1
EXHIBIT 4.5
LOAN AGREEMENT
by and between
TRANSTEXAS GAS CORPORATION
and
TRANSAMERICAN ENERGY CORPORATION
Dated as of June 13, 1997
2
Table of Contents
Page
----
SECTION 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Certain Defined Terms . . . . . . . . . . . . . . . . 1
Section 1.2 Rules of Construction . . . . . . . . . . . . . . . . 19
Section 1.3 Computation of Time Periods . . . . . . . . . . . . . 19
SECTION 2 THE LOAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.1 Commitment to Make Loan. . . . . . . . . . . . . . . 19
Section 2.2 Deposit of Loan Proceeds into Disbursement Account. . 19
Section 2.3 Interest. . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.4 Repayment of the Loan. . . . . . . . . . . . . . . . 20
SECTION 3 PREPAYMENTS AND OTHER PAYMENTS. . . . . . . . . . . . . . . . . . 20
Section 3.1 Mandatory Prepayments. . . . . . . . . . . . . . . . 20
Section 3.2 Permitted Prepayments. . . . . . . . . . . . . . . . 20
Section 3.3 Place of Payment or Prepayment. . . . . . . . . . . . 21
SECTION 4 APPLICATION OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . 21
Section 4.1 Use of Proceeds. . . . . . . . . . . . . . . . . . . 21
SECTION 5 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . 21
Section 5.1 Organization and Qualification. . . . . . . . . . . . 21
Section 5.2 Power and Authority. . . . . . . . . . . . . . . . . 21
Section 5.3 Enforceability. . . . . . . . . . . . . . . . . . . . 21
Section 5.4 Default. . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.5 Title to Assets. . . . . . . . . . . . . . . . . . . 22
Section 5.6 Payment of Taxes. . . . . . . . . . . . . . . . . . . 22
Section 5.7 Conflicting or Adverse Agreements or Restrictions. . 22
SECTION 6 CONDITIONS OF LENDING. . . . . . . . . . . . . . . . . . . . . . 22
Section 6.1 Conditions Precedent to the Loan. . . . . . . . . . . 22
SECTION 7 AFFIRMATIVE COVENANTS OF BORROWER. . . . . . . . . . . . . . . . 23
Section 7.1 Payment of Securities. . . . . . . . . . . . . . . . 23
Section 7.2 Covenants Incorporated by Reference. . . . . . . . . 23
SECTION 8 EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . . . 23
Section 8.1 Events of Default . . . . . . . . . . . . . . . . . . 23
Section 8.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.3 Remedies Cumulative. . . . . . . . . . . . . . . . . 26
SECTION 9 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.1 Waivers, Etc. . . . . . . . . . . . . . . . . . . . . 26
Section 9.2 Reimbursement of Expenses. . . . . . . . . . . . . . 26
Section 9.3 Notices. . . . . . . . . . . . . . . . . . . . . . . 26
i
3
Page
----
Section 9.4 Governing Law. . . . . . . . . . . . . . . . . . . . 27
Section 9.5 Survival of Representations, Warranties and Covenants. 28
Section 9.6 Counterparts. . . . . . . . . . . . . . . . . . . . . 28
Section 9.7 Severability. . . . . . . . . . . . . . . . . . . . . 28
Section 9.8 Descriptive Headings. . . . . . . . . . . . . . . . . 28
Section 9.9 Limitation of Liability. . . . . . . . . . . . . . . 28
Section 9.10 Sale, Pledge or Assignment. . . . . . . . . . . . . . 28
Section 9.11 Release . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.12 Indenture Controls . . . . . . . . . . . . . . . . . 29
Section 9.13 Computation of Time Periods. . . . . . . . . . . . . 29
Section 9.14 Final Agreement. . . . . . . . . . . . . . . . . . . 29
Exhibits and Schedules
Schedule 6.1(g) -- Insurance
Exhibit A -- Form of Promissory Note
ii
4
LOAN AGREEMENT
This Loan Agreement dated as of June 13, 1997 (this "Agreement")
is entered into by and between TransTexas Gas Corporation, a Delaware
corporation (the "Borrower"), and TransAmerican Energy Corporation, a Delaware
corporation (the "Lender").
In consideration of the premises, mutual covenants and agreements
hereinafter contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower and the
Lender hereby agree as follows:
SECTION 1 DEFINITIONS.
Section 1.1 Certain Defined Terms. Capitalized terms used in this
Agreement and not otherwise defined herein shall have the following meanings
or, if not defined below, shall have the meanings given to them in the
Indenture:
"Acceleration Notice" shall have the meaning ascribed to such term in
Section 8.2.
"Agreement" shall mean this Loan Agreement, as the same may be amended,
modified, supplemented, extended, restated, renewed, refunded, replaced,
increased in amount or refinanced, in each case from time to time and whether
in whole or in part.
"Asset Sale" shall mean any direct or indirect conveyance, sale,
transfer or other disposition (including through damage or destruction for
which Insurance Proceeds are paid or by condemnation), in one or a series of
related transactions, of any of the properties, businesses or assets of the
Borrower or any Subsidiary of the Borrower, whether owned on the Closing Date
or thereafter acquired; provided, however, that "Asset Sale" shall not include
(i) any disposition of property that is not Collateral, (ii) any pledge or
disposition of assets (if such pledge or disposition would otherwise constitute
an Asset Sale) to the extent and only to the extent that it results in the
creation of a Permitted Lien other than the creation of a Permitted Lien in
connection with a Dollar-Denominated Production Payment that the Borrower or
any of its Subsidiaries does not elect to treat as Debt or in connection with a
Volumetric Production Payment, which in either case shall be treated as an
Asset Sale hereunder; provided, however, that a contribution of a Dollar
Denominated Production Payment to a Hedging Subsidiary shall not constitute an
Asset Sale or (iii) conveyances, sales, transfers or other dispositions in
connection with a Drilling Program.
"Attributable Debt" in respect of a Sale and Leaseback Transaction shall
mean, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP
or, in the event that such rate of interest is not reasonably determinable,
discounted at the rate of interest borne by the Note) of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such Sale and Leaseback Transaction (including any period for which such
lease has been extended or may, at the option of the lessor, be extended).
"Bankruptcy Law" shall mean Title II, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
1
5
"Board of Directors" shall mean, with respect to any Person, the Board
of Directors of such Person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person.
"Business Day" shall mean any day except Saturday, Sunday and any day
which shall be in New York City a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to
close.
"Capital Expenditures" shall mean expenditures (whether paid in cash or
accrued as a liability) by such Person or any of its Subsidiaries that, in
conformity with GAAP, are or would be included in "capital expenditures,"
"additions to property, plant, or equipment" or comparable items in the
consolidated financial statements of the Borrower consistent with prior
accounting practices.
"Capital Expenditures Testing Quarter" shall mean any fiscal quarter
immediately following a Measurement Quarter in which the SEC PV10 of the
Borrower (based on the Borrower's then most recent Reserve Report) is less than
90% of the Net Debt of the Borrower, measured as of the last day of such
Measurement Quarter.
"Capital Stock" shall mean, with respect to any Person, any capital
stock of such Person and shares, interests, participations, or other ownership
interests (however designated) of such Person and any rights (other than debt
securities convertible into corporate stock), warrants or options to purchase
any of the foregoing, including without limitation, each class of common stock
and preferred stock of such Person, if such Person is a corporation, and each
general or limited partnership interest or other equity interest of such
Person, if such Person is a partnership.
"Capitalized Lease Obligation" shall mean obligations under a lease that
are required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Debt represented by such obligations shall be the
capitalized amount of such obligations, as determined in accordance with GAAP.
"Cash Equivalents" shall mean (a) United States dollars, (b) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than one year from the date of acquisition, (c) certificates of deposit
with maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding one year, and overnight bank
deposits, in each case, with an Eligible Institution, (d) repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (b) and (c) entered into with an Eligible
Institution, (e) commercial paper rated "P-1," "A-1" or the equivalent thereof
by Moody's or S&P, respectively, and in each case maturing within one year
after the date of acquisition, (f) shares of money market funds, including
those of the Indenture Trustee, that invest solely in United States dollars and
securities of the types described in clauses (a) through (e), (g) demand and
time deposits and certificates of deposit with any commercial bank organized in
the United States not meeting the qualifications specified in clause (c) above,
provided, that such deposits and certificates support bonds, letters of credit
and other similar types of obligations incurred in the ordinary course of
business, (h) deposits, including deposits denominated in foreign currency,
with any Eligible Institution; provided, that all such deposits do not exceed
$10 million in the aggregate at any one time, and (i) demand or fully insured
time deposits used in the ordinary course of business with commercial banks
insured by the Federal Deposit Insurance Corporation.
2
6
"Change of Control" shall mean (i) the liquidation or dissolution of, or
the adoption of a plan of liquidation by, the Lender, (ii) any transaction,
event or circumstance pursuant to which any "person" or "group" (as such terms
are used for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether
or not applicable), other than Xxxx X. Xxxxxxx (or his heirs, his estate or any
trust in which he or his immediate family members have, directly or indirectly,
a beneficial interest in 50%) and his Subsidiaries or the Indenture Trustee, is
or becomes the "beneficial owner" (as that term is used in Rules 13d-3 and 13d-
5 of the Exchange Act, whether or not applicable), directly or indirectly, of
more than 50% of the total voting power of the Lender's then outstanding Voting
Stock, or (iii) any event that results in the Lender or any of its Subsidiaries
having beneficial ownership of at least some of the Borrower's Capital Stock,
but less than 50%, on a fully diluted basis, of (x) the total voting power of
the Borrower's Voting Stock, or (y) the economic value of the outstanding
Capital Stock of the Borrower; unless, at the time of the occurrence of an
event specified in clause (ii) or (iii), the TEC Notes have an Investment Grade
Rating; provided, however, that if at any time within 120 days after such
occurrence, the TEC Notes cease having an Investment Grade Rating, such event
shall be a "Change of Control."
"Change of Control Payment Date" shall have the meaning ascribed to such
term in Section 3.1(a).
"Closing Date" shall mean June 13, 1997.
"Collateral" shall mean (x) the assets of the Borrower that are
mortgaged or pledged to the Borrower as security for the Note pursuant to the
terms of the TransTexas Security Documents and (y) the Guarantees by the
Subsidiaries of the Borrower of the Note.
"Consolidated EBITDA" of any Person for any period, unless otherwise
defined herein, shall mean (a) the Consolidated Net Income of such Person for
such period, plus (b) the sum, without duplication (and only to the extent such
amounts are deducted from net revenues in determining such Consolidated Net
Income) of (i) the provision for income taxes for such period for such Person
and its consolidated Subsidiaries, (ii) depreciation, depletion, and
amortization of such Person and its consolidated Subsidiaries for such period,
and (iii) Consolidated Fixed Charges of such Person for such period,
determined, in each case, on a consolidated basis for such Person and its
consolidated Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charges" of any Person for any period shall mean
(without duplication) the sum of (i) Consolidated Interest Expense of such
Person for such period, (ii) dividend requirements of such Person and its
consolidated Subsidiaries (whether in cash or otherwise (except dividends
payable solely in shares of Qualified Capital Stock)) with respect to preferred
stock paid, accrued, or scheduled to be paid or accrued during such period, in
each case to the extent attributable to such period and excluding items
eliminated in consolidation, and (iii) fees paid, accrued, or scheduled to be
paid or accrued during such period by such Person and its Subsidiaries in
respect of performance bonds or other guarantees of payment. For purposes of
clause (ii) above, dividend requirements shall be increased to an amount
representing the pre-tax earnings that would be required to cover such dividend
requirements; accordingly, the increased amount shall be equal to a fraction,
the numerator of which is such dividend requirements and the denominator of
which is 1 minus the applicable actual combined effective Federal, state,
local, and foreign income tax rate of such Person and its Subsidiaries
(expressed as a decimal), on a consolidated basis, for the fiscal year
immediately preceding the date of the transaction giving rise to the need to
calculate Consolidated Fixed Charges.
3
7
"Continuing Operations" shall mean the operations of the TransTexas
Entities after giving effect to the sale by the Borrower of the stock of
TransTexas Transmission Corporation.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Debt" shall mean with respect to any Person, without duplication (i)
all liabilities, contingent or otherwise, of such Person (a) for borrowed money
(whether or not the recourse of the lender is the whole of the assets of such
Person or only to a portion thereof), (b) evidenced by bonds, notes, debentures
or similar instruments or letters of credit or representing the balance
deferred and unpaid of the purchase price of any property acquired by such
Person or services received by such Person (other than long-term service or
supply contracts which require minimum periodic payments), (c) evidenced by
bankers' acceptances or similar instruments issued or accepted by banks or
Interest Swap Obligations, (d) for the payment of money relating to a
Capitalized Lease Obligation, (e) the Attributable Debt associated with any
Sale and Leaseback Transactions or (f) Dollar-Denominated Production Payments
that the Borrower or any of its Subsidiaries elect to treat as Debt (excluding
all other Permitted Production Payment Obligations); (ii) reimbursement
obligations of such Person with respect to letters of credit; (iii) all
liabilities of others of the kind described in the preceding clause (i) or (ii)
that such Person has guaranteed or that is otherwise its legal liability other
than for endorsements, without recourse, of negotiable instruments in the
ordinary course of business); (iv) all obligations secured by a Lien (other
than Permitted Liens, except to the extent the obligations secured by such
Permitted Liens are otherwise included in clause (i), (ii) or (iii) of this
definition and are obligations of such Person) to which the property or assets
(including, without limitation, leasehold interests and any other tangible or
intangible property rights) of such Person are subject, regardless of whether
the obligations secured thereby shall have been assumed by or shall otherwise
be such Person's legal liability (but, if such obligations are not assumed by
such Person or are not otherwise such Person's legal liability, the amount of
such Debt shall be deemed to be limited to the fair market value of such
property or assets determined as of the end of the preceding fiscal quarter);
and (v) any and all deferrals, renewals, extensions, refinancings, and
refundings (whether direct or indirect) of, or amendments, modifications, or
supplements to, any liability of the kind described in any of the preceding
clauses (i) through (iv) regardless of whether between or among the same
parties.
"Default" shall mean an event or condition, the occurrence of which is,
or with the passage of time or the giving of notice, or both, would be an Event
of Default.
"Default Rate" shall mean, at any time, a per annum rate equal to the
then existing interest rate plus one and one half percent.
"Disbursement Account" shall mean the account or accounts created by the
Disbursement Agreement and owned by the Borrower.
"Disbursement Agreement" shall mean that certain Disbursement Agreement
among the Borrower, the Lender and Firstar Bank of Minnesota, N.A.
"Disqualified Capital Stock" shall mean, with respect to any Person, any
Capital Stock of such person or its subsidiaries that, by its terms or by the
terms of any security into which it is convertible or exchangeable, is, or upon
the happening of an event or the passage of time would be, required to be
4
8
redeemed or repurchased by such Person or its subsidiaries, including at the
option of the holder, in whole or in part, or has, or upon the happening of an
event or passage of time would have, a redemption or similar payment due, on or
prior to June 1, 2002.
"Dollars" and "$" shall mean lawful currency of the United States of
America.
"Dollar-Denominated Production Payments" shall mean production payment
obligations recorded as liabilities in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Drilling Program" shall mean any arrangement between the Borrower or
any Subsidiary of the Borrower and another Person pursuant to which (i) such
Person agrees (x) to drill, complete or perform operations to enhance recovery
from, a well or xxxxx on mineral interests owned by the Borrower or such
Subsidiary or (y) to pay to the Borrower or such Subsidiary all or a portion of
the costs paid or incurred in connection with drilling, completing or
performing such other operations (or to reimburse the Borrower or such
Subsidiary for such costs within six months of the incurrence thereof) and (ii)
the Borrower or such Subsidiary agrees to convey or assign to such person an
interest in such well or xxxxx in accordance with clause (l) of the definition
of "Permitted Liens."
"Eligible Institution" shall mean a domestic commercial banking
institution that has combined capital and surplus of not less than $500
million, that is rated "A" (or higher) according to Moody's or S&P at the time
as of which any investment or rollover therein is made.
"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 at 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.
"Equity Offering" of any Person shall mean any Public Equity Offering or
any private placement of any Capital Stock of such Person.
"Event of Default" shall have the meaning ascribed to such term in
Section 9.1.
"Exchange Act" shall have the meaning ascribed to such term in Section
5.13.
"Financing Statements" shall mean the financing statements dated as of
the Closing Date executed and delivered in connection with the TransTexas
Security Documents.
"Force Majeure" shall mean strikes, lockouts or other labor trouble,
fire or other casualty, governmental preemption in connection with a national
emergency, any rule, order or regulation of any governmental agency or any
department or subdivision thereof, or inability to secure materials or labor
because of any such emergency, rule, order, regulation, war, civil disturbance
or other emergency, cause or event beyond the reasonable control of the
Borrower or the Guarantors.
5
9
"GAAP" shall mean generally accepted accounting principles as in effect
in the United States on the Closing Date applied on a basis consistent with
that used in the preparation of the audited financial statements of the
Borrower delivered pursuant to this Agreement.
"Governmental Authority" shall mean any (domestic or foreign) federal,
state, county, municipal, parish, provincial or other government, or any
department, commission, board, court, agency (including, without limitation,
the Environmental Protection Agency) or any other instrumentality of any of
them or any other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of, or
pertaining to, government, including, without limitation, any arbitration
panel, any court or any commission.
"Guarantee" shall mean any guarantee of the obligations of the Borrower
under the Loan or by any Guarantor.
"Guarantor" shall mean each of the Borrower's Subsidiaries that becomes
a guarantor of the Borrower's obligations in compliance with this Agreement.
"Hedging Subsidiary" shall mean a Subsidiary of the Borrower engaged
solely in the business of facilitating Permitted Hedging Transactions with the
Borrower or any of its Subsidiaries.
"Highest Lawful Rate" shall mean the maximum non-usurious interest rate,
if any, permitted from time to time under applicable Laws to be contracted for,
taken, reserved, charged or received by Lender. If the Highest Lawful Rate
shall change after the Closing Date, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, from time to time as
of the effective time of each change in the Highest Lawful Rate, without notice
to Borrower; provided, that the Highest Lawful Rate shall decrease only to any
extent required by applicable Laws and shall increase only to the extent
permitted by applicable Laws.
"Hydrocarbons" shall mean oil, natural gas, condensate and natural gas
liquids.
"Incur" or "Incurrence" shall mean to, directly or indirectly, create,
incur, assume, guarantee, or otherwise become liable for, contingently or
otherwise, any Debt.
"Indenture" shall mean that certain Indenture dated as of the date
hereof between the Lender and the Indenture Trustee.
"Indenture Trustee" shall mean Firstar Bank of Minnesota, N.A., trustee
under the Indenture.
"Independent Director" shall mean an individual that is not and has not
been affiliated (other than as a director of TransAmerican or its past or
present subsidiaries) with, and is not and has not been a Related Person (other
than solely as a director of TransAmerican or one of its past or present
subsidiaries) with respect to Xxxx X. Xxxxxxx, TransAmerican or the Borrower or
its Subsidiaries.
"Insurance Proceeds" shall mean the interest in and to all proceeds (net
of costs of collection including attorney's fees) which now or hereafter may be
paid under any insurance policies now or hereafter obtained by or on behalf of
the Borrower or any Guarantor in connection with any assets thereof, together
with interest payable thereon and the right to collect and receive the same,
including,
6
10
without limitation, proceeds of casualty insurance, title insurance, business
interruption insurance and any other insurance now or hereafter maintained with
respect to such assets.
"Interest Rate or Currency Agreement" of any Person shall mean any
forward contract, futures contract, swap, option or other financial agreement
or arrangement (including, without limitation, caps, floors, collars, puts and
similar agreements) relating to, or the value of which is dependent upon,
interest rates or currency exchange rates.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement, dated as of the Closing Date, by and among the Lender, Borrower,
Firstar Bank of Minnesota, N.A., as trustee under the Senior TransTexas Notes,
Firstar Bank of Minnesota, N.A., as collateral agent, and the Indenture
Trustee.
"Inventory" shall mean and include all of the Borrower's now owned or
hereafter acquired casing, drill pipe and other supplies accounted for as
inventory by the Borrower or its financial statements (excluding any
Hydrocarbons), 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 at any time evidence or contain
information relating to the foregoing.
"Investment" by any Person in any other Person shall mean (a) the
acquisition (whether for cash, property, services, securities or otherwise) of
capital stock, bonds, notes, debentures, partnership, or other ownership
interests or other securities of such other Person or any agreement to make any
such acquisition; (b) the making by such Person of any deposit with, or
advance, loan or other extension of credit to, such other Person (including the
purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
Person) and (without duplication) any amount committed to be advanced, loaned
or extended to such other Person; (c) the entering into of any guarantee of, or
other contingent obligation with respect to, Debt or other liability of such
other Person; (d) the entering into of any Swap Obligation with such other
Person; or (e) the making of any capital contribution by such Person to such
other Person.
"Investment Grade Rating" shall mean, with respect to any Person or
issue of debt securities or preferred stock, a rating in one of the four
highest letter rating categories (without regard to "+" or "-" or other
modifiers) by any rating agency or if any such rating agency has ceased using
letter rating categories or the four highest of such letter rating categories
are not considered to represent "investment grade" ratings, then the comparable
"investment grade" ratings (as designated by any such rating agency).
"Laws" shall mean all constitutions, treaties, statutes, laws,
ordinances, regulations, rules, orders, writs, injunctions or decrees of the
United States of America, any state or commonwealth, any municipality, any
foreign country, any territory or possession or any tribunal, as in effect on
the Closing Date and as the same may hereafter be amended, issued, promulgated
or otherwise hereafter come into effect, from time to time.
"Lien" shall mean any mortgage, lien, pledge, charge, security interest,
or other encumbrance of any kind, regardless of whether filed, recorded, or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement and any lease deemed to constitute a security
interest and any option or other agreement to give any security interest).
"Loan" shall have the meaning ascribed to such term in Section 2.1(a).
7
11
"Loan Documents" shall mean this Agreement, the Note, the TransTexas
Security Documents, the Disbursement Agreement and all other agreements,
documents, financing statements, instruments and certificates now or hereafter
executed and delivered to Lender pursuant to any of the foregoing or the
transactions connected therewith, and all amendments, modifications,
supplements, restatements, renewals, refundings, replacements, extensions,
increases and rearrangements of, and substitutions for, any of the foregoing.
"Loan Parties" shall mean, collectively, Borrower and each Guarantor and
"Loan Party" shall mean any of the foregoing.
"Lobo Sale" shall mean the sale by the Borrower of the Stock of
TransTexas Transmission Corporation, a previous Subsidiary of the Borrower that
owned substantially all of the Borrower's producing properties and related
pipeline transmission system in the Lower Xxxxxx Xxxx Trend.
"Maturity Date" shall mean the earlier to occur of (a) the Stated
Maturity Date and (b) any earlier maturity date resulting from the
acceleration, in accordance with the terms hereof, of the outstanding principal
amount of the Advances.
"Measurement Quarter" shall mean any fiscal quarter ending on or after
April 30, 1998.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"Mortgages" shall mean (i) that certain Act of Mortgage, Security
Agreement and Financing Statement to be recorded in Louisiana, (ii) that
certain Mortgage, Deed of Trust, Assignment of Production, Security Agreement
and Financing Statement to be recorded in Alabama, (iii) that certain Mortgage,
Deed of Trust, Assignment of Production, Security Agreement and Financing
Statement to be recorded in Mississippi, (iv) that certain Mortgage, Deed of
Trust, Assignment of Production, Security Agreement and Financing Statement to
be recorded in North Dakota and (v) that certain Mortgage, Deed of Trust,
Assignment of Production, Security Agreement and Financing Statement to be
recorded in Texas, each dated as of the Closing Date and executed by Borrower
for the benefit of the Lender, and any and all amendments, modifications,
supplements, restatements, replacements, renewals and extensions thereof, in
each case from time to time and whether in whole or in part.
"Net Cash Proceeds" shall mean an amount equal to the aggregate amount
of cash received by the Borrower and its Subsidiaries in respect of an Asset
Sale or a Non-Collateral Asset Sale, less the sum of (i) all reasonable out-of-
pocket fees, commissions, and other expenses incurred in connection with such
Asset Sale or Non-Collateral Asset Sale, as the case may be, including the
amount (estimated in good faith by the Borrower) of income, franchise, sales,
and other applicable taxes required to be paid, payable or accrued by the
Borrower or any Subsidiary of the Borrower (in each case as estimated in good
faith by the Borrower or such Subsidiary without giving effect to tax
attributes unrelated to such Asset Sale) in connection with such Asset Sale or
Non-Collateral Asset Sale, as the case may be, and (ii) the aggregate amount of
cash so received which is used to retire any then existing Debt of the Borrower
or its Subsidiary (other than the Note), as the case may be, which is required
by the terms of such Debt to be repaid in connection with such Asset Sale or
Non-Collateral Asset Sale, as the case may be.
8
12
"Net Debt" of a Person means such Person's outstanding Debt to the
extent recorded in accordance with GAAP less cash and Cash Equivalents of such
Person, in each case as measured on a consolidated basis and as of the last day
of the measuring period.
"Net Worth" of any Person shall mean, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of such Person and its Subsidiaries (which
shall be as of a date not more than 90 days prior to the date of such
computation), less any amounts included therein attributable to Disqualified
Capital Stock or any equity security convertible into or exchangeable for Debt,
the cost of treasury stock (not otherwise deducted from stockholder's equity),
and the principal amount of any promissory notes receivable from the sale of
the Capital Stock of such Person or any of its Subsidiaries, each item to be
determined in conformity with GAAP.
"New TransTexas Property" shall have the meaning ascribed to such term
in the definition of Permitted Liens.
"Non-Collateral Asset Sale" shall mean any direct or indirect
conveyance, sale, transfer or other disposition (including through damage or
destruction for which Insurance Proceeds are paid or by condemnation), in one
or a series of related transactions, of any of the properties, businesses or
assets of the Borrower or any Subsidiary of the Borrower (other than
properties, businesses or assets of any of the TTXD Entities after the TTXD
Spin-off), whether owned on the Closing Date or thereafter acquired, which
properties, businesses or assets do not constitute Collateral.
"Note" shall mean the promissory note executed by Borrower and payable
to the order of Lender pursuant to Section 2, as such promissory note may be
amended, modified, supplemented, restated, renewed, extended or increased in
amount, in each case from time to time.
"Officers' Certificate" shall mean a certificate signed in the name of
Borrower by either its President, one of its Vice Presidents or its Treasurer
and its Secretary or one of its Assistant Secretaries.
"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,
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
Borrower's average net natural gas 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, and 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.
"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
9
13
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 of return on such
investment, not in excess of $25 million less the amount of any Unrestricted
Non-Recourse Debt outstanding of the 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 or gas 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 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 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 anyone 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 or (xix) any deposit or escrow of funds in
connection with adjustments to the Lobo Sale purchase price.
"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
10
14
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 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 the Borrower's 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 of 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 the Borrower's 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, other types of social security legislation, property
insurance and liability insurance; (j) Liens on Equipment, Receivables and
Inventory; (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 the Borrower's 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 Borrower and 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 the Liens
11
15
created pursuant to any of the clauses (a) through (g), (i), (k) through (m) or
(q) through (t) of this definition; or (r) through (v); provided, that such
Liens would have otherwise been permitted under such clauses, and provided
further 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 Non-Recourse 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 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; (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 improvement 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.
"Permitted Prepayment" shall have the meaning ascribed to such term in
Section 3.2
"Permitted Prepayment Fee" shall mean an amount equal to (a) five
percent (5%) of the outstanding principal amount of the Note to be prepaid for
Permitted Prepayments made on or prior to December 31, 1997, (b) eight percent
(8%) of the outstanding principal amount of the Note to be prepaid for
Permitted Prepayments during the period from January 1, 1998 through June 14,
2000, (c) five and three quarters percent (5.750%) of the outstanding principal
amount of the Note to be prepaid for Permitted Prepayments made from June 15,
2000 through June 14, 2001 and (d) no additional amount for Permitted
Prepayments made on or after June 15, 2001.
"Person" shall mean a corporation, individual, joint venture,
partnership, unincorporated organization, governmental regulatory entity,
country, state or political subdivision thereof, trust, municipality, or other
entity.
"Phase I" shall mean that phase of TARC's capital improvement program in
which the Delayed Coking Unit, the Hydrosulfurization Unit, the Naphtha
Pretreater, the No.2 Reformer, the Sulfur Recovery System and certain
supporting offsite facilities will be completed.
"Phase I Completion Date" shall mean the date on which Xxxxx & O'Brien,
Inc., as construction supervisor, issues a written notice (the "Phase I
Completion Notice") to TARC certifying that (a) the process units and
supporting facilities included in the definition of "Phase I" have reached
mechanical completion, and (b) for a period of at least 15 consecutive days,
the TARC Refinery has sustained (i) the successful performance of the Delayed
Coking Unit, the Hydrodesulfurization Unit and the Sulfur Recovery System, (ii)
an average feedstock throughput level of at least 150,000 barrels per day, and
(iii)
12
16
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.
"Phase I Completion Notice" shall have the meaning ascribed to such term
in the definition of "Phase I Completion Date."
"Phase II" shall mean that phase of the TARC capital improvement program
in which the Fluid Catalytic Cracking Unit, FCC Flue Gas Scrubber, the
Alkylation Unit and certain additional offsite facilities will be completed.
"Phase II Completion Date" shall mean the date on which Xxxxx & X'Xxxxx,
Inc., as construction supervisor, issues a written notice (the "Phase II
Completion Notice") to TARC certifying that (a) the process units and
supporting facilities included in the definition of "Phase II" have reached
mechanical completion, and (b) for a period of at least 72 uninterrupted hours,
the TARC Refinery has sustained (i) the successful performance of all of the
Phase I facilities plus the Fluid Catalytic Cracking (FCC) Unit, the FCC Flue
Gas Scrubber and the Alkylation Unit, (ii)an average feedstock throughput level
of at least 180,000 barrels per day, and (iii) average 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 70%, when using as input a combined
Crude Unit feedstock slate with an average API Gravity of 22 degrees or less.
"Phase II Completion Notice" shall have the meaning ascribed to such
term in the definition of "Phase II Completion Date."
"Presale of Gas" shall mean any advance payment agreement or other
arrangement pursuant to which the Borrower or any Guarantor of the Note, having
received full payment of the purchase price for a specified quantity of
Hydrocarbons prior to the first scheduled date of delivery, is required to
deliver, in one or more installments subsequent to the date of such agreement
or arrangement, such quantity of Hydrocarbons to the purchaser of such
Hydrocarbons pursuant to and during the term of such agreement or arrangement;
provided, however, that the term "Presale of Gas" shall not include (i) any
such agreement or other arrangement covering deliveries of Hydrocarbons for a
period not exceeding three calendar months and pursuant to which the Borrower
has received full payment of the purchase price within 120 days of the last
scheduled delivery, (ii) a transaction to the extent and only to the extent
that it results in the creation of any Permitted Lien under clauses (l) or (o)
of the definition of "Permitted Liens," (iii) Permitted Hedging Transactions or
(iv) an Asset Sale involving Hydrocarbon reserves.
"Property" shall mean, with respect to any Person, all right, title and
interest of such Person in any kind of property or asset, whether real,
personal or mixed, owned or leased, tangible or intangible, and whether now
held or hereafter acquired, and in the case of Borrower shall include the
Premises.
"Public Equity Offering" shall mean an underwritten public offering by a
nationally recognized member of the National Association of Securities Dealers
of Qualified Capital Stock of any Person pursuant to an effective registration
statement filed with the SEC pursuant to the Securities Act.
"Qualified Capital Stock" shall mean any Capital Stock that is not
Disqualified Capital Stock.
13
17
"Receivables" shall means and include, as to any Person, any and all of
such Person's now owned or hereafter acquired "accounts" as such term is
defined in Article 9 of the Uniform Commercial Code in the State of New York,
all products and proceeds thereof, and all books, records, ledger cards, files,
correspondence, and computer files, tapes, disks or software that at any time
evidence or contain information relating to the foregoing.
"Reference Period" shall mean, with regard to any Person, the four full
fiscal quarters of such Person ended on or immediately preceding any date upon
which any determination is to be made pursuant to the terms of the Note or this
Agreement.
"Reimbursement and Credit Facility" shall mean the Reimbursement and
Credit Agreement dated January 25, 1996, pursuant to which a third party caused
a $20 million letter of credit to be issued to collateralize a supersedeas bond
on behalf of the Borrower, as amended from time to time in a manner not adverse
to the Lender.
"Related Person" shall mean (i) any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Borrower or any Subsidiary of the Borrower or any officer, director, or
employee of the Borrower or any Subsidiary of the Borrower or of such Person,
(ii) the spouse, any immediate family member, or any other relative who has the
same principal residence of any Person described in clause (i) above, and any
Person, directly or indirectly, controlling or controlled by or under direct or
indirect common control with, such spouse, family member, or other relative,
and (iii) any trust in which any Person described in clause (i) or (ii), above,
is a fiduciary or has a beneficial interest. For purposes of this definition
the term "control" means (a) the power to direct the management and policies of
a Person, directly or through one or more intermediaries, whether through the
ownership of voting securities, by contract, or otherwise, or (b) the
beneficial ownership of 10% or more of the voting common equity of such Person
(on a fully diluted basis) or of warrants or other rights to acquire such
equity (whether or not presently exercisable).
"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 or (iii) owning and operating a Hedging Subsidiary.
"Reserve Amount" shall have the meaning ascribed to such term in Section
2.2(a).
"Reserve Report" shall mean a report prepared by independent petroleum
engineers with respect to Hydrocarbon reserves in accordance with guidelines
published by the SEC.
"Restricted Investment" shall mean any direct or indirect Investment by
the Borrower or any Subsidiary of the Borrower other than a Permitted
Investment.
"Restricted Payment" shall mean, with respect to any Person, (i) any
Restricted Investment, (ii) any dividend or other distribution on shares of
Capital Stock of such Person or any Subsidiary of such Person, (iii) any
payment on account of the purchase, redemption, or other acquisition or
retirement for value of any shares of Capital Stock of such Person, and (iv)
any defeasance, redemption, repurchase,
14
18
or other acquisition or retirement for value, or any payment in respect of any
amendment in anticipation of or in connection with any such retirement,
acquisition, or defeasance, in whole or in part, of any Subordinated Debt,
directly or indirectly, of such Person or a Subsidiary of such Person prior to
the scheduled maturity or prior to any scheduled repayment of principal in
respect of such Subordinated Debt; provided, however, that the term "Restricted
Payment" does not include (i) any dividend, distribution, or other payment on
shares of Capital Stock of an issuer solely in shares of Qualified Capital
Stock of such issuer that is at least as junior in ranking as the Capital Stock
on which such dividend, distribution, or other payment is to be made, (ii) any
dividend, distribution, or other payment to the Borrower from any of its
Subsidiaries, (iii) any defeasance, redemption, repurchase, or other
acquisition or retirement for value, in whole or in part, of any Subordinated
Debt of such Person payable solely in shares of Qualified Capital Stock of such
Person, (iv) any payments or distributions made pursuant to and in accordance
with the Transfer Agreement, the TransTexas Drilling Agreement, the Services
Agreement, the Office Leases or the Tax Allocation Agreement, or (v) any
dividend, distribution or other payment to the Borrower by any of its
Subsidiaries, (vi) any Permitted Prepayment, (ix) any redemption, defeasance,
repurchase or other retirement for value of the Senior TransTexas Notes by the
Borrower, including any premium paid thereon; (x) an Investment by the Borrower
in, or distribution by the Borrower on, its Capital Stock pursuant to share
repurchases or dividends on its Capital Stock in an aggregate amount not to
exceed $400 million; (xi) the redemption, purchase, retirement or other
acquisition of any Debt, including any premium paid thereon, with the proceeds
of any refinancing Debt permitted to be incurred pursuant to Section 4.11(1)(g)
and 4.11(3)(j) of the Indenture; (xii) the distribution by the Borrower of
shares of Capital Stock of TTXD in connection with the TTXD Spin-off; (xiii)
the purchase by the Borrower of shares of Capital Stock of TARC, TTXD or itself
in connection with its employee benefit plan, including without limitation any
employee stock ownership plan or any employee stock option plan in an aggregate
amount not to exceed 7% of the aggregate market value of the voting stock held
by non-affiliates of the issuer measured from the date of the first such
purchase; and (xiv) any repayment or retirement for value by the Borrower of
any loan from the Lender incurred pursuant to Sections 4.11(1)(q), 4.11(1)(r),
4.11(3)(u) or 4.11(3)(v) of the Indenture.
"Royalty Payment Obligations" shall mean (i) royalties, overriding
royalties, revenue interests, net revenue interests, net profit interests, and
reversionary interests, (ii) the interests of others in pooling or unitization
agreements, production sales contracts and operating agreements, (iii) Liens
arising under, in connection with or related to farm-out, farm-in, joint
operating, pooling, unitization or area of mutual interest agreements or other
similar or customary arrangements, agreements or interests, and (iv) similar
burdens on the property of the Borrower or any Subsidiary of the Borrower; each
as incurred in the ordinary course of business and to the extent such burdens
are limited in recourse to (x) the properties subject to such interests or
agreements, (y) the Hydrocarbons produced from such properties, and (z) the
proceeds of such Hydrocarbons.
"S&P" shall mean Standard and Poor's Corporation, Inc.
"Sale and Leaseback Transaction" shall mean an arrangement relating to
property owned on the Closing Date or thereafter acquired whereby the Borrower
or a Subsidiary of the Borrower transfers such property to a Person and leases
it back from such Person.
"SEC" shall mean the Securities and Exchange Commission.
"Senior Obligations" shall have the meaning ascribed to such term in the
Intercreditor Agreement.
15
19
"Senior TransTexas Notes" shall mean the 11 1/2% Senior Secured Notes
due 2002 issued by the Borrower .
"Stated Maturity Date" shall mean June 1, 2002.
"Subordinated Debt" shall mean Debt that (i) requires no payment of
principal prior to or on the date on which all principal of and interest on the
Note is paid in full and (ii) is subordinate and junior in right of payment to
the Note in the event of a liquidation.
"Subsidiary" with respect to any Person, shall mean (i) a corporation
with respect to which such Person or such Person and its Subsidiaries own,
directly or indirectly, at least fifty percent of whose Capital Stock with
voting power, under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by such Person, by such Person and one or more
Subsidiaries of such Person or by one or more Subsidiaries of such Person, or
(ii) a partnership in which such Person or a subsidiary of such Person is, at
the time, a general partner of such partnership and has more than 50 % of the
total voting power of partnership interests entitled (without regard to the
occurrence of any contingency to vote in the election of managers thereof, or
(iii) any other Person (other than a corporation or a partnership) in which
such Person, one or more Subsidiaries of such Person, or such Person and one or
more Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof has (x) at least a fifty percent ownership interest or
(y) the power to elect or direct the election of the directors or other
governing body of such Person; provided, however, that "Subsidiary" shall not
include (i) any Unrestricted Subsidiary of such Person, except for purposes of
Section 4.10 of the Indenture.
"Swap Obligation" of any person shall mean any Interest Rate or Currency
Agreement entered into with one or more financial institutions or one or more
futures exchanges in the ordinary course of business and not for purposes of
speculation that is designed to protect such Person against fluctuations in (x)
interest rates with respect to Debt Incurred and which shall have a notional
amount no greater than 105% of the principal amount of the Debt being hedged
thereby, or (y) currency exchange rate fluctuations.
"TARC" shall mean TransAmerican Refining Corporation, a Texas
corporation.
"TARC Loan" shall mean the loan from the Lender to TARC pursuant to that
certain Loan Agreement between the Lender and TARC dated as of the date hereof.
"TARC Refinery" shall mean the petroleum refinery owned by TARC located
approximately 20 miles from New Orleans, Louisiana.
"TEC Notes" shall mean those certain 11 1/2% Senior Secured Notes due
2002 in the aggregate principal amount of $475,000,000 and 13% Senior Secured
Discount Notes due 2002 in the aggregate principal amount of $1,130,000,000
issued by the Lender.
"Termination Fee" shall mean a fee to be paid in the event of a
mandatory prepayment pursuant to Section 3.1 in the amount of one percent (1%)
of the amount of such prepayment.
"TransAmerican" shall mean TransAmerican Natural Gas Corporation, a
Texas corporation.
16
20
"TransTexas Entities" shall mean the Borrower and each of its
Subsidiaries.
"TransTexas Dividend/Share Repurchase Program" shall mean the dividend
and share repurchase program of the Borrower.
"TransTexas Guarantor Mortgage" shall mean each mortgage, deed of trust,
assignment, security agreement and financing statement by each Guarantor of the
Note to the trustee named therein for the benefit of the Lender.
"TransTexas Guarantor Security Agreement" shall mean any and each
Security and Pledge Agreement by each Guarantor of the Note in favor of the
Lender.
"TransTexas Interest Increase Quarter" shall mean any fiscal quarter
immediately following a Capital Expenditure Testing Quarter, in which Capital
Expenditure Testing Quarter the Capital Expenditures of TransTexas exceeded the
Consolidated EBITDA of TransTexas for the fiscal quarter immediately preceding
such Capital Expenditure Testing Quarter.
"TransTexas Security and Pledge Agreement" shall mean that certain
Security and Pledge Agreement by the Borrower in favor of the Lender.
"TransTexas Security Documents" shall mean the Disbursement Agreement,
the TransTexas Mortgages, the TransTexas Security Agreement, any Guaranty,
TransTexas Guarantor Mortgage, TransTexas Guarantor Security Agreement and each
other agreement relating to the pledge of assets to secure the Notes and any
guarantee of the obligations of the Borrower under the Note by any Guarantor
that may be entered into after the date of the Note, pursuant to the terms of
the Note.
"Tribunal" shall mean any state, commonwealth, federal, foreign,
territorial or other court or governmental or administrative department,
commission, board, bureau, district, authority, agency or instrumentality or
any arbitration authority.
"TTXD" shall mean TransTexas Drilling Services, Inc., a Delaware
corporation, or a newly formed corporation that is initially a wholly-owned
Subsidiary of the Borrower formed for the purpose of receiving the certain
investments described herein under clauses (xii) and (xiii) of the definition
of "Permitted Investments."
"TTXD Entities" shall mean TTXD and each of its Subsidiaries.
"TTXD Equity Investment" shall mean an equity Investment by the Borrower
in TTXD in an aggregate amount not in excess of $75 million.
"TTXD Spin-off" shall mean (i) the transfer of the drilling and
integrated services business and pipeline services business and related assets
from the Borrower to TTXD and (ii) the (x) dividend of shares of common stock
of the Borrower to holders of the Borrower's common stock or (y) any other
transaction that would result, in the case of (x) or (y), in the Borrower's
being the beneficial owner of less than 50% of the common stock of XXXX.
00
00
"Unrestricted Non-Recourse Debt" shall mean (i) Debt that is secured
solely (other than with respect to clause (ii) below) by a Lien upon the stock
of an Unrestricted Subsidiary of such Person and as to which there is no
recourse (other than with respect to clause (ii) below) against such Person or
any of its assets other than against such stock (and the dollar amount of any
Debt of such Person as described in this clause (i) shall be deemed to be zero
for purposes of all other provisions of the Indenture) and (ii) guarantees of
the Debt of Unrestricted Subsidiaries of such Person; provided, that the
aggregate of all Debt of such Person Incurred and outstanding pursuant to
clauses (i) and (ii) of this definition, together with all Permitted
Investments (net of any return on such Investment) in Unrestricted Subsidiaries
of such Person, does not exceed $25 million plus in the case of either (i) or
(ii), Restricted Payments permitted to be made pursuant to clauses (i) or (ii),
as applicable, of Section 4.3 of the Indenture.
"Unrestricted Subsidiary" of any Person shall mean any other Person
("Other Person") that would but for this definition of "Unrestricted
Subsidiary" be a Subsidiary of such Person organized or acquired after the
Closing Date as to which all of the following conditions apply: (i) neither
such Person nor any of its other Subsidiaries provides credit support of any
Debt of such Other Person (including any undertaking, agreement or instrument
evidencing such Debt), other than Unrestricted Non-Recourse Debt; (ii) such
Other Person is not liable, directly or indirectly, with respect to any Debt
other than Unrestricted Subsidiary Debt; (iii) neither such Person nor any of
its Subsidiaries has made an Investment in such Other Person unless such
Investment was permitted by the Indenture; and (iv) the Board of Directors of
such Person, as provided below, shall have designated such Other Person to be
an Unrestricted Subsidiary on or prior to the date of organization or
acquisition of such Other Person. Any such designation by the Board of
Directors of such Person shall be evidenced to the Indenture Trustee by
delivering to the Indenture Trustee a resolution thereof giving effect to such
designation and an Officers' Certificate certifying that such designation
complies with the foregoing conditions. The Board of Directors of any Person
may designate any Unrestricted Subsidiary of such Person as a Subsidiary of
such Person; provided, that, (a) if the Unrestricted Subsidiary has any Debt
outstanding or is otherwise liable for any Debt or has a negative Net Worth,
then immediately after giving pro forma effect to such designation, such Person
could incur at least $1.00 of additional Debt pursuant to the Indenture
(assuming, for purposes of this calculation, that each dollar of negative Net
Worth is equal to one dollar of Debt), (b) all Debt of such Unrestricted
Subsidiary shall be deemed to be incurred by a Subsidiary of the Person on the
date such Unrestricted Subsidiary becomes a Subsidiary, and (c) no Default or
Event of Default would occur or be continuing after giving effect to such
designation. Any subsidiary of an Unrestricted Subsidiary shall be an
Unrestricted Subsidiary for purposes of the Indenture.
"Unrestricted Subsidiary Debt" shall mean, as to any Unrestricted
Subsidiary of any Person, Debt of such Unrestricted Subsidiary (i) as to which
neither such Person nor any Subsidiary of such Person is directly or indirectly
liable (by virtue of such Person or any such Subsidiary being the primary
obligor on, guarantor of, or otherwise liable in any respect to, such Debt),
unless such liability constitutes Unrestricted Non-Recourse Debt and (ii)
which, upon the occurrence of a default with respect thereto, does not result
in, or permit any holder (other than the Borrower or any Subsidiary of the
Borrower) of any Debt of such Person or any Subsidiary of such Person to
declare, a default on such Debt of such Person or any Subsidiary of such Person
(other than the Borrower or any Subsidiary of the Borrower or cause the payment
thereof to be accelerated or payable prior to its stated maturity, unless, in
the case of this clause (ii), such Debt constitutes Unrestricted Non-Recourse
Debt.
"Vehicles" shall mean all trucks, automobiles, trailers and other
vehicles covered by a certificate of title.
18
22
"Volumetric Production Payments" shall mean production payment
obligations recorded as a deferred revenue in accordance with GAAP, together
with all undertakings and obligations in connection therewith.
"Voting Stock" shall mean Capital Stock of a Person having generally the
right to vote in the election of directors of such Person.
Section 1.2 Rules of Construction. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. Unless otherwise specified herein, the term "or" has the inclusive
meaning represented by the term "and/or" and the term "including" is not
limiting. All references as to "Sections", "Schedules" and "Exhibits" shall be
to Sections, Schedules and Exhibits, respectively, of this Agreement unless
otherwise specifically provided.
Section 1.3 Computation of Time Periods. In the computation of
periods of time from a specified date to a later specified date, unless
otherwise specified herein the words "commencing on" mean "commencing on and
including", the word "from" means "from and including" and the words "to" and
"until" each means "to but excluding".
SECTION 2 THE LOAN.
Section 2.1 Commitment to Make Loan.
(a) Lender, upon the terms and conditions set forth herein and
relying upon the representations and warranties set forth herein, agrees
to make a loan (the "Loan") to Borrower on the Closing Date in an amount
equal to $450,000,000.
(b) Borrower shall execute and deliver to Lender to evidence
the Loan made by Lender a promissory note (the "Note"), which shall be
(i) dated the Closing Date; (ii) in the aggregate principal amount of
$450,000,000; and (iii) in substantially the form attached hereto as
Exhibit A and made a part hereof, with the blanks appropriately filled.
Section 2.2 Deposit of Loan Proceeds into Disbursement Account.
(a) The Lender shall deliver to the Borrower, on the Closing
Date, an amount equal to $50,716,000. The Lender shall deposit the
remaining amount of the Loan, $399,284,000 (the "Reserve Amount") into
the Disbursement Account.
(b) Funds in the Disbursement Account shall be disbursed
according to the terms and conditions of the Disbursement Agreement.
Section 2.3 Interest.
(a) Borrower shall pay interest on the unpaid principal amount
of the Loan at a rate per annum equal to the lesser of (i) ten and
seven-eighths of one percent (10.875%) and (ii) the Highest Lawful Rate
from the Closing Date until such principal amount shall be paid in full,
at
19
23
the times and according to the terms and conditions set forth in the
Note; provided, however, that during any TransTexas Interest Increase
Quarter, the unpaid principal amount of the Loan shall bear interest at
a rate per annum equal to the lesser of (i) twelve and seven-eighths of
one percent (12.875%) and (ii) the Highest Lawful Rate; provided,
further, that any amount of principal which is not paid when due
(whether at stated maturity, by acceleration or otherwise) shall bear
interest, from the date on which such amount is due until such amount is
paid in full, payable on demand at a rate per annum equal at all times
to the lesser of (i) the Default Rate and (ii) the Highest Lawful Rate.
(b) Interest on the Note will accrue from the most recent date
to which interest has been paid, or, if no interest has been paid, from
the Closing Date. Interest on the Note will be computed on the basis of
a 360-day year consisting of twelve 30-day months.
Section 2.4 Repayment of the Loan. Borrower shall repay the
outstanding principal amount of the Loan as follows:
(a) Interest shall begin to accrue on June 13, 1997, and
interest shall thereafter be due and payable semiannually on June 15 and
December 15 of each year, commencing December 15, 1997.
(b) The unpaid principal amount of the Note outstanding, plus
all accrued and unpaid interest, shall be due and payable on the Stated
Maturity Date.
SECTION 3 PREPAYMENTS AND OTHER PAYMENTS.
Section 3.1 Mandatory Prepayments.
(a) Change of Control. In the event that a Change of Control
occurs, the Lender will have the right, at the Lender's option, subject
to the terms and conditions of this Agreement and the Indenture, to
require the Borrower to repay the outstanding principal amount of the
Loan in an amount equal to the Borrower's pro rata share of the Change
of Control Purchase Price, as defined in the Indenture, to be paid by
the Lender pursuant to Section 11.1 of the Indenture (such pro rata
share to be calculated using the ratio of the outstanding principal
amount of the Loan to the sum of (i) the outstanding principal amount of
the Loan plus (ii) the Accreted Value of the outstanding principal
amount of the TARC Loan, plus any and all accrued and unpaid interest,
together with the Termination Fee, on a date that is no later than 59
Business Days after the occurrence of such Change of Control (the date
on which the repayment is effected being referred to herein as the
"Change of Control Payment Date").
(b) The Borrower shall notify the Lender and the Indenture
Trustee within five Business Days after each date upon which the
Borrower knows, or reasonably should know, of the occurrence of a Change
of Control.
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 plus
20
24
the Permitted Prepayment Fee, together with accrued and unpaid interest, if
any, to and including the date of such Permitted Prepayment.
Section 3.3 Place of Payment or Prepayment. All payments and
prepayments made in accordance with the provisions of this Agreement or any
other Loan Document in respect of principal, interest, fees, costs or expenses
shall be made on the date when due in Dollars, without deduction, set-off or
counterclaim, to an account of the Lender located in New York, New York, or
such other place as designated by the Lender.
SECTION 4 APPLICATION OF PROCEEDS.
Section 4.1 Use of Proceeds. Borrower agrees that the proceeds of the
Loan shall be used to purchase for cash the TransTexas Senior Notes, production
repayments and purchase price adjustments relating to the Lobo Sale and the
TransTexas Dividend/Share Repurchase Program, with any remaining balance
available to the Borrower for working capital and other general purposes not
otherwise prohibited by the Loan Documents.
SECTION 5 REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants that:
Section 5.1 Organization and Qualification. The Borrower (a) is duly
organized, validly existing and in good standing under the laws of the State of
Delaware; (b) has the corporate power to own its Properties and to carry on its
business as now conducted; and (c) is duly qualified to do business and is in
good standing in every jurisdiction in which the failure to qualify would
reasonably be expected to have a material adverse effect. Borrower has no
Subsidiaries other than those listed on Schedule 5.1(a). All of the issued and
outstanding Capital Stock of Borrower have been authorized, validly issued, and
are fully paid and nonassessable and free of any Lien whatsoever.
Section 5.2 Power and Authority. Each Loan Party has all necessary
corporate and other power and authority to enter into and perform its
obligations under the Loan Documents to which it is a party. The execution,
delivery and performance by each Loan Party of the Loan Documents to which it
is a party have been duly authorized by all necessary corporate proceedings on
its part.
Section 5.3 Enforceability. The Loan Documents to which each Loan
Party is a party have been duly executed and delivered by such Loan Party and
constitute valid and legally binding obligations of such Persons enforceable
against such Persons in accordance with their respective terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights generally.
Section 5.4 Default. Borrower is not in default under the provisions
of any agreement, document or instrument to which it is a party or by which it
or any of its properties is bound or in violation of any order, writ,
injunction or decree of any Tribunal or in default under, or in violation of,
any order, regulation or demand of any Governmental Authority, which default or
violation would,
21
25
individually or in the aggregate, materially and adversely affect the business,
financial condition, Properties, prospects or operations of the Borrower.
Section 5.5 Title to Assets. Borrower has good and marketable title
to its Properties, subject to no Liens except Permitted Liens.
Section 5.6 Payment of Taxes. The Borrower and each of its
Subsidiaries have filed all Federal, state and local tax returns that are or
were required to be filed or have obtained extensions thereof and have paid all
taxes shown on such returns and all assessments received by them, respectively,
to the extent that the same have become due except for such assessments that
the Borrower or such Subsidiary disputes in good faith and has adequately
reserved therefor.
Section 5.7 Conflicting or Adverse Agreements or Restrictions. The
execution and delivery by each Loan Party of the Loan Documents to which it is
a party and its compliance with and performance of the terms and provisions
thereof (a) is not contrary to the provisions of the Articles of Incorporation
or Bylaws of such Person, (b) does not violate any Law, regulation, writ,
injunction, order or decree of any Tribunal, (c) does not conflict with, result
in a breach of or cause a default under any agreement, document or instrument
to which such Person is a party or by which it or any of its Properties is
bound or to which it or any of its Properties is subject and (d) does not
result in the creation of any Lien upon or security interest in any of the
Property of such Person except for Permitted Liens.
SECTION 6 CONDITIONS OF LENDING.
Section 6.1 Conditions Precedent to the Loan. The obligation of
Lender to make the Loan on the Closing Date is subject to the conditions
precedent that Lender shall have received on or before the Closing Date all of
the following, each dated (unless otherwise indicated) the Closing Date and
each in form and substance satisfactory to Lender and in such number of
counterparts as may be requested by Lender:
(a) this Agreement, the Note, the Disbursement Agreement, the
TransTexas Security Documents and the Financing Statements, each duly
executed and delivered by the parties thereto;
(b) the Intercreditor Agreement;
(c) unless waived by Lender, loss payable endorsements with
respect to all property insurance maintained by Borrower as of the
Closing Date, all as described on Schedule 6.1(g) attached hereto and
made a part hereof;
(d) copies of UCC-11s, or equivalent reports, listing all
effective financing statements which name Borrower (under its present
name, any trade names and any previous names) as debtor and which are
filed, together with copies of all such financing statements;
(e) duly executed releases or assignments of Liens and UCC-3
financing statements in recordable form, and in form and substance
satisfactory to Lender, covering such Collateral as may be necessary to
reflect that the Liens granted to Lender are first and prior Liens,
except for Permitted Liens;
22
26
(f) an insurance broker's certificate relating to each
insurance policy maintained by Borrower as of the Closing Date together
with a copy of each such insurance policy or certificates or evidence of
coverage under such policy, evidence of the payment of the premiums
therefor, all in form and substance satisfactory to Lender; and
SECTION 7 AFFIRMATIVE COVENANTS OF BORROWER.
So long as Borrower may borrow hereunder and until payment in full of
the obligations and all other amounts payable to Lender under the Loan
Documents:
Section 7.1 Payment of Securities. The Borrower shall pay the
principal of and interest on the Note on the dates and in the manner provided
in the Note. An installment of principal of or interest on the Note shall be
considered paid on the date it is due if the Lender or Indenture Trustee holds
on or before 10:00 a.m. New York City time on the date, U.S. legal tender
deposited and designated for and sufficient to pay the installment. The
Borrower shall pay interest on overdue principal and on overdue installments of
interest at the rate specified in the Note compounded semi-annually, to the
extent permitted by law.
Section 7.2 Covenants Incorporated by Reference. The Borrower shall,
and shall cause each of its Subsidiaries to, comply with each covenant
applicable to such Borrower described in the Indenture as if made by the
Borrower as of the date hereof.
SECTION 8 EVENTS OF DEFAULT AND REMEDIES.
Section 8.1 Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be caused voluntarily or involuntarily or
effected, without limitation, by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any interest upon the Note as and when
the same becomes due and payable, and the continuance of such default for a
period of 30 days;
(b) default in the payment of all or any part of the principal of the
Note when and as the same becomes due and payable at maturity, redemption, by
acceleration, or otherwise, including default in the payment on Change of
Control Payment Date in accordance with Section 3.1;
(c) default in the observance or performance of, or breach of, any
covenant (including covenants incorporated by reference pursuant to Section
7.2), agreement or warranty of the Borrower or any of its Subsidiaries
contained in the Note or this Agreement or any of the Security Documents (other
than a default in the performance of any covenant, agreement or warranty which
is specifically dealt with elsewhere in this Section 8.1), and continuance of
such default or breach for the period and after the notice, if any, specified
below;
23
27
(d) a default which extends beyond any stated period of grace
applicable thereto, including any extension thereof, under (i) the
Reimbursement and Credit Facility or (ii) any mortgage, indenture or instrument
under which there is outstanding any Debt of the Borrower or any of its
Subsidiaries with an aggregate principal amount in excess of $25 million, or
failure to pay such Debt at its stated maturity, provided that a waiver of such
default by the requisite parties to such Reimbursement and Credit Agreement,
mortgage, indenture or instrument shall constitute a waiver hereunder for the
same period;
(e) a decree, judgment, or order by a court of competent jurisdiction
shall have been entered adjudging the Borrower or any of its Subsidiaries as
bankrupt or insolvent, or ordering relief against the Borrower or any of its
Subsidiaries in response to the commencement of an involuntary bankruptcy case,
or approving as properly filed a petition seeking reorganization or liquidation
of the Borrower or any of its Subsidiaries under any bankruptcy or similar law,
and such decree or order shall have continued undischarged and unstayed for a
period of 60 days; or a decree or order of a court of competent jurisdiction
over the appointment of a receiver, liquidator, trustee, or assignee in
bankruptcy or insolvency of the Borrower, any of its Subsidiaries, or of the
property of any such Person, or for the winding up or liquidation of the
affairs of any such Person, shall have been entered, and such decree, judgment,
or order shall have remained in force undischarged and unstayed for a period of
60 days;
(f) the Borrower or any of its Subsidiaries shall institute voluntary
bankruptcy proceedings, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent seeking
reorganization or liquidation under any bankruptcy or similar law or similar
statute, or shall consent to the filing of any such petition, or shall consent
to the appointment of a Custodian, receiver, liquidator, trustee, or assignee
in bankruptcy or insolvency of it or any of its assets or property, or shall
make a general assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally as they become due, or shall,
within the meaning of any Bankruptcy Law, become insolvent, fail generally to
pay its debts as they become due, or take any corporate action in furtherance
of or to facilitate, conditionally or otherwise, any of the foregoing;
(g) final judgments not covered by insurance for the payment of
money, or the issuance of any warrant of attachment against any portion of the
property or assets of the Borrower or any Subsidiary, which, in the aggregate,
equal or exceed $25 million at any one time shall be entered against the
Borrower or any of its Subsidiaries by a court of competent jurisdiction and
not be stayed, bonded or discharged for a period (during which execution shall
not be effectively stayed) of 60 days (or, in the case of any such final
judgment which provides for payment over time, which shall so remain unstayed,
unbonded or undischarged beyond any applicable payment date provided therein);
(h) any of the TransTexas Security Documents shall for any reason
cease to be in full force and effect (except where no material adverse effect
to the Lender would result), or shall cease to give the Lender the Liens,
rights, powers and privileges purported to be created thereby including but not
limited to, a perfected security interest in, and Lien on, the Collateral in
accordance with the terms thereof, except where the failure to have such Lien,
rights, powers and privileges shall not have a material adverse effect on the
Lender; or
(i) Independent Directors not constituting a majority of the Board of
Directors of the Borrower for a period of 90 days in the aggregate in any
twelve-month period.
24
28
A Default under clause (c) above (other than in the case of any Defaults
incorporated herein by reference and described in Sections 4.3, 4.11, 4.14 or
5.1 of the Indenture, which Defaults shall be Events of Default without the
notice specified in this paragraph or Section 4.7(c) of the Indenture and upon
the passage of 10 days) is not an Event of Default until the Lender notifies
the Borrower of the Default, and the Borrower does not cure the Default within
30 days after receipt of the notice. The notice must specify the Default,
demand that it be remedied and state that the notice is a "Notice of Default."
Section 8.2 Remedies.
(a) If an Event of Default occurs and is continuing (other
than an Event of Default specified in Section 8.1(e) or (f) above,
relating to the Borrower or it Subsidiaries), then in every such case,
unless the principal of the Note shall have already become due and
payable, either the Indenture Trustee or the Lender, by notice in
writing to the Borrower (and to the Indenture Trustee if given by the
Lender) (an "Acceleration Notice"), may declare all principal of the
Note and accrued and unpaid interest thereon or, as appropriate, any
prepayment under 3.1(a) to be due and payable immediately. If an Event
of Default specified in Section 8.1(e) or (f) above occurs relating to
the Borrower or its Subsidiaries, all principal and accrued and unpaid
interest thereon will be immediately due and payable on the Note without
any declaration or other act on the part of the Indenture Trustee or the
Lender. The Indenture Trustee generally is authorized to rescind such
acceleration if all existing Events of Default, other than the non-
payment of the principal and interest on the Note which has become due
solely by such acceleration, have been cured or waived.
(b) In addition to and cumulative of any rights or remedies
expressly provided for in this Section 8, if any one or more Events of
Default shall have occurred, Lender (i) may proceed to protect and
enforce its rights hereunder and under any other Loan Document by any
appropriate proceedings and the Liens evidenced by the TransTexas
Security Documents shall be subject to foreclosure in any manner
provided for therein or provided for by law as Lender may elect and (ii)
may apply any cash collateral securing all or any part of the
Obligations to the payment of the obligations. Lender may also proceed
either by the specific performance of any covenant or agreement
contained in this Agreement or the other Loan Documents or by enforcing
the payment of the Note or by enforcing any other legal or equitable
right provided under this Agreement or the other Loan Documents or
otherwise existing under any law in favor of the Lender. Lender shall
not, however, be under any obligation to xxxxxxxx any assets in favor of
Borrower or against or in payment of any or all obligations under any
Loan Document.
(c) Upon the occurrence of any Event of Default, Lender shall
have the right, immediately and without notice, to take possession of
and exercise possessory rights with regard to any Property securing
payment of amounts due hereunder or under any other Loan Document.
(d) If Lender shall exercise its option to take over
management of the Premises pursuant to Section 8.2(b), Lender shall be
authorized to employ one or more independent managers to manage the
Premises, and Lender shall have no liability or responsibility absent
gross negligence or willful misconduct to Borrower or any other Person
with respect to its management of the Premises so long as Lender
exercises good faith in the selection and retention of such independent
manager or managers. All reasonable costs and expenses incurred by
Lender
25
29
in managing the Premises shall, as paid, constitute indebtedness of
Borrower to Lender payable on demand, bearing interest at the Default
Rate from the date paid. All such demand indebtedness shall constitute
part of the indebtedness secured by the Collateral.
Section 8.3 Remedies Cumulative. No remedy, right or power conferred
upon Lender is intended to be exclusive of any other remedy, right or power
given hereunder or now or hereafter existing at law, in equity or otherwise,
and all such remedies, rights and powers shall be cumulative.
SECTION 9 MISCELLANEOUS.
Section 9.1 Waivers, Etc. No failure or delay on the part of Lender
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No course of dealing between Borrower and Lender shall operate
as a waiver of any right of Lender. No modification or waiver of any provision
of this Agreement, the Note or any other Loan Document nor consent to any
departure by Borrower therefrom shall in any event be effective unless the same
shall be in writing, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on Borrower in any case shall entitle Borrower to any other or further
notice or demand in similar or other circumstances.
Section 9.2 Reimbursement of Expenses. The Borrower agrees to pay or
cause to be paid (i) all costs, expenses, fees and taxes incident to and in
connection with: the preparation, printing and distribution (including, without
limitation, word processing and duplication costs) and delivery of, and
performance under, each of the Loan Documents, (ii) all fees, disbursements and
expenses of the counsel and accountants of the Lender in connection with the
preparation, negotiation and execution of Loan Documents.
Section 9.3 Notices. Any notices or other communications to the
Borrower, the Lender or the Indenture Trustee required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
if to the Company:
TransTexas Gas Corporation
0000 Xxxxx Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx Xxxxxxx
Vice President
26
30
if to the Lender:
TransAmerican Energy Corporation
0000 Xxxxx Xxx Xxxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx Xxxxxxx
Vice President
if to the Indenture Trustee:
Firstar Bank of Minnesota, N.A.
Corporate Trust Department
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxx
The Borrower, the Lender or the Indenture Trustee by notice to
each other party may designate additional or different addresses as shall be
furnished in writing by such party. Any notice or communication to the
Borrower, the Lender or the Indenture Trustee shall be deemed to have been
given or made as of the date so delivered, if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and
five Business Days after mailing if sent by registered or certified mail,
postage prepaid (except that a notice of change of address shall not be deemed
to have been given until actually received by the addressee).
Section 9.4 Governing Law. THIS AGREEMENT AND THE NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. INSOFAR AS THIS AGREEMENT
RELATES TO THE MORTGAGES OR THE CREATION, PERFECTION OR FORECLOSURE OF LIENS
AND THE ENFORCEMENT OF RIGHTS AND REMEDIES AGAINST THE COLLATERAL UNDER THE
TRANSTEXAS SECURITY DOCUMENTS, IT SHALL BE GOVERNED BY THE LAWS OF THE
JURISDICTION SPECIFIED IN SUCH DOCUMENTS. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE NOTE, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE BORROWER
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE PROCESS IN ANY OTHER
27
31
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE BORROWER IN ANY OTHER JURISDICTION.
Section 9.5 Survival of Representations, Warranties and Covenants.
All representations, warranties and covenants contained herein and in any other
Loan Document or made in writing by Borrower in connection herewith shall
survive the execution and delivery of this Agreement and the Note, and will
bind and inure to the benefit of the respective successors and assigns of the
parties hereto, whether so expressed or not, provided that the undertaking of
Lender to make the Loan to Borrower shall not inure to the benefit of any
successor or assign of Borrower. No investigation at any time made by or on
behalf of Lender shall diminish Lender's right to rely thereon. All statements
contained in any certificate or other written instrument delivered by Borrower
or by any Person authorized by Borrower under or pursuant to this Agreement or
in connection with the transactions contemplated hereby shall constitute
representations and warranties hereunder as of the time made by Borrower.
Section 9.6 Counterparts. This Agreement may be executed in several
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.
Section 9.7 Severability. In the event any one or more of the
provisions in this Agreement or in the Note shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions shall not in any way be affected or impaired thereby, it
being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.
Section 9.8 Descriptive Headings. The section headings in this
Agreement have been inserted for convenience only and shall be given no
substantive meaning or significance whatsoever in construing the terms and
provisions of this Agreement.
Section 9.9 Limitation of Liability. No claim may be made by Borrower
or any other Person against Lender or the directors, officers, employees,
attorneys or agents of Lender or the Indenture Trustee for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract arising out of or related to the transactions contemplated by this
Agreement, or any act, omission or event occurring in connection herewith, and
Borrower hereby waives, releases and agrees not to xxx upon any claim for any
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor.
Section 9.10 Sale, Pledge or Assignment. Lender may assign any of its
rights (including, without limitation, rights to payment of principal and/or
interest under the Note) under this Agreement and the other Loan Documents to
the Indenture Trustee without further notice to or consent of Borrower, and the
Borrower hereby agrees to such assignment. The Borrower hereby acknowledges
and consents to the collateral assignment by the Lender of this Agreement and
the Lender's interest in the Collateral to the Indenture Trustee. The Borrower
also agrees that, in the case of an Event of Default, the Indenture Trustee may
exercise any rights and remedies of the Lender under this Agreement, and any
reference to the "Lender" hereunder shall also include the Indenture Trustee.
28
32
Section 9.11 Release. The Collateral, in whole or in part, may be
released in accordance with the Indenture. Each of the Lender and the Borrower
hereby acknowledge and consent to the release of Collateral by the Indenture
Trustee, as the Lender's agent, pursuant to the terms of the Indenture.
Section 9.12 Indenture Controls. If there are any conflicts or
inconsistencies among this Agreement and any of the other Loan Documents, the
provisions of the Indenture shall prevail and control.
Section 9.13 Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
unless otherwise specified herein, the word "from" means "from and including"
and the words "to" and "until" each shall mean "to but excluding."
Section 9.14 Final Agreement. THIS WRITTEN AGREEMENT, TOGETHER WITH
THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
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.
29
33
IN WITNESS WHEREOF, the parties hereto, by their respective officers
thereunto duly authorized, have duly executed and delivered this Agreement as
of the date first above written.
TRANSTEXAS GAS CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
TRANSAMERICAN ENERGY CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
30
34
Exhibit A
[FORM OF PROMISSORY NOTE]
TRANSTEXAS GAS CORPORATION
$450,000,000.00
TransTexas Gas Corporation, a Delaware corporation (hereinafter called
the "Company," which term includes any successor corporation, for value
received, hereby promises to pay to TransAmerican Energy Corporation, a
Delaware corporation (the "Lender"), or registered assigns, the principal sum
of Four Hundred Fifty Million Dollars, on June 1, 2002.
Interest Payment Dates: June 15 and December 15, commencing December
15, 1997
Record Dates: June 1 and December 1
Reference is made to the further provisions of this Note on the reverse
side, which will, for all purposes, have the same effect as if set forth at
this place.
This is the Note referred to in that certain Loan Agreement between the
Company and the Lender, dated as of June 13, 1997 (the "Loan Agreement").
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated:
TRANSTEXAS GAS CORPORATION
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
A-1
35
(BACK OF NOTE)
TRANSTEXAS GAS CORPORATION
1. Interest.
TransTexas Gas Corporation, a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at a rate of
10.875 % per annum; provided, however, that during any TransTexas Interest
Increase Quarter, the Company promises to pay interest on the principal amount
of this Note at a rate of 12.875% per annum. To the extent it is lawful, the
Company promises to pay interest on any interest payment due but unpaid on such
principal amount at the Default Rate.
The Company will pay interest semi-annually on June 15 and December 15
of each year (each, an "Interest Payment Date"), commencing December 15, 1997.
Interest on the Notes will accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from the date of issuance of
the Notes. Interest on the Notes will be computed on the basis of a 360-day
year consisting of twelve 30-day months.
2. Method of Payment.
The Company shall pay interest on the Notes to TransAmerican Energy
Corporation, a Delaware corporation (the "Lender") in accordance with the Loan
Agreement, defined below.
3. Loan Agreement.
The Company issued the Note under a Loan Agreement, dated as of June 13,
1997 (the "Loan Agreement"), among the Company and the Lender. Capitalized
terms herein are used as defined in the Loan Agreement unless otherwise defined
herein. The terms of the Note include those stated in the Loan Agreement. The
Note is limited in aggregate principal amount to $450,000,000.
A-2
