of such Borrowing Request by
notifying Agent and Borrower in writing of its decision. Any such decision shall be made in each
Lender’s absolute and sole discretion, it being

16

 

understood and agreed that no Lender shall have any
obligation to agree to fund any Additional Term Borrowing under any circumstance whatsoever (and
for the avoidance of doubt, the term “Term Commitment” shall not be construed to require any Lender
to fund any requested Additional Term Borrowing). Subject to the terms and conditions of this
agreement, each Lender that agrees to fund any requested Additional Term Borrowing in accordance
with this Section 2.2(b) severally but not jointly agrees to lend to Borrower an amount equal to
that Lender’s Term Commitment Percentage (in an amount not to exceed such Lender’s Term Commitment
then in effect) of such requested Additional Term Borrowing under the Term Facility; provided,
however, that the Term Principal Debt at any one time outstanding shall not exceed the total Term
Commitments.

               (c) Each Term Borrowing shall be comprised entirely of LIBOR-Rate Borrowings having an
Interest Period of three (3) months, which LIBOR-Rate Borrowing shall automatically continue as a
LIBOR-Rate Borrowing having an Interest Period of three (3) months at the end of the first
three-month Interest Period and all subsequent Interest Periods thereafter.

               (d) The Term Borrowings are not revolving in nature, and amounts repaid or prepaid may not be
reborrowed under any circumstance. Any portion of the Term Commitments not utilized by Borrower
before the expiration of the Term Availability Period shall be permanently canceled.

     Section 2.3 Borrowing Procedure. The following procedures apply to Borrowings:

               (a) Revolving Borrowing Request. Borrower may request a Revolving Borrowing by making
or delivering a Borrowing Request (that may be telephonic if confirmed immediately in writing by
2:00 p.m. on the same Business Day) to Agent, which is irrevocable and binding on Borrower, stating
the Class (which shall be a Revolving Borrowing), the Type, amount, and Interest Period for each
Revolving Borrowing and which must be received by Agent no later than 11:00 a.m. on the (i) third
Business Day before the date on which funds are requested (which shall be a Business Day) (the
“Borrowing Date”) for any LIBOR-Rate Borrowing or (ii) Borrowing Date for any Base-Rate
Borrowing. Agent shall promptly notify each Lender of any such Borrowing Request.

               (b) Term Borrowing Request.

                    (i) Borrower shall request the Initial Term Borrowing by making or delivering a Borrowing
Request (that may be telephonic if confirmed immediately in writing by 2:00 p.m. on the same
Business Day) to Agent, which is irrevocable and binding on Borrower, stating the Class (which
shall be a Term Borrowing), the Type (which shall be a LIBOR-Rate Borrowing), amount (which shall
be $7,500,000), Interest Period (which shall be three-month(s)) and the Borrowing Date (which shall
be the Closing Date) and which must be received by Agent no later than 11:00 a.m. on the third
Business Day before the Borrowing Date. Agent shall promptly notify each Lender of any such
Borrowing Request.

                    (ii) Borrower may request Additional Term Borrowings by making or delivering a Borrowing
Request (that may be telephonic if confirmed immediately in writing by

17

 

2:00 p.m. on the same Business Day) to Agent, which is irrevocable and binding on Borrower, stating the Class (which
shall be a Term Borrowing), the Type (which shall be a LIBOR-Rate Borrowing), amount (which shall
be $3,750,000), Interest Period (which shall be three-month(s)) and the Borrowing Date (which shall
be a Business Day) and which must be received by Agent no later than 11:00 a.m. on the third
Business Day before the Borrowing Date. Agent shall promptly notify each Lender of any such
Borrowing Request.

               (c) Funding. Each Lender shall remit its Revolving Commitment Percentage of each
requested Revolving Borrowing, or its Term Commitment Percentage of each requested Term Borrowing
(provided that in the case of each Additional Term Borrowing, such Lender shall have agreed to fund
such Additional Term Borrowing as provided in Section 2.2(b)), as applicable, to Agent’s principal
office in New York, New York, in funds that are available for immediate use by Agent by 1:00 p.m.
on the applicable Borrowing Date. Subject to receipt of those funds, Agent shall (unless to its
actual knowledge any of the applicable conditions precedent have not been satisfied by Borrower or
waived by the requisite Lenders under Section 14.8) make those funds available to Borrower by (at
Borrower’s option) (i) wiring the funds to or for the account of Borrower at the direction of
Borrower or (ii) depositing the funds in an account designated by Borrower.

               (d) Funding Assumed. Absent contrary written notice from a Lender, Agent may assume
that each Lender has made its Revolving Commitment Percentage or Term Commitment Percentage, as
applicable, of the requested Borrowing available to Agent on the applicable Borrowing Date, and
Agent may, in reliance upon such assumption (but shall not be required to), make available to
Borrower a corresponding amount. If a Lender fails to make its Revolving Commitment Percentage or
Term Commitment Percentage, as applicable, of any requested Borrowing available to Agent on the
applicable Borrowing Date, Agent may recover the applicable amount on demand, (i) from that Lender
together with interest, commencing on the Borrowing Date and ending on (but excluding) the date
Agent recovers the amount from that Lender, at an annual interest rate equal to the Federal-Funds
Rate or (ii) if that Lender fails to pay its amount upon demand, then from Borrower. No Lender is
responsible for the failure of any other Lender to make its Revolving Commitment Percentage or Term
Commitment Percentage, as applicable, of any Borrowing available as required by Section 2.3(c);
however, failure of any Lender to make its Revolving Commitment Percentage or Term Commitment
Percentage, as applicable, of any Borrowing so available does not excuse any other Lender from
making its Revolving Commitment Percentage or Term Commitment Percentage, as applicable, of any
Borrowing so available.

     Section 2.4 Letters of Credit.

               (a) Conditions. Subject to the terms and conditions of this agreement Issuing Lender
agrees to issue LCs upon Borrower’s making or delivering an LC Request and delivering an LC
Agreement, both of which must be received by the Issuing Lender no later than the third Business
Day before the Business Day on which the requested LC is to be issued, so long as (i) no LC may
expire after the earlier to occur of the first anniversary of its issuance date or three Business
Days before the Termination Date, (ii) the LC Exposure (after giving effect to such requested LC)
would not exceed $10,000,000 and (iii) the limitations in Section 2.1(c) are not exceeded.

18

 

               (b) Participation. Immediately upon Issuing Lender’s issuance of any LC, Issuing
Lender shall be deemed to have sold and transferred to each other Lender, and each other Lender
shall be deemed irrevocably and unconditionally to have purchased and received from Issuing Lender,
without recourse or warranty, an undivided interest and participation to the extent of such
Lender’s Revolving Commitment Percentage in the LC and all applicable Rights of Issuing Lender in
the LC — other than Rights to receive certain fees provided in Section 4.3 to be for the Issuing
Lender’s sole account.

               (c) Reimbursement Obligation. To induce Issuing Lender to issue and maintain LCs, and
to induce Lenders to participate in issued LCs, Borrower agrees to pay or reimburse Issuing Lender
(i) on the first Business Day after an Issuing Lender notifies Agent and Borrower that it has made
payment under an LC, the amount paid by Issuing Lender and (ii) within five Business Days after
demand, the amount of any additional fees Agent customarily charges for amending LCs Agreements,
for honoring drafts, and for taking similar action in connection with letters of credit. If
Borrower has not reimbursed Issuing Lender for any drafts paid by the date on which reimbursement
is required under this section, then Agent is irrevocably authorized to fund Borrower’s
reimbursement obligations as a Base-Rate Revolving Borrowing under the Revolving Facility if
proceeds are available under the Revolving Facility and if the conditions in this agreement for
such a Revolving Borrowing (other than any notice requirements or minimum funding amounts) have, to
Agent’s knowledge, been satisfied. The proceeds of that Revolving Borrowing shall be advanced
directly to Issuing Lender to pay Borrower’s unpaid reimbursement obligations. If funds cannot be
advanced under the Revolving Facility, then Borrower’s reimbursement obligation shall constitute a
demand obligation. Borrower’s obligations under this section are absolute and unconditional under
any and all circumstances and irrespective of any setoff, counterclaim, or defense to payment that
Borrower may have at any time against Issuing Lender or any other Person. From the date that
Issuing Lender pays a draft under a LC until Borrower either reimburses or is obligated to
reimburse Issuing Lender for that draft under this section, the amount of that draft bears interest
payable to Issuing Lender at the rate then applicable to Base-Rate Revolving Borrowings. From the
due date of the respective amounts due under this section, to the date paid (including any payment
from proceeds of a Base-Rate Revolving Borrowing), unpaid reimbursement amounts accrue interest
that is payable on demand at the Default Rate.

               (d) General. Issuing Lender shall promptly notify Agent and Borrower of the date and
amount of any draft presented for honor under any LC (but failure to give notice will not affect
Borrower’s obligations under this agreement). Issuing Lender shall pay the requested amount upon
presentment of a draft unless presentment on its face does not comply with the terms of the
applicable LC. When making payment, Issuing Lender may disregard (i) any default or potential
default that exists under any other agreement and (ii) obligations under any other agreement that
have or have not been performed by the beneficiary or any other Person (and Issuing Lender is not
liable for any of those obligations). Borrower’s reimbursement obligations to Issuing Lender and
Lenders, and each Lender’s obligations to Issuing Lender, under this section are absolute and
unconditional irrespective of, and Issuing Lender is not responsible for (i) the validity,
enforceability, sufficiency, accuracy, or genuineness of documents or endorsements (even if they
are in any respect invalid, unenforceable, insufficient, inaccurate, fraudulent, or forged), (ii)
any dispute by any Company with or any Company’s claims, setoffs, defenses, counterclaims, or other
Rights against Issuing Lender, any Lender, or

19

 

any other Person or (iii) the occurrence of any
Potential Default or Default. However, nothing in this agreement constitutes a waiver of
Borrower’s Rights to assert any claim or defense based upon the gross negligence or willful
misconduct of any Lender. The Issuing Lender shall promptly pay to Agent for Agent to promptly
distribute reimbursement payments received from Borrower to all Lenders according to their
Revolving Pro Rata Part of the Revolving Facility.

               (e) Obligation of Lenders. If Borrower fails to reimburse Issuing Lender as provided
in Section 2.4(c) by the date on which reimbursement is due under that section, and funds cannot be
advanced under the Revolving Facility to satisfy the reimbursement obligations, then Agent shall
promptly notify each Lender of Borrower’s failure, of the date and amount paid, and of each
Lender’s Revolving Commitment Percentage of the unreimbursed amount. Each Lender shall promptly
and unconditionally make available to Agent in immediately available funds its Revolving Commitment
Percentage of the unpaid reimbursement obligation, subject to the limitations of Section 2.1(c).
Funds are due and payable to Agent before the close of business on the Business Day when Agent
gives notice to each Lender of Borrower’s reimbursement failure (if notice is given before 1:00
p.m.) or on the next succeeding Business Day (if notice is given after 1:00 p.m.). All amounts
payable by any Lender accrue interest after the due date at the Federal-Funds Rate from the day the
applicable draft or draw is paid by Agent to (but not including) the date the amount is paid by the
Lender to Agent. Upon receipt of those funds, Agent shall make them available to the Issuing
Lender.

               (f) Duties of Issuing Lender. Issuing Lender agrees with each Lender that it will
exercise and give the same care and attention to each LC as it gives to its other letters of
credit. Each Lender and Borrower agree that, in paying any draft under any LC, Issuing Lender has
no responsibility to obtain any document (other than any documents expressly required by the
respective LC) or to ascertain or inquire as to any document’s validity, enforceability,
sufficiency, accuracy, or genuineness or the authority of any Person delivering it. Neither
Issuing Lender nor its Representatives will be liable to any Lender or any Company for any LC’s use
or for any beneficiary’s acts or omissions. Any action, inaction, error, delay, or omission taken
or suffered by Issuing Lender or any of its Representatives in connection with any LC, applicable
drafts or documents, or the transmission, dispatch, or delivery of any related message or advice,
if in good faith and in conformity with applicable Laws and in accordance with the standards of
care specified in the Uniform Customs and Practices for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500 (as amended or modified), is
binding upon the Companies and Lenders and, except as provided in Section 2.4(d), does not place
Issuing Lender or any of its Representatives under any resulting liability to any Company or any
Lender. Agent is not liable to any Company or any Lender for any action taken or omitted, in the
absence of gross negligence or willful misconduct, by Issuing Lender or its Representative in
connection with any LC.

               (g) Cash Collateral. On the Termination Date and if requested by Determining Lenders
while a Default exists, Borrower shall provide Agent, for the benefit of Lenders, cash collateral
in an amount equal to the then-existing LC Exposure.

               (h) INDEMNIFICATION. BORROWER SHALL PROTECT, INDEMNIFY, PAY, AND SAVE AGENT, EACH
LENDER, AND THEIR RESPECTIVE REPRESENTATIVES HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS,

20

 

DEMANDS, LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES, AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES)
WHICH ANY OF THEM MAY INCUR OR BE SUBJECT TO AS A CONSEQUENCE OF THE ISSUANCE OF ANY LC, ANY
DISPUTE ABOUT IT, OR THE FAILURE OF ISSUING LENDER TO HONOR A DRAW REQUEST UNDER ANY LC AS A RESULT
OF ANY ACT OR OMISSION (WHETHER RIGHT OR WRONG) OF ANY PRESENT OR FUTURE TRIBUNAL. HOWEVER, NO
PERSON IS ENTITLED TO INDEMNITY UNDER THE FOREGOING FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.

               (i) LC Agreements. Although referenced in any LC, terms of any particular agreement
or other obligation to the beneficiary are not incorporated into this agreement in any manner. The
fees and other amounts payable with respect to each LC are as provided in this agreement, drafts
under each LC are part of the Obligation, only the events specified in this agreement as a Default
shall constitute a default under any LC, and the terms of this agreement control any conflict
between the terms of this agreement and any LC Agreement.

     Section 2.5 Borrowing Notices and LC Requests. Each Borrowing Request (whether telephonic
or written) and LC Request constitutes a representation and warranty by Borrower that as of the
Borrowing Date or the date of issuance of the requested LC, as the case may be, that all of the
conditions precedent in Article VI have been satisfied.

     Section 2.6 Termination.

               (a) Revolving Facility. Borrower may — upon giving at least five Business Days prior
written and irrevocable notice to Agent — terminate all or part of the Revolving Facility. Each
partial termination must be in an amount of not less than $1,000,000 or a greater integral multiple
of $1,000,000 and must be ratable in accordance with each Lender’s Revolving Commitment Percentage.
At the time of any termination, Borrower shall pay to Agent, for the account of each Lender, as
applicable, the amount of any Borrowing Base Deficiency then existing or which would result after
giving effect to such termination, all accrued and unpaid fees under this agreement and, the interest attributable to the amount of that reduction, and any
related Funding Loss. Any part of the Revolving Commitments for the Revolving Facility that are
terminated may not be reinstated.

               (b) Term Facility. Subject to the satisfaction of the conditions for prepayment of
Term Borrowings contained in Section 3.2(c), Borrower may — upon giving at least five Business
Days prior written and irrevocable notice to Agent — terminate all or part of the Term Facility.
Each partial termination must be in an amount of not less than $1,000,000 or a greater integral
multiple of $1,000,000 and must be ratable in accordance with each Lender’s Term Commitment
Percentage. At the time of any termination, Borrower shall pay to Agent, for the account of each
Lender, as applicable, an amount equal to the excess of the then outstanding Term Principal Debt
over the Term Commitments (after giving effect to the termination of Term Commitments), all accrued
and unpaid fees under this agreement and, the interest attributable to the amount of that
reduction, and any related Funding Loss. Any part of the Term Commitments for the Term Facility
that are terminated may not be reinstated.

21

 

     Section 2.7 Borrowing Base and Total PV Determinations.

               (a) The Borrowing Base as of the Closing Date is acknowledged by Borrower, Agent and the
Lenders to be $44,000,000.00. The Total PV as of the Closing Date is acknowledged by Borrower,
Agent and the Lenders to be $78,000,000.00.

               (b) The Borrowing Base and the Total PV shall be redetermined by Agent semi-annually through
the Termination Date, within ninety (90) days after each December 31 and June 30, with the first
such Borrowing Base and Total PV redetermination under this agreement to be made on or before
September 30, 2005, for the Mineral Interests as of June 30, 2005, on the basis of information
supplied by Borrower in compliance with the provisions of this agreement, including, without
limitation, the Reserve Reports, and all other information available. Notwithstanding the
foregoing, Agent may at its discretion (and at the request of the determining Lenders shall) make
redeterminations of the Borrowing Base and/or the Total PV upon the occurrence of any sale,
transfer, release or other disposition or loss or relinquishment of (i) any Option Interest (other
than any Option Interest conveyed to Subordinated Lender contemporaneously with the acquisition by
Borrower or any other Company of the Mineral Interests giving rise to the obligation to convey such
Option Interest under the terms of the Subordinated Loan Agreement), or (ii) any Collateral having
an aggregate value for all such sales or dispositions since the most recent determination of the
Borrowing Base and/or the Total PV hereunder which exceeds $2,500,000, provided, that nothing in
this provision shall be deemed to authorize any sale of any property prohibited pursuant to this
agreement or any other Loan Document. In addition to the determinations of the Borrowing Base and
the Total PV required pursuant to this Section 2.7(b), one additional special determination thereof
may be requested during any calendar year by either Borrower or the Determining Lenders. Upon any
such special determination of the Borrowing Base and the Total PV, if requested by Agent, Borrower
shall submit both (i) a current report of a firm of independent petroleum engineers acceptable to
Agent, prepared in accordance with customary standards and procedures of the petroleum industry
which report shall (A) evaluate the Mineral Interests subject to such redetermination (in the same manner as provided in this Section 2.7 for other such
redeterminations) and (B) be dated within sixty (60) days of such requested redetermination, and
(ii) title opinions, environmental reports and other information reasonably requested by and in
form and substance acceptable to Agent, for those additional Mineral Interests which Borrower
desires to be considered within the Borrowing Base and the Total PV. Adjustments to the Borrowing
Base and the Total PV based upon the addition of Mineral Interests shall not be effective prior to
the date of filing and recording of such Collateral Documents as required by Agent.

               (c) Upon each Borrowing Base and Total PV redetermination, Agent shall notify each Lender of
its recommendation for such redetermined Borrowing Base and Total PV and the Lenders shall have ten
(10) Business Days to approve or reject such recommendation by written notice to Agent. The
proposed Borrowing Base and the proposed Total PV must be approved by the Determining Lenders;
provided, however, that no proposed increase in the Borrowing Base or Total PV shall be effective
unless approved by all of the Lenders. In the event that the Determining Lenders or all of the
Lenders, as applicable, cannot agree as to the amount of the redetermined Borrowing Base or Total
PV, the Borrowing Base or Total PV, as applicable, shall be and be deemed to be the lowest amount
determined by any Lender. Agent

22

 

shall notify Borrower verbally (confirming such notice promptly in
writing) of such determination by the Lenders, and the Borrowing Base and the Total PV so
communicated to Borrower shall become effective upon such verbal notification and shall remain in
effect until the next subsequent Borrowing Base and/or Total PV redetermination in accordance with
the terms hereof.

               (d) The Borrowing Base and the Total PV shall represent the determination by Agent and the
Lenders, in their sole discretion and in accordance with their standard engineering and lending
policies and practices customary for loans of this nature, of the value, for loan purposes, of the
Mortgaged Properties, which Borrower acknowledges may require new and independent credit approvals
by each Lender. Furthermore, Borrower acknowledges that the determination of the Borrowing Base
contains an equity cushion (market value in excess of loan value), which is acknowledged by
Borrower to be essential for the adequate protection of the Lenders.

ARTICLE III

TERMS OF PAYMENT

     Section 3.1 Notes and Payments.

               (a) Notes. Revolving Principal Debt is evidenced by the Revolving Notes, one payable
to each Lender in amount equal to its Revolving Pro Rata Part of $50,000,000, and Term Principal
Debt is evidenced by the Term Notes, one payable to each Lender in amount equal to its Term Pro
Rata Part of $15,000,000. Borrower understands, acknowledges and agrees that the execution and
delivery by Borrower of each Lender’s Notes in such original principal amount does not imply or
infer, and shall not be construed to create, any obligation or commitment on the part of any Lender
to make any advances or issue or participate in any LC’s in excess of, in the aggregate, in the case of Revolving Borrowings, the lesser of the
Borrowing Base or the Revolving Commitments, and in the case of Term Borrowings, the Initial Term
Borrowing; the amount represented by such Lender’s Notes being for ease of administration only in
the event that the Lenders and Borrower may hereafter agree, in writing, to increase the Borrowing
Base or make Additional Term Borrowings, as the case may be, in accordance with the terms and
conditions hereof.

               (b) Payment. Borrower must make each payment and prepayment on the Obligation to
Agent’s principal office in New York, New York in immediately available funds by 1:00 p.m. on the
day due; otherwise, but subject to Section 3.8, those funds continue to accrue interest as if they
were received on the next Business Day. Agent shall promptly pay to each Lender the part of any
payment or prepayment to which that Lender is entitled under this agreement on the same day Agent
receives the funds from Borrower.

               (c) Payment Assumed. Unless Agent has received notice from Borrower prior to the date
on which any payment is due under this agreement that Borrower will not make that payment in full,
Agent may assume that Borrower has made the full payment due and Agent may, in reliance upon that
assumption, cause to be distributed to each Lender on that date the amount then due to each Lender.
If and to the extent Borrower does not make the full payment due to Agent, each Lender shall repay
to Agent on demand the amount distributed to that Lender

23

 

by Agent together with interest for each day from the date that Lender received payment from Agent until the date that Lender repays Agent
(unless such repayment is made on the same day as such distribution), at an interest rate equal to
the Federal-Funds Rate.

     Section 3.2 Interest and Principal Payments.

               (a) Interest. Accrued interest on each LIBOR-Rate Revolving Borrowing is due and
payable on the last day of its respective Interest Period. If any Interest Period for a LIBOR-Rate
Borrowing is greater than three months, then accrued interest is also due and payable on the date
three months after the commencement of the Interest Period. Accrued interest on each Base-Rate
Borrowing and each Term Borrowing is due and payable on the last day of each March, June,
September, and December — commencing on the first of those dates that follows the Closing Date —
and on the Termination Date.

               (b) Revolving Facility Principal. The Revolving Principal Debt under the Revolving
Facility is due and payable on the Termination Date. Before that date, Borrower may at any time
prepay, without penalty and in whole or in part, the Revolving Principal Debt under the Revolving
Facility provided that (i) each voluntary partial prepayment must be in a principal amount not less
than $500,000 or a greater integral multiple of $100,000 and (ii) Borrower shall pay any related
Funding Loss upon demand. Conversions under Section 3.10 are not prepayments.

               (c) Term Facility Principal. The Term Principal Debt under the Term Facility is due
and payable on the Termination Date. Before that date, Borrower may at any time prepay, without
penalty and in whole or in part, the Term Principal Debt under the Term Facility provided that (i) after giving effect to such prepayment, the unused portion of the Revolving
Commitment is greater than or equal to $5,000,000 or the Revolving Principal Debt has been paid in
full and the Revolving Commitments have been terminated, (ii) each voluntary partial prepayment
must be in a principal amount not less than $500,000 or a greater integral multiple of $100,000,
and (iii) Borrower shall pay any related Funding Loss upon demand.

               (d) Revolving Facility-Mandatory Prepayments. At any time a Borrowing-Base Deficiency
exists, Borrower shall make prepayments to Agent (with any related Funding Loss) of the Revolving
Principal Debt under the Revolving Facility in six (6) monthly installments each in the amount of
one-sixth (1/6th) of such Borrowing Base Deficiency so that such Borrowing Base Deficiency no
longer exists by the end of the sixth month after notice from Agent of the existence of such
Borrowing Base Deficiency.

     Section 3.3 Interest Options. Except that the LIBOR Rate may not be selected when a
Default or Potential Default exists and except as otherwise provided in this agreement, Borrowings
bear interest at an annual rate equal to the lesser of either (a) the Base Rate plus the Applicable
Margin or the LIBOR Rate plus the Applicable Margin (in each case as designated or deemed
designated by Borrower), as the case may be or (b) the Maximum Rate. Each change in the Base Rate
and Maximum Rate is effective, without notice to Borrower or any other Person, upon the effective
date of change.

24

 

     Section 3.4 Quotation of Rates. Borrower may call Agent before delivering a Borrowing
Request to receive an indication of the interest rates then in effect, but the indicated rates do
not bind Agent or Lenders or affect the interest rate that is actually in effect when Borrower
makes a Borrowing request or on the Borrowing Date.

     Section 3.5 Default Rate. If permitted by Law, from and after the occurrence of any
Default, or at any time during which a Borrowing Base Deficiency exists, all Principal Debt,
reimbursement obligations in connection with LCs, and other amounts constituting the Obligation
shall bear interest at the Default Rate until paid, regardless whether payment is made before or
after entry of a judgment.

     Section 3.6 Interest Recapture. If the designated interest rate applicable to any
Borrowing exceeds the Maximum Rate, the interest rate on that Borrowing is limited to the Maximum
Rate, but any subsequent reductions in the designated rate shall not reduce the interest rate
thereon below the Maximum Rate until the total amount of accrued interest equals the amount of
interest that would have accrued if that designated rate had always been in effect. If at maturity
(stated or by acceleration), or at final payment of the Notes, the total interest paid or accrued
is less than the interest that would have accrued if the designated rates had always been in
effect, then, at that time and to the extent permitted by Law, Borrower shall pay an amount equal
to the difference between (a) the lesser of the amount of interest that would have accrued if the
designated rates had always been in effect and the amount of interest that would have accrued if the Maximum Rate had always been in effect
and (b) the amount of interest actually paid or accrued on the Notes.

     Section 3.7 Interest Calculations. Interest will be calculated on the basis of actual
number of days (including the first day but excluding the last day) elapsed but computed as if each
calendar year consisted of 360 days (unless the calculation would result in an interest rate
greater than the Maximum Rate or in the case of interest on Base-Rate Borrowings in which event
interest will be calculated on the basis of a year of 365 or 366 days, as the case may be). All
interest rate determinations and calculations by Agent are conclusive and binding absent manifest
error.

     Section 3.8 Maximum Rate. Regardless of any provision contained in any Loan Document, no
Lender is entitled to contract for, charge, take, reserve, receive, or apply, as interest on all or
any part of the Obligation, any amount in excess of the Maximum Rate, and, if Lenders ever do so,
then any excess shall be treated as a partial prepayment of principal and any remaining excess
shall be refunded to Borrower. In determining if the interest paid or payable exceeds the Maximum
Rate, Borrower and Lenders shall, to the maximum extent permitted under applicable Law, (a) treat
all Borrowings as but a single extension of credit (and Lenders and Borrower agree that is the case
and that provision in this agreement for multiple Borrowings is for convenience only), (b)
characterize any nonprincipal payment as an expense, fee, or premium rather than as interest, (c)
exclude voluntary prepayments and their effects and (d) amortize, prorate, allocate, and spread the
total amount of interest throughout the entire contemplated term of the Obligation. However, if
the Obligation are paid in full before the end of their full contemplated term, and if the interest
received for its actual period of existence exceeds the Maximum Amount, Lenders shall refund any
excess (and Lenders may not, to the extent permitted by Law, be subject to any penalties provided
by any Laws for contracting for,

25

 

charging, taking, reserving, or receiving interest in excess of
the Maximum Amount). If the Laws of the State of Texas are applicable for purposes of determining
the “Maximum Rate” or the “Maximum Amount,” then those terms mean the “indicated
(weekly) ceiling” from time to time in effect as determined in accordance with Section 303.301 of
the Texas Finance Code, as amended. Borrower agrees that Chapter 346 of the Texas Finance Code, as
amended (which regulates certain revolving credit loan accounts and revolving triparty accounts),
does not apply to the Obligation.

     Section 3.9 Interest Periods. When Borrower requests any LIBOR-Rate Borrowing, Borrower
may elect the applicable interest period (each an “Interest Period”), which may be, at
Borrower’s option, one, two, three, or six months for LIBOR-Rate Borrowings (except for Term
Borrowings, the Interest Period of which shall be three (3) months, it being understood and agreed
that Borrower shall have no right to select any other Interest Period for any Term Borrowing),
subject to Section 14.1 and the following conditions: (a) the initial Interest Period for a
LIBOR-Rate Borrowing commences on the applicable Borrowing Date or conversion date, and each
subsequent Interest Period applicable to any Borrowing commences on the day when the next preceding
applicable Interest Period expires, (b) if any Interest Period for a LIBOR-Rate Borrowing begins on
a day for which no numerically corresponding Business Day in the calendar month at the end of the Interest Period
exists, then the Interest Period ends on the last Business Day of that calendar month, (c) if
Borrower is required to pay any of a LIBOR-Rate Borrowing before the end of its Interest Period in
order to comply with the payment provisions of the Loan Documents, Borrower shall also pay any
related Funding Loss and (d) no more than five Interest Periods may be in effect at one time.

     Section 3.10 Conversions. Subject to the dollar limits of Section 2.1(b) and provided that
Borrower may not convert to or select a new Interest Period for a LIBOR-Rate Revolving Borrowing at
any time when a Default or Potential Default exists, Borrower may (a) convert a LIBOR-Rate
Revolving Borrowing on the last day of the applicable Interest Period to a Base-Rate Revolving
Borrowing, (b) convert a Base-Rate Revolving Borrowing at any time to a LIBOR-Rate Revolving
Borrowing and (c) elect a new Interest Period for a LIBOR-Rate Revolving Borrowing. That election
may be made by telephonic request to Agent no later than 10:00 a.m. on the third Business Day
before the conversion date or the last day of the Interest Period, as the case may be (for
conversion to a LIBOR-Rate Revolving Borrowing or election of a new Interest Period), and no later
than 10:00 a.m. on the last day of the Interest Period (for conversion to a Base-Rate Revolving
Borrowing). Borrower shall provide a Conversion Notice to Agent no later than two days after the
date of the conversion or election. Absent Borrower’s telephonic request for conversion or
election of a new Interest Period or if a Default or Potential Default exists, then, a LIBOR-Rate
Revolving Borrowing shall be deemed converted to a Base-Rate Revolving Borrowing effective when the
applicable Interest Period expires. Notwithstanding anything to the contrary contained herein,
Borrower may not convert a Term Borrowing into a Revolving Borrowing.

     Section 3.11 Order of Application.

               (a) No Default. If no Default or Potential Default exists, any payment shall be
applied to the Obligation — except as otherwise specifically provided in the Loan Documents — in
the order and manner as Borrower directs.

26

 

               (b) Default. If a Default or Potential Default exists or if Borrower fails to give
direction, any payment (including proceeds from the exercise of any Rights) shall be applied in the
following order: (i) to all fees and expenses for which Agent has not been paid or reimbursed in
accordance with the Loan Documents (and if such payment is less than all unpaid or unreimbursed
fees and expenses, then the payment shall be paid against unpaid and unreimbursed fees and expenses
in the order of incurrence or due date), (ii) to all fees and expenses for which any Lender has not
been paid or reimbursed in accordance with the Loan Documents (and if such payment is less than all
unpaid or unreimbursed fees and expenses, then the payment shall be paid against unpaid and
unreimbursed fees and expenses in the order of incurrence or due date), (iii) pro rata to (A) the
payment of the Principal Debt, and accrued but unpaid interest thereon, (B) any LC reimbursement
obligations that are due and payable and that remain unfunded by any Borrowing under the Revolving
Facility, (C) any Debts, liabilities, or obligations owed by any Company to any Lender or its one
or more Affiliates under any Swap Agreement and (D) as a deposit with Agent, for the benefit of
Lenders, as security for and payment of any subsequent LC reimbursement obligations and (iv) to the remaining Obligation in
the order and manner Determining Lenders deem appropriate.

               (c) Pro Rata. Each payment or prepayment shall be distributed to each Lender in
accordance with its Pro Rata Part of that payment or prepayment.

     Section 3.12 Sharing of Payments, Etc. If any Lender obtains any payment or prepayment
with respect to the Obligation (whether voluntary, involuntary, or otherwise, including, without
limitation, as a result of exercising its Rights under Section 3.13) that exceeds the part of that
payment or prepayment that it is then entitled to receive under the Loan Documents, then that
Lender shall purchase from the other Lenders participations that will cause the purchasing Lender
to share the excess payment or prepayment ratably with each other Lender. If all or any portion of
any excess payment or prepayment is subsequently recovered from the purchasing Lender, then the
purchase shall be rescinded and the purchase price restored to the extent of the recovery.
Borrower agrees that any Lender purchasing a participation from another Lender under this section
may, to the fullest extent permitted by Law, exercise all of its Rights of payment (including the
Right of offset) with respect to that participation as fully as if that Lender were the direct
creditor of Borrower in the amount of that participation.

     Section 3.13 Offset. If a Default exists, each Lender is entitled to exercise (for the
benefit of all Lenders in accordance with Section 3.12) the Rights of offset and banker’s Lien
against each and every account and other property, or any interest therein, that any Company may
now or hereafter have with, or which is now or hereafter in the possession of, that Lender to the
extent of the full amount of the Obligation owed (directly or participated) to it.

     Section 3.14 Booking Borrowings. To the extent permitted by Law, any Lender may make,
carry, or transfer its Borrowings at, to, or for the account of any of its branch offices or the
office or branch of any of its Affiliates. However, no Affiliate or branch is entitled to receive
any greater payment under Section 3.16 than the transferor Lender would have been entitled to
receive with respect to those Borrowings, and a transfer may not be made if, as a direct result of
it, Section 3.15 or Section 3.17 would apply to any of the Obligation. If any of the conditions of
Section 3.16 or Section 3.17 ever apply to a Lender, that Lender shall carry or transfer its
Borrowings at, to, or for the account of any of its branch offices or the office or branch of any
of

27

 

its Affiliates so long as the transfer is consistent with the other provisions of this section,
does not create any burden or adverse circumstance for that Lender that would not otherwise exist,
and eliminates the conditions of Section 3.16 or Section 3.17 as applicable.

     Section 3.15 Basis Unavailable for LIBOR Rate. If, on or before any date when a LIBOR Rate
is to be determined for a Borrowing, Agent reasonably determines that the basis for determining the
applicable rate is not available, then Agent shall promptly notify Borrower and Lenders of that
determination (which is conclusive and binding on Borrower absent manifest error) and the applicable Borrowing shall bear interest at
the sum of the Base Rate plus the Applicable Margin. Until Agent notifies Borrower that those
circumstances no longer exist, Lenders’ commitments under this agreement to make, or to convert to,
LIBOR-Rate Borrowings, as the case may be, are suspended.

     Section 3.16 Additional Costs. Each Lender severally and not jointly agrees to notify
Agent, the other Lenders, and Borrower within 180 days after it has actual knowledge that any
circumstances exist that would give rise to any payment obligation by Borrower under clauses (a)
through (c) below. Although no Lender shall have any liability to Agent, any other Lender, or any
Company for its failure to give that notice, Borrower is not obligated to pay any amounts under
those clauses that arise, accrue, or are imposed more than 180 days before that notice to the
extent it is applicable to those amounts. Any Lender demanding payment of any additional costs
under this section must generally be making similar demand for similar additional costs under
credit agreements to which it is party that contain similar provisions to this section.

               (a) Reserves. With respect to any or LIBOR-Rate Borrowing (i) if any present or
future Law imposes, modifies, or deems applicable (or if compliance by any Lender with any
requirement of any Tribunal results in) any requirement that any reserves (including, without
limitation, any marginal, emergency, supplemental, or special reserves) be maintained (other than
any reserve included in the Reserve Requirement), and if (ii) those reserves reduce any sums
receivable by that Lender under this agreement or increase the costs incurred by that Lender in
advancing or maintaining any portion of any LIBOR-Rate Borrowing, then (iii) that Lender (through
Agent) shall deliver to Borrower a certificate setting forth in reasonable detail the calculation
of the amount necessary to compensate it for its reduction or increase (which certificate is
conclusive and binding absent manifest error) and (iv) Borrower shall pay that amount to that
Lender within five Business Days after demand. The provisions of and undertakings and
indemnification in this clause (a) survive the satisfaction and payment of the Obligation and
termination of this agreement.

               (b) Capital Adequacy. With respect to any Commitment, Borrowing or LC if any present
or future Law regarding capital adequacy or compliance by Agent (as issuer of LCs) or any Lender
with any request, directive, or requirement now existing or hereafter imposed by any Tribunal
regarding capital adequacy, or any change in its written policies or in the risk category of this
transaction, reduces the rate of return on its capital as a consequence of its obligations under
this agreement to a level below that which it otherwise could have achieved (taking into
consideration its policies with respect to capital adequacy) by an amount deemed by it to be
material (and it may, in determining the amount, utilize reasonable assumptions and allocations of
costs and expenses and use any reasonable averaging or attribution method in apportioning such
costs to its customers generally), then (unless the effect is already reflected in

28

 

the rate of interest then applicable under this agreement) Agent or that Lender (through Agent) shall notify
Borrower and deliver to Borrower a certificate setting forth in reasonable detail the calculation
of the amount necessary to compensate it (which certificate is conclusive and binding absent
manifest error), and Borrower shall pay that amount to Agent or that Lender within five Business
Days after demand. The provisions of and undertakings and indemnification in this
clause (b) shall survive the satisfaction and payment of the Obligation and termination of
this agreement.

               (c) Taxes. Subject to Section 3.19, any Taxes payable by Agent or any Lender or ruled
(by a Tribunal) payable by Agent or any Lender in respect of this agreement or any other Loan
Document shall, if permitted by Law, be paid by Borrower, together with interest and penalties, if
any except for Taxes payable on or measured by the overall net income of Agent or that Lender (or
Agent or that Lender, as the case may be, together with any other Person with whom Agent or that
Lender files a consolidated, combined, unitary, or similar Tax return) and except for interest and
penalties incurred as a result of the gross negligence or willful misconduct of Agent or any
Lender). Agent or that Lender (through Agent) shall notify Borrower and deliver to Borrower a
certificate setting forth in reasonable detail the calculation of the amount of payable Taxes,
which certificate is conclusive and binding (absent manifest error), and Borrower shall pay that
amount to Agent for its account or the account of that Lender, as the case may be within five
Business Days after demand. If Agent or that Lender subsequently receives a refund of the Taxes
paid to it by Borrower, then the recipient shall promptly pay the refund to Borrower.

     Section 3.17 Change in Laws. If any Law makes it unlawful for any Lender to make or
maintain LIBOR-Rate Borrowings, then that Lender shall promptly notify Borrower and Agent, and (a)
as to undisbursed funds, that requested Borrowing shall be made as a Base-Rate Borrowing and (b) as
to any outstanding Borrowing (i) if maintaining the Borrowing until the last day of the applicable
Interest Period is unlawful, the Borrowing shall be converted to a Base-Rate Borrowing as of the
date of notice, in which event Borrower will not be required to pay any related Funding Loss, or
(ii) if not prohibited by Law, the Borrowing shall be converted to a Base-Rate Borrowing as of the
last day of the applicable Interest Period or (iii) if any conversion will not resolve the
unlawfulness, Borrower shall promptly prepay the Borrowing, without penalty but with related
Funding Loss.

     Section 3.18 Funding Loss. Borrower shall indemnify each Lender against, and pay to it
upon demand, any Funding Loss of that Lender. When any Lender demands that Borrower pay any
Funding Loss, that Lender shall deliver to Borrower and Agent a certificate setting forth in
reasonable detail the basis for imposing Funding Loss and the calculation of the amount, which
calculation is conclusive and binding absent manifest error. The provisions of and undertakings
and indemnification in this section survive the satisfaction and payment of the Obligation and
termination of this agreement.

     Section 3.19 Foreign Lenders, Participants, and Assignees. Each Lender, Participant (by
accepting a participation interest under this agreement), and Assignee (by executing an Assignment)
that is not organized under the Laws of the United States of America or one of its states (a)
represents to Agent and Borrower that (i) no Taxes are required to be withheld by Agent or Borrower
with respect to any payments to be made to it in respect of the Obligation and

29

 

(ii) it has
furnished to Agent and Borrower two duly completed copies of either U.S. Internal Revenue Service
Form W-8BEN or W-8ECI, or any other form acceptable to Agent and Borrower that entitles it to a complete exemption from U.S. federal
withholding Tax on all interest payments under the Loan Documents and (b) covenants to (i) provide
Agent and Borrower a new Form W-8BEN or W-8ECI, or other form acceptable to Agent upon the
expiration or obsolescence according to Law of any previously delivered form, duly executed and
completed by it, entitling it to a complete exemption from U.S. federal withholding Tax on all
interest and fee payments under the Loan Documents and (ii) comply from time to time with all Laws
with regard to the withholding Tax exemption. If any of the foregoing is not true at any time or
the applicable forms are not provided, then Borrower and Agent (without duplication) may deduct and
withhold from interest and fee payments under the Loan Documents any Tax at the maximum rate under
the Code or other applicable Law, and amounts so deducted and withheld shall be treated as paid to
that Lender for all purposes under the Loan Documents.

ARTICLE IV

FEES

     Section 4.1 Treatment of Fees. The fees described in this Article IV (a) are not
compensation for the use, detention, or forbearance of money, (b) are in addition to, and not in
lieu of, interest and expenses otherwise described in this agreement, (c) are payable in accordance
with Section 3.1, (d) are non-refundable and (e) to the fullest extent permitted by Law, bear
interest, if not paid when due, at the Default Rate.

     Section 4.2 Fees to Agent and Affiliates. Borrower shall pay to Agent, and its Affiliates
as Agent may designate, the fees and other amounts described in the letter agreement (as it may be
renewed, extended, or modified) of even date herewith between Borrower and Agent and any other
letter agreement (as it may be renewed, extended, or modified) between Borrower and Agent. Those
fees are solely for the account of Agent and its Affiliates except to the extent that Agent may
unilaterally agree in writing with any Lender in respect of the sharing of such fees.

     Section 4.3 LC Fees. As an inducement for the issuance (including, without limitation, the
extension) of each LC, Borrower agrees to pay to the Issuing Lender:

               (a) For the account of each Lender according to each Lender’s Revolving Commitment Percentage
on the day the fee is payable for a standby LC, an issuance fee equal to the greater of (i) $500.00
or (ii) a per annum rate equal to the Applicable Margin for LIBOR-Rate Revolving Borrowings in
effect on the date of issuance, payable quarterly in arrears, of the average-face amount of that LC
during each applicable quarterly period.

               (b) For the account of the Issuing Lender a fronting fee of 0.125% of the face amount of the
LC , payable on the date of issuance.

     Section 4.4 Revolving Commitment Fee. From and after the date of this agreement, Borrower shall pay to Agent a revolving commitment
fee for Lenders according to each Lender’s Revolving Commitment Percentage. The fee is payable as
it accrues on the last day of each March, June, September, and December — commencing on the first
of those dates that follows

30

 

the date of this agreement — and on the Termination Date. Each
payment of the fee is equal to the following, determined for the calendar quarter (or portion of a
calendar quarter commencing on the date of this agreement or ending on the Termination Date)
preceding and including the date it is due: From the date of this agreement until the Termination
Date, the product of (i) the Applicable Percentage times (ii) the amount by which (x) the lesser of
the Borrowing Base or the total Revolving Commitments exceeds (y) the sum of the average-daily
Revolving Principal Debt under the Revolving Notes plus the average-daily LC Exposure, times (iii)
a fraction with the number of days in the applicable quarter or portion of it as the numerator and
360 as the denominator.

ARTICLE V

SECURITY

     Section 5.1 Guaranty. Borrower shall cause Goodrich and all of Goodrich’s present and
future Subsidiaries — whether now existing or in the future formed or acquired as permitted by the
Loan Documents — that are Restricted Companies to unconditionally guarantee the full payment and
performance of the Obligation by execution of a written guaranty agreement in form and substance
satisfactory to Agent.

     Section 5.2 Collateral. Borrower shall cause full payment and performance of the
Obligation to be secured by Lender Liens on all of the items and types of property — (together
with the additional collateral described in Section 2.4(g) and Section 5.3, if any, and the cash
and non-cash proceeds of all of the foregoing, the “Collateral”) — described in the
present and future Loan Documents creating Lender Liens (said documents and any documents and
instruments from time to time amending or supplementing the same are herein sometimes collectively
called the “Collateral Documents”), including, without limitation all such property
described in the Collateral Documents listed on Schedule 6 to this agreement.

     Section 5.3 Collateral Account. In order to secure further the performance by Borrower of
the Obligation and to effect and facilitate Agent’s right of offset, immediately following Agent’s
request, Borrower shall, and shall cause the other Restricted Companies to, execute such forms,
authorizations, documents and instruments, and do such other things, as Agent shall request, in
order to require that pipeline companies, operators of the Mortgaged Properties and others
(collectively, the “Purchasers”) purchasing (or acting as agents for, or making payments on
behalf of, those purchasing) the oil, gas and other minerals produced or to be produced from, or
relating to, the Mineral Interests deliver to a post office box number specified by Agent all
royalties, production payments, checks, cash, proceeds and monies now or hereafter payable by the
Purchasers (or any of them) on account of oil, gas or other minerals produced from or relating to
the Mineral Interests or otherwise with respect to the Mineral Interests. Borrower agrees that all such royalties, payments
and monies delivered to such post office box shall be deposited by Agent in a cash collateral
account at Agent styled “Goodrich Petroleum Company, L.L.C. Production Account.” After the
occurrence of a Default, Borrower shall, upon receipt, deposit in the Goodrich Petroleum Company,
L.L.C. Production Account all such royalties, payments and monies which any Restricted Company
receives directly from the Purchasers. Each Restricted Company hereby irrevocably authorizes and
directs Agent to charge from time to time after the occurrence of a Default, the Goodrich Petroleum
Company, L.L.C. Production Account and any other accounts of such Restricted Company at Agent or
any Lender

31

 

for amounts due to the Lenders hereunder and under the Notes. After the occurrence of a
Default, Agent is hereby authorized, in its own name or the name of any Restricted Company, to
notify any or all parties obligated to such Restricted Company with respect to the Mineral
Interests to make all payments due or to become due thereon directly to Agent, or such other person
or officer as Agent may require whereupon the power and authority of Borrower to collect the same
in the ordinary course of its business shall be deemed to be immediately revoked and terminated.
With or without such general notification, after the occurrence of a Default, Agent may take or
bring in any Restricted Company’s name or that of Agent all steps, actions, suits or proceedings
deemed by Agent necessary or desirable to effect possession or collection of payments, may complete
any contract or agreement of such Restricted Company in any way related to any of the Mineral
Interests, may make allowances or adjustments related to the Mineral Interests, may compromise any
claims related to the Mineral Interests or may issue credit in its own name or the name of such
Restricted Company. Regardless of any provision hereof, however, Agent shall never be liable for
its failure to collect or for its failure to exercise diligence in the collection, possession, or
any transaction concerning, all or part of the Mineral Interests or sums due or paid thereon, nor
shall it or they be under any obligation whatsoever to anyone by virtue of its security interests
and liens relating to the Mortgaged Properties.

     Agent is hereby authorized and empowered on behalf of such Restricted Company to endorse the
name of any Restricted Company upon any check, draft, instrument, receipt, instruction or other
document or items, including, but not limited to, all items evidencing payment upon any
indebtedness of any Person to such Restricted Company coming into Agent’s possession, and to
receive and apply the proceeds therefrom in accordance with the terms hereof. Agent is hereby
granted an irrevocable power of attorney, which is coupled with an interest, to execute all checks,
drafts, receipts, instruments, instructions or other documents, agreements or items on behalf of
any Restricted Company, either before or after demand of payment on the Notes, as shall be deemed
by Agent to be necessary or advisable, in the sole discretion of Agent, to protect its security
interests and liens in the Mineral Interests or the repayment of the Obligation, and Agent shall
not incur any liability in connection with or arising from its exercise of such power of attorney.

     Borrower acknowledges that all funds so transferred into the Goodrich Petroleum Company,
L.L.C. Production Account shall be the property of the Restricted Companies only and not subject to
any claim by any party other than Agent, for the benefit of the Lenders.

     Section 5.4 Further Assurances. Borrower covenants and agrees that the Lender Liens otherwise described in Section 5.2 and, when
required, Section 2.4(g) and Section 5.3 must be created and perfected as a condition to funding
any Borrowings or the issuance of any LC. Furthermore, Borrower shall — and shall cause each
other appropriate Company to — perform the acts, duly authorize, execute, acknowledge, deliver,
file, and record any additional writings, and pay all filings fees and costs as Agent or
Determining Lenders may reasonably deem appropriate or necessary to perfect and maintain the Lender
Liens and preserve and protect the Rights of Agent and Lenders under any Loan Document.

32

 

     Section 5.5 Release of Collateral.

               (a) Whenever no Lender has any commitment to extend credit under any Loan Document and the
Obligation has been fully paid and performed, Agent shall, upon Borrower’s written request and at
Borrower’s cost and expense, cause the Lender Liens on all Collateral to be released.

               (b) In connection with any sale or other disposition of assets permitted by Section 9.10,
Agent shall, upon Borrower’s request and at Borrower’s cost and expense, release the Lender Liens
on the assets sold or disposed of.

ARTICLE VI

CONDITIONS PRECEDENT

     No Lender is obligated to fund the initial Borrowing or issue any LC unless Agent has received
all of the items described in Part A on Schedule 6. In addition, no Lender is obligated to
fund (as opposed to continue or convert) any Borrowing or issue any LC unless on the applicable
Borrowing Date, or issue date (and after giving effect to the requested Borrowing or LC), as the
case may be: (a) Agent (and the Issuing Lender, if applicable) timely receives a Borrowing Request
or LC Request (together with the applicable LC Agreement), as the case may be, (b) the Issuing
Lender receives any applicable LC fee then due and payable, (c) all of the representations and
warranties of the Companies in the Loan Documents are true and correct in all material respects
(unless they speak to a specific date or are based on facts which have changed by transactions
contemplated or expressly permitted by this agreement), (d) no Material Adverse Event, Default, or
Potential Default exists, (e) no Borrowing-Base Deficiency will exist after giving effect to the
Borrowing or LC issuance, (f) in the case of an Additional Term Borrowing, such Lender has agreed
in writing to fund such Additional Term Borrowing in accordance with Section 2.2(b), and (g) no
limitation in Section 2.1 or Section 2.4 is exceeded. Each Borrowing Request and LC Request,
however delivered, constitutes Borrower’s representation and warranty that the conditions in
clauses (c) through (g) above are satisfied. Upon Agent’s or any Lender’s reasonable request,
Borrower shall deliver to Agent or such Lender evidence substantiating any of the matters in the
Loan Documents that are necessary to enable Borrower to qualify for the Borrowing or LC, as the
case may be. Each condition precedent in this agreement (including, without limitation, those on
Schedule 6) is material to the transactions contemplated by this agreement, and time is of
the essence with respect to each condition precedent.

ARTICLE VII

REPRESENTATIONS AND WARRANTIES

     Borrower represents and warrants to Agent and Lenders as follows:

     Section 7.1 Purpose and Regulation U.

               (a) Borrower will use LCs for general corporate purposes and the proceeds of the (i) Revolving
Facility for the Restricted Companies’ working capital, for acquisition and development of Mineral
Interests and for other general corporate purposes and (ii) Term Facility

33

 

for the exploration,
development and exploitation of oil and gas, principally for its drilling activities in Rusk and
Panola Counties, Texas and Caddo and DeSoto Parishes, Louisiana.

               (b) No Company is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying any “margin stock” within the meaning
of Regulation U of the Board of Governors of the Federal Reserve System, as amended. No part of
the proceeds of any LC draft or drawing or Borrowing will be used, directly or indirectly, for a
purpose that violates any Law, including, without limitation, Regulation U.

     Section 7.2 Corporate Existence, Good Standing, and Authority. Each Restricted Company is
duly organized, validly existing, and in good standing under the Laws of its jurisdiction of
incorporation. Each Restricted Company is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the nature and extent of its business
and properties require due qualification and good standing (each of which jurisdictions is
identified on Schedule 6). Each Restricted Company possesses all requisite authority and
power to conduct its business as is now being conducted and as proposed under the Loan Documents to
be conducted and to own and operate its assets as now owned and operated and as proposed to be
owned and operated under the Loan Documents.

     Section 7.3 Subsidiaries and Names. Schedule 7.3 — as supplemented from time to
time by written notice from Borrower to Agent and Lenders specifically referring to that schedule
and this section and reflecting changes to that schedule as a result of transactions permitted by
the Loan Documents — describes (a) all of Goodrich’s direct and indirect Subsidiaries, (b) all
Restricted Companies, (c) every name or trade name used by each Restricted Company during the
five-year period before the date of this agreement and (d) every change of each Subsidiary’s name
and jurisdiction of organization or formation during the four-month period before the date of this
agreement. All of the outstanding shares of capital stock (or similar voting interests) of
Borrower’s Subsidiaries are (a) duly authorized, validly issued, fully paid, and nonassessable, (b)
owned of record and beneficially as described in that schedule or those writings, free and clear of
any Liens (provided that applicable Permitted Liens may exist, however, no intention to subordinate
the first priority Lien granted in favor of Agent for the benefit of Lenders is to be hereby
implied or expressed by the permitted existence of such Permitted Liens) and (c) not subject to any
warrant, option, or other acquisition Right of any Person or subject to any transfer restriction except restrictions imposed by
securities Laws and general corporate Laws.

     Section 7.4 Authorization and Contravention. The execution and delivery by each Restricted
Company of each Loan Document to which it is a party and the performance by it of its obligations
under those Loan Documents (a) are within its corporate power, (b) have been duly authorized by all
necessary corporate action, (c) require no action by or filing with any Tribunal (except any action
or filing that has been taken or made on or before the Closing Date), (d) do not violate any
provision of its charter or bylaws and (e) do not violate any provision of Law applicable to it or
any material agreement to which it is a party except violations that individually or collectively
are not a Material Adverse Event.

34

 

     Section 7.5 Binding Effect. Upon execution and delivery by all parties to it, each Loan
Document will constitute a legal and binding obligation of each Restricted Company party to it,
enforceable against it in accordance with that Loan Document’s terms except as that enforceability
may be limited by Debtor Laws and general principles of equity.

     Section 7.6 Financials and Existing Debt. The Current Financials were prepared in
accordance with GAAP and present fairly, in all material respects, the Companies’ consolidated
financial condition, results of operations, and cash flows as of, and for the portion of the fiscal
year ending on their dates (subject only to normal year-end adjustments for interim statements).
All material liabilities of the Companies as of those dates are reflected in those Current
Financials or in the notes to them or have otherwise been disclosed to Lenders in writing. Except
for transactions directly related to, specifically contemplated by, or expressly permitted by the
Loan Documents (a) no material adverse changes have occurred in the Companies’ consolidated
financial condition from that shown in the Current Financials and (b) no Company has incurred any
material liability except Debt that is not prohibited by the Loan Documents.

     Section 7.7 [Reserved]

     Section 7.8 Solvency. On each Borrowing Date and the date any LC is issued, each
Restricted Company is — and after giving effect to the requested Borrowing or LC will be —
Solvent.

     Section 7.9 Litigation. Except as disclosed on Schedule 7.9 and matters covered
(subject to reasonable and customary deductible and retention) by insurance or indemnification
agreements (a) no Restricted Company is subject to, or aware of the threat of, any Litigation that
is reasonably likely to be determined adversely to any Restricted Company and, if so adversely
determined, is a Material Adverse Event and (b) no outstanding and unpaid judgments against any
Restricted Company exist.

     Section 7.10 Taxes. Except where not a Material Adverse Event (a) all Tax returns of each
Restricted Company required to be filed have been filed (or extensions have been granted) before
delinquency and (b) all Taxes imposed upon each Restricted Company that are due and payable have
been paid before delinquency except as being contested as permitted by Section 8.5.

     Section 7.11 Environmental Matters. Except as disclosed on Schedule 7.11:

               (a) No consent or other approval of — or declaration or other filing with — any Tribunal is
required under any Environmental Law in connection with any transaction contemplated by the Loan
Documents.

               (b) Except where adequately covered by an Environmental Indemnity Agreement or where not a
Material Adverse Event, none of the following are present at any Real Property (including, without
limitation, the Leases and the Mineral Interests) of any Restricted Company in violation of any
Environmental Law: (i) Any asbestos or asbestos-containing material, (ii) any underground or
aboveground storage tank or tank system subject to regulation under any Environmental Law or (iii)
any electrical or other fixtures or equipment containing polychlorinated biphenyls.

35

 

               (c) Except where adequately covered by an Environmental Indemnity Agreement or where not a
Material Adverse Event, no unreported Release of any Hazardous Substance has occurred at or in the
vicinity to any Real Property (including, without limitation, the Leases and the Mineral Interests)
(i) in a quantity that requires any report or other notice to any Tribunal under any Environmental
Law or (ii) that has resulted or that threatens to result in the presence of any Hazardous
Substance in the environment in a quantity, concentration, state, or other condition that exceeds
any applicable standard for the protection of human health or the environment under any
Environmental Law.

               (d) Except where not a Material Adverse Event, no Real Property (including, without
limitation, the Leases and the Mineral Interests) has been used for the storage (other than
short-term storage not requiring an Environmental Permit), treatment, or disposal of any Hazardous
Substance in any amounts that are reasonably likely to result in any Environmental Liabilities or
violation of any Environmental Law while owned or operated by any Company or any Predecessor.

               (e) Except where adequately covered by an Environmental Indemnity Agreement or where not a
Material Adverse Event, no Restricted Company or Predecessor is — or has received any notice from
any Tribunal during the last five years that it is — potentially liable for any removal,
remediation, or other response costs under any Environmental Law as the result of the Release or
threatened Release of any Hazardous Substance.

               (f) No Company knows of any material error or omission in any Environmental Report delivered
to Agent or any Lender.

     Section 7.12 Employee Plans. Except where not a Material Adverse Event (a) no Employee
Plan has incurred an “accumulated funding deficiency” (as defined in Section 302 of ERISA or
Section 412 of the Code), (b) no Company has incurred liability — except for liabilities for
premiums that have been paid or that are not past due — under ERISA to the PBGC in connection with
any Employee Plan, (c) no Company has withdrawn in whole or in part from participation in a
Multiemployer Plan, (d) no Company has engaged in any “prohibited transaction” (as defined in
Section 406 of ERISA or Section 4975 of the Code), (e) no “reportable event” (as defined in Section
4043 of ERISA) has occurred, excluding events for which the notice requirement is waived under
applicable PBGC regulations, (f) no Company or Affiliate of any Company has any liability under or
is subject to any Lien under ERISA or the Code to or on account of any employee benefit plan,
program, scheme, or arrangement established or maintained by any Company or Affiliate of any
Company or to which any Company or any Affiliate of any Company contributes or had an obligation to
contribute, (g) each Employee Plan complies in all material respects, both in form and operation,
with ERISA and the Code and (h) no Multiemployer Plan is in reorganization within the meaning of §
418 of the Code.

     Section 7.13 Properties; Liens. Each Restricted Company has indefeasible title to the
Mortgaged Properties and all of its other property reflected on the Current Financials as being
owned by it except for property that is obsolete or that has been disposed of in the ordinary
course of business between the date of the Current Financials and the date of this agreement or,
after the date of this agreement, as permitted by Section 9.10 or Section 9.11. No Lien exists on

36

 

any property (including, without limitation, the Mortgaged Properties) of any Company (provided
that applicable Permitted Liens may exist, however, no intention to subordinate the first priority
Lien granted in favor of Agent for the benefit of Lenders is to be hereby implied or expressed by
the permitted existence of such Permitted Liens). No Restricted Company is party or subject to any
agreement, instrument, or order which in any way restricts any Restricted Company’s ability to
allow Liens to exist upon any of its assets except relating to Permitted Liens (provided that no
intention to subordinate the first priority Lien granted in favor of Agent for the benefit of
Lenders is to be hereby implied or expressed by the permitted existence of such Permitted Liens).
The provisions of each Collateral Document are effective to create in favor of Agent for the
ratable benefit of the Lenders, a legal, valid and enforceable Lender Lien in all right, title and
interest of the Restricted Companies in the Collateral described therein, which Lender Liens shall
constitute fully perfected first-priority Liens on all right, title and interest of the Restricted
Companies in the Collateral described therein (provided that applicable Permitted Liens may exist,
however, no intention to subordinate the first priority Lien granted in favor of Agent for the
benefit of Lenders is to be hereby implied or expressed by the permitted existence of such
Permitted Liens). No orders of, proceedings pending before, or other requirements of, the Federal
Energy Regulatory Commission or any other Tribunal exist which could result in the Restricted
Companies being required to refund any material portion of the proceeds received or to be received
from the sale of hydrocarbons constituting part of the Mortgaged Properties. No Restricted Company
(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 the Mortgaged Properties at some future date
without receiving full payment therefor at the time of delivery and (b) has produced gas, in any material amount, subject
to, and is, nor is any of the Mortgaged Properties, subject to balancing rights of third parties or
subject to balancing duties under governmental requirements, except as to such matters for which
such Restricted Company has established monetary reserves adequate in an amount to satisfy such
obligations and has segregated such reserves from other accounts.

     Section 7.14 Government Regulations. No Restricted Company is subject to regulation under
the Investment Company Act of 1940, as amended, or the Public Utility Holding Company Act of 1935,
as amended.

     Section 7.15 Transactions with Affiliates. Except for transactions with other Restricted
Companies and as otherwise disclosed on Schedule 7.15, no Restricted Company is a party to
a material transaction with any of its Affiliates except transactions in the ordinary course of
business and upon fair and reasonable terms not materially less favorable than it could obtain or
could become entitled to in an arm’s-length transaction with a Person that was not its Affiliate.

     Section 7.16 Debt. No Restricted Company has any Debt except Permitted Debt.

     Section 7.17 Leases. Except where not a Material Adverse Event (a) each Restricted Company
enjoys peaceful and undisturbed possession of all leases necessary for the operation of its
properties and assets, none of which contains any unusual or burdensome provisions which might
materially affect or impair the operation of those properties and assets and (b) all material
leases under which any Restricted Company is a lessee are in full force and effect, and no default
— or event that, with notice, time lapse, or both, would become a default — exists. The leases

37

 

which underlie or constitute part of the Mineral Interests (the “Leases”) are in full force
and effect, and no Restricted Company nor any other person has defaulted on any of its obligations
thereunder so as to impair the value of such Leases.

     Section 7.18 Labor Matters. Except where not a Material Adverse Event (a) no actual or
threatened strikes, labor disputes, slow downs, walkouts, work stoppages, or other concerted
interruptions of operations that involve any employees employed at any time in connection with the
business activities or operations at the Real Property exist, (b) hours worked by and payment made
to the employees of any Restricted Company or any Predecessor have not been in violation of the
Fair Labor Standards Act or any other applicable Laws pertaining to labor matters, (c) all payments
due from any Restricted Company for employee health and welfare insurance, including, without
limitation, workers compensation insurance, have been paid or accrued as a liability on its books
and (d) the business activities and operations of each Company are in compliance with OSHA and
other applicable health and safety Laws.

     Section 7.19 Intellectual Property. Except where not a Material Adverse Event (a) each
Restricted Company owns or has the right to use all material licenses, patents, patent
applications, copyrights, service marks, trademarks, trademark applications and trade names
necessary to continue to conduct its businesses as presently conducted by it and proposed to be
conducted by it immediately after the date of this agreement, (b) each Restricted Company is
conducting its business without infringement or claim of infringement of any license, patent,
copyright, service mark, trademark, trade name, trade secret or other intellectual property right
of others and (c) no infringement or claim of infringement by others of any material license,
patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property
of any Restricted Company exists.

     Section 7.20 Full Disclosure. Each material fact or condition relating to the Loan
Documents or any Restricted Company’s financial condition, business, or property has been disclosed
in writing to Agent. All information previously furnished to Agent by or at the direction of a
Responsible Officer or the General Counsel of or the attorneys for Borrower in connection with the
Loan Documents was — and all information furnished to Agent in the future by or at the direction
of a Responsible Officer or the General Counsel of or the attorneys for Borrower will be — true
and accurate in all material respects or based on reasonable estimates on the date the information
is stated or certified.

     Section 7.21 Estimated Oil and Gas Reserves. Borrower has heretofore delivered to Agent
copies of all requested reports (prepared by independent consulting engineers), which have been
obtained by the Restricted Companies and concern the estimated oil and gas reserves and future net
revenues attributable to the Mineral Interests. The statements of fact contained in said reports
with respect to the character and ownership of the Mineral Interests (including, without
limitation, the revenue interest and working interest of the Restricted Companies stated therein)
and the other factual data furnished by the Restricted Companies as a basis for the estimates set
forth therein are true and correct and do not omit any material fact necessary to make said
statements not misleading.

     Section 7.22 Working Interest. The Restricted Companies own a “working interest” in each
of the Mortgaged Properties which is not greater than the interest specified in the

38

 

description of
such property in the Collateral Documents, with the term “working interest”, as used herein,
meaning the right to explore for, drill and produce oil, gas or other minerals, whether such right
is created by lease or otherwise, and being equivalent to the proportionate part of the cost of
exploration, development and marketing of oil, gas and other minerals borne by the Restricted
Companies with respect to each respective property.

     Section 7.23 Net Revenue Interest. The Restricted Companies own a “net revenue interest”
in each of the Mortgaged Properties which is not less than the interest specified in the
description of such property in the Collateral Documents, with the term “net revenue interest”, as
used herein, meaning the proportionate share of the production of oil, gas or other minerals to which the Restricted Companies are entitled
after deduction of all royalties, overriding royalties and other interests payable from or measured
by production.

     Section 7.24 Burdensome Contracts. No Restricted Company is a party to, or bound by, nor
are any of the Mineral Interests or Mortgaged Properties subject to, any contract, agreement or
other arrangement which would result in a Material Adverse Event.

     Section 7.25 Regulatory Defects. As of the date hereof, Borrower has advised Agent, in
writing, of all regulatory defects of which the Restricted Companies have been advised or have
actual knowledge with respect to the ownership or operation of the Mortgaged Properties. No such
regulatory defect results in a Material Adverse Event or affects the Restricted Companies intended
operation of any of the Mineral Interests or the value of the sale of production therefrom.

     Section 7.26 Agreements Affecting Mineral Interests. Borrower has advised Agent of, and
delivered (to the extent requested by Agent) true and correct copies to Agent of, all material
operating agreements, pooling or unitization agreements, sales or processing contracts,
restrictions, preferential purchase right agreements, farm-out, drilling and/or development
agreements, pipeline transportation agreements, gas purchase or other marketing agreements, Swap
Agreements and other material agreements which pertain to the Mineral Interests, the operation
thereof or the disposition of production attributable thereto.

     Section 7.27 Locations of Business, Offices. The principal place of business and chief
executive office of the each Restricted Company is located at the address of Borrower, set forth
next to its name on the signature pages hereof or at such other location as Borrower may have, by
proper written notice hereunder, advised Agent and the Lenders, provided that such other
location of Borrower or other Restricted Company is within a state in which appropriate financing
statements from Borrower or other Restricted Company, as applicable, in favor of Agent have been
filed.

ARTICLE VIII

AFFIRMATIVE COVENANTS

     For so long as any Lender is committed to lend or issue LCs under this agreement and until the
Obligation has been fully paid and performed, Borrower covenants and agrees with Agent and Lenders
that, without first obtaining Agent’s written notice of Determining Lenders’ consent to the
contrary:

39

 

     Section 8.1 Certain Items Furnished. Borrower shall furnish or cause to be furnished, the
following to each Lender:

               (a) Annual Financials, Etc. Promptly after preparation but no later than 120 days
after the last day of each fiscal year of Goodrich, Financials showing the Companies’ consolidated
financial condition and results of operations as of, and for the year ended on, that last day,
accompanied by (i) the opinion, without material qualification, of KPMG LLP or other firm of
nationally-recognized independent certified public accountants reasonably acceptable to Determining
Lenders, based on an audit using generally accepted auditing standards, that the Financials were
prepared in accordance with GAAP and present fairly, in all material respects, the Companies’

consolidated financial condition and results of operations and (ii) a Compliance Certificate.

               (b) Quarterly Financials, Etc. Promptly after preparation but no later than 45 days
after the last day of each of the first three fiscal quarters of Goodrich each year, Financials
showing the Companies’ consolidated financial condition and results of operations for that fiscal
quarter and for the period from the beginning of the current fiscal year to the last day of that
fiscal quarter, accompanied by a Compliance Certificate.

               (c) Reserve Report(s).

                    (i) Borrower shall deliver to Agent and each Lender no later than March 1 of each year during
the term of this agreement, engineering reports in form and substance acceptable to the Lenders
prepared and certified by Coutret and Associates or such other nationally-recognized or
regionally-recognized independent consulting petroleum engineers acceptable to the Lenders setting
forth (A) the proven producing, non-producing and undeveloped oil and gas reserves (separately
classified as such) attributable to the Mineral Interests as of December 31 of the preceding year,
(B) the aggregate present value determined on the basis of stated pricing assumptions, of the
future net income with respect to such Mineral Interests, discounted at a stated per annum discount
rate, (C) projections of the annual rate of production, gross income and net income with respect to
such reserves and (D) information with respect to any “take or pay,” “prepayment” and gas balancing
liabilities of the Restricted Companies.

                    (ii) Borrower shall deliver to Agent and each Lender no later than September 1 of each year
during the term of this agreement, a supplement to the most recent year-end Reserve Report,
satisfactory to Agent, prepared by or under the supervision of the chief petroleum engineer of
Borrower and containing an update through June 30 of such year of the information described in
Subsection 8.1(c)(i)(A)-(D) to reflect changes from the most recent year-end Reserve Report
delivered pursuant to Subsection 8.1(c)(i).

                    (iii) Each of the reports provided pursuant to this Section shall be submitted to Agent and
each Lender together with a certificate of a Responsible Officer certifying that such report is
true and correct in all material respects and stating the value of the Mortgaged Properties as a
percentage of all Mineral Interests based on the information contained therein, and with additional
data as Agent or any Lender may reasonably request concerning

40

 

pricing, quantities of production
from the Mortgaged Properties, purchasers of production and engineering and geological data.

               (d) Production Information; Hedging Reports. Contemporaneously with the delivery of
each Compliance Certificate pursuant to Section 8.1(a) and (b), a production and operations report
for the relevant quarterly period in the form of Exhibit B hereto, and a detailed summary
of the material terms of each Swap Agreement to which any Company is a party, in form and substance
satisfactory to Agent, and including, without limitation, the term, notional amounts, fixed and
floating prices and payors, credit support, and the current mark-to-market value of each
transaction and accompanied by copies of all transaction confirmations, modifications or other
documentation executed or delivered in connection therewith during such quarterly period, each duly
completed and certified by a Responsible Officer.

               (e) Other Reports. Promptly after preparation and distribution, accurate and complete
copies of all reports and other material communications about material financial matters or
material corporate plans or projections by or for any Company for distribution to any Tribunal or
any existing or potential creditor (i) including, without limitation, each Form 10-K, 10-Q, and S-8
filed with the Securities and Exchange Commission but (ii) excluding (A) credit, trade, and other
reports prepared and distributed in the ordinary course of business and (B) information otherwise
furnished to Agent and Lenders under this agreement. Promptly upon Agent’s request therefor,
copies of (i) any statements or other reports describing reserves, future income or value
attributable to any of the Mineral Interests and monthly production reports filed with the Minerals
Management Service by the operator of any of the Mortgaged Properties, (ii) all material operating
agreements, pooling or unitization agreements, sales or processing contracts, restrictions,
preferential purchase right agreements, drilling and/or development agreements, pipeline
transportation agreements and other material agreements which pertain to the Mineral Interests, the
operation thereof or the disposition of production attributable thereto and (iii) all reports,
forms and other documents and data submitted by Borrower to the United States Department of the
Interior Bureau of Land Management Minerals Management Service, the Louisiana Oil Conservation
Commission, United States Department of Energy, United States Federal Energy Regulatory Commission,
the Texas Railroad Commission or other Tribunal, concerning the operation of, drilling of wells on,
sale of production from, or the prices received for the sale of production from, the Mineral
Interests.

               (f) Employee Plans. As soon as possible and within 30 days after Borrower knows that
any event which would constitute a reportable event under Section 4043(b) of Title IV of ERISA with
respect to any Company’s employee pension or other benefit plan subject to ERISA has occurred, or
that the PBGC has instituted or will institute proceedings under ERISA to terminate that plan,
deliver a certificate of a Responsible Officer of Borrower setting forth details as to that
reportable event and the action which the Companies propose to take with respect to it, together
with a copy of any notice of that reportable event which may be required to be filed with the PBGC,
or any notice delivered by the PBGC evidencing its intent to institute those proceedings or any
notice to the PBGC that the plan is to be terminated, as the case may be. For all purposes of this
section, Borrower is deemed to have all knowledge or knowledge of all facts attributable to the
plan administrator under ERISA.

41

 

               (g) Other Notices. Promptly after Borrower has knowledge of, but in any event prior
to five days after the occurrence of any of the following events, notice of (i) the existence and
status of any Litigation that is reasonably likely to be adversely determined and, if determined
adversely to any Company, would be a Material Adverse Event, (ii) any change in any material fact or circumstance represented or warranted by any Company in any Loan
Document, (iii) a Default or Potential Default, specifying the nature thereof and what action the
Companies have taken, are taking, or propose to take or (iv) claims made against any Restricted
Company by any Person in excess of $100,000, other than for accounts payable in the ordinary course
of business.

               (h) Certificate of Responsible Officer—Total Debt. Upon (A) any change to Total PV
(whether pursuant to a scheduled redetermination, an additional special redetermination or other
adjustment pursuant to Section 2.7 or otherwise) or (B) the incurrence of any Debt of the types
described in the definition of “Total Debt” by Borrower or any other Restricted Company, Borrower
will promptly, but in any event within fifteen (15) days after any such event, deliver to Agent a
certificate of a Responsible Officer of Borrower setting forth the Total Debt and the Total PV,
both prior to and after giving effect to such event, and demonstrating compliance with Section
10.4.

               (i) Other Information. Promptly when reasonably requested by Agent or any Lender,
such information (not otherwise required to be furnished under this agreement) about any Company’s
business affairs, assets, and liabilities.

     Section 8.2 Use of Credit. Borrower shall use LCs and the proceeds of Borrowings only for
the purposes represented in this agreement.

     Section 8.3 Books and Records. Each Company shall maintain books, records, and accounts
necessary to prepare Financials in accordance with GAAP.

     Section 8.4 Inspections. Upon reasonable request, each Company shall allow Agent or any
Lender (or their respective Representatives) to inspect any of its properties, to review reports,
files, and other records and to make and take away copies, to conduct tests or investigations, and
to discuss any of its affairs, conditions, and finances with its other creditors, directors,
officers, employees, or representatives from time to time, during reasonable business hours. Any
reviews and investigations shall be limited to matters relevant to the present or future financial
condition of the Companies and their compliance with — or ability to comply with — the Loan
Documents.

     Section 8.5 Taxes. Each Restricted Company shall promptly pay when due any and all Taxes
except Taxes that are being contested in good faith by lawful proceedings diligently conducted,
against which reserve or other provision required by GAAP has been made, and in respect of which
levy and execution of any Lien has been and continues to be stayed.

     Section 8.6 Payment of Obligation. Each Restricted Company shall promptly pay (or renew and extend) all of its material obligations
as they become due (unless the obligations are being contested in good faith by appropriate
proceedings).

42

 

     Section 8.7 Expenses. Within five (5) Business Days of demand by Agent, Borrower shall pay
(a) all costs, fees, and expenses paid or incurred by Agent incident to any Loan Document
(including, without limitation, the reasonable fees and expenses of Agent’s counsel in connection
with the negotiation, preparation, delivery, and execution of the Loan Documents and any related
amendment, waiver, or consent), (b) all other out-of-pocket costs and expenses paid or incurred by
Agent in connection with the normal, ongoing administration, of this agreement and the other Loan
Documents, including, without limitation, independent insurance reviews, environmental assessments
or third party engineering support and (c) all reasonable costs and expenses incurred by Agent or
any Lender in connection with the enforcement of the obligations of any Restricted Company under
the Loan Documents or the exercise of any Rights under the Loan Documents (including, without
limitation, reasonable allocated costs of in-house counsel, other reasonable attorneys’ fees, and
court costs), all of which are part of the Obligation, bearing interest, if not paid when due at
the Default Rate until paid.

     Section 8.8 Maintenance of Existence, Assets, and Business. Each Restricted Company shall
(a) except in connection with dispositions permitted under Section 9.10 and mergers and
consolidations permitted under Section 9.11, maintain its corporate existence and good standing in
its state of incorporation as of the Closing Date and (b) (i) maintain its authority to transact
business and good standing in all other states where required or necessary for its business, (ii)
maintain all licenses, permits, and franchises (including, without limitation, Environmental
Permits) necessary for its business and (iii) keep all of its assets that are useful in and
necessary to its business in good working order and condition (ordinary wear and tear excepted) and
make all necessary repairs and replacements.

     Section 8.9 Insurance. Each Restricted Company shall, at its cost and expense, maintain
with financially sound, responsible, and reputable insurance companies or associations — or, as to
workers’ compensation or similar insurance, with an insurance fund or by self-insurance authorized
by the jurisdictions in which it operates — insurance concerning its properties and businesses
against casualties, risks and contingencies and of types and in amounts (and with co-insurance and
deductibles) as is customary in the case of similar businesses. Each such policy of insurance
shall name Agent as an additional insured and loss payee thereunder and shall be non-cancelable
except upon thirty (30) days prior written notice to Agent.

     Section 8.10 Environmental Matters. Each Restricted Company shall (a) operate and manage
its businesses, processes, and other activities in compliance with all Environmental Laws,
Environmental Permits, and Environmental Indemnity Agreements and in a manner to avoid incurring
Environmental Liabilities, to prevent any Release of Hazardous Substances, and to minimize the risk
of loss or damage in the event of any Release of Hazardous Substances, (b) keep each Environmental Indemnity
Agreement in full force and effect according to its terms, take all steps that may be necessary or
appropriate to timely assert and receive payment or all claims under it, and (to the extent that
the material remediation or indemnity protections or benefits provided by it would be jeopardized)
not consent to any modification or amendment of any Environmental Indemnity Agreement or waive,
compromise, settle, or otherwise release or discharge any obligation or indemnity of any indemnitor
or other obligor under it and (c) continuously and diligently carry out such removal, remedial, or
other response actions as may be necessary or appropriate (i) in respect of each matter (whether or
not disclosed on Schedule 7.11) that constitutes non-compliance with any Environmental Law
and (ii) to prevent or

43

 

minimize potential Environmental Liabilities from any of those matters
(whether or not disclosed on Schedule 7.11) or any Release of Hazardous Substances.

     Section 8.11 Subsidiaries. In respect of each applicable present and future Subsidiary of
Goodrich (whether as a result of acquisition, creation, or otherwise), Borrower shall cause such
Subsidiary to promptly and fully comply with Article V and its assets, capital stock or other
equity securities to become subject to Lender Liens pursuant to the Collateral Documents.

     Section 8.12 Indemnification.

               (a) BORROWER AND (PURSUANT TO ITS GUARANTY) EACH OTHER RESTRICTED COMPANY SHALL, JOINTLY AND
SEVERALLY INDEMNIFY AGENT AND LENDERS AND THEIR RESPECTIVE PARENTS, SUBSIDIARIES, DIRECTORS,
OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS, ASSIGNS, AND ATTORNEYS (COLLECTIVELY, THE
“INDEMNIFIED PARTIES”), PROTECT AND DEFEND (WITH COUNSEL ACCEPTABLE TO DETERMINING LENDERS)
AGAINST, HOLD THEM HARMLESS FROM AND AGAINST, AND ON DEMAND PAY OR REIMBURSE THEM FOR ANY AND ALL
LIABILITIES, OBLIGATION, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, AND
PROCEEDINGS AND ALL COSTS, EXPENSES (INCLUDING, WITHOUT LIMITATION, ALL REASONABLE ATTORNEYS’ FEES
AND LEGAL EXPENSES WHETHER OR NOT SUIT IS BROUGHT), AND DISBURSEMENTS OF ANY KIND OR NATURE (THE
“INDEMNIFIED LIABILITIES”) THAT MAY AT ANY TIME BE IMPOSED ON, INCURRED BY, OR ASSERTED
AGAINST THE INDEMNIFIED PARTIES, IN ANY WAY RELATING TO OR ARISING OUT OF (i) ANY LOAN DOCUMENT,
(ii) ANY TRANSACTION CONTEMPLATED BY ANY LOAN DOCUMENT, (iii) ANY COLLATERAL, (iv) ANY REAL
PROPERTY (INCLUDING, WITHOUT LIMITATION, THE LEASES AND MINERAL INTERESTS) OR OIL AND GAS PROPERTY,
(v) ANY ENVIRONMENTAL LIABILITY IN ANY WAY RELATED TO ANY COMPANY, PREDECESSOR, COLLATERAL, REAL
PROPERTY (INCLUDING, WITHOUT LIMITATION, THE LEASES AND MINERAL INTERESTS) OIL AND GAS PROPERTY, OR
ANY ACT, OMISSION, STATUS, OWNERSHIP, OR OTHER RELATIONSHIP, CONDITION, OR CIRCUMSTANCE
CONTEMPLATED BY, CREATED UNDER, OR ARISING PURSUANT TO OR IN CONNECTION WITH ANY LOAN DOCUMENT OR (vi) ANY INDEMNIFIED PARTY’S
SOLE OR CONCURRENT ORDINARY NEGLIGENCE.

               (b) THE FOREGOING PROVISIONS (i) ARE NOT LIMITED IN AMOUNT, EVEN IF THAT AMOUNT EXCEEDS THE
AMOUNT OF THE OBLIGATION, (ii) INCLUDE, WITHOUT LIMITATION, REASONABLE FEES AND EXPENSES OF
ATTORNEYS AND OTHER COSTS OR EXPENSES OF LITIGATION OR OF PREPARING FOR LITIGATION, DAMAGES OR
INJURY TO PERSONS, PROPERTY, OR NATURAL RESOURCES ARISING UNDER ANY STATUTORY OR COMMON LAW,
PUNITIVE DAMAGES, FINES, AND OTHER PENALTIES, AND LOSS OF VALUE OF ANY REAL PROPERTY OR COLLATERAL,
(iii) ARE NOT AFFECTED BY ANY ACT OR OMISSION OF ANY TRIBUNAL OR OTHER THIRD PARTY, OR THE SOURCE
OR ORIGIN OF ANY HAZARDOUS SUBSTANCE AND (iv) ARE NOT AFFECTED BY ANY INDEMNIFIED

44

 

PARTY’S
INVESTIGATION, ACTUAL OR CONSTRUCTIVE KNOWLEDGE, COURSE OF DEALING, OR WAIVER.

               (c) However, no Indemnified Party has the right to be indemnified under the Loan Documents for
its own fraud, gross negligence, or willful misconduct.

               (d) The provisions of and undertakings and indemnification in this section survive the
foreclosure of any Lender Lien or any transfer in lieu of that foreclosure, the sale or other
transfer of any Collateral or real property to any Person, the satisfaction of the obligation, the
termination of the Loan Documents, and the release of any or all Lender Liens.

     Section 8.13 Operations and Properties. Each Company will act prudently and in accordance
with customary industry standards in managing or operating its assets, properties, business and
investments. Each Company will keep in good working order and condition, ordinary wear and tear
excepted, all of its assets and properties which are necessary to the conduct of its business,
including without limitation all wells and equipment necessary or useful in the operation of the
Mineral Interests.

     Section 8.14 Leases. Each Company will pay and discharge promptly, or cause to be paid and
discharged promptly, all rentals, delay rentals, royalties, overriding royalties, payments out of
production and other indebtedness or obligations accruing under, and perform or cause to be
performed each and every act, matter or thing required by each and all of, the Leases and all other
agreements and contracts constituting or affecting the Mineral Interests, and do all other things
necessary to keep unimpaired its rights thereunder and prevent any forfeiture thereof or default
thereunder, and operate or cause to be operated such properties in a diligent, careful and
efficient manner and in compliance with all applicable proration and conservation laws and all
applicable rules and regulations of every Tribunal, whether state, federal, municipal or other
jurisdiction, from time to time constituted to regulate the development and operations of oil and
gas properties and the production and sale of oil, gas and other hydrocarbons therefrom.

     Section 8.15 Development and Maintenance. Each Company will explore, develop and maintain (or cause to be explored, developed and
maintained) the Leases, wells, units and acreage to which the Mineral Interests pertain in a
prudent manner, and as may be reasonably necessary for the prudent and economical operation of (and
in an effort to maximize the production capacity of and ultimate recovery of hydrocarbons from)
such Leases, wells, units and acreage.

     Section 8.16 Maintenance of Liens. Each Company shall perform all such acts and execute
all such documents as Agent may reasonably request in order to enable Agent to report, file and
record every instrument that Agent may deem necessary in order to perfect and maintain the Lender
Liens in the Mortgaged Properties and otherwise to preserve and protect the rights of Agent and the
Lenders in and to the Collateral.

     Section 8.17 Farmout Agreement. Borrower shall cause the “Farmor” under the Farmout
Agreement to deliver to Borrower each assignment earned under the Farmout Agreement in recordable
form in the time and manner provided for in the Farmout Agreement, but in no event later than 45
days after such assignment has been earned under the Farmout

45

 

Agreement (provided that with respect
to any assignments earned but not delivered as of the Closing Date, Borrower shall have 45 days
from the Closing Date to obtain such assignments from the Farmor). Contemporaneously with the
receipt of any such assignment, Borrower shall notify Agent of its receipt thereof and cause such
assignment to be duly and properly recorded and the interests subject of such assignment to be
subject to Lender Liens pursuant to documentation in form and substance satisfactory to Agent.

ARTICLE IX

NEGATIVE COVENANTS

     For so long as any Lender is committed to lend or issue LCs under this agreement and until the
Obligation has been fully paid and performed, Borrower covenants and agrees with Agent and Lenders
that, without first obtaining Agent’s written notice of Determining Lenders’ consent to the
contrary:

     Section 9.1 Payroll Taxes. No Company may use any proceeds of any Borrowing to pay the
wages of employees unless a timely payment to or deposit with the United States of America of all
amounts of Tax required to be deducted and withheld with respect to such wages is also made.

     Section 9.2 Debt. No Restricted Company may:

               (a) Have any Debt except Permitted Debt.

               (b) Pay or cause to be paid any principal of, or any interest on, any of its Debt except (i)
the Obligation, (ii) payments on the Subordinated Debt to the extent permitted under the Subordination Agreement and (iii) scheduled payments (but not prepayments) of any of its
other Permitted Debt if, in each case, no Default or Potential Default exists.

     Section 9.3 Letters of Credit. No Restricted Company may have issued for its account — or
otherwise become obligated for any reimbursement obligations for — any letter of credit except
LCs.

     Section 9.4 Liens. No Restricted Company may (a) create, incur, or suffer or permit to be
created or incurred or to exist any Lien upon any of its assets (provided that applicable Permitted
Liens may exist, however, no intention to subordinate the first priority Lien granted in favor of
Agent for the benefit of Lenders is to be hereby implied or expressed by the permitted existence of
such Permitted Liens) or (b) enter into or permit to exist any arrangement or agreement that
directly or indirectly prohibits any Restricted Company from creating or incurring any Lien on any
of its assets except the Loan Documents.

     Section 9.5 Employee Plans. No Restricted Company may permit any of the events or
circumstances described in Section 7.12 to exist or occur.

     Section 9.6 Transactions with Affiliates. No Restricted Company may enter into any
material transaction with any of its Affiliates except (a) those described on Schedule
7.15, (b) transactions between one or more Restricted Companies, (c) transactions permitted
under Section 9.8 and (d) transactions in the ordinary course of business and upon fair and
reasonable terms not

46

 

materially less favorable than it could obtain or could become entitled to in
an arm’s-length transaction with a Person that was not its Affiliate.

     Section 9.7 Compliance with Laws and Documents. No Restricted Company may (a) violate the
provisions of any Laws (including, without limitation, Environmental Laws) applicable to it or of
any material agreement to which it is a party if that violation alone, or when aggregated with all
other violations, would be a Material Adverse Event, (b) violate in any material respect any
provision of its charter or bylaws or (c) repeal, replace, or amend any provision of its charter or
bylaws if that action would be a Material Adverse Event.

     Section 9.8 Loans, Advances, and Investments. No Restricted Company may make any loan,
advance, extension of credit, or capital contribution to, make any investment in, or purchase or
commit to purchase any stocks or other securities or evidences of Debt of, or interests in, any
other Person except those described on Schedule 9.8.

     Section 9.9 Distributions. No Restricted Company may declare, make, or pay any
Distribution except Distributions paid in the form of additional common stock, and distributions to
any other Restricted Company; provided, however, that so long as no Potential
Default or Borrowing Base Deficiency exists or would result therefrom, Goodrich may pay regularly
scheduled dividends, in cash, on the Existing Preferred Stock.

     Section 9.10 Disposition of Assets. No Restricted Company may sell, assign, lease,
transfer, or otherwise dispose of any of its assets except (a) sales and dispositions of oil and
gas production in the ordinary course of business for a fair and adequate consideration, (b) sales
of Option Interests to the Subordinated Lender so long as the Lenders are given sufficient prior
written notice to redetermine the Borrowing Base in accordance with Section 2.7(b) taking into
consideration, among other things, the sale of such Option Interests and, after giving effect to
any such redetermination of the Borrowing Base, no Borrowing Base Deficiency exists or would result
from such sales, (c) sales of assets which are obsolete or are no longer in use and which are not
significant to the continuation of that Restricted Company’s business, (d) sales and dispositions
from any Restricted Company to any other Restricted Company, (e) dispositions of equipment where
substantially similar equipment has been or is being acquired or (f) dispositions of other assets
for an aggregate consideration not to exceed, in any fiscal year, $2,500,000.00, provided,
however, that if any Borrowing Base Deficiency exists at the time of such disposition, 100%
of the proceeds therefrom shall be applied to reduce the Principal Debt.

     Section 9.11 Mergers, Consolidations, and Dissolutions. No Restricted Company may merge or
consolidate with any other Person or dissolve except:

               (a) if no Default or Potential Default exists or will exist as a result of it, any merger or
consolidation between Restricted Companies (so long as, if Borrower is involved, it is the
survivor); and

               (b) dissolution of any Subsidiary of a Restricted Company if substantially all of its assets
have been conveyed to any Restricted Company.

     Section 9.12 Assignment. No Restricted Company may assign or transfer any of its Rights,
duties, or obligations under any of the Loan Documents.

47

 

     Section 9.13 Fiscal Year and Accounting Methods. No Restricted Company may change its
fiscal year for accounting purposes or any material aspect of its method of accounting except (a)
for changes which do not affect, change or alter the calculation of any of the financial or
accounting terms (or any component thereof) described in any of the financial covenants provided in
Article X of this agreement or (b) to conform any new Subsidiary’s accounting methods to Goodrich’s
accounting methods.

     Section 9.14 New Businesses. No Restricted Company may engage in any business except the
businesses in which it is presently engaged and any other reasonably related business.

     Section 9.15 Government Regulations. No Restricted Company may conduct its business in a
way that it becomes regulated under the Investment Company Act of 1940, as amended, or the Public
Utility Holding Company Act of 1935, as amended.

     Section 9.16 Strict Compliance. No Restricted Company may indirectly do anything that it
may not directly do under any covenant in any Loan Document.

     Section 9.17 Alteration of Material Agreements. No Restricted Company will consent to or
permit any material alterations, amendments, modifications, releases, waivers or terminations of
any material agreement to which it is a party.

     Section 9.18 Operating Agreements. No Restricted Company shall enter into any operating
agreement or material amendment of any existing operating agreement after the date hereof covering
any of the Mortgaged Properties, except for those containing terms .and provisions customary in the
industry consistent with past practice and with respect to which prompt written notice thereof is
given to Agent.

     Section 9.19 Burdensome Contracts. No Restricted Company shall enter into, become bound
by, or subject the Mortgaged Properties to any contract or agreement which is burdensome on any
Restricted Company or materially and adversely affects the operation of the Mortgaged Properties.

     Section 9.20 Hedging. Borrower will not, and Borrower will not permit any other Restricted
Company to, enter into Swap Agreements which would cause the volume of (a) (i) the aggregate
notional volume of oil which is subject thereto at any time to exceed seventy-five percent (75%) of
the Restricted Companies’ anticipated production of oil from proved, developed producing reserves
during the entire term (which shall not exceed three (3) years) thereof and (ii) the notional
volume of oil with respect to which a settlement is required on a particular settlement date under
such Swap Agreement to exceed seventy-five percent (75%) of the Restricted Companies’ anticipated
production of oil from proved, developed producing reserves for the period (a “Settlement
Period”) from the immediately preceding settlement date thereunder (or the commencement thereof
in the event there is no prior settlement date) to such settlement date, and (b) (i) the aggregate
notional volume of gas which is subject thereto at any time to exceed seventy-five percent (75%) of
the Restricted Companies’ anticipated production of gas from proved, developed production reserves during the entire term (which shall not exceed three (3) years
thereof and (ii) the notional volume of gas with respect to which a settlement is required on a
particular settlement date thereunder to exceed seventy-five percent

48

 

(75%) of the Restricted
Companies’ anticipated production of gas from proved, developed reserves for any Settlement Period.

ARTICLE X

FINANCIAL COVENANTS

     For so long as any Lender is committed to lend or issue LCs under this agreement and until the
Obligation has been fully paid and performed, Borrower covenants and agrees with Agent and Lenders
that, without first obtaining Agent’s written notice of Determining Lenders’ consent to the
contrary, it may not directly or indirectly permit:

     Section 10.1 Current Ratio. The ratio – determined as of the last day of each fiscal
quarter of Goodrich, commencing with the quarter ending December 31, 2004 – of the Companies’
consolidated current assets to consolidated current liabilities to ever be less than 1.00 to 1.00;
provided, that for purposes of this Section 10.1, (a) “consolidated current assets” as of
any such date of determination shall include the difference, if any, between the Borrowing Base and
the Revolving Commitment Usage and (b) “consolidated current liabilities” as of any such date of
determination shall (i) exclude any current liability for any Swap Agreement resulting from the
requirements of Statement of Financial Accounting Standards 133 (or any statement replacing,
modifying, or superceding such statement) and any similar non-cash charges and (ii) exclude current
maturities of the Revolving Principal Debt.

     Section 10.2 Interest Coverage. The ratio — determined as of the last day of each fiscal
quarter of Goodrich for the four (4) consecutive fiscal quarters then ended, commencing with the
quarter ending December 31, 2004 — of the Companies’ EBITDAX to Interest Expense to ever be less
than 3.00 to 1.00.

     Section 10.3 Tangible-Net Worth. The Companies’ Tangible-Net Worth — determined as of the
last day of each fiscal quarter of Goodrich, commencing with the quarter ending December 31, 2004
— to ever be less than the sum of (a) $53,392,838 plus (b) 50% of the Companies’
cumulative Net Income (without deduction for losses) after September 30, 2004 plus (c) 100%
of the net (i.e., gross less usual and customary underwriting, placement, and other related costs
and expenses) proceeds of the issuance of any equity securities by Goodrich after September 30,
2004.

     Section 10.4 Total PV to Total Debt Ratio. The ratio of Total PV to Total Debt to ever be
less than 1.5 to 1.0.

ARTICLE XI

DEFAULT

     The term “Default” means the occurrence of any one or more of the following:

     Section 11.1 Payment of Obligation. Borrower’s failure or refusal to pay (a) principal of
any Note or any LC Exposure or any part thereof on or before the date due or (b) any other part of
the Obligation on or before one Business Day after the date due.

49

 

     Section 11.2 Covenants. Any Company’s failure or refusal to punctually and properly
perform, observe, and comply with any covenant (other than covenants to pay the Obligation)
applicable to it:

               (a) In Section 8.1(f), Section 8.2, Section 8.17, Article IX or Article X; or

               (b) In any other provision of any Loan Document, and that failure or refusal continues for
fifteen (15) days after the earlier of either any Company knowing of it or any Company is notified
of it by Agent or any Lender.

     Section 11.3 Debtor Relief. Any Restricted Company (a) is not Solvent, (b) fails to pay
its Debts generally as they become due, (c) voluntarily seeks, consents to, or acquiesces in the
benefit of any Debtor Relief Law or (d) becomes a party to or is made the subject of any proceeding
provided for by any Debtor Relief Law — except as a creditor or claimant — that could suspend or
otherwise adversely affect the Rights of Agent or any Lender granted in the Loan Documents (unless,
if the proceeding is involuntary, the applicable petition is dismissed within 60 days after its
filing).

     Section 11.4 Judgments and Attachments. Where the amounts in controversy or of any
judgments, as the case may be, exceed — from and after the date of this agreement and individually
or collectively for all of the Restricted Companies — $1,000,000, the Restricted Companies fail
(a) to have discharged, within 60 days after its commencement, any attachment, sequestration, or
similar proceeding against any assets of any Restricted Company or (b) to pay any money judgment
against any Restricted Company within ten days before the date on which any Restricted Company’s
assets may be lawfully sold to satisfy that judgment.

     Section 11.5 Government Action. Where the fair value of the assets involved exceed — from
and after the date of this agreement and individually or collectively for all of the Restricted
Companies — $1,000,000, (a) a final non-appealable order is issued by any Tribunal (including, but
not limited to, the United States Justice Department) seeking to cause any Company to divest a
significant portion of its assets under any antitrust, restraint of trade, unfair competition,
industry regulation, or similar Laws or (b) any Tribunal condemns, seizes, or otherwise appropriates, or takes custody or control of all or
any substantial portion of any Restricted Company’s assets.

     Section 11.6 Misrepresentation. Any representation or warranty made by any Company in any
Loan Document at any time proves to have been materially incorrect when made.

     Section 11.7 Change of Control. Any Change of Control occurs.

     Section 11.8 Other Funded Debt. In respect of any Funded Debt (other than the Obligation)
(a) any Restricted Company fails to make any payment when due beyond any applicable grace or cure
period, or (b) any default or other event or condition occurs or exists beyond the applicable grace
or cure period, the effect of which is to cause or to permit any holder of that Funded Debt to
cause — whether or not it elects to cause — any of that Funded Debt to become due before its
stated maturity or regularly scheduled payment dates or (c) any of that Funded Debt is declared to
be due and payable or required to be prepaid by any Restricted Company before its stated maturity.

50

 

     Section 11.9 SEC Reporting Requirements. Any Restricted Company fails to comply with any
applicable reporting requirements of the Securities Exchange Act of 1934, as amended, for which the
failure to report would constitute a Material Adverse Event.

     Section 11.10 Validity and Enforceability. Once executed, this agreement, any Note, any LC
Agreement, any Guaranty, any Collateral Document ceases to be in full force and effect in any
material respect or is declared to be null and void or its validity or enforceability is contested
in writing by any Restricted Company party to it or any Restricted Company party to it denies in
writing that it has any further liability or obligations under it except in accordance with that
document’s express provisions or as the appropriate parties under Section 14.8 below may otherwise
agree in writing.

     Section 11.11 LCs. Agent is served with, or becomes subject to, a court order, injunction,
or other process or decree restraining or seeking to restrain it from paying any amount under any
LC and either (a) a drawing has occurred under the LC, and Borrower has refused to reimburse the
Issuing Lender for payment or (b) the expiration date of the LC has occurred, but the Right of the
beneficiary to draw under the LC has been extended past the expiration date in connection with the
pendency of the related court action or proceeding, and Borrower has failed to deposit with Agent
cash collateral in an amount equal to the Issuing Lender’s maximum exposure under the LC.

ARTICLE XII

RIGHTS AND REMEDIES

     Section 12.1 Remedies Upon Default.

          (a) Debtor Relief. If a Default exists under Section 11.3, the commitment to extend
credit under this agreement automatically terminates, the entire unpaid balance of the Obligation
automatically becomes due and payable without any action of any kind whatsoever.

          (b) Other Defaults. If any Default exists, subject to the terms of Section 13.5(b),
Agent may (with the consent of, and must, upon the request of, Determining Lenders), do any one or
more of the following: (i) If the maturity of the Obligation has not already been accelerated
under Section 12.1(a), declare the entire unpaid balance of all or any part of the Obligation
immediately due and payable, whereupon it is due and payable, (ii) terminate the commitments of
Lenders to extend credit under this agreement, (iii) reduce any claim to judgment, (iv) demand
payment of an amount equal to the LC Exposure then existing and retain as collateral for the LC
Exposure any amounts received from any Company, from any property of any Company, through offset,
or otherwise and (v) exercise any and all other legal or equitable Rights afforded by the Loan
Documents, by applicable Laws, or in equity.

          (c) Offset. If a Default exists, to the extent permitted by applicable Law, each
Lender may exercise the Rights of offset and banker’s lien against each and every account and other
property, or any interest therein, which any Restricted Company may now or hereafter have with, or
which is now or hereafter in the possession of, that Lender to the extent of the full amount of the
Obligation owed to that Lender.

51

 

          (d) Production Proceeds. Notify any and all purchasers of production and take all
other actions specified in Section 5.3 of this agreement.

     Section 12.2 Company Waivers. To the extent permitted by Law, Borrower and (pursuant to
its Guaranty) each other Restricted Company waives presentment and demand for payment, protest,
notice of intention to accelerate, notice of acceleration, and notice of protest and nonpayment,
and agrees that its liability with respect to all or any part of the Obligation is not affected by
any renewal or extension in the time of payment of all or any part of the Obligation, by any
indulgence, or by any release or change in any security for the payment of all or any part of the
Obligation.

     Section 12.3 Performance by Agent. If any Company’s covenant, duty, or agreement is not
performed in accordance with the terms of the Loan Documents, Agent may, while a Default exists, at
its option (but subject to the approval of Determining Lenders), perform or attempt to perform that
covenant, duty, or agreement on behalf of that Company (and any amount expended by Agent in its
performance or attempted performance is payable by the Companies, jointly and severally, to Agent
on demand, becomes part of the Obligation, and bears interest at the Default Rate from the date of
Agent’s
expenditure until paid). However, Agent does not assume and shall never have, except by its
express written consent, any liability or responsibility for the performance of any Company’s
covenants, duties, or agreements.

     Section 12.4 Not in Control. Nothing in any Loan Documents gives or may be deemed to give
to Agent or any Lender the Right to exercise control over any Company’s Real Property (including,
without limitation, the Leases and the Mineral Interests), other assets, affairs, or management or
to preclude or interfere with any Company’s compliance with any Law or require any act or omission
by any Company that may be harmful to Persons or property. Any “Material Adverse Event” or
other materiality or substantiality qualifier of any representation, warranty, covenant, agreement,
or other provision of any Loan Document is included for credit documentation purposes only and does
not imply or be deemed to mean that Agent or any Lender acquiesces in any non-compliance by any
Company with any Law, document, or otherwise or does not expect the Companies to promptly,
diligently, and continuously carry out all appropriate removal, remediation, compliance, closure,
or other activities required or appropriate in accordance with all Environmental Laws. Agent’s and
Lenders’ power is limited to the Rights provided in the Loan Documents. All of those Rights exist
solely — and may be exercised in manner calculated by Agent or Lenders in their respective good
faith business judgment — to preserve and protect the Collateral and to assure payment and
performance of the Obligation.

     Section 12.5 Course of Dealing. The acceptance by Agent or Lenders of any partial payment
on the Obligation is not a waiver of any Default then existing. No waiver by Agent, Determining
Lenders, or Lenders of any Default is a waiver of any other then-existing or subsequent Default.
No delay or omission by Agent, Determining Lenders, or Lenders in exercising any Right under the
Loan Documents impairs that Right or is a waiver thereof or any acquiescence therein, nor will any
single or partial exercise of any Right preclude other or further exercise thereof or the exercise
of any other Right under the Loan Documents or otherwise.

52

 

     Section 12.6 Cumulative Rights. All Rights available to Agent, Determining Lenders, and
Lenders under the Loan Documents are cumulative of and in addition to all other Rights granted to
Agent, Determining Lenders, and Lenders at law or in equity, whether or not the Obligation are due
and payable and whether or not Agent, Determining Lenders, or Lenders have instituted any suit for
collection, foreclosure, or other action in connection with the Loan Documents.

     Section 12.7 Application of Proceeds. Any and all proceeds ever received by Agent or
Lenders from the exercise of any Rights pertaining to the Obligation shall be applied to the
Obligation according to Article III.

     Section 12.8 Certain Proceedings. Borrower shall promptly execute and deliver, or cause the execution and delivery of, all
applications, certificates, instruments, registration statements, and all other documents and
papers Agent or Determining Lenders reasonably request in connection with the obtaining of any
consent, approval, registration (other than securities Law registrations), qualification, permit,
license, or authorization of any Tribunal or other Person necessary or appropriate for the
effective exercise of any Rights under the Loan Documents. Because Borrower agrees that Agent’s
and Determining Lenders’ remedies at Law for failure of Borrower to comply with the provisions of
this section would be inadequate and that failure would not be adequately compensable in damages,
Borrower agrees that the covenants of this section may be specifically enforced.

     Section 12.9 Expenditures by Lenders. Any sums spent by Agent or any Lender in the
exercise of any Right under any Loan Document is payable by the Companies to Agent within five
Business Days after demand, becomes part of the Obligation, and bears interest at the Default Rate
from the date spent until the date repaid.

     Section 12.10 Diminution in Value of Collateral. Neither Agent nor any Lender has any
liability or responsibility whatsoever for any diminution in or loss of value of any collateral now
or in the future securing payment or performance of any of the Obligation (other than diminution in
or loss of value caused by its own gross negligence or willful misconduct).

ARTICLE XIII

AGENT AND LENDERS

     Section 13.1 Agent.

          (a) Appointment. Each Lender appoints Agent (and Agent accepts appointment) as its
nominee and agent, in its name and on its behalf: (i) To act as its nominee and on its behalf in
and under all Loan Documents, (ii) to arrange the means whereby its funds are to be made available
to Borrower under the Loan Documents, (iii) to take any action that it properly requests under the
Loan Documents (subject to the concurrence of other Lenders as may be required under the Loan
Documents), (iv) to receive all documents and items to be furnished to it under the Loan Documents,
(v) to be the secured party, mortgagee, beneficiary, recipient, and similar party in respect of any
collateral for the benefit of Lenders, (vi) to promptly distribute to it all material information,
requests, documents, and items received from Borrower under the Loan Documents, (vii) to promptly
distribute to it its ratable part of each payment or

53

 

prepayment (whether voluntary, as proceeds of
collateral upon or after foreclosure, as proceeds of insurance thereon, or otherwise) in accordance
with the terms of the Loan Documents and (viii) to deliver to the appropriate Persons requests,
demands, approvals, and consents received from it. However, Agent may not be required to take any
action that exposes it to personal liability or that is contrary to any Loan Document or applicable
Law.

          (b) Successor. Agent may voluntarily resign as Agent hereunder upon thirty (30) days
notice to Borrower and the Lenders. If the initial or any successor Agent ever resigns, then
Determining Lenders shall (which, if no Default or Potential Default exists, is subject to
Borrower’s approval that may not be unreasonably withheld) appoint the successor Agent from among
Lenders (other than the resigning Agent). If Determining Lenders fail to appoint a successor Agent
within thirty (30) days after the resigning Agent has given notice of resignation, then the
resigning Agent may, on behalf of Lenders, appoint a successor Agent, which must be a commercial
bank having a combined capital and surplus of at least $1,000,000,000 (as shown on its most
recently published statement of condition). Upon its acceptance of appointment as successor Agent,
the successor Agent succeeds to and becomes vested with all of the Rights of the prior Agent, and
the prior Agent is discharged from its duties and obligations of Agent under the Loan Documents
(but, when used in connection with LCs issued and outstanding before the appointment of the
successor Agent, “Agent” shall continue to refer solely to the prior Agent — but, any LCs issued
or renewed after the appointment of any successor Agent shall be issued or renewed by the successor
Agent), and each Lender shall execute the documents that any Lender, the resigning Agent, or the
successor Agent reasonably request to reflect the change. After any Agent’s resignation as Agent
under the Loan Documents, the provisions of this section inure to its benefit as to any actions
taken or not taken by it while it was Agent under the Loan Documents.

          (c) Rights as Lender. Agent, in its capacity as a Lender, has the same Rights under
the Loan Documents as any other Lender and may exercise those Rights as if it were not acting as
Agent. The term “Lender”, unless the context otherwise indicates, includes Agent. Agent’s
resignation does not impair or otherwise affect any Rights that it has or may have in its capacity
as an individual Lender. Each Lender and Borrower agree that Agent is not a fiduciary for Lenders
or for Borrower but is simply acting in the capacity described in this agreement to alleviate
administrative burdens for Borrower and Lenders, that Agent has no duties or responsibilities to
Lenders or Borrower except those expressly set forth in the Loan Documents, and that Agent in its
capacity as a Lender has the same Rights as any other Lender.

          (d) Other Activities. Agent or any Lender may now or in the future be engaged in one
or more loan, letter of credit, leasing, or other financing transactions with Borrower, act as
trustee or depositary for Borrower, or otherwise be engaged in other transactions with Borrower
(collectively, the “other activities”) not the subject of the Loan Documents. Without
limiting the Rights of Lenders specifically set forth in the Loan Documents, neither Agent nor any
Lender is responsible to account to the other Lenders for those other activities, and no Lender
shall have any interest in any other Lender’s activities, any present or future guaranties by or
for the account of Borrower that are not contemplated by or included in the Loan Documents, any
present or future offset exercised by Agent or any Lender in respect of those other activities, any
present or future property taken as security for any of those other activities, or any property now
or hereafter in Agent’s or any other Lender’s

54

 

possession or control that may be or become security
for the obligations of Borrower arising under the Loan Documents by reason of the general
description of indebtedness secured or of property contained in any other agreements, documents, or
instruments related to any of those other activities (but, if any payments in respect of those
guaranties or that property or the proceeds thereof is applied by Agent or any Lender to reduce the
Obligation, then each Lender is entitled to share ratably in the application as provided in the
Loan Documents).

     Section 13.2 Expenses. Each Lender shall pay its Pro Rata Part of any reasonable expenses
(including, without limitation, court costs, reasonable attorneys’ fees and other costs of
collection) incurred by Agent (while acting in such capacity) in connection with any of the Loan
Documents if Agent is not reimbursed from other sources within 30 days after incurrence. Each
Lender is entitled to receive its Pro Rata Part of any reimbursement that it makes to Agent if
Agent is subsequently reimbursed from other sources.

     Section 13.3 Proportionate Absorption of Losses. Except as otherwise provided in the Loan
Documents, nothing in the Loan Documents gives any Lender any advantage over any other Lender
insofar as the Obligation is concerned or relieves any Lender from ratably absorbing any losses
sustained with respect to the Obligation (except to the extent unilateral actions or inactions by
any Lender result in Borrower or any other obligor on the Obligation having any credit, allowance,
setoff, defense, or counterclaim solely with respect to all or any part of that Lender’s Pro Rata
Part of the Obligation).

     Section 13.4 Delegation of Duties; Reliance. Lenders may perform any of their duties or
exercise any of their Rights under the Loan Documents by or through Agent, and Lenders and Agent
may perform any of their duties or exercise any of their Rights under the Loan Documents by or
through their respective Representatives. Agent, Lenders, and their respective Representatives (a)
are entitled to rely upon (and shall be protected in relying upon) any written or oral statement
believed by it or them to be genuine and correct and to have been signed or made by the proper
Person and, with respect to legal matters, upon opinion of counsel selected by Agent or that Lender
(but nothing in this clause (a) permits Agent to rely on (i) oral statements if a writing is
required by this agreement or (ii) any other writing if a specific writing is required by this
agreement), (b) are entitled to deem and treat each Lender as the owner and holder of its portion
of the Obligation for all purposes until, written notice of the assignment or transfer is given to
and received by Agent (and any request, authorization, consent, or approval of any Lender is
conclusive and binding on each subsequent holder, assignee, or transferee of or Participant in that
Lender’s portion of the Obligation until that notice is given and received), (c) are not deemed to
have notice of the occurrence of a Default unless a responsible officer of Agent, who handles
matters associated with the Loan Documents and transactions thereunder, has actual knowledge or
Agent has been notified by a Lender or Borrower and (d) are entitled to consult with legal counsel
(including counsel for Borrower), independent accountants, and other experts selected by Agent and
are not liable for any action taken or not taken in good faith by it in accordance with the advice
of counsel, accountants, or experts. Each Lender acknowledges that Vinson & Elkins L.L.P. is
acting in this transaction as special counsel to Agent only, except to the extent otherwise
expressly stated in any legal opinion or any Loan Document. Each other party hereto will consult
with its own legal counsel to the extent that it deems necessary in connection with the Loan
Documents and the matters contemplated therein.

55

 

     Section 13.5 Limitation of Agent’s Liability.

          (a) Exculpation. Neither Agent nor any of its Representatives will be liable for any
action taken or omitted to be taken by it or them under the Loan Documents in good faith and
believed by it or them to be within the discretion or power conferred upon it or them by the Loan
Documents or be responsible for the consequences of any error of judgment (except for fraud, gross
negligence, or willful misconduct), and neither Agent nor any of its representatives has a
fiduciary relationship with any Lender by virtue of the Loan Documents (but nothing in this
agreement negates the obligation of Agent to account for funds received by it for the account of
any Lender).

          (b) Indemnity. Unless indemnified to its satisfaction against loss, cost, liability,
and expense, Agent may not be compelled to do any act under the Loan Documents or to take any
action toward the execution or enforcement of the powers thereby created or to prosecute or defend
any suit in respect of the Loan Documents. If Agent requests instructions from Lenders, or
Determining Lenders, as the case may be, with respect to any act or action in connection with any
Loan Document, Agent is entitled to refrain (without incurring any liability to any Person by so
refraining) from that act or action unless and until it has received instructions. In no event,
however, may Agent or any of its Representatives be required to take any action that it or they
determine could incur for it or them criminal or onerous civil liability. Without limiting the
generality of the foregoing, no Lender has any right of action against Agent as a result of Agent’s
acting or refraining from acting under this agreement in accordance with instructions of
Determining Lenders.

          (c) Reliance. Agent is not responsible to any Lender or any Participant for, and each
Lender represents and warrants that it has not relied upon Agent in respect of, (i) the
creditworthiness of any Company and the risks involved to that Lender, (ii) the effectiveness,
enforceability, genuineness, validity, or the due execution of any Loan Document (except by Agent),
(iii) any representation, warranty, document, certificate, report, or statement made therein
(except by Agent) or furnished thereunder or in connection therewith, (iv) the adequacy of any
collateral now or hereafter securing the Obligation or the existence, priority, or perfection of
any Lien now or hereafter granted or purported to be granted on the collateral under any Loan
Document or (v) observation of or compliance with any of the terms, covenants, or conditions of any
Loan Document on the part of any Company. EACH LENDER AGREES TO INDEMNIFY AGENT AND ITS
REPRESENTATIVES AND HOLD THEM HARMLESS FROM AND AGAINST (BUT LIMITED TO SUCH LENDER’S COMMITMENT
PERCENTAGE OF) ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, REASONABLE EXPENSES, AND REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER THAT MAY BE IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY THEM IN ANY WAY RELATING TO OR
ARISING OUT OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THEM UNDER THE LOAN DOCUMENTS
IF AGENT AND ITS REPRESENTATIVES ARE NOT REIMBURSED FOR SUCH AMOUNTS BY ANY COMPANY. ALTHOUGH
AGENT AND ITS REPRESENTATIVES HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR ITS OR
THEIR OWN ORDINARY NEGLIGENCE, AGENT AND ITS REPRESENTATIVES DO NOT HAVE THE RIGHT TO

56

 

BE INDEMNIFIED UNDER THIS AGREEMENT FOR ITS OR THEIR OWN FRAUD, GROSS NEGLIGENCE, OR WILLFUL
MISCONDUCT.

     Section 13.6 Default. While a Default exists, Lenders agree to promptly confer in order
that Determining Lenders or Lenders, as the case may be, may agree upon a course of action for the
enforcement of the Rights of Lenders. Agent is entitled to act or refrain from taking any action
(without incurring any liability to any Person for so acting or refraining) unless and until it has
received instructions from Determining Lenders. In actions with respect to any Company’s property,
Agent is acting for the ratable benefit of each Lender.

     Section 13.7 Collateral Matters.

          (a) Each Lender authorizes and directs Agent to enter into the Loan Documents for the Lender
Liens and agrees that any action taken by Agent concerning any Collateral (with the consent or at
the request of Determining Lenders) in accordance with any Loan Document, that Agent’s exercise
(with the consent or at the request of Determining Lenders) of powers concerning the Collateral in
any Loan Document, and that all other reasonably incidental powers are authorized and binding upon
all Lenders.

          (b) Agent is authorized on behalf of all Lenders, without the necessity of any notice to or
further consent from any Lender, from time to time before a Default or Potential Default, to take
any action with respect to any Collateral or Loan Documents related to Collateral that may be
necessary to perfect and maintain perfected the Lender Liens upon the Collateral.

          (c) Except to use the same standard of care that it ordinarily uses for collateral for its
sole benefit, Agent has no obligation whatsoever to any Lender or to any other Person to assure
that the Collateral exists or is owned by any Company or is cared for, protected, or insured or has
been encumbered or that the Lender Liens have been properly or sufficiently or lawfully created,
perfected, protected, or enforced or are entitled to any particular priority.

          (d) Agent shall exercise the same care and prudent judgment with respect to the Collateral and
the Loan Documents as it normally and customarily exercises in respect of similar collateral and
security documents.

          (e) Lenders irrevocably authorize Agent, at its option and in its discretion, to release any
Lender Lien upon any Collateral (i) upon full payment of the Obligation, (ii) constituting property
being disposed of as permitted under any Loan Document, (iii) constituting property in which no
Company owned any interest at the time the Lender Lien was granted or at any time after that, (iv)
constituting property leased to any Company under a lease that has expired or been terminated in a
transaction permitted under the Loan Documents or is about to expire and that has not been, and is
not intended by that Company to be, renewed, (v) consisting of an instrument evidencing Debt
pledged to Agent (for the benefit of Lenders), if the underlying Debt has been paid in full or (vi)
if approved, authorized, or ratified in writing by Lenders. Upon
request by Agent at any time, Lenders shall confirm in writing Agent’s authority to release
particular types or items of Collateral under this clause (e).

     Section 13.8 Limitation of Liability. No Lender or any Participant will incur any
liability to any other Lender or Participant except for acts or omissions in bad faith, and neither

57

 

Agent nor any Lender or Participant will incur any liability to any other Person for any act or
omission of any other Lender or any Participant.

     Section 13.9 Relationship of Lenders. The Loan Documents do not create a partnership or
joint venture among Agent and Lenders or among Lenders.

     Section 13.10 Benefits of Agreement. None of the provisions of this section inure to the
benefit of any Company or any other Person except Agent and Lenders. Therefore, no Company or any
other Person is responsible or liable for, entitled to rely upon, or entitled to raise as a defense
— in any manner whatsoever — the failure of Agent or any Lender to comply with these provisions.

ARTICLE XIV

MISCELLANEOUS

     Section 14.1 Nonbusiness Days. Any payment or action that is due under any Loan Document
on a non-Business Day may be delayed until the next-succeeding Business Day (but interest shall
continue to accrue on any applicable payment until payment is in fact made) unless the payment
concerns a LIBOR-Rate Borrowing, in which case if the next-succeeding Business Day is in the next
calendar month, then such payment shall be made on the next-preceding Business Day.

     Section 14.2 Communications. Unless otherwise specifically provided, whenever any Loan
Document requires or permits any consent, approval, notice, request, or demand from one party to
another, communication must be in writing (which may be by telex or fax) to be effective and shall
be deemed to have been given (a) if by telex, when transmitted to the appropriate telex number and
the appropriate answer back is received, (b) if by fax, when transmitted to the appropriate fax
number (and all communications sent by fax must be confirmed promptly thereafter by telephone; but
any requirement in this parenthetical shall not affect the date when the fax shall be deemed to
have been delivered), (c) if by mail, on the third Business Day after it is enclosed in an envelope
and properly addressed, stamped, sealed, and deposited in the appropriate official postal service
or (d) if by any other means, when actually delivered. Until changed by notice pursuant to this
agreement, the address (and fax number) for Borrower and Agent is stated beside their respective
signatures to this agreement and for each Lender is stated beside its name on Schedule 2.

     Section 14.3 Form and Number of Documents. The form, substance, and number of counterparts of each writing to be furnished under this
agreement must be satisfactory to Agent and its counsel.

     Section 14.4 Exceptions to Covenants. No Company may take or fail to take any action that
is permitted as an exception to any of the covenants contained in any Loan Document if that action
or omission would result in the breach of any other covenant contained in any Loan Document.

     Section 14.5 Survival. All covenants, agreements, undertakings, representations, and
warranties made in any of the Loan Documents survive all closings under the Loan Documents and,
except as otherwise indicated, are not affected by any investigation made by any party.

58

 

     Section 14.6 Governing Law. Unless otherwise stated in any Loan Document, the laws of the
State of Texas and of the United States of America govern the Rights and duties of the parties to
the Loan Documents and the validity, construction, enforcement, and interpretation of the Loan
Documents.

     Section 14.7 Invalid Provisions. Any provision in any Loan Document held to be illegal,
invalid, or unenforceable is fully severable; the appropriate Loan Document shall be construed and
enforced as if that provision had never been included; and the remaining provisions shall remain in
full force and effect and shall not be affected by the severed provision. Agent, Lenders, and each
Company party to the affected Loan Document agree to negotiate, in good faith, the terms of a
replacement provision as similar to the severed provision as may be possible and be legal, valid,
and enforceable.

     Section 14.8 Amendments, Consents, Conflicts, and Waivers.

          (a) Determining Lenders. Unless otherwise specifically provided (i) the provisions of
this agreement may be amended, modified, or waived, only by an instrument in writing executed by
Borrower, Agent, and Determining Lenders and supplemented only by documents delivered or to be
delivered in accordance with the express terms of this agreement and (ii) the other Loan Documents
may only be the subject of an amendment, modification, or waiver that has been approved by
Determining Lenders and Borrower.

          (b) All Lenders. Any amendment to or consent or waiver under this agreement or any
Loan Document that purports to accomplish any of the following must be by an instrument in writing
executed by Borrower and Agent and executed (or approved, as the case may be) by each Lender: (i)
Extends the due date or decreases the amount of any scheduled payment or amortization of the
Obligation beyond the date specified in the Loan Documents, (ii) decreases any rate or amount of
interest, fees, or other sums payable to Agent or Lenders under this agreement (except such
reductions as are contemplated by this agreement), (iii) changes the
definition of “Commitment,” “Commitment Percentage,” “Revolving Commitment”, “Term
Commitment”, “Determining Lenders,” “Pro Rata Part”, “Revolving Pro Rata Part”, “Term Pro Rata
Part” or the definition of “Borrowing Base”, (iv) increases any one or more Lender’s Commitment,
(v) waives compliance with, amends, or fully or partially releases — except as expressly provided
by the Loan Documents or when a Company merges into another Person or dissolves when specifically
permitted in the Loan Documents — any Guaranty or Collateral, (vi) changes the requirement that
any increase of the Borrowing Base be approved and consented to by all of the Lenders or (vii)
changes this clause (b) or any other matter specifically requiring the consent of all Lenders under
this agreement.

          (c) Agency Fees. Any amendment or consent or waiver with respect to fees payable
solely to Agent under a separate letter agreement must be executed in writing only by Agent and
Borrower.

          (d) Conflicts. Any conflict or ambiguity between the terms and provisions of this
agreement and terms and provisions in any other Loan Document is controlled by the terms and
provisions of this agreement.

59

 

          (e) Waivers. No course of dealing or any failure or delay by Agent, any Lender, or
any of their respective Representatives with respect to exercising any Right of Agent or any Lender
under this agreement operates as a waiver thereof. A waiver must be in writing and signed by Agent
and Lenders (or Determining Lenders, if permitted under this agreement) to be effective, and a
waiver will be effective only in the specific instance and for the specific purpose for which it is
given.

     Section 14.9 Multiple Counterparts. Any Loan Document may be executed in a number of
identical counterparts with the same effect as if all signatories had signed the same document.
All counterparts must be construed together to constitute one and the same instrument.

     Section 14.10 Parties.

          (a) Parties Bound. Each Loan Document binds and inures to the parties to it, any
intended beneficiary of it, and each of their respective successors and permitted assigns. No
Company may assign or transfer any Rights or obligations under any Loan Document without first
obtaining all Lenders’ consent, and any purported assignment or transfer without Lenders’ consent
is void. No Lender may transfer, pledge, assign, sell any participation in, or otherwise encumber
its portion of the Obligation except as permitted by clauses (b) or (c) below.

          (b) Participations. Any Lender may (subject to the provisions of this section, in
accordance with applicable Law, in the ordinary course of its business, and at any time) sell to
one or more Persons (each a “Participant”) participating interests in its portion of the
Obligation. The selling Lender remains a “Lender” under the Loan Documents, the Participant does
not become a “Lender” under the Loan Documents, and the selling Lender’s obligations under the Loan
Documents remain unchanged. The selling Lender remains solely responsible for the
performance of its obligations and remains the holder of its share of the Principal Debt for
all purposes under the Loan Documents. Borrower and Agent shall continue to deal solely and
directly with the selling Lender in connection with that Lender’s Rights and obligations under the
Loan Documents, and each Lender must retain the sole right and responsibility to enforce due
obligations of the Companies. Participants have no Rights under the Loan Documents except as
provided below. Subject to the following, each Lender may obtain (on behalf of its Participants)
the benefits of Article III with respect to all participations in its part of the Obligation
outstanding from time to time so long as Borrower is not obligated to pay any amount in excess of
the amount that would be due to that Lender under Article III calculated as though no
participations have been made. No Lender may sell any participating interest under which the
Participant has any Rights to approve any amendment, modification, or waiver of any Loan Document
except as to matters in Section 14.8(b)(i) and (ii).

          (c) Assignments. Each Lender may make assignments to the Federal Reserve Bank. Each
Lender may also assign to one or more assignees (each an “Assignee”) all or any part of its
Rights and obligations under the Loan Documents so long as (i) the assignor Lender and Assignee
execute and deliver to Agent and Borrower for their consent and acceptance (that may not be
unreasonably withheld in any instance and is not required if the Assignee is an Affiliate of the
assigning Lender, and the consent of Borrower is also not required at any time after the occurrence
and during the continuance of any Default or Potential Default) an

60

 

assignment and assumption
agreement in substantially the form of Exhibit F (an “Assignment”) and pay to Agent
a processing fee of $3,500, (ii) the assignment must be for a minimum total Commitment of
$5,000,000 and the assigning Lender (if not assigning its entire Commitment) must retain a minimum
total Commitment of $5,000,000 and (iii) the conditions for that assignment set forth in the
applicable Assignment are satisfied. The Effective Date in each Assignment must (unless a shorter
period is agreeable to Borrower and Agent) be at least five Business Days after it is executed and
delivered by the assignor Lender and the Assignee to Agent and Borrower for acceptance. Once that
Assignment is accepted by Agent and Borrower, and subject to all of the following occurring, then,
on and after the Effective Date stated in it (i) the Assignee automatically becomes a party to this
agreement and, to the extent provided in that Assignment, has the Rights and obligations of a
Lender under the Loan Documents, (ii) the assignor Lender, to the extent provided in that
Assignment, is released from its obligations to fund Borrowings under this agreement and its
reimbursement obligations under this agreement and, in the case of an Assignment covering all of
the remaining portion of the assignor Lender’s Rights and obligations under the Loan Documents,
that Lender ceases to be a party to the Loan Documents, (iii) Borrower shall execute and deliver to
the assignor Lender and the Assignee the appropriate Notes in accordance with this agreement
following the transfer, (iv) upon delivery of the Notes under clause (iii) preceding, the assignor
Lender shall return to Borrower all Notes previously delivered to that Lender under this agreement
and (v) Schedule 2 is automatically deemed to be amended to reflect the name, address,
telecopy number, and Commitment of the Assignee and the remaining Commitment (if any) of the
assignor Lender, and Agent shall prepare and circulate to Borrower and Lenders an amended
Schedule 2 reflecting those changes.

     Section 14.11 VENUE, SERVICE OF PROCESS, AND JURY TRIAL. BORROWER AND (PURSUANT TO ITS
GUARANTY) EACH RESTRICTED COMPANY, IN EACH CASE FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS,
IRREVOCABLY (a) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS IN TEXAS,
(b) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOT OR IN THE FUTURE
HAVE TO THE LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH ANY LOAN
DOCUMENT AND THE OBLIGATION BROUGHT IN THE COURTS OF THE STATE OF TEXAS, OR IN THE UNITED STATES
COURTS LOCATED IN THE SOUTHERN DISTRICT OF TEXAS, (c) WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT
IN ANY OF THE FOREGOING COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (d) CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THOSE COURTS IN ANY LITIGATION BY THE MAILING OF COPIES OF THAT
PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID, BY HAND DELIVERY, OR BY
DELIVERY BY A NATIONALLY-RECOGNIZED COURIER SERVICE, AND SERVICE SHALL BE DEEMED COMPLETE UPON
DELIVERY OF THE LEGAL PROCESS AT ITS ADDRESS FOR PURPOSES OF THIS AGREEMENT, (e) AGREES THAT ANY
LEGAL PROCEEDING AGAINST ANY PARTY TO ANY LOAN DOCUMENT ARISING OUT OF OR IN CONNECTION WITH THE
LOAN DOCUMENTS OR THE OBLIGATION MAY BE BROUGHT IN ONE OF THE FOREGOING COURTS AND (f) WAIVES TO
THE FULLEST EXTENT PERMITTED BY LAW, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUR OF ANY LOAN DOCUMENT. THE SCOPE OF EACH OF THE FOREGOING WAIVERS
IS INTENDED TO BE ALL ENCOMPASSING

61

 

OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. BORROWER AND
(PURSUANT TO ITS GUARANTY) EACH OTHER RESTRICTED COMPANY ACKNOWLEDGES THAT THESE WAIVERS ARE A
MATERIAL INDUCEMENT TO AGENT’S AND EACH LENDER’S AGREEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT AGENT AND EACH LENDER HAS ALREADY RELIED ON THESE WAIVERS IN ENTERING INTO THIS AGREEMENT, AND
THAT AGENT AND EACH LENDER WILL CONTINUE TO RELY ON EACH OF THESE WAIVERS IN RELATED FUTURE
DEALINGS. BORROWER AND (PURSUANT TO ITS GUARANTY) EACH OTHER RESTRICTED COMPANY FURTHER WARRANTS
AND REPRESENTS THAT IT HAS REVIEWED THESE WAIVERS WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY AND
VOLUNTARILY AGREES TO EACH WAIVER FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THE WAIVERS IN THIS
SECTION ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND
THESE WAIVERS APPLY TO ANY FUTURE RENEWALS, EXTENSIONS, AMENDMENTS, MODIFICATIONS, OR REPLACEMENTS
IN RESPECT OF THE APPLICABLE LOAN DOCUMENT. IN CONNECTION WITH ANY LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     Section 14.12 ENTIRETY. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER,
LENDERS, AND AGENT AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     Section 14.13 USA Patriot Act Notice. Each Lender hereby notifies Borrower that pursuant
to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October
26, 2001)) (the “Act”), it is required to obtain, verify and record information that
identifies Borrower, which information includes the name and address of Borrower and other
information that will allow such Lender to identify Borrower in accordance with the Act.

REMAINDER OF PAGE INTENTIONALLY BLANK.

SIGNATURE PAGES FOLLOW.

62

 

     EXECUTED as of the date first stated above.

	 	 	 	 	 
	Address for notices:	 	Goodrich Petroleum Company, L.L.C.
	 
	 	 	 	 
	808 Travis Street, Suite 1320

	 	By:	 	/s/ Robert C. Turnham, Jr.
	

	 	 	 	 
	Houston, TX 77002
	 	 	 	 
	Attention: Mr. Robert C. Turnham	 	Name: Robert C. Turnham, Jr.
	Fax: 713-780-9254	 	Title:   President and
	

	 	 	 	  Chief Operating Officer
	 
	 	 	 	 
	 	 	BNP Paribas, as Agent and a Lender
	 
	 	 	 	 
	1200 Smith Street, Suite 3100

	 	By:	 	/s/ Gabe Ellisor
	

	 	 	 	 
	Houston, Texas 77002	 	Name: Gabe Ellisor
	Attention: Brian M. Malone	 	Title:   Vice President
	Fax: 713-659-6915
	 	 	 	 
	

	 	By:	 	/s/ Polly Schott
	

	 	 	 	 
	 	 	Name: Polly Schott
	 	 	Title:   Vice President

SIGNATURE PAGE

TO CREDIT AGREEMENT

 

 

EXHIBIT A-1

REVOLVING NOTE

	 	 	 
	$______

	___, 200___

     FOR VALUE RECEIVED, Goodrich Petroleum Company, L.L.C., a Louisiana limited liability company
(“Maker”) promises to pay to the order of ___, ___
(“Payee”), that portion of the principal amount of $___that may from time to
time be disbursed and outstanding under this note, together with interest.

     This note is a “Revolving Note” under the Credit Agreement (as renewed, extended,
amended, or restated, the “Credit Agreement”) dated as of November 9, 2001, as amended and
restated on February 25, 2005, between Maker as Borrower, Payee, certain other “Lenders,” and BNP
Paribas, as “Agent” for Lenders. All of the terms defined in the Credit Agreement have the same
meanings when used—unless otherwise defined—in this Note.

     This Note incorporates by reference the principal and interest payment terms in the Credit
Agreement for this Note, including, without limitation, the final maturity date for this Note,
which is the Termination Date. Principal and interest are payable to the holder of this Note
through Agent at its offices at 1200 Smith Street, Suite 3100, Houston, Texas 77002, or at any
other address of which Agent may notify Maker in writing.

     This Note also incorporates by reference all other provisions in the Credit Agreement
applicable to this Note—such as provisions for disbursement of principal, applicable-interest rates
before and after Default, voluntary and mandatory prepayments, acceleration of maturity, exercise
of rights, payment of attorney’s fees, court costs, and other costs of collection, certain waivers
by Maker and other obligors, assurances and security, choice of Texas and United States federal
law, usury savings, and other matters applicable to Loan Documents under the Credit Agreement.

     This Note is given by Maker in extension, renewal and modification of, and not in novation or
discharge of, the obligations and indebtedness evidenced by those certain Promissory Notes dated
January 31, 2001, executed by Maker and payable to the order of Prior Lenders in the original
aggregate principal amount of $30,000,000, such promissory notes, among other things, having been
assigned from Prior Lenders to Agent for the benefit of the Lenders pursuant to that certain
Assignment of Notes, Documents and Liens dated November 9, 2001, executed by Prior Agent and Prior
Lenders, as assignor in favor of Agent.

	 	 	 	 	 
	

	 	Goodrich
	 	Petroleum Company, L.L.C., as Maker
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Name:	 	 
	

	 	Title:	 	 

Exhibit A-1

 

 

EXHIBIT A-2

TERM NOTE

			
	$                                                            
	 	                                        , 200___

     FOR VALUE RECEIVED, Goodrich Petroleum Company, L.L.C., a Louisiana limited liability company
(“Maker”) promises to pay to the order of ___, ___
(“Payee”), that portion of the principal amount of $___that may from time to
time be disbursed and outstanding under this note, together with interest.

     This note is a “Term Note” under the Credit Agreement (as renewed, extended, amended,
or restated, the “Credit Agreement”) dated as of November 9, 2001, as amended and restated
on February 25, 2005, between Maker as Borrower, Payee, certain other “Lenders,” and BNP Paribas,
as “Agent” for Lenders. All of the terms defined in the Credit Agreement have the same meanings
when used—unless otherwise defined—in this Note.

     This Note incorporates by reference the principal and interest payment terms in the Credit
Agreement for this Note, including, without limitation, the final maturity date for this Note,
which is the Termination Date. Principal and interest are payable to the holder of this Note
through Agent at its offices at 1200 Smith Street, Suite 3100, Houston, Texas 77002, or at any
other address of which Agent may notify Maker in writing.

     This Note also incorporates by reference all other provisions in the Credit Agreement
applicable to this Note—such as provisions for disbursement of principal, applicable-interest rates
before and after Default, voluntary and mandatory prepayments, acceleration of maturity, exercise
of rights, payment of attorney’s fees, court costs, and other costs of collection, certain waivers
by Maker and other obligors, assurances and security, choice of Texas and United States federal
law, usury savings, and other matters applicable to Loan Documents under the Credit Agreement.

	 	 	 	 	 
	 	Goodrich Petroleum Company, L.L.C., as Maker

 	 
	 	By:	 	 
	 	Name: 	  	 	 
	 	Title: 	  	 	 

 

 

EXHIBIT B

FORM OF PRODUCTION REPORT

Section 1: Total Company Most Recent Six-Month Operations Statistics

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Month:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Production Sales Volumes
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Oil (Bbls)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Gas (MMcf)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	NGLs (Bbls)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Average Realized Prices
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Oil ($/Bbl)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Gas ($/Mcf)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	NGLs ($/Bbl)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Total Sales ($000)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Total LOE ($000)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Total Capex ($000)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

Section 2: Discussion of Significant Production Variances

Section 3: Discussion of Significant Operating Expenditures or Significant
Changes in Total Operating Expenses

Section 4: Discussion of Significant Capital Expenditures

Section 5: Significant Lease or Well Production Statistics (for each lease
or well comprising over 5% of total production)

Property:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Month:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Production Sales Volumes
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Oil (Bbls)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Gas (MMcf)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	NGLs (Bbls)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Water (Bbls)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	FTP (PSI)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Production Sales Volumes
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Oil (Bbls)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Gas (MMcf)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

Exhibit B - 1

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	NGLs (Bbls)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Water (Bbls)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	FTP (PSI)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	

	 	Prepared:
	 	By:	 	 	 	 
	

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Name:	 	 	 	 
	

	 	 	 	 	 	 	 	 
	

	 	 	 	Title:	 	 	 	 
	

	 	 	 	 	 	 	 	 
	

	 	 	 	Date:	 	 	 	 
	

	 	 	 	 	 	 	 	 

Exhibit B - 2

 

EXHIBIT C-1

BORROWING REQUEST

					
	 	 	 	 	 
	AGENT:
	 	BNP Paribas
	 	DATE:                    , 200___

BORROWER: Goodrich Petroleum Company, L.LC.

	 	 	 
	 
	 	 
	 

     This notice is delivered under Section 2.3 of the Credit Agreement (as renewed, extended, and
amended, the “Credit Agreement”) dated as of November 9, 2001, as amended and restated on
February 25, 2005, between Borrower, Agent, and certain lenders. Terms defined in the Credit
Agreement have the same meanings when used — unless otherwise defined — in this request.

     Borrower requests a Borrowing under the Credit Agreement as follows:

	 	 	 	 	 	 	 
	Borrowing Date1

	 	 	 	 	 	, 200_
	Amount of Borrowing2

	 	 	$	 	 	                    
	Class of Borrowing3
	 	 	 	 	 	 
	Type of Borrowing4
	 	 	 	 	 	 
	For LIBOR-Rate Borrowing, the Interest Period5

	 	 	 	 	 	months

     Borrower certifies that on the above Borrowing Date — after giving effect to the requested
Borrowing — (a) all of the representations and warranties in the Loan Documents will be true and
correct in all material respects and (b) no Material Adverse Event, Default, or Potential Default
will exist.

	 	 	 	 	 	 	 
	 	 	Goodrich Petroleum Company, L.L.C., as Borrower  
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	 	 	 
	

	 	(Name)	 	 	 	 
	

	 	 	 	 	 	 
	

	 	(Title)	 	 	 	 
	

	 	 	 	 	 	 

	1	 	Business Day of request for Base-Rate
Borrowing or at least third Business Day after request for LIBOR-Rate
Borrowing.
	 
	2	 	Not less than $500,000 or a $100,000 greater
multiple if a Base-Rate Borrowing, and not less than $1,000,000 or a $500,000
greater multiple if a LIBOR-Rate Borrowing.
	 
	3	 	Revolving Borrowing or Term Borrowing.
	 
	4	 	LIBOR-Rate Borrowing or Base-Rate Borrowing.
	 
	5	 	1, 2, 3, or 6 months.

Exhibit C-1

 

EXHIBIT C-2

NOTICE OF CONVERSION

					
	 
	 	 
	 	 
	AGENT:
	 	BNP Paribas
	 	DATE:                     , 200___

BORROWER: Goodrich Petroleum Company, L.L.C.

     This notice is delivered under Section 3.10 of the Credit Agreement (as renewed, extended,
amended, or restated, the “Credit Agreement”) dated as of November 9, 2001, as amended and
restated on February 25, 2005, between Borrower, Agent, and certain lenders. Terms defined in the
Credit Agreement have the same meanings when used — unless otherwise defined — in this notice.

     Borrower presently has a ___/ Borrowing (the “Existing Borrowing”) under the
Revolving Facility in the amount of $___ — which, if a Libor-Rate Borrowing, has
an Interest Period of ___/ ending on ___. On
___(the “Conversion Date”), Borrower shall partially pay, continue in full or
part as the same Type of Borrowing, or convert in full or part to another Type of Borrowing and —
if applicable — with the Interest Period(d) designated below [check applicable boxes]:

     o Amount to be paid, if any, $___

     o Balance to be in the following Types of Borrowings with — if applicable — the following
Interest Period(s):

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Type	 	 	Amount	 	 	 	Interest Period	 	 
	 	 
	 	 	$	 	 	 	 	 	 	 	 
	 	 
	 	 	$	 	 	 	 	 	 	 	 
	 	 
	 	 	$	 	 	 	 	 	 	 	 
	 	 
	 	 	$	 	 	 	 	 	 	 	 
	 

     Borrower certifies that on the Conversion Date — and after giving effect to the above
action(s) — (a) all of the representations and warranties in the Loan Documents will be true and
correct in all material respects and (b) no Material Adverse Event, Default, or Potential Default
will exist.

	 	 	 	 	 
	Goodrich Petroleum Company, L.L.C.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	

	 	 	 	 
	(Name)
	 	 	 	 
	

	 	 	 	 
	(Title)
	 	 	 	 
	

	 	 	 	 

Exhibit C-2

 

EXHIBIT C-3

LC REQUEST

					
	 
	 	 
	 	 
	AGENT:
	 	BNP Paribas
	 	DATE:                     , 200___

	 	 	 
	ISSUING LENDER:
	 	 
	BORROWER:

	 	Goodrich Petroleum Company, L.L.C.

     This notice is delivered under Section 2.4(a) of the Credit Agreement (as renewed, extended,
and amended, the “Credit Agreement”) dated as of November 9, 2001, as amended and restated on
February 25, 2005, between Borrower, Agent, Issuing Lender, and certain other lenders. Terms
defined in the Credit Agreement have the same meanings when used — unless otherwise defined — in
this request.

     Borrower requests Issuing Lender to issue a LC under the Credit Agreement as follows:

	 	 	 
	Issue Date

	 	                                                          ,                     
	Beneficiary

	 	                                                                                
	Expiry Date

	 	                                                                                /
	Face Amount

	 	$                                                                              

     Borrower certifies that on the above Issue Date — after giving effect to the requested LC —
(a) all of the representations and warranties in the Loan Documents will be true and correct in all
material respects and (b) no Material Adverse Event, Default, or Potential Default will exist.

	 	 	 	 	 
	Goodrich Petroleum Company, L.L.C., as Borrower	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	

	 	 	 	 
	(Name)
	 	 	 	 
	

	 	 	 	 
	(Title)
	 	 	 	 
	

	 	 	 	 

Exhibit C-3

 

EXHIBIT C-4

COMPLIANCE CERTIFICATE

FOR THE FISCAL QUARTER/YEAR ENDED ____________________

(the “Subject Period”)

					
	 
	 	 
	 	 
	AGENT:
	 	BNP Paribas
	 	DATE:                                         

	 	 	 
	BORROWER:

	 	Goodrich Petroleum Company, L.L.C.

     This certificate is delivered under the Credit Agreement (as renewed, extended, amended, or
restated, the “Credit Agreement”) dated as of November 9, 2001, as amended and restated on
February 25, 2005, between Goodrich’s, Agent, and certain lenders, all defined terms in which have
the same meanings when used — unless otherwise defined — in this certificate.

     In my capacity as a Responsible Officer of — and on behalf of — Borrower, I certify to Agent
and Lenders on the date of this certificate that (a) I am a Responsible Officer of Borrower, (b)
Goodrich’s Financial Statements attached to this certificate were prepared in accordance with GAAP
and present fairly the Companies’ consolidated financial condition and results of operations as of,
and for the fiscal quarter or year, as the case may be, ended on, the last day of the Subject
Period, (c) a review of the activities of the Companies during the Subject Period has been made
under my supervision with a view to determining whether, during the Subject Period, the Companies
performed and complied with all of their obligations under the Loan Documents, and, during the
Subject Period, to my knowledge (i) the Companies performed, and complied with all of their
obligations under the Loan Documents (except for the deviations, if any, described on a schedule to
this certificate) in all material respects, and (ii) no Default (nor any Potential Default) has
occurred which has not been cured or waived (except the Defaults or Potential Defaults, if any,
described on the schedule to this certificate), and (d) to my knowledge, the status of compliance
by the Companies with Sections 10.1, 10.2, 10.3 and 10.4 of the Credit Agreement at the end of the
Subject Period is as described on the schedule to this certificate.

	 	 	 	 	 
	By:
	 	 	 	 
	

	 	 	 	 
	(Name)
	 	 	 	 
	

	 	 	 	 
	(Title)
	 	 	 	 
	

	 	 	 	 

Exhibit C-4

 

SCHEDULE TO COMPLIANCE CERTIFICATE

(For Fiscal Quarter/Year Ended                                                             )

     A. Describe deviations from performance or compliance with covenants, if any, pursuant to
clause (c)(i) of the attached certificate. If none, so state.

     B. Describe Potential Defaults and Defaults, if any, pursuant to clause (c)(ii) of the
attached certificate. If none, so state.

     C. Reflect compliance with Sections 10.1, 10.2, 10.3 and 10.4 at the end of the Subject Period
on a consolidated basis pursuant to clause (d) of the attached certificate.

Table 1

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Covenant
	 	 	At End of Subject Period	 	 
	 	§10.1 Current Ratio
	 	 	 	 	 	 	 	 	 	 	 
	 	(a) Current assets
	 	 	$	 	 	 	 	 	 	 	 
	 	(b) Current liabilities
	 	 	$	 	 	 	 	 	 	 	 
	 	(c) Ratio of Line (a) to Line (b)
	 	 	 	 	 	 	 	___ to 1.00	 
	 	(d) Minimum
	 	 	 	 	 	 	 	 	1.00 to 1.00	 	 
	 	§10.2 Interest Coverage
	 	 	 	 	 	 	 	 	 	 	 
	 	(a) Net Income for the fiscal quarter then ended
	 	 	$	 	 	 	 	 	 	 	 
	 	Interest expense (including capitalized interest) in
that applicable period
	 	 	$	 	 	 	 	 	 	 	 
	 	(c) Taxes for that applicable period
	 	 	$	 	 	 	 	 	 	 	 
	 	(d) Extraordinary expense/(income) for that applicable
period
	 	 	$	 	 	 	 	 	 	 	 
	 

Schedule to Compliance Certificate

Page 1

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Covenant	 	 	At End of Subject Period	 	 
	 	(e) Depreciation, depletion and amortization for that
applicable period
	 	 	$	 	 	 	 	 	 	 	 
	 	(f) EBITDAX for that applicable period (sum of Lines
(a)-(e))
	 	 	 	 	 	 	 	$	 	 	 
	 	(g) Ratio of Line (f) to Line (b)
	 	 	 	 	 	 	 	___ to 1.00	 
	 	(h) Minimum
	 	 	 	 	 	 	 	 	3.00 to 1.00	 	 
	 	§10.3 Minimum Tangible Net Worth
	 	 	 	 	 	 	 	 	 	 	 
	 	(a) Tangible Net Worth at the end of the Subject Period
	 	 	 	 	 	 	 	$	 	 	 
	 	 Cumulative Net Income (without deduction for losses)
from the Closing Date, through the end of the Subject
Period
	 	 	$	 	 	 	 	 	 	 	 
	 	 Net proceeds of the issuance of any equity securities
by Goodrich after the Closing Date
	 	 	$	 	 	 	 	 	 	 	 
	 	 Minimum Tangible Net Worth [Sum of $40,000,000 plus
(50% X Line(b)) plus (100% X Line (c))]
	 	 	 	 	 	 	 	$	 	 	 
	 	§10.4 Total PV to Total Debt
	 	 	 	 	 	 	 	 	 	 	 
	 	 Total PV at the end of the Subject Period
	 	 	$	 	 	 	 	 	 	 	 
	 	 Total Debt at the end of the Subject Period
	 	 	$	 	 	 	 	 	 	 	 
	 	 Ratio of Line (a) to Line (b)
	 	 	 	 	 	 	 	___ to 1.00	 
	 	 Minimum
	 	 	 	 	 	 	 	 	1.5 to 1.00	 	 
	 

Schedule to Compliance Certificate

Page 2

 

EXHIBIT D

OPINION OF COUNSEL TO COMPANIES

Exhibit D

 

 

EXHIBIT E

ASSIGNMENT AND ASSUMPTION AGREEMENT

     THIS AGREEMENT is entered into as of ___, between ___
(“Assignor”) and ___(“Assignee”).

     Goodrich Petroleum Company, L.L.C., a Louisiana limited liability company (“Borrower”)
certain lenders (“Lenders”), and BNP Paribas, a foreign banking corporation organized under
the laws of the Republic of France (in its capacity as Agent for Lenders, “Agent”), are
party to the Credit Agreement (as renewed, extended, amended, or restated, the “Credit
Agreement”) dated as of November 9, 2001, as amended and restated on February 25, 2005, all of
the defined terms in which have the same meanings when used — unless otherwise defined — in this
agreement. This agreement is entered into as required by Section 14.10(c) of the Credit Agreement
and, if required pursuant to the terms of the Credit Agreement, is not effective until consented to
by Borrower and Agent, which consents may not under the Credit Agreement be unreasonably withheld.

     ACCORDINGLY, for adequate and sufficient consideration, Assignor and Assignee agree as
follows:

1. Assignment and Assumption. By this agreement, and effective as of ___
(which must be at least five Business Days after the execution and delivery of this agreement to
both Borrower, if applicable, and Agent for consent, the “Effective Date”), Assignor sells and
assigns to Assignee (without recourse to Assignor) and Assignee purchases and assumes from Assignor
a ___% interest (the “Assigned Interest”), which, if not equal to 100%, must be a percentage, when
computed as an aggregate dollar amount, that is at least $5,000,000, in and to all of Assignor’s
Rights and obligations under the Credit Agreement as of the Effective Date, including, without
limitation, the Assigned Interest in (a) Assignor’s Commitment as of the Effective Date, (b) the
Note held by Assignor as of the Effective Date, (c) all Principal Debt owed to Assignor on the
Effective Date, (d) all unpaid reimbursement obligations under drawings or drafts under any LC on
the Effective Date, (e) all outstanding participations owned by Assignor under Section 2.4(b) of
the Credit Agreement on the Effective Date, (f) all interest accruing in respect of the Assigned
Interest after the Effective Date, (g) all LC fees paid in advance before the Effective Date under
Section 4.3(a) of the Credit Agreement in respect of the Assigned Interest and in respect of any
period or periods after the Effective Date, and (h) all commitment fees accruing in respect of the
Assigned Interest under Section 4.4 of the Credit Agreement after the Effective Date.

2. Assignor Provisions. Assignor (a) represents and warrants to Assignee that as of the
Effective Date (i) the following principal amounts and LC liabilities are owed to it without
reduction for any assignments that have not yet become effective:

	 	 	 	 	 
	Item	 	Amount	 
	Revolving Principal Debt of Revolving Facility
	 	$	 	 
	Term Principal Debt of Term Facility
	 	$	 	 
	LC reimbursement obligations
	 	$	 	 
	§ 2.3(b) participations
	 	$	 	 

Exhibit E - 1

 

and (ii) Assignor is the legal and beneficial owner of the Assigned Interest, which is free and
clear of any adverse claim, and (b) makes no representation or warranty to Assignee and assumes no
responsibility to Assignee with respect to (i) any statements, warranties, or representations made
in or in connection with any Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency, or value of any Loan Document, or (iii) the financial condition of any
Company or the performance or observance by any Company of any of its obligations under any Loan
Document.

3. Assignee Provisions. Assignee (a) represents and warrants to Assignor, Borrower, and
Agent that Assignee is legally authorized to enter into this agreement, (b) confirms that it has
received a copy of the Credit Agreement, copies of the Current Financials, and such other documents
and information as it deems appropriate to make its own credit analysis and decision to enter into
this agreement, (c) agrees with Assignor, Borrower, and Agent that Assignee shall — independently
and without reliance upon Agent, Assignor, or any other Lender and based on such documents and
information as Assignee deems appropriate at the time — continue to make its own credit decisions
in taking or not taking action under the Loan Documents, (d) appoints and authorizes Agent to take
such action as agent on its behalf and to exercise such powers under the Loan Documents as are
delegated to Agent by the terms of the Loan Documents and all other reasonably-incidental powers,
(e) agrees with Assignor, Borrower, and Agent that Assignee shall perform and comply with all
provisions of the Loan Documents applicable to Lenders in accordance with their respective terms,
and (f) if Assignee is not organized under the Laws of the United States of America or one of its
states, it (i) represents and warrants to Assignor, Agent, and Borrower that no Taxes are required
to be withheld by Assignor, Agent, or Borrower with respect to any payments to be made to it in
respect of the Obligations, and it has furnished to Agent and Borrower two duly completed copies of
either U.S. Internal Revenue Service Forms W-8BEN, W-8ECI, or any other form acceptable to Agent
that entitles Assignee to exemption from U.S. federal withholding Tax on all interest payments
under the Loan Documents, (ii) covenants to provide Agent and Borrower a new Forms W-8BEN, W-8ECI,
or other form acceptable to Agent upon the expiration or obsolescence of any previously delivered
form according to Law, duly executed and completed by it, and to comply from time to time with all
Laws with regard to the withholding Tax exemption, and (iii) agrees with Agent and Borrower that,
if any of the foregoing is not true or the applicable forms are not provided, then Agent and
Borrower (without duplication) may deduct and withhold from interest payments under the Loan
Documents any United States federal-income Tax at the full rate applicable under the Code.

4. Credit Agreement and Commitments. From and after the Effective Date (a) Assignee shall
be a party to the Credit Agreement and (to the extent provided in this agreement) have the Rights
and obligations of a Lender under the Loan Documents and (b) Assignor shall (to the extent provided
in this agreement) relinquish its Rights and be released from its obligations under the Loan
Documents. On the Effective Date, after giving effect to this agreement, but without giving effect
to any other assignments that have not yet become effective, Assignor’s total Commitment (which, if
positive, must be at least $5,000,000) and Assignee’s total Commitment will be as follows:

Exhibit E - 2

 

	 	 	 	 	 
	Lender	 	Commitment	 
	Assignor
	 	$	 	 
	Assignee
	 	$	 	 

5. Notes. Assignor and Assignee request Borrower to issue new Notes to Assignor and
Assignee in the amounts of their respective Commitments under Paragraph 4 above and otherwise
issued in accordance with the Credit Agreement. Upon delivery of those Notes, Assignor shall
return to Borrower the Note previously delivered to Assignor under the Credit Agreement.

6. Payments and Adjustments. From and after the Effective Date, Agent shall make all
payments in respect of the Assigned Interest (including payments of principal, interest, fees, and
other amounts) to Assignee. Assignor and Assignee shall make all appropriate adjustments in
payments for periods before the Effective Date by Agent or with respect to the making of this
assignment directly between themselves.

7. Conditions Precedent. Paragraphs 1 through 5 above are not effective until (a)
counterparts of this agreement are executed and delivered by Assignor and Assignee to — and are
executed in the spaces below by — Borrower and Agent and (b) Agent receives from Assignor or
Assignee a $3,500 processing fee.

8. Incorporated Provisions. Although this agreement is not a Loan Document, the provisions
of Sections 1 and 14 of the Credit Agreement applicable to Loan Documents are incorporated into
this instrument by reference the same as if this agreement were a Loan Document and those
provisions were set forth in this agreement verbatim.

9. Communications. For purposes of Section 14.2 of the Credit Agreement, Assignee’s
address and telecopy number — until changed under that section — are beside its signature below.

10. Amendments, Etc. No amendment, waiver, or discharge to or under this agreement is
valid unless in writing that is signed by the party against whom it is sought to be enforced and is
otherwise in conformity with the requirements of the Credit Agreement.

11. ENTIRETY. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN ASSIGNOR AND ASSIGNEE
ABOUT ITS SUBJECT MATTER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF ASSIGNOR AND ASSIGNEE. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN ASSIGNOR AND ASSIGNEE.

12. Parties. This agreement binds and benefits Assignor, Assignee, and their respective
successors and assigns that are permitted under the Credit Agreement.

Exhibit E - 3

 

     EXECUTED as of the date first stated above.

[ASSIGNOR]

	 	 	 	 	 
	By:
	 	 	 	 
	

	 	 	 	 
	(Name)
	 	 	 	 
	

	 	 	 	 
	(Title)
	 	 	 	 
	

	 	 	 	 

[ASSIGNEE]

	 	 	 	 	 
	By:
	 	 	 	 
	

	 	 	 	 
	(Name)
	 	 	 	 
	

	 	 	 	 
	(Title)
	 	 	 	 
	

	 	 	 	 

(Address)

(Telecopy No.)

As of the Effective Date, [Borrower] and Agent consent to this agreement and the transactions
contemplated in it.

[GOODRICH PETROLEUM COMPANY, L.L.C., as Borrower]

	 	 	 	 	 
	By:
	 	 	 	 
	

	 	 	 	 
	(Name)
	 	 	 	 
	

	 	 	 	 
	(Title)
	 	 	 	 
	

	 	 	 	 

BNP PARIBAS, as Agent

	 	 	 	 	 
	By:
	 	 	 	 
	

	 	 	 	 
	(Name)
	 	 	 	 
	

	 	 	 	 
	(Title)
	 	 	 	 
	

	 	 	 	 

	 	 	 	 	 
	By:
	 	 	 	 
	

	 	 	 	 
	(Name)
	 	 	 	 
	

	 	 	 	 
	(Title)
	 	 	 	 
	

	 	 	 	 

Exhibit E - 4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]