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EXHIBIT 4.3
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TRANSAMERICAN ENERGY CORPORATION
AND
TRANSTEXAS GAS CORPORATION
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SECOND AMENDMENT TO LOAN AGREEMENT
Dated as of December 15, 1998
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SECOND AMENDMENT TO LOAN AGREEMENT
This Second Amendment to Loan Agreement (this "Second Amendment") is
made as of December 15, 1998, by and between TransAmerican Energy Corporation, a
Delaware corporation ("TEC"), and TransTexas Gas Corporation, a Delaware
corporation ("TransTexas").
WHEREAS, TEC and Firstar Bank of Minnesota, N.A., as Trustee, have
entered into an Indenture dated as of June 13, 1997, as amended (the
"Indenture"), pursuant to which TEC issued $475,000,000 aggregate principal
amount of its 11 1/2% Senior Secured Notes due 2002 and $1,130,000,000 aggregate
principal amount of its 13% Senior Secured Discount Notes due 2002
(collectively, the "Notes"); and
WHEREAS, TEC and TransTexas have entered into a Loan Agreement dated as
of June 13, 1997, as amended by a First Amendment to Loan Agreement dated as of
December 30, 1997 (as so amended, the "TransTexas Intercompany Loan Agreement"),
pursuant to which TEC agreed to loan to TransTexas an aggregate of $450,000,000
out of the proceeds of the issuance of the Notes; and
WHEREAS, TEC and TransTexas have agreed to certain amendments to the
TransTexas Intercompany Loan Agreement as hereinafter set forth (the "Proposed
Amendments"); and
WHEREAS, pursuant to Section 9.2 of the Indenture, the holders of not
less than 66-2/3% in aggregate Value (as defined in the Indenture) of the Notes
have consented to the Proposed Amendments to the TransTexas Intercompany Loan
Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Second
Amendment hereby agree as follows:
ARTICLE I
AMENDMENTS TO THE TRANSTEXAS INTERCOMPANY LOAN AGREEMENT
Section 1.01. Amendments to Section 1.1. The following definitions in
Section 1.1 of the TransTexas Intercompany Loan Agreement are hereby amended as
follows:
(a) The definition of "Equipment" is hereby amended to read as
follows:
"Equipment" shall mean and includes all of any
Person's now owned or hereafter acquired Vehicles, drilling
rigs, workover rigs, fracture stimulation equipment, well site
compressors, rolling stock and related equipment and other
assets accounted for as equipment by such Person in its
financial statements, all proceeds thereof, and all documents
of title, books, records, ledger cards, files, correspondence
and computer files, tapes, disks and related data processing
software that any time evidence or contain information
relating to the foregoing; provided, however that "Equipment"
shall not include any assets constituting part of a natural
gas pipeline or the compression or dehydration equipment used
in the operation of any such pipeline; provided further,
however, notwithstanding the foregoing, "Equipment" shall
include (x) production related facilities, (y) assets
comprising amine plants and (z) equipment and related assets
designed to dehydrate, compress, treat, separate, stabilize,
store or otherwise process hydrocarbons,
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including, without limitation, the facilities at Winnie, Texas
(including the real property associated with such facilities
at Winnie, Texas).
(b) The definition of "Permitted Hedging Transactions" is hereby
amended to read as follows:
"Permitted Hedging Transactions" shall mean
non-speculative transactions in futures, forwards, swaps or
option contracts (including both physical and financial
settlement transactions) engaged in by the TransTexas Entities
as part of their normal business operations as a
risk-management strategy or hedge against adverse changes in
market conditions in the prices of natural gas, condensate,
feedstock or refined products; provided, that such
transactions do not in the case of the Borrower, on a monthly
basis, relate to more than 90% of the TransTexas Entities'
average net hydrocarbon production per month from the
Continuing Operations for the most recent 3-month period
measured at the time of such incurrence; provided, further,
that, at the time of such transaction (i) the counter party to
any such transaction is an Eligible Institution or a Person
that has an Investment Grade Rating or has an issue of debt
securities or preferred stock outstanding with an Investment
Grade Rating or (ii) such counter party's obligation pursuant
to such transaction is unconditionally guaranteed in full by,
or secured by a letter of credit issued by, an Eligible
Institution or a Person that has an Investment Grade Rating or
that has an issue of debt securities or preferred stock
outstanding with an Investment Grade Rating.
(c) The definition of "Permitted Investment" is hereby amended to read
as follows:
"Permitted Investment" shall mean, when used with
reference to the Borrower or its Subsidiaries, (i) trade
credit extended to persons in the ordinary course of business;
(ii) purchases of Cash Equivalents; (iii) Investments by the
Borrower or its wholly owned Subsidiaries in wholly owned
Subsidiaries of the Borrower (other than TTXD) that are
engaged in Related TransTexas Businesses; (iv) Swap
Obligations; (v) the receipt of capital stock in lieu of cash
in connection with the settlement of litigation; (vi) advances
to officers and employees in connection with the performance
of their duties in the ordinary course of business in an
amount not to exceed $3 million in the aggregate outstanding
at any time; (vii) margin deposits in connection with
Permitted Hedging Transactions; (viii) an Investment in one or
more Unrestricted Subsidiaries of the Borrower in an aggregate
amount, net return of income on such investment, not in excess
of $25 million less the amount of any Unrestricted
Non-Recourse Debt outstanding of Borrower or any of its
Subsidiaries; (ix) Investments and expenditures made in the
ordinary course of business by the Borrower or its
Subsidiaries, and of a nature that is or shall have become
customary in, the oil and gas business as a means of actively
exploiting, exploring for, acquiring, developing, processing,
gathering, marketing or transporting oil and gas or providing
services with respect to such activities through agreements,
transactions, interests or arrangements which permit a person
to share risks or costs, comply with regulatory requirements
regarding local ownership or satisfy other objectives
customarily achieved through the conduct of the oil and gas
business jointly with third parties, including, without
limitation, (a) ownership interests in oil and gas properties
or gathering systems and (b) Investments and expenditures in
the form of or pursuant to operating agreements, processing
agreements, farm-in agreements, farm-out agreements,
development agreements, area of mutual interest agreements,
unitization agreements, pooling arrangements, joint
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bidding agreements, service contracts, joint venture
agreements, partnership agreements (whether general or
limited), subscription agreements, stock purchase agreements
and other similar agreements with third parties (including
Unrestricted Subsidiaries); provided, that in the case of any
joint venture primarily engaged in processing, gathering,
marketing or transporting oil or gas (i) all Debt of such
joint venture (other than a joint venture that is an
Unrestricted Subsidiary) that would not otherwise constitute
Debt of one of the TransTexas Entities shall be deemed Debt of
the Borrower in proportion to its direct or indirect ownership
interest in such joint venture (other than through an
Unrestricted Subsidiary) and (ii) such joint venture shall be
reasonably calculated to enhance the value of the reserves of
the TransTexas Entities or marketability of production from
such reserves; (x) a guaranty by any Subsidiary of the
Borrower permitted under the Indenture; (xi) deposits
permitted by the definition of Permitted Liens or any
extension, renewal or replacement of any of them; (xii) the
TTXD Equity Investment (in addition to any contribution by the
Borrower pursuant to clause (xiii) below, (xiii) a capital
contribution by the Borrower to TTXD or to a joint venture, a
partnership, a limited liability company or a similar entity
of the Borrower's drilling and energy services business and
pipeline services business and related assets, (xiv) an
acquisition by the Borrower of tank storage facilities (or the
company that owns such facilities) in the vicinity of the TARC
Refinery; (xv) guarantees by the Borrower of Debt of TTXD to
the extent such Debt relates to assets contributed to TTXD
pursuant to clause (xiii) hereof; (xvi) other Investments not
in excess of $5 million at any time outstanding, (xvii) loans
made (x) to officers, directors and employees of the Borrower
or any of its Subsidiaries approved by the applicable Board of
Directors (or by an authorized officer), the proceeds of which
are used solely to purchase stock or to exercise stock options
received pursuant to an employee stock option plan or other
incentive plan, in a principal amount not to exceed the
purchase price of such stock or the exercise price of such
stock options, as applicable, and (y) to refinance loans,
together with accrued interest thereon made pursuant to this
clause, in each case not in excess of $3 million in the
aggregate outstanding at any one time, (xviii) a capital
contribution by the Borrower of any or all of its assets to a
joint venture, a partnership, a limited liability company or a
similar entity, (xix) any deposit or escrow of funds in
connection with adjustments to the Lobo Sale purchase price or
(xx) the acquisition by the Borrower of TEC Notes as a result
of a capital contribution to the Borrower by a Person other
than the Lender or any of its Subsidiaries.
(d) The definition of "Permitted Liens" is hereby amended to read as
follows:
"Permitted Liens" shall mean (a) Liens imposed by
governmental authorities for taxes, assessments, or other
charges not yet due or which are being contested in good faith
and by appropriate proceedings, if adequate reserves with
respect thereto are maintained on the books of any of the
TransTexas Entities in accordance with GAAP; (b) statutory
Liens of landlords, carriers, warehousemen, mechanics,
materialmen, repairmen, mineral interest owners, or other like
Liens arising by operation of law in the ordinary course of
business; provided, that (i) the underlying obligations are
not overdue for a period of more than 60 days, or (ii) such
Liens are being contested in good faith and by appropriate
proceedings and adequate reserves with respect thereto are
maintained on the books of any of the TransTexas Entities in
accordance with GAAP; (c) (i) pledges of assets or deposits of
cash or Cash Equivalents to secure the performance of bids,
trade contracts (other than
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borrowed money), leases, statutory obligations, surety bonds,
performance bonds and other obligations of a like nature
incurred in the ordinary course of business (or to secure
reimbursement obligations or letters of credit in support of
such bonds) in an aggregate amount not in excess of 5% of the
SEC PV10 indicated on TransTexas' most recent Reserve Report
at the time such pledges or deposits are made or (ii) pledges
of assets, the fair market value of which is not in excess of
$40 million in the aggregate pledged at any one time, or
deposits of cash or Cash Equivalents, in each case, to secure
appeal or supersedeas bonds (or to secure reimbursement
obligations or letters of credit in support of such bonds);
(d) Liens encumbering customary initial deposits and margin
deposits securing Swap Obligations or Permitted Hedging
Transactions; (e) pledges of assets including, without
limitation, the mortgage of a production payment by a Hedging
Subsidiary, to secure margin obligations, settlement
obligations, reimbursement obligations or letters of credit in
connection with Permitted Hedging Transactions; provided that,
at the time such pledge is made (or, if such pledge secures
future Permitted Hedging Transactions, at the time any such
Permitted Hedging Transaction is entered into), the maximum
aggregate exposure under such Permitted Hedging Transactions
does not exceed the greater of (i) $25 million or (ii) 10% of
the SEC PV10 indicated on TransTexas' then most recent Reserve
Report; (f) easements, rights-of-way, zoning, similar
restrictions and other similar encumbrances or title defects
incurred in the ordinary course of business which, in the
aggregate, are not material in amount, and which do not in any
case materially detract from the value of the property subject
thereto (as such property is used by any of the TransTexas
Entities) or materially interfere with the ordinary conduct of
the business of any of the TransTexas Entities; (g) Liens
arising by operation of law in connection with judgments, only
to the extent, for an amount and for a period not resulting in
an Event of Default with respect thereto; (h) Liens securing
Debt or other obligations not in excess of $3 million and
Liens existing on the Closing Date; (i) pledges or deposits
made in the ordinary course of business in connection with
worker's compensation, unemployment insurance, and other types
of social security legislation, property insurance and
liability insurance; (j) Liens granted on Equipment, Inventory
or Receivables; (k) Liens granted in connection with the
Presale of Gas, provided that all of the proceeds from such
Presale of Gas shall be applied to the repurchase of the Note;
(l) Liens created on acreage drilled or to be drilled pursuant
to Drilling Programs, on Hydrocarbons produced therefrom and
on the proceeds of such Hydrocarbons to secure TransTexas'
obligations thereunder, provided that (i) the number of xxxxx
included in such program commenced in any fiscal year does not
exceed 30 per fiscal year (plus the number of xxxxx included
in programs commenced in prior years but not yet completed),
(ii) such obligations are limited to a percentage of
production from such xxxxx, (iii) such Liens survive only
until the Person to whom such Lien was granted has received
production with a value equal to the reimbursable costs,
expenses and fees related to property and services provided or
paid for by such Person plus an agreed-upon interest
component, and (iv) such Liens secure obligations that are
nonrecourse to each of the Company or its Subsidiaries; (m)
Liens on the assets of any entity existing at the time such
assets are acquired by any of the TransTexas Entities, whether
by merger, consolidation, purchase of assets or otherwise so
long as such Liens (A) are not created, incurred or assumed in
contemplation of such assets being acquired by any of the
TransTexas Entities and (B) do not extend to any other assets
of any of the TransTexas Entities; (n) any extension, renewal,
or replacement of Liens created pursuant to any of clauses (a)
through (g), (i), (k) through (m) or (q) through (t) of this
definition, or (r) through (v) ;provided that
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such Liens would have otherwise been permitted under such
clauses, and further provided that the Liens permitted by this
clause (n) do not secure any additional Debt or encumber any
additional property; (o) Liens securing (i) Royalty Payment
Obligations and (ii) Permitted Production Payment Obligations;
(p) Liens on the assets of one of the TransTexas Entities in
favor of another TransTexas Entity; (q) Liens that secure
Unrestricted NonRecourse Debt; provided however, that at the
time of incurrence the aggregate fair market value of the
assets securing such Lien (exclusive of the stock of the
applicable Unrestricted Subsidiary) shall not exceed the
amount of allowed Unrestricted Non-Recourse Debt of the
Borrower; (r) Liens on the proceeds of any property subject to
a Permitted Lien or on deposit accounts containing any such
proceeds; (s) Liens on the proceeds of any property that is
not Collateral, on the proceeds of any Debt incurred in
accordance with the provisions hereof, or on deposit accounts
containing any such proceeds; (t) Liens (including extensions
and renewals thereof) on real or personal property, acquired
after the Closing Date ("New TransTexas Property"); provided,
however, that (A) such Lien is created solely for the purpose
of securing Debt Incurred to finance the cost (including the
cost of improvements or construction) of New TransTexas
Property subject thereto and such Lien is created at the time
of, or within six months after the later of the acquisition,
the completion of construction, or the commencement of full
operation of such New TransTexas Property, (B) the principal
amount of the Debt secured by such Lien does not exceed 100%
of such cost plus reasonable financing fees and other
associated reasonable out-of-pocket expenses and (C) any such
Lien shall not extend to or cover any property or assets other
than such item of New TransTexas property and any improvements
on such New TransTexas Property; (u) Liens of the trustee
under the indenture and related collateral documents governing
the terms of the TransTexas Senior Notes and (v) Liens in
favor of the Lender or its assignee under the TransTexas
Security Documents.
(e) The definition of "Phase I Completion Date" is hereby amended to
read as follows:
"Phase I Completion Date" shall mean the date on
which the Construction Supervisor issues a written notice (the
"Phase I Completion Notice") to TARC certifying that the Phase
I Performance Test has been completed.
(f) The definition of "Phase I Performance Test" is hereby added to the
TransTexas Intercompany Loan Agreement to read in its entirety as follows:
"Phase I Performance Test" means for a period of at
least 72 uninterrupted hours, TARC Operating's refinery has
sustained (i) an average feedstock throughput level of at
least 150,000 barrels per day, and (ii) no net production of
vacuum tower bottoms when using as input a combined feedstock
slate with an average API Gravity of 22 degrees or less.
(g) The definition of "Phase II Completion Date" is hereby amended to
read as follows:
"Phase II Completion Date" means the date on which
the Construction Supervisor issues a written notice (the
"Phase II Completion Notice") to the Borrower certifying that
for a period of at least 72 uninterrupted hours, TARC
Operating's refinery has sustained (i) an average feedstock
throughput level of at least 180,000 barrels per day and (ii)
average
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production yields (measured as the liquid volume percent of
feedstock throughput) of refined products with a specific
gravity of gasoline or lighter of at least 40% and of middle
distillates or lighter of at least 60%, when using a combined
Crude Unit feedstock slate with an average API Gravity of 22
degrees or less.
(h) The definition of "Related TransTexas Business" is hereby amended
to read as follows:
"Related TransTexas Business" shall mean (i) the
exploration for, acquisition of, development of, production,
transportation, gathering, and processing (in connection with
natural gas and natural gas liquids only) of, crude oil,
natural gas, condensate, and natural gas liquids; provided
that the Related TransTexas Business shall not include any
refining or distilling of Hydrocarbons other than processing
and fractionating natural gas and natural gas liquids, (ii)
the drilling and energy services business and pipeline
services business, (iii) owning and operating a Hedging
Subsidiary or (iv) owning and operating facilities in or near
Winnie, Texas, designed for separation, dehydration,
treatment, stabilization, processing and storage of
hydrocarbons and related operations.
Section 1.02. Section 2.4 of the TransTexas Intercompany Loan
Agreement. Section 2.4 of the TransTexas Intercompany Loan Agreement is hereby
amended to add a new subsection (b) following subsection (a) to read as follows:
(b) Notwithstanding anything to the contrary herein,
the Borrower may at any time repay the principal of the Loan
by surrender to the Lender for cancellation of 11 1/2% Senior
Secured Notes due 2000 of the Lender ("Senior Notes") and at
any time after June 15, 1999 repay the principal of the Loan
by surrender to the Lender for cancellation of 13% Senior
Secured Discount Notes due 2002 ("Senior Discount Notes"), but
only to the extent the Borrower has received Senior Notes or
Senior Discount Notes or a cash amount equal to the cost to
the Borrower of such Senior Notes or Senior Discount Notes as
a capital contribution from a person other than the Lender or
any of its Subsidiaries. Upon each such surrender of Senior
Notes or Senior Discount Notes to the Lender, the principal
amount of the Loan shall be reduced by 100.0% of the principal
amount of the Senior Notes surrendered and 100.0% of the
principal amount of the Senior Discount Notes surrendered.
Section 1.03. Section 3.2 of the TransTexas Intercompany Loan
Agreement. Section 3.2 of the TransTexas Intercompany Loan Agreement is hereby
amended to read as follows:
Section 3.2 Permitted Prepayments. The Borrower may
at any time make a prepayment of all or a portion of the
principal amount of the Note then outstanding (a "Permitted
Prepayment") at a prepayment price equal to the portion of the
outstanding principal amount of the Note to be prepaid
together with accrued and unpaid interest, if any, to and
including the date of such Permitted Prepayment.
Section 1.04. Section 9.15 of the TransTexas Intercompany Loan
Agreement. A Section 9.15 is hereby added to the TransTexas Intercompany Loan
Agreement to read as follows:
Section 9.15 Agreement. The term "Agreement," as used
in the TransTexas Intercompany Loan Agreement, and the terms
"TransTexas Intercompany Loan Agreement"
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and "Loan Agreement," as used in the other Loan Documents,
each shall mean and refer to the TransTexas Intercompany Loan
Agreement, as amended, modified, supplemented, restated,
renewed, and/or extended from time to time; . . .
ARTICLE II
MISCELLANEOUS
Section 2.01. Ratification and Confirmation. As amended and modified by
this Second Amendment, the terms and provisions of the TransTexas Intercompany
Loan Agreement are hereby ratified and confirmed and shall continue in full
force and effect.
Section 2.02. Reference to TransTexas Intercompany Loan Agreement. The
TransTexas Intercompany Loan Agreement and any and all other agreements,
documents or instruments now or hereafter executed and delivered pursuant to the
terms of the TransTexas Intercompany Loan Agreement, are hereby amended so that
any reference therein to the TransTexas Intercompany Loan Agreement shall mean a
reference to the TransTexas Intercompany Loan Agreement as amended hereby.
Section 2.03. Counterparts. This Second Amendment may be executed in
one or more counterparts, each of which when executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the same
instrument.
Section 2.04. Headings. The headings, captions and arrangements used in
this Second Amendment are for convenience only and shall not affect the
interpretation of this Second Amendment.
Section 2.05. Governing Law. THIS SECOND AMENDMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Section 2.06. Effectiveness of Amendments. This Second Amendment is
effective as of the date first above written. However, the provisions of the
TransTexas Intercompany Loan Agreement amended or eliminated as provided in this
Second Amendment (the "Amended Provisions") shall remain operative in the form
in which they exist in the TransTexas Intercompany Loan Agreement until the
Transaction Closing Date, whereupon the Amended Provisions will be amended or
eliminated as provided herein, effective immediately prior to the Transaction
Closing Date.
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IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be executed as of the date of first written above.
TRANSTEXAS GAS CORPORATION
By:
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Name:
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Title:
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TRANSAMERICAN ENERGY CORPORATION
By:
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Name:
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Title:
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