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EXHIBIT 4.2
LOAN AGREEMENT
by and between
TRANSAMERICAN REFINING CORPORATION
and
TRANSAMERICAN ENERGY CORPORATION
Dated as of June 13, 1997
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Table of Contents
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SECTION 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 1.3 Computation of Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2 THE LOAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.1 Commitment to Make Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.2 Deposit of Loan Proceeds into Disbursement Account. . . . . . . . . . . . . . . . . . . . . 17
Section 2.3 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.4 Repayment of the Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3 PREPAYMENTS AND OTHER PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.1 Mandatory Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.2 Permitted Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.3 Place of Payment or Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4 APPLICATION OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.1 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.1 Organization and Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.2 Power and Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.3 Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.4 Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.5 Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.6 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.7 Conflicting or Adverse Agreements or Restrictions. . . . . . . . . . . . . . . . . . . . . 20
SECTION 6 CONDITIONS OF LENDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.1 Conditions Precedent to the Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7 AFFIRMATIVE COVENANTS OF BORROWER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.1 Payment of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.2 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7.3 Covenants Incorporated by Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 8 EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 8.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.3 Remedies Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 9.1 Waivers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 9.2 Reimbursement of Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 9.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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Section 9.4 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 9.5 Survival of Representations, Warranties and Covenants. . . . . . . . . . . . . . . . . . . 26
Section 9.6 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.8 Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.9 Limitation of Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.10 Sale, Pledge or Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.11 Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 9.12 Indenture Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 9.13 Computation of Time Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 9.14 Final Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Schedules and Exhibits:
Schedule 6.1(f) -- Insurance
Exhibit A -- Form of Promissory Note
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LOAN AGREEMENT
This Loan Agreement dated as of June 13, 1997 (this
"Agreement") is entered into by and between TransAmerican Refining Corporation,
a Texas 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.
"Accreted Value" shall mean, with respect to each $1,000 principal
amount of the Note, as of any Semi-Annual Accretion Date set forth below as the
Accreted Value thereof set forth below and as of any other date as the Accreted
Value set forth below for the immediately preceding Semi-Annual Accretion Date
plus the Proportionate Amount to such date:
Accreted Value
(per $1,000
Semi-Annual Accretion Date principal amount)
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December 15, 1997 $ 793.832
June 15, 1998 $ 857.338
December 15, 1998 $ 925.925
June 15, 1999 and thereafter $1,000.000
The Accreted Value prior to the first Semi-Annual Accretion Date will
be the sum of $734.401 plus the Proportionate Amount.
"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 or (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.
"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
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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 debtor.
"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.
"Budget" shall have the meaning ascribed to such term in the
Disbursement Agreement.
"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 Improvement Program" shall mean the expansion and improvement
program of the Borrower in connection with the reactivation and modification of
the Refinery.
"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,
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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.
"CATOFIN(R) Unit" shall mean certain real property currently owned by
the Borrower as more specifically defined in the TARC Mortgage, together with
all personal property of the Borrower now or hereinafter located on such real
property buy only to the extent that such property is part of a refining unit
designed to produce propane and butane mono-olefins using the CATOFIN(R)
process.
"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 John R. Stanley (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 or TransTexas' Capital Stock, respectively, but less than 50%, on a
fully diluted basis, of (x) the total voting power of the Borrower's or
TransTexas' then outstanding Voting Stock, or (y) the economic value of the
outstanding Capital Stock of the Borrower or TransTexas, respectively; 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 the assets of the Borrower that are mortgaged
or pledged to the Borrower as security for the Note in accordance with the TARC
Security Documents.
"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
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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.
"Construction Supervisor" shall mean Baker & O'Brien, Inc., as
construction supervisor of the Capital Improvement Program or any successor
construction supervisor appointed pursuant to the Disbursement Agreement.
"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 or (e) the Attributable Debt associated with any
Sale and Leaseback Transactions; (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, with
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 (1 1/2%).
"Delayed Coking Unit" shall mean the delayed coking unit being
constructed as part of the Capital Improvement Program.
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"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, the disbursement agent named therein
and the Construction Supervisor, as amended pursuant to the terms thereof.
"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
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.
"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, 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 the Refinery or used in the Borrower's processing
or storage operations.
"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 TARC 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.
"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.
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"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.
"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.
"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 John R. Stanley, 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 in connection with any assets thereof, together with
interest payable thereon and the right to collect and receive the same,
including, without limitation, proceeds of casualty insurance, title insurance,
business interruption insurance and any other insurance now or hereafter
maintained with respect to such assets.
"Intercreditor Agreement" shall mean that certain Intercreditor
Agreement, dated as of the Closing Date, by and among the Lender, Borrower,
First Union National Bank, as trustee under that certain Indenture by and
between the Borrower and First Union National Bank dated as of February 23,
1995 and the Indenture Trustee.
"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.
"Inventory" shall mean and include feedstocks, refined products,
chemicals and catalysts, other supplies and storeroom items and similar items
accounted for as inventory by the Borrower on its financial statements, all
proceeds thereof, and all documents of title, books, records, ledger cards,
files,
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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).
"Loan Documents" shall mean this Agreement, the Note, the TARC
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.
"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 Loan.
"Mechanical Completion" shall mean with respect to the Capital
Improvement Program, Phase I, Phase II or any specified unit or component
thereof, sufficient completion of the construction of the Capital Improvement
Program, Phase I, Phase II or any specified unit or component, as the case may
be, in accordance with the Plans, as defined in the Disbursement Agreement, so
that the Capital Improvement
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Program, Phase I, Phase II or such unit or component, as the case may be, can
be operated for its intended purpose.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage" shall mean that certain Act of Mortgage, Security Agreement
and Financing Statement, dated as of the Closing Date, 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.
"Mortgaged Property" shall have the meaning set forth in Section
6.1(e).
"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.
"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 TARC 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, 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.
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"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 TARC Entities
as part of their normal business operations as a risk-management strategy or
hedge against adverse changes in market conditions in the natural gas industry
as prices of feedstock and refined products; provided, 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 Borrower that are engaged in Related TARC 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 of the assets constituting the CATOFIN(R) Unit
owned by the Borrower as of the date hereof; (ix) a guaranty by any Subsidiary
of the Borrower permitted under the Indenture; (x) deposits permitted by the
definition of Permitted Liens or any extension, renewal or replacement of any
of them; (xi) any acquisition by the Borrower of tank storage facilities (or
the company that owns such facilities) in the vicinity of the Refinery; (xii)
Investments in Accounts Receivables Notes by the Borrower in an Accounts
Receivable Subsidiary in amounts not to exceed the greater of $20 million or
20% of the Borrowing Base at any one time; (xiii) Investments by the Borrower
in an Accounts Receivable Subsidiary or in a reincorporation subsidiary, in
each case in connection with the initial capitalization thereof, and not to
exceed $1,000; (xiv) Investments by the Borrower or a wholly owned Subsidiary
solely for the purpose of facilitating a repurchase of the TARC Warrants in
connection with a short form merger; (xv) other Investments not in excess of $5
million at any time outstanding and (xvi) 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.
"Permitted Liens" shall mean (a) Liens imposed by governmental
authorities for taxes, assessments, or other charges not yet due or which are
being contested in good faith and by appropriate proceedings, if adequate
reserves with respect thereto are maintained on the books of any of the TARC
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 TARC Entities in accordance with
GAAP; (c) deposits of cash or Cash Equivalents to secure (i) 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
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reimbursement obligations or letters of credit issued to secure such
performance or other obligations) in an aggregate amount outstanding at any one
time not in excess of $5 million or (ii) appeal or supersedeas bonds (or to
secure reimbursement obligations or letters of credit in support of such
bonds); (d) 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 TARC Entities) or materially interfere
with the ordinary conduct of the business of any of the TARC Entities; (e)
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; (f) Liens securing Debt or other obligations existing on
the Closing Date not in excess of $3 million; (g) 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; (h) Liens on Equipment, Receivables and
Inventory; (i) Liens on the assets of any entity existing at the time such
assets are acquired by any of the TARC 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 TARC Entities and (B) do not extend to any other assets of any of
the TARC Entities; (j) Liens (including extensions and renewals thereof) on
real or personal property, acquired after the Closing Date ("New TARC
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 the item of New TARC 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 TARC 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, (C) any
such Lien shall not extend to or cover any property or assets other than such
item of New TARC Property and any improvements on such New TARC Property and
(D) such Lien does not extend to assets or property which are part of the fixed
refinery assets that are part of the Capital Improvement Program; (k) leases or
subleases granted to others that do not materially interfere with the ordinary
course of business of any of the TARC Entities, taken as a whole; (l) Liens on
the assets of one of the TARC Entities in favor of another TARC Entity; (m)
Liens securing reimbursement obligations with respect to letters of credit that
encumber documents relating to such letters of credit and the products and
proceeds thereof provided, that such reimbursement obligations are not matured
for a period of over sixty (60) days; (n) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods; (o) Liens encumbering customary
initial deposits and margin deposits securing Swap Obligations or Permitted
Hedging Transactions; (p) Liens on cash deposits to secure reimbursement
obligations with respect to letters of credit after the Delayed Coking Unit is
completed; (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 imposed in connection with the Port Commission Bond Financing; provided,
that such liens do not extend to property other than Port Facility Assets; (u)
any extension, renewal or replacement of the Liens created pursuant to any of
the clauses (a) through (g) or (i) through (t) or (w); provided, that such
Liens would have otherwise been permitted under such clauses, and provided
further that the Liens permitted by this clause (u) do not secure any
additional Debt or encumber any additional property; (v) Liens of the trustee
under the indenture and related collateral documents governing the terms of the
Senior TARC Mortgage Notes and the Senior TARC Discount Notes, (w) Liens in
favor of the Lender
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or its assignee under the TARC Security Documents and (y) Liens on tank storage
facilities in the vicinity of the Refinery acquired after the date hereof.
"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 Accreted Value 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 Accreted Value 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 Accreted Value 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 the 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 according to the Plans.
"Phase I Completion Date" shall mean the date on which the
Construction Supervisor issues a written notice (the "Phase I Completion
Notice") to the Borrower and the Disbursement Agent certifying that (a) the
process units and supporting facilities included in the definition of "Phase I"
have reached Mechanical Completion in accordance with the Plans, as defined in
the Disbursement Agreement and (b) for a period of at least 15 consecutive
days, the 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) 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 Capital Improvement Program in
which the Flue Catalytic Cracking Unit, FCC Flue Gas Scrubber, the Alkylation
Unit and certain additional offsite facilities will be completed according to
the Plans and Specifications.
"Phase II Completion Date" shall mean the date on which the
Construction Supervisor issues a written notice (the "Phase II Completion
Notice") to the Borrower and the Disbursement Agent certifying that (a) the
process units and supporting facilities included in the definition of "Phase
II" have reached Mechanical Completion in accordance with the Plans, as defined
in the Disbursement Agreement and (b) for a period of at least 72 uninterrupted
hours, the 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
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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."
"Plans" shall mean (a) the plans and specifications prepared by or on
behalf of the Borrower as used in the Disbursement Agreement, which described
and show the proposed expansion and modification of the Refinery and (b) a
budget prepared by or on behalf of the Borrower as used in the Disbursement
Agreement.
"Port Commission Bond Financing" shall mean a financing transaction
involving the following elements: (a) the transfer of the Borrower's interest
in all or some of the following assets that are under construction in or near
the Refinery: (i) the Prospect Road tank farm; (ii) certain dock improvements;
(iii) the dock vapor recovery system; (iv) the coke handling system; (v) the
Refinery waste water treatment facility; and (vi) tankage for liquefied
petroleum gas (the "Port Facility Assets") to the South Louisiana Port
Commission (the "Tax-Exempt Issuer") or its affiliate and a leaseback of the
Port Facility Assets to the Borrower or one of its Subsidiaries; (b) the
issuance of tax-exempt bonds by the Tax-Exempt Issuer, and the loan of proceeds
from such bonds to the Borrower or one of its Subsidiaries for the purpose of
financing completion of the Port Facility Assets.
"Port Facility Assets" shall have the meaning ascribed to such term in
the definition of Port Commission Bond Financing.
"Premises" shall mean the Mortgaged Property, the Refinery and all
fixtures, equipment, leases, rentals, accounts, general intangibles and
personal property of any kind or character now or hereafter related to,
situated on or used or acquired for use on or in connection with the Mortgaged
Property or in any improvements now or hereafter constructed thereon, and all
related parts, accessions and accessories thereto and all replacements or
substitutions therefor, as well as all other improvements, benefits and
appurtenances now or hereafter placed thereon or accruing thereto.
"Project Disbursement" shall have the meaning ascribed to such term in
the Disbursement Agreement.
"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.
"Proportionate Amount" shall mean, as of any date, an amount equal to
the product of (i) the Accreted Value for the immediately following Semi-Annual
Accretion Date less the Accreted Value for the immediately preceding
Semi-Annual Accretion Date (or, with respect to the period before the first
Semi-Annual Accretion Date, less $734.401) multiplied by (ii) a fraction, the
numerator of which is the actual number of days elapsed from the immediately
preceding Semi-Annual Accretion Date (or, with respect to the period before the
first Semi-Annual Accretion Date, the Closing Date) to the date for which the
Proportionate Amount is being determined and the denominator of which is the
actual number of days from the date of the immediately preceding Semi-Annual
Accretion Date to and including the immediately following Semi- Annual
Accretion Date or the actual number of days from the Closing Date to the first
Semi-Annual Accretion Date, as the case may be.
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"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.
"Qualified Capital Stock" shall mean any Capital Stock that is not
Disqualified Capital Stock.
"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.
"Refinery" shall have the meaning ascribed to such term in Section
4.1.
"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 TARC Business" shall mean the business of (i) processing,
blending, terminalling storing, marketing (other than through operating retail
gasoline stations), refining, or distilling crude oil, condensate, natural gas
liquids, petroleum blendstocks or refined products thereof, (ii) owning and
operating an Accounts Receivable Subsidiary and (iii) after the Phase II
Completion Date, the exploration for, acquisition of, development of,
production, transportation and gathering of crude oil, natural gas, condensate
and natural gas liquids from outside of the United States.
"Required Phase I Completion Date" shall mean March 31, 1999.
"Reserve Amount" shall have the meaning ascribed to such term in
Section 2.2(a).
"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, 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
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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 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, (vii)
any redemption, repurchase or other retirement for value of the TARC Warrants
by the Lender or the Borrower, including any premium paid thereon, (viii) any
redemption, defeasance, repurchase or other retirement for value of the Senior
TARC Mortgage Notes by the Borrower, including any premium paid thereon, (ix)
any redemption, defeasance, repurchase or other retirement for value of the
Senior TARC Discount Notes by the Lender or the Borrower, including any premium
paid thereon, (x) 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(2)(q) or
Section 4.11(4)(j) of the Indenture, (xi) the purchasing by the Borrower of
shares of the Capital Stock of TransTexas 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 (xii) any repayment or retirement for value by the Borrower of any loan
from the Lender incurred pursuant to Sections 4.11(2)(o), 4.11(2)(p),
4.11(4)(s) or 4.11(4)(t) of the Indenture.
"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 Loan Documents" shall mean the Senior TARC Discount Notes and
the Senior TARC Mortgage Notes.
"Senior Obligations" shall have the meaning ascribed to such term in
the Intercreditor Agreement.
"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
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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
or (ii) an Accounts Receivable Subsidiary.
"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 Discount Notes" shall mean the Guaranteed First Mortgage
Discount Notes due 2002 issued by the Borrower and guaranteed by the Lender.
"TARC Entities" shall mean the Borrower and each of its Subsidiaries.
"TARC Mortgage Notes" shall mean the Guaranteed First Mortgage Notes
due 2002 issued by the Borrower and guaranteed by the Lender.
"TARC Security Agreement" shall mean that certain Security and Pledge
Agreement by the Borrower in favor of the Lender.
"TARC Security Documents" shall mean the Disbursement Agreement, the
TARC Mortgage, the TARC 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.
"TARC Supplemental Indenture" shall mean that certain Supplemental
Indenture between the Borrower and the First Union National Bank, relating to
the Senior TARC Discount Notes.
"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.
"TransTexas" shall mean TransTexas Gas Corporation, a Texas
corporation.
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"TransTexas Loan" shall mean the loan from the Lender to TransTexas
pursuant to that certain Loan Agreement between the Lender and TransTexas,
dated as of the date hereof.
"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.
"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 this 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 20% of Consolidated EBITDA since the Phase II
Completion Date 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
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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.
"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 $675,648,920.
(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 fully accreted
principal amount of $920,000,000; 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 $540,548,664.08. The Lender shall
deposit the remaining amount of the Loan, $135,100,255.92 (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.
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Section 2.3 Interest.
(a) The Note will accrete principal at sixteen percent
(16%) per annum commencing as of the Closing Date until June 15, 1999.
Interest will begin to accrue commencing June 15, 1999 and will be
payable semi- annually in arrears on June 15 and December 15 of each
year commencing on December 15, 1999.
(b) Borrower shall pay interest on the unpaid principal
amount of the Loan at a rate per annum equal to the lesser of (i)
sixteen percent (16%) and (ii) the Highest Lawful Rate from the
Closing Date until such principal amount shall be paid in full, at the
times and according to the terms and conditions set forth in the Note;
provided, however, that, in the event that the cost to complete Phase
I is in excess of $245 million, interest will begin to so accrue
commencing June 15, 1999 at a rate per annum equal to the lesser of
(i) sixteen and one quarter of one percent (16.25%) 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.
(c) 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 June 15, 1999. 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, plus all accrued and unpaid interest
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 Accreted Value of 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 Accreted Value of the outstanding principal amount of the Loan
plus (ii) the outstanding principal amount of the TransTexas 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
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prepayment price equal to the Accreted Value of the portion of the outstanding
principal amount of the Note to be prepaid plus 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 for the purposes described more specifically in the
Offering Circular dated June 5, 1997 relating to the issuance of the TEC Notes,
including without limitation (a) to finance a two-phase construction and
expansion program designed to reactivate its petroleum refinery located
approximately twenty miles from New Orleans, Louisiana (the "Refinery") and (b)
to purchase for cash the TARC Discount Notes and the TARC Mortgage Notes, with
any remaining balance available to the Borrower for working capital and other
general purposes not otherwise prohibited by the Loan Documents. Borrower
agrees to place $135,100,255.92 million of the proceeds of the Loan in the
Disbursement Account, which funds will be restricted pursuant to the
Disbursement Agreement.
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 Texas; (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 Louisiana and in every jurisdiction in which the failure
to be qualified would reasonably be expected to have a material adverse effect.
Borrower has no Subsidiaries and is not a party to any joint venture or
partnership. 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. The Borrower 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 the Borrower 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 have been duly
executed and delivered by the Borrower and constitute valid and legally binding
obligations of the Borrower enforceable against the Borrower 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. The 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,
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any order, regulation or demand of any Governmental Authority, which default or
violation would, 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 (including the Premises), 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 the Borrower of the Loan Documents 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 the
Borrower, (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 the
Borrower 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 the
Borrower 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 TARC Security Documents and the Financing Statements, each duly
executed and delivered by the parties thereto;
(b) the fully executed and delivered Intercreditor
Agreement;
(c) a commitment for mortgagee policy of title insurance
(the "Title Commitment") issued by First American Title Insurance
Company (the "Title Company") in favor of Lender and Indenture Trustee
in form and substance satisfactory to Lender and in an amount
satisfactory to Lender, committing to insure that the Mortgage creates
valid, first and prior Liens in the fee estate covered thereby
(collectively, the "Mortgaged Property"), except for Permitted Liens;
(d) 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(f) attached hereto
and made a part hereof;
(e) 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;
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(f) 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;
(g) 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;
(h) the initial Budget, in form and substance
satisfactory to Lender; and
(i) certified copies of the fully executed and delivered
Senior Loan Documents, as amended by the TARC Supplemental Indenture
which shall be in form and substance satisfactory to Lender.
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 Construction. The Borrower shall use its best
efforts to expand and modify the Refinery pursuant to the Capital Improvement
Program with diligence and continuity in a good and workmanlike manner except
during the existence of delays caused by Force Majeure. The Borrower shall use
its best efforts to prevent and to minimize any delays caused by Force Majeure.
Section 7.3 Covenants Incorporated by Reference. The Borrower
shall, and shall cause each of its Subsidiaries to, comply with each covenant
applicable to the Borrower or its Subsidiaries, as 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;
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(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;
(d) a default which extends beyond any stated period of grace
applicable thereto, including any extension thereof, under 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 lenders under such
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);
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(h) any of the TARC Security Documents shall for any reason cease
to be in full force and effect (except where no material adverse effect to the
Lenders would result), or shall cease to give the Lenders 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;
(i) if Phase I of the Capital Improvement Program is not completed
by the Required Phase I Completion Date; or
(j) if the Phase II Completion Date has not occurred by January
31, 2000.
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
TARC 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 marshall any
assets in favor of Borrower or against or in payment of any or all
obligations under any Loan Document.
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(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 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:
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if to the Company:
TransAmerican Refining Corporation
1300 North Sam Houston Parkway East
Suite 320
Houston, Texas 77060
Attention: Ed Donahue
Vice President
if to the Lender:
TransAmerican Energy Corporation
1300 North Sam Houston Parkway East
Suite 200
Houston, Texas 77060
Attention: Ed Donahue
Vice President
if to the Indenture Trustee:
Firstar Bank of Minnesota, N.A.
Corporate Trust Department
101 East Fifth Street, 12th Floor
St. Paul, Minnesota 55101-1860
Attention: Frank Leslie
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 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 TARC MORTGAGE OR THE CREATION, PERFECTION OR FORECLOSURE OF LIENS AND THE
ENFORCEMENT OF RIGHTS AND REMEDIES AGAINST THE COLLATERAL UNDER THE TARC
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
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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 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, the Indenture Trustee 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 sue 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
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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.
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" shall each 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.
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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.
TRANSAMERICAN REFINING CORPORATION
By: ___________________________
Name: ___________________________
Title: ___________________________
TRANSAMERICAN ENERGY CORPORATION
By: ___________________________
Name: ___________________________
Title: ___________________________
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Exhibit A
[FORM OF PROMISSORY NOTE]
TRANSAMERICAN REFINING CORPORATION
$920,000,000
TransAmerican Refining Corporation, a Texas corporation (hereinafter
called the "Company," which term includes any successor corporation under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to TransAmerican Energy Corporation, a Delaware corporation (the "Lender"), or
registered assigns, the principal sum of Nine Hundred Twenty Million Dollars,
on June 1, 2002.
Interest Payment Dates: June 15 and December 15, commencing
December 15, 1999 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:
TRANSAMERICAN REFINING CORPORATION
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
A-1
33
(BACK OF NOTE)
TRANSAMERICAN REFINING CORPORATION
1. Interest.
TransAmerican Refining Corporation, a Texas corporation (the
"Company"), promises to pay interest on the principal amount of this Note at a
rate of 16% per annum; provided, however, that in the event that the cost to
complete Phase I is in excess of $245 million, the Company promises to pay
interest on the principal amount of the Note at a rate of 16.25% 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,
1999. Interest on the Note will accrue commencing on June 15, 1999 from the
most recent date to which interest has been paid or, if no interest has been
paid, from June 15, 1997. Interest on the Note will be computed on the basis
of a 360-day year consisting of twelve 30-day months.
The Note will have the Accreted Value set forth below as of the dates
indicated:
Accreted Value
(per $1,000
principal
Semi-Annual Accretion Date amount)
- -------------------------- -------------------
December 15, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 793.832
June 15, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 857.338
December 15, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 925.925
June 15, 1999 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000.000
2. Method of Payment.
The Company shall pay interest on the Note 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 $920,000,000.
A-2