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EXHIBIT 4.3
TRANSAMERICAN ENERGY CORPORATION
SECURITY AND PLEDGE AGREEMENT
by
TRANSAMERICAN ENERGY CORPORATION
in favor of
FIRSTAR BANK OF MINNESOTA, N.A.
as Indenture Trustee for the Holders of the
11 1/2% Senior Secured Notes due 2002
13%Senior Secured Discount Notes due 2002
Dated as of June 13, 1997
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TRANSAMERICAN ENERGY CORPORATION
SECURITY AND PLEDGE AGREEMENT
This Security and Pledge Agreement (this "Agreement") is made
and entered into as of June 13, 1997 by TransAmerican Energy Corporation, a
Delaware corporation (the "Company"), in favor of Firstar Bank of Minnesota, as
trustee (the "Indenture Trustee") for the Noteholders (hereafter defined) under
the Indenture described herein.
RECITALS
WHEREAS, the Company has entered into an Indenture dated as of
June 13, 1997 (as it may from time to time be amended or modified and in
effect, the "Indenture") with the Indenture Trustee; and
WHEREAS, pursuant to the Indenture, the Company has issued
$425,000,000 aggregate principal amount of 13% Senior Secured Notes due 2002
and $1,105,000,000 aggregate principal amount of 13% Senior Secured Discount
Notes due 2002 (the "Notes"); and
WHEREAS, contemporaneously with the issuance of the Notes, the
Company shall make loans to TransAmerican Refining Corporation, a Delaware
corporation ("TARC"), and to TransTexas Gas Corporation, a Delaware corporation
("TransTexas"), and such loans are evidenced by (i) that certain Loan Agreement
dated as of June 13, 1997 (the "TARC Intercompany Loan Agreement") executed by
TARC in favor of the Company, and (ii) that certain Loan Agreement dated as of
June 13, 1997 (the "TransTexas Intercompany Loan Agreement") executed by
TransTexas in favor of the Company; and
WHEREAS, TARC's obligations under the TARC Intercompany Loan
Agreement are further evidenced by that certain promissory note in the amount
of $920,000,000 dated as of June 13, 1997 (the "TARC Intercompany Note"), and
executed by TARC in favor of the Company, and TransTexas' obligations under the
TransTexas Intercompany Loan Agreement are further evidenced by that certain
promissory note in the amount of $450,000,000 dated as of June 13, 1997 (the
"TransTexas Intercompany Note" and, together with the TARC Intercompany Note,
the "Intercompany Notes"), and executed by TransTexas in favor of the Company;
and
WHEREAS, the obligations of TARC under the TARC Intercompany
Note and the TARC Intercompany Loan Agreement are secured by (i) that certain
Security and Pledge Agreement dated as of June 13, 1997 (the "TARC Security
Agreement") executed by TARC in favor of the Company and (ii) that certain Act
of Mortgage, Security Agreement and Financing Statement dated as of June 13,
1997 (the "TARC Mortgage" and, together with the TARC Intercompany Loan
Agreement, the TARC Intercompany Note and the TARC Security Agreement, the
"TARC Loan Documents"); and
WHEREAS, the obligations of TransTexas under the TransTexas
Intercompany Note and the TransTexas Intercompany Loan Agreement are secured by
(i) that certain Security and Pledge Agreement dated as of June 13, 1997 (the
"TransTexas Security Agreement") executed by TransTexas in favor of the
Company, (ii) that certain Mortgage, Deed of Trust, Assignment of Production,
Security Agreement and Financing Statement dated as of June 13, 1997 (the
"TransTexas Alabama Mortgage"), (iii) that certain Mortgage, Deed of Trust,
Assignment of Production, Security Agreement and Financing Statement dated as
of June 13, 1997 (the "TransTexas Texas Mortgage"), (iv) that certain Mortgage,
Deed of Trust, Assignment of Production, Security Agreement and Financing
Statement dated as of June 13, 1997 (the "TransTexas Mississippi Mortgage"),
(v) that certain Mortgage, Deed of Trust, Assignment
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of Production, Security Agreement and Financing Statement dated as of June 13,
1997 (the "TransTexas North Dakota Mortgage") and (vi) that certain Act of
Mortgage, Security Agreement and Financing Statement dated as of June 13, 1997
(the "TransTexas Louisiana Mortgage" and, together with the TransTexas
Intercompany Note, the TransTexas Intercompany Loan Agreement, the TransTexas
Security Agreement, the TransTexas Alabama Mortgage, the TransTexas Texas
Mortgage, the TransTexas Mississippi Mortgage and the TransTexas North Dakota
Mortgage, the "TransTexas Loan Documents"); and
WHEREAS, in order to secure the payment and performance in
full of the Indenture obligations of the Company, the parties hereto desire to
set forth their mutual understanding and certain agreements regarding the terms
and conditions of the grant of a security interest in the Company UCC
Collateral, the Assigned Collateral and the Pledged Collateral (as defined
below);
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Indenture Trustee hereby agree as follows:
Section 1. Definitions.
(a) As used in this Agreement, capitalized terms not
otherwise defined herein have the meanings set forth in the Indenture,
and the following terms shall have the respective meanings set forth
below (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"Assigned Collateral" shall have the meaning assigned to that
term in Section 2 of this Agreement.
"Collateral" shall have the meaning assigned to that term in
Section 2 of this Agreement.
"Default" and "Event of Default" shall have the meanings
assigned to those terms in Section 6(a) of this Agreement.
"Disbursement Account" means the account or accounts owned by
the Company and created by that certain Disbursement Agreement by and
among the Company, TARC, the disbursement agent named therein, or its
successor, and the construction supervisor named therein, as amended
pursuant to the terms thereof.
"GAAP" means generally accepted accounting principles of the
United States of America, consistently applied.
"Obligations" shall have the meaning assigned to that term in
Section 2 of this Agreement.
"Indebtedness" means the following indebtedness and
liabilities of the Company (and any extensions, renewals, refunding,
increases, substitutions, replacements, consolidations, modifications
or rearrangements of such indebtedness and liabilities, regardless of
whether the Company executes any extension agreement or renewal
instrument):
(i) all amounts advanced or expended by the
Indenture Trustee under the Indenture and/or under or in
connection with this Agreement, all reasonable costs and
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out-of-pocket expenses (excluding expenses representing
administrative overhead) at any time and from time to time
incurred by the Indenture Trustee in connection with the
administration and/or enforcement of this Agreement
(including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel employed by the Indenture
Trustee in connection therewith), and all indemnities at any
time and from time to time payable hereunder to the Indenture
Trustee, and
(ii) all indemnities which relate to the Notes at
any time and from time to time payable to the Indenture
Trustee or the holders of the Notes (the "Noteholders") (or
any of them) under or in connection with the Indenture or any
related documents, ratably according to the amount owing to
the Indenture Trustee and each Noteholder, without preference
or priority among the Indenture Trustee and the Noteholders,
and
(iii) all principal, premium and accrued interest
owing on the Notes, and
(iv) all other amounts payable by the Company
under the Indenture.
"Pledged Collateral" shall have the meaning assigned to that
term in Section 2 of this Agreement.
"UCC" means the Uniform Commercial Code as in effect in the
State of New York.
"Vehicles" means all trucks, automobiles, trailers and other
vehicles covered by a certificate of title.
(b) All terms used in this Agreement which are defined in
the UCC, other than those which are defined in the Indenture or
specifically defined in Section 1(a) above, shall have the same
meaning herein as in the UCC.
Section 2. Grant of Security Interest.
(a) The Company hereby grants to the Indenture Trustee
for the benefit of the Noteholders, to secure the payment and
performance in full of the Obligations, a security interest in and a
lien on and so pledges and assigns to the Indenture Trustee for the
benefit of the Noteholders all of the Company's right, title and
interest in, to and under any and all of the following described
property, assets and rights, in each case, wherever located, whether
now owned or hereafter acquired or arising, all accessions and
additions thereto, all substitutions and replacements therefor, and
all proceeds and products thereof and assigns all rights in and to all
collateral securing the following described property, assets and
rights; provided, however, that this grant shall not include any of
TARC's, TransTexas' or any other Subsidiary's right, title and
interest in such described property:
(i) all equipment, machinery, chattels, tools,
parts, machine tools, motor vehicles, furniture, fixtures and
supplies of every nature, including, without limitation,
Vehicles, drilling rigs, workover rigs, fracture stimulation
equipment, wellsite compressors, rolling stock and related
equipment and other assets accounted for as equipment by the
Company on 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
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contain information relating to the foregoing (any and all
such property being the "Equipment");
(ii) all inventory in all of its forms, including
without limitation, feedstocks, refined petroleum products,
acquired line pipe, casing, drill pipe and other supplies
accounted for as inventory by the Company on 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 (any and all such property being "Inventory");
(iii) all personal and fixture property of every
kind and nature including, without limitation, all furniture,
fixtures, raw materials, goods, contract rights, rights to the
payment of money (including, without limitation, all right
title and interest in and to the TARC Intercompany Loan
Agreement, the TARC Intercompany Note, the TransTexas
Intercompany Loan Agreement and the TransTexas Intercompany
Note), insurance refund claims and all other insurance claims
and proceeds, tort claims, chattel paper, documents,
instruments (including certificated securities), deposit
accounts and all general intangibles including, without
limitation, all uncertificated securities, tax refund claims,
license fees, patents, patent applications, trademarks,
trademark applications, trade names, copyrights, copyright
applications, rights to sue and recover for past infringement
of patents, trademarks and copyrights, computer programs,
computer software, engineering drawings, service marks,
customer lists, goodwill, and all licenses, permits,
agreements of any kind or nature pursuant to which the Company
possesses, uses or has authority to possess or use property
(whether tangible or intangible) of others or others possess,
use or have authority to possess or use property (whether
tangible or intangible) of the Company, and all recorded data
of any kind or nature, regardless of the medium of recording
including, without limitation, all software, writings, plans,
specifications and schematics (any and all such property being
the "Personal Property"); and
(iv) any and all "accounts" as such term is
defined in Article 9 of the UCC (excluding all intercompany
accounts), 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 (any and all
such property, the "Receivables" and together with the
Equipment, Inventory and Personal Property, the "Company UCC
Collateral").
(b) The Company also pledges to the Indenture Trustee for
the benefit of the Noteholders, and grants to the Indenture Trustee
for the benefit of the Noteholders a security interest in all of the
Company's right, title and interest in, to and under any and all of
the following described property, rights and interests, in each case,
wherever located, whether now owned or hereafter acquired or arising,
all accessions and additions thereto, all substitutions and
replacements therefor, and all proceeds and products thereof
(collectively, the "Pledged Collateral"):
(i) all of the issued and outstanding shares of
common stock identified on Schedule 2(b) attached hereto of
TARC, TransTexas and any other subsidiary of the Company
presently existing or hereafter created or acquired (the
"Pledged Subsidiaries") therein set forth;
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(ii) all other shares of common stock or other
equity securities now or hereafter owned or acquired by the
Company in any manner issued by the Pledged Subsidiaries, and
the certificates representing such securities, and any present
or future options, warrants or other rights to subscribe for
or purchase any property described in Schedule 2(b) or any
notes, bonds, debentures or other evidences of indebtedness
now or hereafter owned or acquired by the Company in any
manner that (A) are at any time convertible, exchangeable or
exercisable into capital stock or other equity securities of
the Pledged Subsidiaries or (B) have or at any time could by
their terms have voting rights with respect to any matter
affecting the Pledged Subsidiaries and all securities,
certificates and instruments representing or evidencing
ownership of any of the property described in Schedule 2(b)
hereof; provided, however, that in the event the Company
acquires any outstanding Common Stock Purchase Warrants of
TARC issued on February 23, 1995 (the "TARC Warrants")
pursuant to a tender offer by the Company for such TARC
Warrants, the Company shall promptly cancel such TARC Warrants
or contribute such TARC Warrants to TARC for prompt
cancellation, and in no event will such TARC Warrants be
included in the definition of "Pledged Collateral"; and
(iii) all proceeds and products of the foregoing
and distributions thereof or with respect thereto, including
without limitation dividends, distributions, cash, instruments
and other property or securities, now or hereafter at any time
or from time to time received or receivable or otherwise
distributed or distributable in respect of or in exchange for
any or all of the foregoing.
(c) The Company hereby also assigns to the Indenture
Trustee for the benefit of the Noteholders and grants to the Indenture
Trustee for the benefit of the Noteholders a security interest in,
pledge of and lien on, the Disbursement Account and all investments,
securities, financial assets credited thereto and security
entitlements with respect thereto and all certificates and
instruments, if any, from time to time representing or evidencing the
Disbursement Account or any property credited thereto, whether now
owned by the Company or existing or hereafter acquired, created or
arising including the proceeds thereof (the "Assigned Collateral" and,
together with the Company UCC Collateral and the Pledged Collateral,
the "Collateral").
Subject to any Permitted Liens, pursuant to the terms
hereof, the Company has endorsed, assigned and delivered to the
Indenture Trustee, or such other Person that the Indenture Trustee has
designated as its agent to hold for perfection purposes, all
negotiable or non-negotiable instruments (including certificated
securities) and chattel paper pledged by it hereunder, together with
instruments of transfer or assignment duly executed in blank as the
Indenture Trustee may have specified. In the event that the Company
shall, after the date of this Agreement, acquire any other negotiable
or non-negotiable instruments (including certificated securities) or
chattel paper to be pledged by it hereunder, the Company shall,
subject to Permitted Liens, forthwith endorse, assign and deliver the
same to the Indenture Trustee, or such other Person that the Indenture
Trustee has designated as its agent to hold for perfection purposes,
accompanied by such instruments of transfer or assignment duly
executed in blank as the Indenture Trustee may from time to time
specify. To the extent that any securities are uncertificated,
appropriate book-entry transfers reflecting the pledge of such
securities created hereby have been or, in the case of uncertificated
securities hereafter acquired by the Company, will at the time of such
acquisition be, duly made for the account of the Indenture Trustee or
one or more nominees of the Indenture Trustee with the issuer of such
securities or other appropriate book-entry facility or financial
intermediary, with the Indenture Trustee having at all times the
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right to obtain definitive certificates (in the Indenture Trustee's
name or in the name of one or more nominees of the Indenture Trustee)
where the issuer customarily or otherwise issues certificates, all to
be held as Collateral hereunder. The Company hereby acknowledges that
the Indenture Trustee may, in its discretion, appoint one or more
financial institutions to act as the Indenture Trustee's agent in
holding in custodial accounts instruments or other financial assets,
including securities, in which the Indenture Trustee is granted a
security interest hereunder, including, without limitation,
certificates of deposit and other instruments evidencing short term
obligations.
(d) The inclusion of proceeds in this Agreement does not
authorize the Company to sell, dispose of or otherwise use the
Collateral in any manner not specifically authorized hereby or under
the Indenture.
(e) This Agreement secures the prompt and complete (i)
payment of all obligations of the Company to the Indenture Trustee
under the Indenture and to the Holders under the Notes, whether such
obligations are now existing or hereafter arising, and all renewals,
extensions, amendments, supplements and rearrangements thereof and
(ii) payment and performance of all covenants and conditions by the
Company contained herein and in the Indenture and the Notes in each
case whether for principal, interest, prepayment premium, taxes,
costs, losses, compensation, reimbursements, fees, expenses or any
other amount payable to the Indenture Trustee under the terms of this
Agreement (all such obligations, covenants and conditions described in
the foregoing clauses (i) and (ii) being hereinafter collectively
referred to as the "Obligations").
(f) Notwithstanding anything contained herein to the
contrary, the stock of an Accounts Receivable Subsidiary shall not
constitute Collateral hereunder.
Section 3. Representations and Warranties. The Company represents and
warrants, as of the date hereof, to the Indenture Trustee and each Noteholder
as follows:
(a) The chief executive office and principal place of
business of the Company is located at 1300 N. Sam Houston Parkway
East, Suite 320, Houston, Harris County, Texas 77032. Any and all
Collateral not delivered to the Indenture Trustee or its designated
agent is and will continue to be located only in the State of Texas.
(b) The Company is the legal and beneficial owner of all
of the Collateral free and clear of any lien, security interest,
charge or encumbrance of any kind or nature, except for the lien and
security interest created hereby and for Permitted Liens, and has not
made any other pledge, assignment, mortgage, hypothecation or transfer
of the Collateral except as permitted hereunder or under the
Indenture. Except for the lien and security interest created hereby,
all of the Collateral is free from any material credit, deduction,
allowance, defense, dispute, setoff or counterclaim and there is no
material extension or indulgence with respect thereto. The Pledged
Collateral is not subject to any put, call, option or other right in
favor of any other person whatsoever.
(c) The Pledged Collateral is accurately described in
Schedule 2(b) hereto and has been duly authorized and validly issued
and non-assessable.
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(d) This Agreement has been duly executed and delivered
by the Company and creates a valid security interest in, and lien on,
the Collateral securing the payment of the Indebtedness. Upon the
delivery of physical certificates evidencing the Pledged Collateral to
the Indenture Trustee or its designated agent, delivery of the TARC
Intercompany Note and the TransTexas Intercompany Note and the making
of the filings and the taking of all other actions necessary to
perfect the security interests created hereby, including, without
limitation, those actions specified in Section 2(b) and Section 4, the
security interests created by this Agreement will be duly perfected
security interests subject to no equal or prior lien, security
interest or encumbrance of any kind or nature other than Permitted
Liens.
(e) The Company has the requisite corporate power and
authority to pledge the Collateral in the manner hereby done or
contemplated and to defend its title thereto against the lawful claims
of all persons whomsoever.
(f) Neither the execution and delivery of this Agreement
by the Company, the performance by the Company of its obligations
hereunder, nor the transactions herein contemplated will (i) violate
the Company's charter or bylaws, (ii) violate the terms of any
agreement, indenture, mortgage, deed of trust, equipment lease,
instrument or other document to which the Company is a party, (iii)
violate any law, order, rule or regulation applicable to the Company
of any court or any government, regulatory body or administrative
agency or other governmental body having jurisdiction over the Company
or its properties, or (iv) result in or require the creation or
imposition of any lien (other than the lien contemplated hereby), upon
or with respect to any of the property now owned or hereafter acquired
by the Company, which violation or conflict would have a material
adverse effect on the financial condition, business, assets or
liabilities of the Company or on the value of the Collateral or a
material adverse effect on the security interests hereunder.
(g) The Pledged Collateral includes the issued and
outstanding shares of Common Stock of the Pledged Subsidiaries as
described in Schedule 2(b) attached hereto, and as of the date of
execution hereof, there are no outstanding options, warrants or other
rights to subscribe for or purchase any property described in Section
2(b) or any notes, bonds, debentures or other evidences of
indebtedness that (i) are at any time convertible into capital stock
of the Pledged Subsidiaries or (ii) have or at any time could by their
terms have voting rights with respect to any matters affecting the
Pledged Subsidiaries.
(h) No consent or approval which has not been obtained
prior to the date hereof of any other person or entity and no
authorization, approval or other action (other than delivery of
physical certificates evidencing the Pledged Collateral) by, and no
notice to or filing with any governmental body (other than UCC
filings), regulatory authority or securities exchange, was or is
necessary as a condition to the validity of the pledge hereunder of
the Collateral, and such pledge is effective to vest in the Indenture
Trustee the rights of the Indenture Trustee in the Collateral as set
forth herein. There are no restrictions on the transferability of any
of the Collateral transferred or delivered by the Company hereunder
or, except for restrictions related to federal and state securities
laws governing the sale of "restricted stock" or "control stock," with
respect to the foreclosure, transfer or disposition thereof by the
Indenture Trustee.
Section 4.Covenants. During the term of this Agreement and until all
the Obligations with respect to the Indebtedness have been fully and finally
paid and discharged in full, the Company covenants and agrees with the
Indenture Trustee and each Noteholder that:
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(a) Except as permitted by the Indenture or in the
ordinary course of business, the Company will not make any compromise
or settlement with respect to the Collateral without notice to or
consent of the Indenture Trustee.
(b) The Company shall deliver to the Indenture Trustee or
its designated agent concurrently with the execution of this Agreement
or, to the extent acquired subsequent to the date of execution hereof,
including without limitation Pledged Collateral issued by a newly
created or acquired Subsidiary, immediately upon the Company's
acquisition thereof: (i) all certificates and instruments representing
the Pledged Collateral and a revised Schedule 2(b), and (ii) all
certificates and instruments representing each other item of
Collateral (including all certificates, instruments and notes
representing any such Company UCC Collateral, including without
limitation the Intercompany Notes). Any and all Pledged Collateral
delivered to the Indenture Trustee shall be accompanied by undated
duly executed powers in blank and by such other instruments of
transfer or documents as the Indenture Trustee may reasonably request.
The Indenture Trustee may hold the certificates representing the
Pledged Collateral delivered to it in its own name or in the name of
its nominee, all in form and substance satisfactory to the Indenture
Trustee.
(c) From time to time, the Company shall, at its own
expense, promptly give, execute, deliver, file and/or otherwise
formalize any such notice, statement, instrument, document, agreement
or other papers, and do all such other acts and things, as may be
necessary or desirable, or as the Indenture Trustee may reasonably
request, in order to create, evidence, preserve, perfect, validate or
continue any lien or security interest created pursuant to this
Agreement or to enable the Indenture Trustee to exercise or enforce
its rights hereunder with respect to such lien or security interest,
or otherwise further to effect the purposes of this Agreement.
Without limiting the generality of the foregoing, the Company shall,
at any time or from time to time upon the request of the Indenture
Trustee and at the Company's own expense, execute, acknowledge,
witness, deliver, file and/or record such financing and continuation
statements, notices, additional assignments and other documents or
instruments (all of which shall be in form and substance satisfactory
to the Indenture Trustee and its counsel) as the Indenture Trustee may
from time to time reasonably request for the perfection of the liens
and security interests created hereby.
(d) The Company shall promptly notify the Indenture
Trustee (i) of any material changes in any fact or circumstance
represented or warranted by the Company with respect to any material
portion of the Collateral, (ii) of any material impairment of the
Collateral and (iii) of any claim, action or proceeding affecting
title to all or any of the Collateral.
(e) Except for the liens and security interests created
by this Agreement and the Permitted Liens in the Collateral, the
Company shall at its own expense defend the Collateral against any and
all liens, claims, security interests and other encumbrances or
interests, howsoever arising and shall maintain and preserve the
security interest granted hereunder with respect to the Collateral as
long as this Agreement shall remain in full force and effect. The
Company shall not make any other pledge, assignment, mortgage,
hypothecation or transfer of the Collateral except as permitted
hereunder or under the Indenture.
(f) The Company shall at all times keep accurate and
complete records with respect to the Collateral, including, without
limitation, records of all payments made, credit granted and proceeds
received in connection therewith.
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(g) The Company shall not relocate its principal place of
business or chief executive office to a county or state other than
that specified in Section 3(a) of this Agreement unless the Company
gives 30 days' prior written notice to the Indenture Trustee, which
notice shall specify the county and state into which such relocation
is to be made. The Collateral, to the extent not delivered to the
Indenture Trustee pursuant to Section 2, will be kept at those
locations listed on the Perfection Certificate delivered to the
Indenture Trustee herewith in the form attached as Exhibit A hereto
and the Company will not remove the Collateral from such locations,
without providing at least 30 days' prior written notice to the
Indenture Trustee.
(h) The Company will keep the Collateral in good order
and repair, except in situations where not to do so would not be
material, and will not use the same in violation of law or any policy
of insurance thereon. The Indenture Trustee, or its designee, may
inspect the Collateral at any reasonable time, wherever located.
(i) The Indenture Trustee, or its representative, shall
at all times have full and free access during normal business hours to
all of the books, correspondence and records of the Company relating
to the Collateral (other than information that is privileged and
confidential) and the Indenture Trustee and its representatives may
examine the same, make abstracts therefrom and make photocopies
thereof, and the Company agrees to render to the Indenture Trustee, at
the Company's cost and expense, such clerical and other assistance as
may be reasonably requested by the Indenture Trustee with regard
thereto.
(j) The Company shall not permit any of the Pledged
Subsidiaries to issue to the Company any securities of the type
required to be pledged hereunder unless such securities are promptly
pledged and delivered hereunder to the Indenture Trustee in accordance
with Section 2(b).
(k) If, while this Agreement is in effect, any stock
dividend, stock split, reclassification, readjustment, reorganization,
merger, consolidation, exchange offer, tender offer or other change in
the capital structure, including the creation of any subscription or
other rights relating to the Pledged Collateral, is declared or made,
or proposed to be declared or made, by any of the Pledged Subsidiaries
or any other issuer of the Collateral, all substituted and additional
securities or interest issued with respect to the Collateral and
evidenced by certificates shall be endorsed in blank by the Company
promptly upon receipt thereof or otherwise appropriately transferred
to the Indenture Trustee or its designated agent in negotiable form,
and all certificates or instruments evidencing such securities shall
be delivered to the Indenture Trustee or its designated agent to be
held under the terms of this Agreement in the same manner as, and as a
part of, the Collateral. All Pledged Collateral shall be evidenced by
one or more certificates. Any securities that may be issued upon
exercise of any subscription or other rights relating to the Pledged
Collateral shall be endorsed in blank and delivered to the Indenture
Trustee or its designated agent with any necessary powers.
Section 5. Powers of the Secured Party.
(a) The Company hereby irrevocably designates and
appoints the Indenture Trustee as its attorney- in-fact, with full
power of substitution, for the purposes of carrying out the provisions
of this Agreement and taking any action and executing any instrument,
including,without limitation, any financing statement or continuation
statement, and taking any other action to maintain the validity,
perfection, priority and enforcement of the security interest
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intended to be created hereunder, that the Indenture Trustee may
reasonably deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and
coupled with an interest.
(b) Without limiting the generality of Section 5(a)
hereof, the Company hereby irrevocably authorizes and empowers the
Indenture Trustee for the ratable benefit of the Noteholders, upon the
occurrence and during the continuation of any Event of Default, at the
expense of the Company, either in the Indenture Trustee's own name or
in the name of the Company, at any time and from time to time:
(i) to ask, demand, receive, issue a receipt for,
give acquittance for, settle and compromise any and all monies
which may be or become due or payable or remain unpaid at any
time or times to the Company, and any and all other property
which may be or become deliverable at any time or times to the
Company, under or with respect to the Collateral;
(ii) to exercise any rights or remedies of the
Company under the TARC Loan Documents and the TransTexas Loan
Documents;
(iii) to endorse any drafts, checks, orders or
other instruments for the payment of money payable to the
Company on account of the Collateral (including any such
draft, check, order or instrument issued by any insurance
company payable jointly to the Company and the Indenture
Trustee); and
(iv) to settle, compromise, prosecute or defend
any action, claim or proceeding, or take any other action, all
either in its own name or in the name of the Company or
otherwise, which the Indenture Trustee may deem to be
necessary or advisable for the purpose of exercising and
enforcing its powers and rights under this Agreement or in
furtherance of the purposes hereof, including any action which
by the terms of this Agreement is to be taken by the Company.
(c) Nothing in this Agreement shall be construed as
requiring or obligating the Indenture Trustee to make any commitment
or to make any inquiry as to the nature or sufficiency of any payment
received by it, or to present or file any claim or notice, or to take
any other action with respect to any of the Collateral or any part
thereof or the amounts due or to become due in respect thereof or any
property covered thereby, or to collect or enforce the payment of any
amounts assigned to it or to which it may otherwise be entitled
hereunder at any time or times other than to account for amounts or
Collateral received.
(d) The Indenture Trustee shall be entitled at any time
to file this Agreement, or a carbon, photographic or any other
reproduction of this Agreement, as a financing statement, but the
failure of the Indenture Trustee to do so shall not impair the
validity or enforceability of this Agreement. The Indenture Trustee
shall have no duty to comply with any recording, filing or other legal
requirements necessary to establish or maintain the validity, priority
or enforceability of, or the Indenture Trustee's rights in or to, any
of the Collateral.
(e) In its discretion, the Indenture Trustee may
discharge taxes and other encumbrances at any time levied or placed on
any of the Collateral, make repairs thereto and pay any necessary
filing fees. The Company agrees to reimburse the Indenture Trustee on
demand
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for any and all reasonable expenditures so made with interest on
unpaid amounts at the maximum rate permitted by law. The Indenture
Trustee shall have no obligation to the Company to make any such
expenditures, nor shall the making thereof relieve the Company of any
default.
(f) Anything herein to the contrary notwithstanding, the
Company shall remain liable under each contract or agreement comprised
in the Collateral to be observed or performed by the Company
thereunder. The Indenture Trustee shall not have any obligation or
liability under any such contract or agreement by reason of or arising
out of this Agreement or the receipt by the Indenture Trustee of any
payment relating to any of the Collateral, nor shall the Indenture
Trustee be obligated in any manner to perform any of the obligations
of the Company under or pursuant to any such contract or agreement, to
make inquiry as to the nature or sufficiency of any payment received
by the Indenture Trustee in respect of the Collateral or as to the
sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may
have been assigned to the Indenture Trustee or to which the Indenture
Trustee may be entitled at any time or times other than to account for
amounts or Collateral received, and no action taken or omitted shall
give rise to any defense, counterclaim or right of action against the
Indenture Trustee, unless the Indenture Trustee's actions are taken or
omitted to be taken with gross negligence or bad faith or constitute
willful misconduct. The Indenture Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the UCC or otherwise, shall
be to deal with such Collateral in the same manner as the Indenture
Trustee deals with similar property for its own account.
(g) If an Event of Default has occurred and is
continuing, the Indenture Trustee may at any time, at its option,
transfer to itself or any nominee any securities constituting the
Pledged Collateral, receive any income thereon and hold such income as
additional Collateral or apply it to the Indebtedness. Regardless of
whether any Indebtedness is due, the Indenture Trustee may demand, sue
for, collect, or make any settlement or compromise which it deems
desirable with respect to the Collateral. Regardless of the adequacy
of Collateral or any other security for the Indebtedness, any deposits
or other sums at any time credited by or due from the Indenture
Trustee to the Company may at any time be applied to or set off
against any of the Indebtedness.
(h) If an Event of Default shall have occurred and be
continuing, the Company shall, at the request of the Indenture
Trustee, notify obligors on chattel paper and general intangibles of
the Company and obligors on instruments for which the Company is an
obligee of the security interest of the Indenture Trustee in any
chattel paper, general intangible or instrument and that payment
thereof is to be made directly to the Indenture Trustee or to any
financial institution designated by the Indenture Trustee as the
Indenture Trustee's agent therefor, and the Indenture Trustee may
itself, if an Event of Default shall have occurred and be continuing,
without notice to or demand upon the Company, so notify said obligors.
After the making of such a request or the giving of any such
notification, the Company shall hold any proceeds of collection of
chattel paper, general intangibles and instruments received by the
Company as trustee for the Indenture Trustee without commingling the
same with other funds of the Company and shall turn the same over to
the Indenture Trustee in the identical form received, together with
any necessary endorsements or assignments. The Indenture Trustee
shall apply the proceeds of collection of chattel paper, general
intangibles and instruments received by the Indenture Trustee to the
Indebtedness, such proceeds to be immediately entered after final
payment in cash of the items giving rise to them.
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Section 6.Voting Rights, Dividends, Etc.
(a) Until an Event of Default shall have occurred and be
continuing:
(i) except as otherwise provided in this
Agreement, the Company shall be entitled to exercise any and
all voting or consensual rights and powers, including
subscription rights, in relation to the Pledged Collateral;
provided, however, that no vote shall be cast or consent,
waiver or ratification given or action taken which would
materially impair the securities or the value thereof or
violate any provision of this Agreement, the Indenture or any
other ancillary document;
(ii) except as otherwise provided in this
Agreement, the Company shall be entitled to receive and retain
any and all dividends, distributions or other payments in
respect of the Pledged Collateral and the Indenture Trustee,
upon receipt of any of the foregoing, shall promptly pay or
distribute the same to the Company, and, to the extent so
permitted, any distributions received by the Company and
transferred to other persons shall pass free and clear of the
lien and security interest hereof; and
(iii) the Indenture Trustee shall execute and
deliver to the Company or cause to be executed and delivered
to the Company, all such proxies, powers of attorney, dividend
orders and other instruments as the Company may reasonably
request for the purpose of enabling it to exercise the voting
or consensual rights and powers which the Company is entitled
to exercise pursuant to the foregoing Section 6(a)(i) or to
receive the dividends, distributions or other payments which
the Company is authorized to retain pursuant to the foregoing
Section 6(a)(ii).
(b) Upon the occurrence and during the continuance of an
Event of Default, all rights of the Company to exercise the voting or
consensual rights and powers which the Company would otherwise be
entitled to exercise pursuant to Section 6(a)(i) and to receive the
dividends, distributions and other payments which the Pledgor would
otherwise be authorized to receive and retain pursuant to Section
6(a)(ii) shall automatically cease, and all such rights shall
thereupon become vested in the Indenture Trustee, which shall then
have the sole and exclusive right and authority to exercise, in its
sole discretion, all such voting and consensual rights and powers and
to receive and retain as Collateral all such dividends, distributions
and other payments. Without limiting the foregoing, in such event the
Indenture Trustee may exercise all voting and corporate rights at any
meeting of any corporation issuing any such securities and any and all
rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining to any such securities as if it were
the absolute owner thereof, including, without limitation, the rights
to exchange at its discretion, any and all such securities upon the
merger, consolidation, reorganization, recapitalization or other
readjustment of any corporation issuing any such securities or upon
the exercise by any such issuer or the Indenture Trustee of any right,
privilege or option pertaining to any such securities, and, in
connection therewith, to deposit and deliver any and all securities
with any committee, depository, transfer agent, registrar or other
designated agency upon such terms and conditions as it may determine,
all without liability except to account for the property actually
received by it, but the Indenture Trustee shall have no duty to
exercise any of the aforesaid rights, privileges or options and the
Indenture Trustee shall not be responsible for any failure to do so or
delay in so doing.
Section 7. Default.
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(a) It shall constitute a Default or an Event of Default
under this Agreement if a "Default" or an "Event of Default" shall
occur under the Indenture.
(b) If an Event of Default shall have occurred and is
continuing and if the maturity of the Notes is accelerated under the
provisions of the Indenture, in addition to any other rights and
remedies that may be available to the Indenture Trustee under the UCC
or the Indenture or under Section 5(a) or 5(b) of this Agreement or
otherwise under this Agreement or at law, the Indenture Trustee, for
the ratable benefit of the Noteholders, shall also have the following
rights and powers:
(i) The Indenture Trustee may, without being
required to give any notice except as hereinafter provided,
sell the Collateral, or any part thereof, at public or private
sale, for cash, upon credit or for future delivery and at such
price or prices as the Indenture Trustee deems satisfactory,
and the Indenture Trustee and/or its collateral agent may be
the purchaser for the ratable benefit of the Noteholders of
any or all of the Collateral so sold at a public sale and
thereafter hold the same absolutely free from any right or
claim of whatsoever kind, and the Indebtedness or any portion
of the Indebtedness may be applied as a credit against the
purchase price.
(ii) Upon any such sale, the Indenture Trustee
shall have the right to deliver, assign and transfer to the
purchaser thereof the Collateral so sold. Each purchaser at
any such sale shall hold the property sold absolutely free
from any claim or right of whatsoever kind by or on behalf of
the Company, including any equity or rights of redemption of
the Company, and the Company hereby specifically waives, to
the full extent permitted by applicable law, all rights of
redemption, stay or appraisal which it has or may have under
any rule or law or statute now existing or hereafter adopted.
(iii) The Indenture Trustee shall give the Company
ten (10) business days' written notice (which the Company
agrees is reasonable notification within the meaning of
Section 9.504 of the UCC) of its intention to make any such
public or private sale. Such notice, in case of public sale,
shall state the time and place fixed for such sale and, in
case of a private sale, shall state the date after which such
sale is to be made.
(iv) Any such public sale shall be held at such
time or times within ordinary business hours and at such
places as the Indenture Trustee may fix in the notices of such
sale. At any such sale the Collateral may be sold in one lot
as an entirety or in separate parcels, as the Indenture
Trustee may, in its sole discretion, determine.
(v) The Indenture Trustee shall not be obligated
to make any sale of the Collateral if it shall determine not
to do so, regardless of the fact that notice of sale of the
Collateral may have been given. The Indenture Trustee may,
without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale, and
such sale may, without further notice, be made at any time or
place to which the same shall be so adjourned.
(vi) In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so
sold may be retained by the Indenture Trustee until the
selling price is paid by the purchaser thereof, but the
Indenture Trustee shall not incur
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any liability in case of the failure of such purchaser to take
up and pay for the Collateral so sold and, in case of any such
failure, such Collateral may again be sold upon like notice.
(vii) The Indenture Trustee, instead of exercising
the power of sale herein conferred upon it, may proceed by a
suit or suits at law or in equity to exercise its remedies
regarding the Collateral and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or
courts of competent jurisdiction.
(viii) The Company agrees that if any Event of
Default shall have occurred and be continuing, then the
Indenture Trustee shall have the right to take possession of
the Collateral, and for that purpose the Indenture Trustee
may, so far as the Company can give authority therefor, enter
upon any premises on which the Collateral may be situated and
remove the same therefrom with or without notice or process of
law. The Company waives any and all rights that it may have
to a judicial hearing in advance of the enforcement of any of
the Indenture Trustee's rights hereunder, including, without
limitation, its right following an Event of Default to take
immediate possession of the Collateral and to exercise its
rights with respect thereto. To the extent that any of the
Obligations are to be paid or performed by a person other than
the Company, the Company waives and agrees not to assert any
rights or privileges which it may have under Section 9-112 of
the UCC.
(ix) If under mandatory requirements of applicable
law, the Indenture Trustee shall be required to make
disposition of the Collateral within a period of time that
does not permit the giving of notice to the Company as
hereinbefore provided, the Indenture Trustee need give the
Company only such notice of disposition as shall be reasonably
practicable in view of such mandatory requirements of law.
(x) The Indenture Trustee may instruct the
obligor or obligors on any agreement, instrument or other
obligation constituting the Collateral, including the obligors
under the Intercompany Notes, to make any payment or render
any performance required by the terms of such agreement,
instrument or obligation directly to the Indenture Trustee or
its designee.
(c) The Indenture Trustee shall incur no liability as a
result of the sale of the Collateral, or any part thereof, at any
private sale other than for its own gross negligence, willful
misconduct or bad faith. The Company hereby waives, to the maximum
extent permitted by applicable law, any claims against the Indenture
Trustee and each Noteholder arising by reason of the fact that the
price at which the Collateral may have been sold at such private sale
was less than the price which might have been obtained at a public
sale or was less than the aggregate amount of the Indebtedness, even
if the Indenture Trustee accepts the first offer received and does not
offer such Collateral to more than one offeree.
(d) The Indenture Trustee shall not be obligated to
pursue or exhaust its rights and remedies against any particular
Collateral or other security for the Indebtedness before pursuing or
enforcing its rights and remedies against any other Collateral or
other security for the Indebtedness.
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(e) To the extent permitted by law, the Company hereby
waives (i) any rights to require the Indenture Trustee to proceed
first against any other Person, to exhaust its rights in the
Collateral or other security for the Indebtedness or to pursue any
other right that the Indenture Trustee might have, (ii) with respect
to the Notes, presentment and demand for payment, protest, notice of
protest and nonpayment, notice of dishonor, notice of the intention to
accelerate and notice of acceleration (except as otherwise set forth
in the Indenture), and (iii) all rights of marshalling in respect of
any and all of the Collateral.
(f) Without precluding any other methods of sale, the
Company acknowledges that the sale of the Collateral shall have been
made in a commercially reasonable manner if conducted in conformity
with reasonable commercial practices of banks disposing of similar
property. The Indenture Trustee shall not be liable for any
depreciation in the value of the Collateral.
(g) The Company agrees that its obligation to deliver the
Collateral is of the essence of this Agreement and that accordingly,
upon application to a court of equity having jurisdiction, the
Indenture Trustee shall be entitled to a decree requiring specific
performance by the Company of such obligation.
(h) Remedies of the Indenture Trustee are cumulative and
the exercise of any one or more of the remedies provided herein shall
not be construed as a waiver of any of the other remedies of the
Indenture Trustee.
(i) If an Event of Default shall have occurred and be
continuing, the proceeds of any sale of or other realization upon all
or any part of the Collateral and any other amounts held by the
Indenture Trustee under this Agreement shall be applied by the
Indenture Trustee as provided in the Indenture.
Any amounts remaining after such applications and the payment
in full of all Notes with respect to the Indebtedness shall be remitted to the
Company, its successors or assigns, or as a court of competent jurisdiction may
otherwise direct.
Section 8. Registration Rights.
(a) If the Indenture Trustee or the Noteholders shall
determine to exercise the right to sell any or all of the Pledged
Collateral pursuant to Section 7 hereof, and if in the opinion of
counsel for the Indenture Trustee or the Noteholders it is necessary
(or if in the opinion of the Indenture Trustee or the Noteholders it
is advisable) to have the Pledged Collateral, or that portion thereof
to be sold, registered under the provisions of the Securities Act of
1933, as amended (the "Securities Act"), the Company will cause each
issuing corporation to execute and deliver, and cause the directors
and officers of each thereof to execute and deliver, all at the
Company's expense, all such instruments and documents, and to do or
cause to be done all such other acts and things as may be necessary
or, in the opinion of the Indenture Trustee or the Noteholders,
advisable to register the Pledged Collateral, or that portion thereof
to be sold, under the provisions of the Securities Act and to use its
best efforts to cause the registration statement relating thereto to
become effective and to remain effective for a period of one year from
the date of the first public offering of the Pledged Collateral, or
that portion thereof to be sold, and to make all amendments or
supplements thereto and/or to the related prospectus which, in the
opinion of the Indenture Trustee or the Noteholders, are necessary or
advisable, all in conformity with the requirements of the Securities
Act and the rules and regulations of the Securities and
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Exchange Commission applicable thereto. The Company agrees to use its
best efforts to cause each such issuing corporation to comply with the
provisions of the securities or "Blue Sky" laws of any jurisdiction
which the Indenture Trustee or the Noteholder shall designate and to
cause each such issuing corporation to make available to its security
holders, as soon as practicable, an earnings statement (which need not
be audited) which will satisfy the provisions of Section 11(a) of the
Securities Act.
(b) The Company recognizes that the Indenture Trustee or
the Noteholders may be unable, or find it undesirable, to effect a
public sale of any or all the Pledged Collateral by reason of certain
prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, but may be compelled or desire to resort
to one or more private sales thereof to a restricted group of
purchasers who will be obliged to agree, among other things, to
acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof in violation of the
Securities Act. The Company acknowledges and agrees that any such
private sale may result in prices and other terms less favorable to
the seller than if such sale were a public sale, but, notwithstanding
such circumstances, such private sale shall be deemed to have been
made in a commercially reasonable manner. The Indenture Trustee and
the Noteholders shall be under no obligation to delay a sale of any of
the Pledged Collateral for the period of time necessary to permit the
issuing corporation of such securities to register such securities for
public sale under the Securities Act, or under applicable state
securities laws, even if the issuing corporation would agree to do so.
(c) The Company further agrees to use commercially
reasonable efforts to do or cause to be done all such other acts and
things as may be necessary to make such sale or sales of any portion
or all of the Pledged Collateral valid and binding and in compliance
with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having
jurisdiction over any such sale or sales, all at the Company's
expense. The Company further agrees that a breach of any of the
covenants contained in this Section 8 will cause irreparable injury to
the Noteholders, that the Indenture Trustee and the Noteholders have
no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this
Section 8 shall be specifically enforceable against the Company, and
the Company hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred under the
Indenture.
(d) In addition, the Company agrees to enter into, and to
cause TransTexas to enter into, a Registration Rights Agreement, by
and among the Company, TransTexas and the Indenture Trustee,
satisfactory in both form and substance to both the Company and the
Indenture Trustee, within 60 days of the date of this Agreement.
Section 9. General Provisions.
(a) Continuing Security Interest; Binding Effect. This
Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until
termination of the obligations of the Indenture Trustee under the
Indenture and the indefeasible payment in full thereafter of the
Obligations; (b) be binding upon the Company and its successors and
assigns; and (c) inure to the benefit of the Indenture Trustee for the
benefit of the Noteholders and their respective successors,
transferees and assigns. Without limiting the generality of the
foregoing clause (c), the Indenture Trustee may assign or otherwise
transfer any
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of its rights under this Agreement to any other Person, and such
Person shall thereupon become vested with all the benefits in respect
thereof granted herein or otherwise to the Indenture Trustee. Upon
the termination of the obligations of the Indenture Trustee under the
Indenture and the indefeasible payment in full thereafter of the
Obligations, the Company shall be entitled to the return, upon its
request and at its expense, of such of the Collateral as is in the
Indenture Trustee's possession and as shall not have been sold or
otherwise disposed of pursuant to the terms hereof.
(b) Security Interest Absolute. The lien and security
interest created hereunder and the Company's obligations hereunder and
the Indenture Trustee's rights hereunder shall not be released,
diminished, impaired or adversely affected by the occurrence of any
one or more of the following events:
(i) The taking or accepting of any other security
or assurance for any or all of the Indebtedness;
(ii) Any release, surrender, exchange,
subordination or loss of any security or assurance at any time
existing in connection with any or all of the Indebtedness;
(iii) The modification of, amendment to, or waiver
of compliance with any terms of the Indenture, the Notes, the
TARC Loan Documents or the TransTexas Loan Documents;
(iv) Any renewal, extension and/or rearrangement
of the payment of any or all of the Indebtedness or any
statement, indulgence, forbearance or compromise that may be
granted or given by the Indenture Trustee to the Company or
any other Person;
(v) any neglect, delay, omission, failure or
refusal of the Indenture Trustee to take or prosecute any
action in connection with any agreement, document or other
instrument evidencing, securing or assuring the payment of any
or all of the Indebtedness;
(vi) the illegality, invalidity or
unenforceability of all or any part of the Indenture, the
Notes, the TARC Loan Documents or the TransTexas Loan
Documents; or
(vii) any other circumstance (other than payment in
full of the Obligations) that might otherwise constitute a
defense available to, or a discharge of, the Company or any
party to any document in respect of the Obligations.
(c) Amendments. This Agreement or any term hereof may be
amended or changed only by an instrument in writing executed jointly
by the Company and the Indenture Trustee and in accordance with
Article IX of the Indenture.
(d) Remedies Cumulative. Each right, power and remedy
herein specifically granted to the Indenture Trustee or otherwise
available to it or now or hereafter existing in law or in equity shall
be cumulative and concurrent, and shall be in addition to every other
right, power and remedy herein specifically given or now or hereafter
existing at law, in equity, or otherwise (including, without
limitation, all rights, powers and remedies granted to a secured party
under
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the UCC), and each such right, power and remedy, whether specifically
granted herein or otherwise existing, may be exercised at any time and
from time to time as often and in such order as may be deemed
expedient by the Indenture Trustee in its sole and complete
discretion. The provisions of this Agreement may only be waived by an
instrument in writing signed by the Indenture Trustee, and no failure
on the part of the Indenture Trustee to exercise, and no delay in
exercising, and no course of dealing with respect to, any such right,
power or remedy, shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other
right. No notice to or demand on the Company hereunder shall, of
itself, entitle the Company to any other or further notice or demand
in the same or similar circumstances.
(e) Assignment. Neither this Agreement nor any interest
herein or in the Collateral, or any part thereof, may be assigned by
the Company without the prior written consent of the Indenture
Trustee, except as expressly permitted herein or in the Indenture or
in the Disbursement Agreement.
(f) Headings. The descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the
provisions hereof.
(g) Severability. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof
or affecting the validity of enforceability or such provision in any
other jurisdiction.
(h) Survival. All representations and warranties
contained herein, in the Indenture or made in writing by the Company
in connection herewith or therewith, shall survive the execution and
delivery of this Agreement, the Indenture and any documents executed
in connection herewith or therewith.
(i) Counterparts. This Agreement may be executed in any
number of counterparts and by different parties in separate
counterparts, each of which when so executed and delivered shall be
deemed to be an original, but all of which when taken together shall
constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Indenture Trustee.
(j) Waiver. To the extent permitted by applicable law
the Company hereby waives promptness, diligence, notice of acceptance
and any other notice with respect to any of the Indenture obligations
and this Agreement and any requirement that the Indenture Trustee
protect, secure, perfect or insure any security interest or any
property subject thereto or exhaust any right or take any action
against the Company or any other person or entity; provided however,
that the Indenture Trustee shall in any event take such care in the
handling of any Collateral in its possession as it takes with respect
to its own property of a similar nature in its possession.
(k) Notices. Any notices or other communications
required or permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by telex, by facsimile or
registered or certified mail, postage prepaid, return receipt
requested, addressed as provided in Section 13.2 of the Indenture.
Any party hereto may by notice to the other party designate such
additional or different addresses as shall be furnished in writing by
such party. Any notice or communication to any party shall be deemed
to have been given or made as of the
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date so delivered, if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if faxed; and five (5) calendar
days after mailing, if sent by registered or certified mail (except
that a notice of change of address shall not be deemed to have been
given until actually received by the addressee). The Company may give
notice to the Noteholders at the addresses set forth for them in the
register kept by the Registrar under the Indenture or may request that
the Indenture Trustee notify the Noteholders at such address.
(l) Conflicting Terms. In the event of any conflict or
inconsistency between the terms, covenants, conditions and provisions
set forth in this Agreement and the terms, covenants, conditions and
provisions set forth in the Indenture, the terms, covenants,
conditions and provisions of the Indenture shall prevail.
(m) Release. The Collateral, in whole or in part, may be
released in accordance with the Indenture.
(n) Conflicts. If any provision of the Indenture limits,
qualifies, or conflicts with any similar provision of this Agreement,
such provision of the Indenture shall control.
(o) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW EXCEPT SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW. THE COMPANY 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 IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION
OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY
JURY AND ANY OBJECTION THAT 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.
THE COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO THE COMPANY AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME
EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE INDENTURE TRUSTEE TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
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IN WITNESS WHEREOF, the Company and the Indenture Trustee have
executed this Agreement as of the date first above written.
TRANSAMERICAN ENERGY CORPORATION
By:
---------------------------------
Name:
------------------------------
Title:
------------------------------
FIRSTAR BANK OF MINNESOTA, N.A.,
as Indenture Trustee
By:
---------------------------------
Name:
------------------------------
Title:
------------------------------
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EXHIBIT A
PERFECTION CERTIFICATE
The undersigned, Chief Financial Officer of TransAmerican
Energy Corporation, a Delaware corporation (the "Company"), hereby certify with
reference to the Security and Pledge Agreement dated as of June 13, 1997
between the Company and, as Indenture Trustee Firstar Bank of Minnesota, N.A.,
as (terms defined therein being used herein as therein defined), to the
Indenture Trustee as follows:
Section 1. Names.
(a) The exact corporate name of the Company, as it
appears in its certificate of incorporation is as follows:
TransAmerican Energy Corporation
(b) Set forth below is each other corporate name the
Company has had since its organization, together with the date of the
relevant change:
n/a
(c) The Company has not changed its identity or corporate
structure in any way within the past five years except:
n/a
(d) The following is a list of all other names (including
trade names or similar appellations) used by the Company or any of its
divisions or other business units at any time during the past five
years:
The TEC Group, Inc.
Section 2. Current Locations.
(a) The chief executive office of the Company is located
at the following address:
Mailing Address County State
1300 N. Sam Houston Parkway East Harris Texas
Houston, 77032
(b) The following are all the places of business of the
Company not identified above:
Mailing Address County State
n/a
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Section 3. Prior Locations. Set forth below is the information
required by subparagraphs (a) and (b) of Section 2 with respect to each
location or place of business maintained by the Company at any time during the
past five years:
n/a
Section 4. UCC Filings. A duly signed financing statement on Form
UCC-1 in substantially the form of Schedule 4(a) hereto has been duly filed in
the UCC filing office in each jurisdiction identified in Section 2 hereof. The
Company will deliver a true copy of each such filing duly acknowledged by the
filing officer as soon as practicable after the date hereof.
Section 5. Schedule of Filings. Attached hereto as Schedule 5 is a
schedule setting forth filing information with respect to the filings described
in Section 4 above.
Section 6. Filings Fees. All filing fees and taxes payable in
connection with the filings described in Section 4 above have been paid.
A-2
24
IN WITNESS WHEREOF, the undersigned have hereunto set their
hands this ___ day of June, 1997 in the respective capacities indicated below
their signatures.
----------------------------
Name:
-----------------------
Title:
----------------------
A-3
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SCHEDULE 2(b)
PLEDGED COLLATERAL
========================================================================================================================
Percentage
Stock Number of
Stock Class of Certificate Par of Outstanding
Issuer Stock No.(s) Value Shares Shares
- ------ -------- ----------- ----- ------- -----------
========================================================================================================================
TransAmerican Refining Common Stock 4 $0.01 30,000,000 100%
Corporation
- ------------------------------------------------------------------------------------------------------------------------
TransTexas Gas Corporation Common Stock 0043 $0.01 1,940,147 2.62%
- ------------------------------------------------------------------------------------------------------------------------
TransTexas Gas Corporation Common Stock 0044 $0.01 38,059,853 51.43%
- ------------------------------------------------------------------------------------------------------------------------
TransTexas Gas Corporation Common Stock 0045 $0.01 10,450,000 14.12%
========================================================================================================================
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SCHEDULE 4(a)
DESCRIPTION OF COLLATERAL
1. All of the Debtor's right, title and interest in, to and under
any and all of the following described property, assets and rights, in each
case, wherever located, whether now owned or hereafter acquired or arising, all
accessions and additions thereto, all substitutions and replacements therefor,
and all proceeds and products thereof and assigns all rights in and to all
collateral securing the following described property, assets and rights:
(a) all equipment, machinery, chattels, tools, parts,
machine tools, motor vehicles, furniture, fixtures and supplies of
every nature, including, without limitation, vehicles, drilling rigs,
workover rigs, fracture stimulation equipment, wellsite compressors,
rolling stock and related equipment and other assets accounted for as
equipment by the Debtor on 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 (any and all such property being
the "Equipment");
(b) all inventory in all of its forms, including without
limitation, feedstocks, refined petroleum products, acquired line
pipe, casing, drill pipe and other supplies accounted for as inventory
by the Debtor on its financial statements (excluding any oil, natural
gas, condensate and natural gas liquids), all proceeds thereof, and
all documents of title, books, records, ledger cards, files,
correspondence, and computer files, tapes, disks and related data
processing software (any and all such property being "Inventory");
(c) all personal and fixture property of every kind and
nature including, without limitation, all furniture, fixtures, raw
materials, goods, contract rights, rights to the payment of money
(including, without limitation, all right title and interest in and to
(a) that certain Loan Agreement dated as of June 13, 1997 by and
between TransAmerican Refining Corporation ("TARC") and the Debtor;
(b) that certain promissory note in the amount of $920,000,000
executed by TARC in favor of the Debtor dated as of June 13, 1997; (c)
that certain Loan Agreement dated as of June 13, 1997 by and between
TransTexas Gas Corporation ("TransTexas") and the Debtor and (d) that
certain promissory note in the amount of $450,000,000 executed by
TransTexas in favor of the Debtor dated as of June 13, 1997),
insurance refund claims and all other insurance claims and proceeds,
tort claims, chattel paper, documents, instruments (including
certificated securities), deposit accounts and all general intangibles
including, without limitation, all uncertificated securities, tax
refund claims, license fees, patents, patent applications, trademarks,
trademark applications, trade names, copyrights, copyright
applications, rights to sue and recover for past infringement of
patents, trademarks and copyrights, computer programs, computer
software, engineering drawings, service marks, customer lists,
goodwill, and all licenses, permits, agreements of any kind or nature
pursuant to which the Company possesses, uses or has authority to
possess or use property (whether tangible or intangible) of others or
others possess, use or have authority to possess or use property
(whether tangible or intangible) of the Debtor, and all recorded data
of any kind or nature, regardless of the medium of recording
including, without limitation, all software, writings, plans,
specifications and schematics (any and all such property being the
"Personal Property"); and
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(d) any and all "accounts" as such term is defined in
Article 9 of the Uniform Commercial Code as in effect in the State of
New York (excluding all intercompany accounts), 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
(any and all such property, the "Receivables" and together with the
Equipment, Inventory and Personal Property, the "Company UCC
Collateral").
2. All of the following described property, rights and interests,
in each case, wherever located, whether now owned or hereafter acquired or
arising, all accessions and additions thereto, all substitutions and
replacements therefor, and all proceeds and products thereof (collectively, the
"Pledged Collateral"):
(a) all of the issued and outstanding shares of common
stock identified on Schedule 2(b) attached hereto of TARC, TransTexas
and any other subsidiary of the Company presently existing or
hereafter created or acquired (the "Pledged Subsidiaries") therein set
forth;
(b) all other shares of common stock or other equity
securities issued by the Pledged Subsidiaries now or hereafter owned
or acquired by the Company in any manner, and the certificates
representing such securities, and any present or future options,
warrants or other rights to subscribe for or purchase any property
described in Section (b)(i) or any notes, bonds, debentures or other
evidences of indebtedness that (A) are at any time convertible,
exchangeable or exercisable into capital stock or other equity
securities of the Pledged Subsidiaries or (B) have or at any time
could by their terms have voting rights with respect to any matter
affecting the Pledged Subsidiaries and all securities, certificates
and instruments representing or evidencing ownership of any of the
property described in Section (b) hereof; provided, however, that in
the event the Company acquires any outstanding Common Stock Purchase
Warrants of TARC issued on February 23, 1995 (the "TARC Warrants")
pursuant to a tender offer by the Company for such TARC Warrants, the
Company shall promptly cancel such TARC Warrants or contribute such
TARC Warrants to TARC for prompt cancellation, and in no event will
such TARC Warrants be included in the definition of "Pledged
Collateral"; and
(c) all proceeds and products of the foregoing and
distributions thereof or with respect thereto, including without
limitation dividends, distributions, cash, instruments and other
property or securities, now or hereafter at any time or from time to
time received or receivable or otherwise distributed or distributable
in respect of or in exchange for any or all of the foregoing.
3. The disbursement account (the "Disbursement Account")
maintained at Firstar Bank of Minnesota, N.A., more specifically described on
Schedule I attached hereto, owned by the Debtor and created by that certain
Disbursement Agreement by and among the Company, TARC, the disbursement agent
named therein and the construction supervisor named therein, as amended
pursuant to the terms thereof, and all investments, securities, financial
assets credited thereto and security entitlements with respect thereto, and all
certificates and instruments, if any, from time to time representing or
evidencing the Disbursement Account or any property credited thereto, whether
now owned by the Company or existing or hereafter acquired, created or arising
including the proceeds thereof (the "Assigned Collateral" and, together with
the Company UCC Collateral and the Pledged Collateral, the "Collateral").
Notwithstanding anything contained herein to the contrary, the stock of an
Accounts Receivable Subsidiary shall not constitute Collateral hereunder.
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SCHEDULE 5
SCHEDULE OF FILINGS
Debtor Filing Officer File Number
Date(1)
- ---------------
(1) Indicate lapse date, if other than fifth anniversary.
1