<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM T-3
FOR APPLICATIONS FOR QUALIFICATION OF INDENTURES
UNDER THE TRUST INDENTURE ACT OF 1939
TRANSTEXAS GAS CORPORATION
--------------------------
(Name of Applicant)
1300 North Sam Houston Parkway East, Suite 310
Houston, Texas 77032
----------------------------------------
(Address of principal executive offices)
SECURITIES TO BE ISSUED UNDER INDENTURE TO BE QUALIFIED:
Title of Class Amount
-------------- ------
15% Senior Secured Notes due 2004 $200,000,000
---------------------
Approximate Date of Proposed Public Offering: October 6, 1999
---------------------
Ed Donahue, Vice President
TransTexas Gas Corporation
1300 North Sam Houston Parkway East, Suite 310
Houston, Texas 77032
(Name and Address of Agent for Service)
With a copy to:
C. Robert Butterfield
Gardere & Wynne, L.L.P.
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
---------------------
The applicant hereby amends this application for qualification on such date or
dates as may be necessary to delay its effectiveness until: (i) the 20th day
after the filing of a further amendment which specifically states that it shall
supersede this amendment, or (ii) such date as the Commission, acting pursuant
to Section 307(c) of the Trust Indenture Act of 1939, as amended (the "Act"),
may determine upon the written request of the applicant.
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GENERAL
ITEM 1. GENERAL INFORMATION.
(a) FORM OF ORGANIZATION.
Corporation.
(b) STATE OR OTHER SOVEREIGN POWER UNDER THE LAWS OF WHICH
ORGANIZED.
Delaware.
ITEM 2. SECURITIES ACT EXEMPTION APPLICABLE.
TransTexas Gas Corporation (the "Applicant" or the "Company") relies
upon Section 1145(a)(1) of the Bankruptcy Reform Act of 1978, as
amended, Title 11, United States Code (the "Bankruptcy Code"), as the
basis for its claim that registration of the offer and sale, pursuant
to the Plan (defined below) of the 15% Senior Secured Notes due 2004
(the "Notes") to be issued by the Company under an indenture (the
"Indenture") to be dated as of the effective date of the Plan (the
"Effective Date"), among the Company and a trustee (to be named by
amendment) (the "Trustee"), is not required under the Securities Act
of 1933, as amended (the "Securities Act").
On April 19, 1999, the Company filed a petition for relief under
Chapter 11 ("Chapter 11") of the Bankruptcy Code in the United States
District Court for the District of Delaware. On April 20, 1999,
TransAmerican Energy Corporation ("TEC") and TransAmerican Refining
Corporation ("TARC") also filed petitions for relief under Chapter 11.
On May 20, 1999, the Chapter 11 cases were transferred to the United
States District Court for the Southern District of Texas, Corpus
Christi Division (the "Bankruptcy Court"). The cases are being jointly
administered under case number 99-21550-C-11. The Company has
continued to operate its business and manage its properties as a
debtor-in-possession pursuant to Sections 1107 and 1108 of the
Bankruptcy Code.
The Company proposes to issue the Notes pursuant to its Second Amended
Plan of Reorganization dated September 29, 1999 (as same may be
further amended or modified, the "Plan"). The First Amended Joint
Disclosure Statement dated September 29, 1999 of the Company, TEC and
TARC (the "Disclosure Statement") will be distributed to holders of
claims against or interests in the Company for the purpose of
soliciting their votes for the acceptance or rejection of the Plan.
The Disclosure Statement was approved by the Bankruptcy Court on
September 29, 1999. A hearing on confirmation of the Plan will be held
on November 9, 1999.
AFFILIATIONS
ITEM 3. AFFILIATES.
The following diagram sets forth the relationship among the Company
and all of its affiliates, including their respective percentages of
voting securities, as of September 29, 1999.
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<TABLE>
<S> <C> <C> <C> <C> <C> <C>
John R. Stanley
|
|
(100%)
TNGC Holdings Corporation (1)
|
|
(100%)
TransAmerican Natural Gas Corporation (2)
|
|
(100%)
TEC/TransAmerican LLC
|
|
(100%)
TransAmerican Energy Corporation
|
---------------------------------------------
| |
(100%)
TransAmerican Refining (72.3%)
Corporation TRANSTEXAS GAS
CORPORATION (3)
|
------------------------------------------------------------------------------------------------
| | | | | |
(100%) (100%) (100%) (100%) (100%) (100%)
Galveston Bay Galveston Bay PetroAmerican TransTexas TransTexas TransTexas Gas
Processing Pipeline Services Drilling Exploration Corporation
Corporation Company Corporation Services, Corporation -- Liberia
Inc.
| |
| |
(100%) (99%)
PetroAmerican TransTexas
Offshore, Inc. Energia de
Mexico, S.A. de C.V. (4)
</TABLE>
- ------------------
(1) Other direct and indirect subsidiaries of TNGC Holdings Corporation
include TransAmerican Pipeline Corporation, Southern States, Inc.,
Southern States Exploration, Inc., and Laredo Exploration, Inc.
(2) Other direct and indirect subsidiaries of TransAmerican Natural Gas
Corporation include Southeast Marine, Inc., TransAmerican Exploration
Corporation, Southeast Louisiana Contractors of Norco, Inc.,
TransAmerican Gas Transmission Corporation, TransLouisiana Pipeline
Corporation, TransAmerican Terminals Corporation, Realty/TransAmerican
LLC, JRS Realty, Inc., JRS Properties, Inc., and TCP Construction
Company, Inc.
(3) Also owned approximately 9.0% by TransAmerican Natural Gas Corporation
and its subsidiary, Southeast Marine, Inc., and approximately 18.7% by
the public.
(4) Also owned 1% by TransTexas Gas Corporation.
Information regarding affiliates as of the Effective Date will be provided by
amendment.
3
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MANAGEMENT AND CONTROL
ITEM 4. DIRECTORS AND EXECUTIVE OFFICERS.
The following persons served as directors and executive officers of
the Applicant as of September 29, 1999:
<TABLE>
<CAPTION>
NAME AND ADDRESS* OFFICE
----------------- ------
<S> <C>
John R. Stanley Chief Executive Officer and
Director
Arnold Brackenridge President and Chief Operating Officer
Ed Donahue Vice President, Chief Financial Officer and
Secretary
Simon Ward Vice President and Treasurer
George Wright Vice President of Accounting
Thomas B. McDade Director and Chairman of the Board
Robert L. May Director
James V. Langston Director
</TABLE>
------------------
* The address for each director and executive officer is 1300
North Sam Houston Parkway East, Suite 310, Houston, Texas
77032.
Upon the Effective Date, all of the directors, except Mr. Stanley,
will resign and new directors will be appointed. The new directors
will be identified at the confirmation hearing.
Information regarding directors and executive officers as of the
Effective Date will be provided by amendment.
ITEM 5. PRINCIPAL OWNERS OF VOTING SECURITIES.
Presented below is certain information regarding each person owning
10% or more of the Company's voting securities as of September 29,
1999:
<TABLE>
<CAPTION>
NAME AND COMPLETE TITLE OF CLASS AMOUNT PERCENTAGE OF VOTING
MAILING ADDRESS* OWNED OWNED SECURITIES OWNED
----------------- -------------- ------ --------------------
<S> <C> <C> <C>
John R. Stanley (1) Common Stock 46,800,264 81.37%
TNGC Holdings Corporation (2) Common Stock 46,788,664 81.35%
TransAmerican Natural Gas
Corporation (3) Common Stock 46,788,664 81.35%
TEC/TransAmerican LLC (4) Common Stock 41,588,664 72.31%
TransAmerican Energy
Corporation Common Stock 41,588,664 72.31%
</TABLE>
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----------------
* The address of each stockholder is 1300 North Sam Houston
Parkway East, Houston, Texas 77032.
(1) Mr. Stanley owns 3,500 shares of Common Stock of the Company.
Mr. Stanley also owns all of the common stock of TNGC
Holdings Corporation, and may be deemed to beneficially own
all of the shares of Common Stock of the Company beneficially
owned by TNGC Holdings Corporation. Mr. Stanley is also
deemed to beneficially own 8,100 shares of Common Stock of
the Company held by his wife.
(2) TNGC Holdings Corporation owns all of the common stock of
TransAmerican Natural Gas Corporation, and may be deemed to
beneficially own all of the shares of Common Stock of the
Company owned beneficially by TransAmerican Natural Gas
Corporation.
(3) TransAmerican Natural Gas Corporation owns 5 million shares
of Common Stock of the Company. TransAmerican Natural Gas
Corporation also owns all of the membership interests of
TEC/TransAmerican LLC and all of the common stock of
Southeast Marine, Inc., which owns 200,000 shares of Common
Stock of the Company. TransAmerican Natural Gas Corporation
may be deemed to beneficially own all of the shares of Common
Stock of the Company held or owned beneficially by
TEC/TransAmerican LLC and Southeast Marine, Inc.
(4) TEC/TransAmerican LLC owns all of the Common Stock of TEC,
and may be deemed to beneficially own all of the shares of
Common Stock of the Company held by TEC.
Information regarding principal owners of voting securities as of the
Effective Date will be provided by amendment.
UNDERWRITERS
ITEM 6. UNDERWRITERS.
(a) PERSONS ACTING AS UNDERWRITERS WITHIN LAST THREE YEARS.
None.
(b) PROPOSED PRINCIPAL UNDERWRITER OF SECURITIES PROPOSED TO BE
OFFERED.
None.
CAPITAL SECURITIES
ITEM 7. CAPITALIZATION.
(a) CAPITALIZATION.
Pursuant to the Plan, the Company's Certificate of Incorporation will
be amended to provide for, among other things, the authorization of
(i) 100,000,000 shares of new Class A Common Stock, $0.01 par value
(the "New Class A Common Stock"), (ii) 247,500 shares of new Class B
Common Stock, $0.01 par value (the "New Class B Common Stock, and,
together with the New Class A Common Stock, the "New Common Stock"),
(iii) 320,000,000 shares of new Senior Preferred Stock (the "New
Senior Preferred Stock"), and (iv) shares of new Junior Preferred
Stock (the "New Junior Preferred Stock"). The following information is
provided with respect to each authorized class of securities of the
Applicant:
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As of September 29, 1999:
<TABLE>
<CAPTION>
TITLE OF CLASS AMOUNT AUTHORIZED AMOUNT OUTSTANDING
-------------- ----------------- ------------------
<S> <C> <C>
Common Stock
$0.01 par value 100,000,000 shares 57,515,566 shares
13 3/4% Senior Subordinated
Notes due 2001 $117,573,000 $115,800,000
</TABLE>
As of the Effective Date:
<TABLE>
<CAPTION>
TITLE OF CLASS AMOUNT AUTHORIZED AMOUNT OUTSTANDING
-------------- ----------------- ------------------
<S> <C> <C>
Class A Common Stock
$0.01 par value 100,000,000 shares 1,002,500 shares*
Class B Common Stock
$0.01 par value 247,500 shares 247,500 shares
Senior Preferred Stock
$1.00 par value 320,000,000 shares 220,000,000 shares
Junior Preferred Stock
$1.00 par value ** ***
15% Senior Secured
Notes due 2004 $200,000,000 $200,000,000
</TABLE>
------------------
* As of the Effective Date, there will also be issued 625,000
Warrants (the "New Warrants") to purchase shares of New Class
A Common Stock. Each New Warrant will be exercisable to
purchase one share of New Class A Common Stock at an exercise
price of $120.00 per share. The New Warrants will be
exercisable at any time on or after the date of issuance
thereof and will expire on June 30, 2002.
** An amount adequate to allow reallocation of such shares
pursuant to the Plan, and to allow for dividends payable in
kind on such shares for 10 years after the Effective Date.
*** To be filed by amendment.
(b) VOTING RIGHTS.
The voting rights of each class of voting securities listed in (a)
above is described below:
Old Common Stock
Each share of the common stock of the Company issued and outstanding
prior to the Effective Date (the "Old Common Stock") has one vote with
respect to all matters submitted to a vote of stockholders. Cumulative
voting is prohibited. The Old Common Stock will be canceled pursuant
to the Plan.
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<PAGE> 7
New Common Stock
Subject to the rights described below of holders of the New Senior
Preferred Stock and the New Class B Common Stock to elect directors,
holders of shares of New Common Stock will be entitled to one vote per
share on any matter submitted to a vote of stockholders. Cumulative
voting will be prohibited. The holders of the New Class B Common Stock
will have the right, voting separately as a class, to elect one
director of the Company during periods in which the holders of the New
Senior Preferred Stock are not entitled to elect all five directors of
the Company.
New Senior Preferred Stock
The holders of the New Senior Preferred Stock will have the right,
voting separately as a class, to elect four of the five directors to
the New Board of Directors of the Company; provided, that if dividends
have not been paid with respect to the payments due on the New Senior
Preferred Stock commencing two years after the Effective Date of the
Plan, such holders will have the right, voting separately as a class,
to elect all five directors to the New Board of Directors of the
Company. Such voting rights will terminate when all such dividends
accrued and in default have been paid in full or set apart for
payment. The term of the fifth director so elected will terminate
immediately upon such payment or setting apart for payment. Holders of
the New Senior Preferred Stock will have one vote per share, voting
together with the new Class A Common Stock (and the New Junior
Preferred Stock and any other series of classes of Company stock
entitled to vote with the New Class A Common Stock), on all matters on
which holders of the New Class A Common Stock are entitled to vote
generally. In exercising such voting rights, each outstanding share of
New Senior Preferred Stock will be entitled to one vote, excluding
shares held by the Company or any entity controlled by the Company,
which shares shall have no voting rights.
In addition, so long as any New Senior Preferred Stock is outstanding,
the Company shall not, without the affirmative vote or consent of the
holders of at least 75% of all outstanding shares of New Senior
Preferred Stock, voting separately as a class, (i) amend, alter or
repeal any provision of the Certificate of Incorporation or Bylaws of
the Company so as to affect adversely the relative rights,
preferences, qualifications, limitations or restrictions of the New
Senior Preferred Stock, (ii) authorize or issue, or increase the
authorized amount of, any additional class or series of stock, or any
security convertible into stock of such class or series, ranking
senior to the New Senior Preferred Stock as to dividends or upon
liquidation, dissolution or winding up of the Company or (iii) effect
any reclassification of the New Senior Preferred Stock.
New Junior Preferred Stock
Holders of the New Junior Preferred Stock will have one-tenth of one
vote per share, voting together with the New Class A Common Stock (and
the New Senior Preferred Stock and any other series or classes of
Company stock entitled to vote with the New Class A Common Stock), on
all matters on which holders of the New Class A Common Stock are
entitled to vote generally. In exercising such voting rights, each
outstanding share of New Junior Preferred Stock will be entitled to
one-tenth of one vote, excluding shares held by the Company or any
entity controlled by the Company, which shares shall have no voting
rights.
INDENTURE SECURITIES
ITEM 8. ANALYSIS OF INDENTURE PROVISIONS.
The following analysis of indenture provisions is required under
Section 305(a)(2) of the Act.
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EVENTS OF DEFAULT; WITHHOLDING OF NOTICE OF DEFAULT
The Indenture defines an Event of Default as (i) the failure by the
Company to pay installments of interest on the Notes as and when the
same become due and payable and the continuance of any such failure
for 30 days, (ii) the failure by the Company to pay all or any part of
the principal or premium, if any, on the Notes when and as the same
become due and payable at maturity, redemption, by acceleration, or
otherwise, including payment due by reason of a Change of Control,
(iii) the failure by the Company or any of its Subsidiaries to observe
or perform any other covenant, agreement, or warranty contained in the
Security Documents, the Notes or the Indenture and, subject to certain
exceptions, the continuance of such failure for a period of 30 days
after written notice is given to the Company by the Trustee or the
Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Notes outstanding, (iv) certain events of
bankruptcy, insolvency, or reorganization in respect of the Company or
any of its Subsidiaries, (v) 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 Company or any of its Subsidiaries
aggregating in excess of $5 million or a failure to pay such Debt at
its stated maturity, provided that a waiver by all of the lenders of
such debt of such default shall constitute a waiver hereunder for the
same period, (vi) final judgments not covered by insurance aggregating
at least $5 million at any one time rendered against the Company or
any of its Subsidiaries and not stayed or discharged within 60 days,
or (vii) any of the Security Documents not being in full force and
effect or ceasing to give the Trustee a perfected security interest
in, and Lien on, the Collateral (except where no material adverse
effect to the holders of the Notes would result). The Indenture
provides that if a default occurs and is continuing and if it is known
to the Trustee, the Trustee must, within 90 days after the occurrence
of such default, give to the Holders notice of such default; provided,
that, except in the case of default in payment of principal of,
premium, if any, or interest on the Notes, the Trustee will be
protected in withholding such notice if it in good faith determines
that the withholding of such notice is in the interest of the holders
of the Notes.
If an Event of Default occurs and is continuing (other than an Event
of Default specified in clause (iv), above, relating to the Company or
its Subsidiaries), then in every such case, unless the principal of
all of the Notes shall have already become due and payable, either the
Trustee or the Holders of 25% in aggregate principal amount of Notes
then outstanding, by notice in writing to the Company (and to the
Trustee if given by Holders) (an "Acceleration Notice"), may declare
all principal of the Notes, determined as set forth below, and accrued
interest thereon, to be due and payable immediately. If an Event of
Default specified in clause (iv), above, relating to the Company or
its Subsidiaries occurs, all principal and accrued interest thereon
will be immediately due and payable on all outstanding Notes without
any declaration or other act on the part of the Trustee or the
Holders. The Holders of no less than a majority in aggregate principal
amount of Notes generally are authorized to rescind such acceleration
if all existing Events of Default, other than the non-payment of the
principal of, premium, if any, and interest on the Notes which have
become due solely by such acceleration, have been cured or waived.
Prior to the declaration of acceleration of the Notes, the Holders of
a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any default or
potential default, except a default or potential default in the
payment of principal of, premium, if any, or interest on any Note not
yet cured, or a default or potential default with respect to any
covenant or provision which cannot be modified or amended without the
consent of the Holder of each outstanding Note affected. Subject to
the provisions of the Indenture relating to the duties of the Trustee,
the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request, order, or direction of any
of the Holders, unless such Holders have offered to the Trustee
reasonable security or indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate
principal amount of the Notes at the time outstanding have the right
to direct the time, method, and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee.
AUTHENTICATION AND DELIVERY OF THE NOTES; APPLICATION OF PROCEEDS
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A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note but such
signature shall be conclusive evidence that the Note has been
authenticated pursuant to the terms of the Indenture.
The Trustee shall authenticate Notes for original issue in the
aggregate principal amount of up to $200,000,000 upon a written order
of the Company in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of Notes to be authenticated and
the date on which the Notes are to be authenticated. The aggregate
principal amount of Notes outstanding at any time may not exceed
$200,000,000. Upon the written order of the Company in the form of an
Officers' Certificate, the Trustee shall authenticate Notes in
substitution of Notes originally issued to reflect any name change of
the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Notes whenever
the Trustee may do so. An authenticating agent has the same rights as
an Agent to deal with the Company, any Guarantor, any Affiliate, or
any of their respective Subsidiaries.
Notes shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
There will be no proceeds from the issuance of the Notes.
RELEASE OR RELEASE AND SUBSTITUTION OF PROPERTY SUBJECT TO THE LIEN OF
THE INDENTURE
The Notes are secured by a lien on substantially all of the assets of
the Company, other than Inventory and Receivables (the "Collateral").
Concurrently with any Asset Sale, the Collateral that is the subject
of such Asset Sale may be released from the security interest created
by the Security Documents.
Upon satisfaction and discharge of the Indenture, the Trustee's lien
on the Collateral will be released.
The liens securing the Extended DIP Facility, the Post Confirmation
Credit Facility and certain other indebtedness will be senior to the
lien securing the Notes.
SATISFACTION AND DISCHARGE OF THE INDENTURE
The Indenture ceases to be of further effect as to all outstanding
Notes (except as to (i) rights of registration of transfer,
substitution, and exchange of Notes and the Company's right of
optional redemption, (ii) rights of Holders to receive payments of
principal of, premium, if any, and interest on the Notes (but not the
payment due by reason of a Change of Control) and any other rights of
the Holders with respect to such amounts, (iii) the rights,
obligations, and immunities of the Trustee under the Indenture, and
(iv) certain other specified provisions in the Indenture (the
foregoing exceptions (i) through (iv) are collectively referred to as
the "Reserved Rights")) on the 91st day (or one day after such other
greater period of time in which any such deposit of trust funds may
remain subject to set aside or avoidance under bankruptcy or
insolvency laws, e.g., one year after any such deposit) after the
irrevocable deposit by the Company with the Trustee, in trust for the
benefit of the Holders, of (i) money in an amount, (ii) U.S.
Government Obligations which through the payment of interest and
principal will provide, not later than one day before the due date of
payment in respect of the Notes, money in an amount, or (iii) a
combination thereof, sufficient to pay and discharge the principal of,
premium, if any, and interest on the Notes then outstanding on the
stated maturity or on the applicable redemption date, as the case may
be. Such a trust may be established only if certain conditions are
satisfied, including delivery by the Company to the
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Trustee of an opinion of outside counsel acceptable to the Trustee
(who may be outside counsel to the Company) to the effect that (i) the
defeasance and discharge will not be deemed, or result in, a taxable
event for Federal income tax purposes, with respect to the Holders and
(ii) after the passage of 90 days (or any greater period of time in
which any such deposit of trust funds may remain subject to bankruptcy
or insolvency laws insofar as those laws apply to the Company)
following the deposit of the trust funds, such funds will not be
subject to set aside or avoidance under any bankruptcy, insolvency, or
other similar laws affecting creditors' rights generally. The
Indenture will not be discharged if, among other things, an Event of
Default relating to certain events of bankruptcy, insolvency or
reorganization of the Company shall have occurred and be continuing on
the date of such deposit. The Company will be deemed to have paid and
discharged the entire indebtedness on all of the outstanding Notes
when (i) all outstanding Notes have been delivered to the Trustee for
cancellation, or (ii) the Company has paid or caused to be paid the
principal of and interest on the Notes.
EVIDENCE TO BE FURNISHED TO TRUSTEE AS TO COMPLIANCE WITH CONDITIONS
AND COVENANTS
The Company is required to furnish to the Trustee, within 60 days
after the end of each fiscal quarter or 105 days after the end of a
fiscal quarter that is also the end of a fiscal year, an officers'
certificate to the effect that such officers have conducted or
supervised a review of the activities of the Company and its
Subsidiaries and of performance under the Indenture and that, to the
best of such officers' knowledge, based on their review, the Company
and its Subsidiaries have fulfilled all of their obligations under the
Indenture or, if there has been a default, specifying each default
known to them, its nature and its status. The Company is also required
to notify the Trustee of any changes in the composition of the Board
of Directors of the Company or any of its Subsidiaries or of any
amendment to the charter or bylaws of the Company or any of its
Subsidiaries.
The Company and each of its Subsidiaries, where applicable, shall
deliver to the Trustee and to each Holder, within 15 days after it
files them with the Commission, copies of all reports and information
that the Company is required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act. The Company agrees to
continue to be subject to the filing and reporting requirements of the
Commission as long as any of the Notes are outstanding.
Concurrently with the reports delivered pursuant to the preceding
paragraph, the Company shall deliver to the Trustee and to each Holder
annual and quarterly financial statements with appropriate footnotes
of the Company and its Subsidiaries, all prepared and presented in a
manner substantially consistent with those of the Company required by
the preceding paragraph.
ITEM 9. OTHER OBLIGORS.
None.
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CONTENTS OF APPLICATION FOR QUALIFICATION
This Application for Qualification comprises:
(a) Pages numbered 1 to 13, consecutively.
(b) The statement of eligibility and qualification on Form T-1 of
the trustee under the indenture to be qualified (to be filed
by amendment).
(c) The following exhibits in addition to those filed as part of
the statement of eligibility and qualification of the
trustee:
Exhibit T3A-1 Certificate of Incorporation, as amended,
of the Company, as in effect on the date of
filing hereof (filed as an exhibit to the
Company's registration statement on Form
S-1 under the Securities Act (No.
33-75050), and incorporated herein by
reference thereto).
Exhibit T3A-2 Form of Amended and Restated Certificate of
Amendment of the Company, to be filed with
the Secretary of State of Delaware and to
become effective as of the Effective Date
(to be filed by amendment).
Exhibit T3B-1 Bylaws of the Company, as in effect on the
date of filing hereof (filed as an exhibit
to the Company's registration statement on
Form S-1 under the Securities Act (No.
33-75050), and incorporated herein by
reference thereto).
Exhibit T3B-2 Form of Amended and Restated Bylaws of the
Company, to become effective as of the
Effective Date (to be filed by amendment).
Exhibit T3C Indenture, to be dated as of the Effective
Date, between the Company and the Trustee
to be named therein, in the form to be
qualified, including an itemized table of
contents showing the articles, sections and
subsections of the Indenture, together with
the subject matter thereof and the pages on
which they appear (filed herewith).
Exhibit T3D Not applicable.
Exhibit T3E First Amended Joint Disclosure Statement
Pursuant to Section 1125 of the Bankruptcy
Code dated September 29, 1999 (filed
herewith).
Exhibit T3F Cross reference sheet showing the location
in the Indenture of the provisions inserted
therein pursuant to Sections 310 through
318(a), inclusive, of the Act (filed
herewith).
Exhibit T3G Trustee's Statement of Eligibility on Form
T-1 under the Act (to be filed by
amendment).
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SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Applicant, TransTexas Gas Corporation, a Delaware corporation, has
duly caused this Application on Form T-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, and its seal to be hereunto affixed and
attested, all in the City of Houston, and State of Texas, on the 6th day of
October, 1999.
TRANSTEXAS GAS CORPORATION
(Seal)
By: /s/ Ed Donahue
----------------------------
Name: Ed Donahue
Title: Vice President
Attest:
By: /s/ Ann F. Gullion
---------------------------------
Name: Ann F. Gullion
Title: Assistant Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- ----------- ------- ----
<S> <C> <C>
T3A-1 Certificate of Incorporation, as amended,
of the Company, as in effect on the date of
filing hereof (filed as an exhibit to the
Company's registration statement on Form
S-1 under the Securities Act (No.
33-75050), and incorporated herein by
reference thereto).
T3A-2 Form of Amended and Restated Certificate of
Amendment of the Company, to be filed with
the Secretary of State of Delaware and to
become effective as of the Effective Date
(to be filed by amendment).
T3B-1 Bylaws of the Company, as in effect on the
date of filing hereof (filed as an exhibit
to the Company's registration statement on
Form S-1 under the Securities Act (No.
33-75050), and incorporated herein by
reference thereto).
T3B-2 Form of Amended and Restated Bylaws of the
Company, to become effective as of the
Effective Date (to be filed by amendment).
T3C Indenture, to be dated as of the Effective
Date, between the Company and the Trustee
to be named therein, in the form to be
qualified, including an itemized table of
contents showing the articles, sections and
subsections of the Indenture, together with
the subject matter thereof and the pages on
which they appear (filed herewith).
T3D Not applicable.
T3E First Amended Joint Disclosure Statement
Pursuant to Section 1125 of the Bankruptcy
Code dated September 29, 1999 (filed herewith).
T3F Cross reference sheet showing the location
in the Indenture of the provisions inserted
therein pursuant to Sections 310 through
318(a), inclusive, of the Act (filed herewith).
T3G Trustee's Statement of Eligibility on Form
T-1 under the Act (to be filed by amendment).
</TABLE>
<PAGE> 1
EXHIBIT T3C
================================================================================
$200,000,000 15% Senior Secured Notes due 2004
INDENTURE
between
TRANSTEXAS GAS CORPORATION,
as Issuer,
and
FIRSTAR BANK, N.A.,
as Trustee
Dated as of [ , 1999]
----------- ---
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
------- ---------
<S> <C>
310(a)(1)............................................................................... 7.10
(a)(2)............................................................................ 7.10
(a)(3)............................................................................ N.A.
(a)(4)............................................................................ N.A.
(a)(5)............................................................................ 7.10
(b)............................................................................... 7.8; 7.10
(c)............................................................................... N.A.
311(a).................................................................................. 7.11
(b)............................................................................... 7.11
(c)............................................................................... N.A.
312(a).................................................................................. 2.5
(b)............................................................................... 14.3
(c)............................................................................... 14.3
313(a).................................................................................. 7.6
(b)(1)............................................................................ 7.6
(b)(2)............................................................................ 7.6
(c)............................................................................... 7.6; 14.2
(d)............................................................................... 7.6
314(a).................................................................................. 4.8; 14.2
(b)............................................................................... 12.3(b)
(c)(1)............................................................................ 2.2; 7.2; 14.4
(c)(2)............................................................................ 7.2; 14.4
(c)(3)............................................................................ N.A.
(d)............................................................................... 12.3(b); 12.4(b); 12.5(b)
(e)............................................................................... 14.6
(f)............................................................................... N.A.
315(a).................................................................................. 7.1(b)
(b)............................................................................... 7.5; 14.2
(c)............................................................................... 7.1(a)
(d)............................................................................... 6.11; 7.1(c)
(e)............................................................................... 6.13
316(a)(last sentence)................................................................... 2.9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
(a)(1)(A)......................................................................... 6.11
(a)(1)(B)......................................................................... 6.12
(a)(2)............................................................................ N.A.
(b)............................................................................... 6.12; 6.8
(c)............................................................................... 10.5
317(a)(1)............................................................................... 6.3
(a)(2)............................................................................ 6.4
(b)............................................................................... 2.4
318(a).................................................................................. 14.1
</TABLE>
- --------------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
ii
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE....................................................................1
Section 1.1 Definitions............................................................................1
Section 1.2 Incorporation by Reference of TIA.....................................................20
Section 1.3 Rules of Construction.................................................................20
ARTICLE II
THE NOTES....................................................................................................21
Section 2.1 Form and Dating.......................................................................21
Section 2.2 Execution and Authentication..........................................................21
Section 2.3 Registrar and Paying Agent............................................................22
Section 2.4 Paying Agent to Hold Assets in Trust..................................................22
Section 2.5 Noteholder Lists......................................................................22
Section 2.6 Transfer and Exchange.................................................................22
Section 2.7 Replacement Notes.....................................................................23
Section 2.8 Outstanding Notes.....................................................................23
Section 2.9 Treasury Notes........................................................................24
Section 2.10 Temporary Notes.......................................................................24
Section 2.11 Cancellation..........................................................................24
Section 2.12 Defaulted Interest....................................................................24
Section 2.13 Computation of Interest...............................................................25
ARTICLE III
REDEMPTION...................................................................................................25
Section 3.1 Right of Redemption...................................................................25
Section 3.2 Notices to Trustee....................................................................25
Section 3.3 Selection of Notes to Be Redeemed.....................................................26
Section 3.4 Notice of Redemption..................................................................26
Section 3.5 Effect of Notice of Redemption........................................................27
Section 3.6 Deposit of Redemption Price...........................................................27
Section 3.7 Notes Redeemed in Part................................................................27
ARTICLE IV
COVENANTS....................................................................................................27
Section 4.1 Payment of Notes......................................................................27
Section 4.2 Maintenance of Office or Agency.......................................................28
Section 4.3 Limitation on Restricted Payments.....................................................28
Section 4.4 Corporate Existence...................................................................28
Section 4.5 Payment of Taxes and Other Claims.....................................................28
Section 4.6 Maintenance of Properties and Insurance...............................................29
</TABLE>
i
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 4.7 Compliance Certificate; Notice of Default......................................29
Section 4.8 SEC Reports and TIA Compliance.................................................30
Section 4.9 Limitation on Status as Investment Company or
Public Utility Company.........................................................30
Section 4.10 Limitation on Transactions with Affiliates.....................................30
Section 4.11 Limitation on Incurrences of Additional Debt and Issuances of Disqualified
Capital Stock..................................................................31
Section 4.12 Limitations on Restricting Subsidiary Dividends................................33
Section 4.13 Limitation on Liens............................................................33
Section 4.14 Limitation on Asset Sales......................................................33
Section 4.15 Waiver of Stay, Extension or Usury Laws........................................36
Section 4.16 Guarantee by Subsidiaries......................................................37
Section 4.17 Intentionally Omitted..........................................................37
Section 4.18 Limitations on Line of Business................................................37
Section 4.19 Separate Existence and Formalities.............................................37
Section 4.20 Intentionally Omitted..........................................................38
Section 4.21 Intentionally Omitted..........................................................38
Section 4.23 Limitation on Assets Held by Nominees..........................................38
Section 4.24 Intentionally Omitted..........................................................38
Section 4.25 Intentionally Omitted..........................................................38
Section 4.26 Intentionally Omitted..........................................................38
ARTICLE V
SUCCESSOR CORPORATION.................................................................................39
Section 5.1 When the Company May Merge, Etc................................................39
Section 5.2 Successor Corporation Substituted..............................................40
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES........................................................................40
Section 6.1 Events of Default..............................................................40
Section 6.2 Acceleration of Maturity Date; Rescission and Annulment........................42
Section 6.3 Collection of Indebtedness and Suits for Enforcement by Trustee................43
Section 6.4 Trustee May File Proofs of Claim...............................................43
Section 6.5 Trustee May Enforce Claims Without Possession of Notes.........................44
Section 6.6 Priorities.....................................................................44
Section 6.7 Limitation on Suits............................................................44
Section 6.8 Unconditional Right of Holders to Receive
Principal, Premium and Interest................................................45
Section 6.9 Rights and Remedies Cumulative.................................................45
Section 6.10 Delay or Omission Not Waiver...................................................45
Section 6.11 Control by Holders.............................................................45
Section 6.12 Waiver of Past Default.........................................................46
Section 6.13 Undertaking for Costs..........................................................46
Section 6.14 Restoration of Rights and Remedies.............................................46
</TABLE>
ii
<PAGE> 6
<TABLE>
<S> <C>
ARTICLE VII
TRUSTEE...............................................................................................46
Section 7.1 Duties of Trustee..............................................................47
Section 7.2 Rights of Trustee..............................................................48
Section 7.3 Individual Rights of Trustee...................................................48
Section 7.4 Trustee's Disclaimer...........................................................48
Section 7.5 Notice of Default..............................................................48
Section 7.6 Reports by Trustee to Holders..................................................49
Section 7.7 Compensation and Indemnity.....................................................49
Section 7.8 Replacement of Trustee.........................................................50
Section 7.9 Successor Trustee by Merger, Etc...............................................50
Section 7.10 Eligibility; Disqualification..................................................50
Section 7.11 Preferential Collection of Claims against Company..............................50
Section 7.12 No Bond........................................................................51
Section 7.13 Condition to Action............................................................51
Section 7.14 Investment.....................................................................51
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE..............................................................51
Section 8.1 Option to Effect Legal Defeasance or Covenant Defeasance.......................51
Section 8.2 Legal Defeasance and Discharge.................................................51
Section 8.3 Covenant Defeasance............................................................51
Section 8.4 Conditions to Legal or Covenant Defeasance.....................................52
Section 8.5 Deposited U.S. Legal Tender and U.S. Government Obligations to be
Held in Trust; Other Miscellaneous Provisions..................................53
Section 8.6 Repayment to Issuers...........................................................53
Section 8.7 Reinstatement..................................................................53
Section 8.3 Termination of Obligations Upon Cancellation of the Notes......................54
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS...................................................................54
Section 9.1 Supplemental Indentures Without Consent of Holders.............................54
Section 9.2 Amendments, Supplemental Indentures and Waivers
with Consent of Holders........................................................55
Section 9.3 Compliance with TIA............................................................56
Section 9.4 Revocation and Effect of Consents..............................................56
Section 9.5 Notation on or Exchange of Notes...............................................57
Section 9.6 Trustee to Sign Amendments, Etc................................................57
ARTICLE X
MEETINGS OF NOTEHOLDERS...............................................................................57
Section 10.1 Purposes for Which Meetings May Be Called......................................57
Section 10.2 Manner of Calling Meetings.....................................................58
Section 10.3 Call of Meetings by Company or Holders.........................................58
</TABLE>
iii
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<TABLE>
<S> <C> <C>
Section 10.4 Who May Attend and Vote at Meetings............................................58
Section 10.5 Regulations May Be Made by Trustee; Conduct
of the Meeting; Voting Rights; Adjournment.....................................59
Section 10.6 Voting at the Meeting and Record to Be Kept....................................59
Section 10.7 Exercise of Rights of Trustee or Noteholders May
Not Be Hindered or Delayed by Call of Meeting..................................59
ARTICLE XI
RIGHT TO REQUIRE REPURCHASE...........................................................................60
Section 11.1 Repurchase of Notes at Option of the
Holder Upon Change of Control..................................................60
ARTICLE XII
SECURITY..............................................................................................62
Section 12.1 Grant of Security Interest.....................................................62
Section 12.2 Trustee's Execution of Intercreditor Agreements
and Subordination Agreements...................................................62
Section 12.3 Recording; Opinions of Counsel.................................................63
Section 12.4 Disposition of Certain Collateral Without Requesting Release...................64
Section 12.5 Requesting Release of Collateral...............................................65
Section 12.6 Substitute Collateral Other Than Cash Collateral...............................67
Section 12.7 Substitution of Cash Collateral................................................68
Section 12.8 Release Upon Defeasance or Satisfaction
and Discharge of this Indenture................................................69
Section 12.9 Reliance on Opinion of Counsel.................................................69
Section 12.10 Purchaser May Rely.............................................................69
Section 12.11 Payment of Expenses............................................................69
Section 12.12 Trustee's Duties...............................................................69
Section 12.13 Authorization of Actions to be Taken by
the Trustee Under the Security Documents.......................................70
ARTICLE XIII
GUARANTEE.............................................................................................70
Section 13.1 Guarantee......................................................................70
Section 13.2 Execution and Delivery of Guarantee............................................71
Section 13.3 Limitation of Guarantor's Liability............................................72
Section 13.4 Contribution...................................................................72
Section 13.5 Rights Under the Guarantee.....................................................72
Section 13.6 Severability...................................................................73
ARTICLE XIV
MISCELLANEOUS.........................................................................................73
Section 14.1 TIA Controls...................................................................73
Section 14.2 Notices........................................................................73
</TABLE>
iv
<PAGE> 8
<TABLE>
<S> <C> <C>
Section 14.3 Communications by Holders with Other Holders...................................74
Section 14.4 Certificate and Opinion as to Conditions Precedent.............................74
Section 14.5 Intentionally Omitted..........................................................74
Section 14.6 Statements Required in Certificate or Opinion..................................74
Section 14.7 Rules by Trustee, Paying Agent, Registrar......................................74
Section 14.8 Legal Holidays.................................................................74
Section 14.9 Governing Law..................................................................75
Section 14.10 No Adverse Interpretation of Other Agreements..................................75
Section 14.11 No Recourse against Others.....................................................75
Section 14.12 Successors.....................................................................75
Section 14.13 Duplicate Originals............................................................75
Section 14.14 Severability...................................................................75
Section 14.15 Table of Contents, Headings, Etc...............................................76
SIGNATURES................................................................................................77
</TABLE>
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Guarantee
- --------------------------------------------
Note: This Table of Contents shall not, for any purpose, be deemed to be part
of this Indenture.
v
<PAGE> 9
INDENTURE, dated as of _________ ___, 1999, between TRANSTEXAS GAS
CORPORATION, a Delaware corporation (the "Company"), and FIRSTAR BANK, N.A., as
Trustee.
Each party hereto agrees as follows for the benefit of each other party
and for the equal and ratable benefit of the Holders of the Company's 15% Senior
Secured Notes due 2004:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"Accounts" means "accounts," as that term is defined in Article 9 of
the Uniform Commercial Code as in effect in the State of New York, together with
the proceeds and products thereof.
"Adjusted Consolidated Net Income"of any Person for any period means
the net income (loss) of such Person and its consolidated Subsidiaries for such
period, determined in accordance with GAAP, excluding (without duplication) (i)
all extraordinary gains (but not losses), (ii) the net income, if positive, of
any other Person, other than a consolidated Subsidiary, in which such Person or
any of its consolidated Subsidiaries has an interest, except to the extent of
the amount of any dividends or distributions actually paid in cash to such
Person or a consolidated Subsidiary of such Person during such period, (iii) the
net income, if positive, of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition, and (iv) the
net income, if positive, of any Subsidiary of such Person to the extent that the
declaration or payment of dividends or similar distributions is not at the time
permitted by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule, or governmental regulation applicable to
such Subsidiary.
"Adjusted Consolidated Tangible Assets" means (without duplication), as
of the date of determination, (A) the sum of (i) discounted future net cash
flows from proved oil and gas reserves of the Company Entities, calculated in
accordance with SEC guidelines (before any state or federal income tax), as
estimated in a Reserve Report as of a date no earlier than the Company's most
recent fiscal year end (or, if such Reserve Report is unavailable, or if the
date of determination is after the end of the first fiscal quarter of the most
recent fiscal year of the Company, as estimated by the Company engineers on the
same basis as of a date no earlier than the end of the most recent fiscal
quarter, which estimates shall be confirmed in writing by a report by nationally
recognized independent petroleum engineers in accordance with SEC guidelines in
the event of a Material Change), (ii) the Net Working Capital of the Company on
a date no earlier than the date of the Company's latest consolidated annual or
quarterly financial statements, and (iii) with respect to all other tangible
assets (which are deemed to include mineral lease-hold interests) of the Company
Entities, the net book value of such other tangible assets on a date no earlier
than the date of the Company's latest consolidated annual or quarterly financial
statements, minus (B) minority interests and, to the extent not otherwise taken
into account in determining Adjusted Consolidated Tangible Assets, any gas
balancing liabilities of the Company Entities. In addition to, but without
duplication of the foregoing, for purposes of this definition, "Adjusted
Consolidated Tangible Assets" shall be calculated after giving effect, on a pro
forma basis, to (1) any Permitted Investment, on or before the date of the
transaction giving rise to the need to calculate Adjusted Consolidated Tangible
Assets (the "Assets Transaction Date"), in any other Person that, as a result of
such investment, becomes a Subsidiary of the Company, (2) the acquisition, on or
before the Assets Transaction Date (by merger, consolidation,
1
<PAGE> 10
or purchase of stock or assets), of any business or assets, including, without
limitation, Permitted Investments, and (3) any sales or other dispositions of
assets (other than sales of Hydrocarbons or other mineral products in the
ordinary course of business) occurring on or prior to the Assets Transaction
Date. For purposes of calculating the ratio of the Company's Adjusted
Consolidated Tangible Assets to total consolidated Debt of the Company Entities,
Debt of a Subsidiary that is not a wholly owned Subsidiary of the Company (which
Debt is non-recourse to the Company or any of its other Subsidiaries or any of
their assets) shall be included only to the extent of the Company's pro rata
ownership interest in such Subsidiary.
"Adjusted Net Assets" of a Guarantor means the lesser of (a) the amount
by which the Guarantor's property, at a fair valuation, exceeds the sum of its
debts (including unliquidated or contingent debts), (b) the amount by which the
present fair salable value of the Guarantor's assets exceeds the amount that
will be required to pay its probable liability on its existing debts as they
become absolute and matured, (c) the amount by which the Guarantor's assets
exceed the maximum amount that would constitute unreasonably small capital for
its business, or (d) the amount by which the Guarantor's assets exceed the
amount that such Guarantor should reasonably retain to pay its debts (including
unliquidated or contingent debts) as they mature.
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person, or (ii) any officer,
director or controlling shareholder of such other Person. 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)
without limiting the foregoing, the beneficial ownership of 10% or more of the
voting power of the voting common equity of such Person (on a fully diluted
basis) or of warrants or other rights to acquire such equity (regardless of
whether presently exercisable).
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Appraisal" means, when used with respect to the valuation of any
property, an appraisal prepared by an Appraiser as to the Appraised Value of
such property.
"Appraised Value" means, with respect to any property at any date, the
then current fair market value of such property as set forth in the most recent
Appraisal.
"Appraiser" means an independent appraiser of national recognition
qualified to appraise the property appraised.
"Asset Sale" means 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 transaction or a series of related
transactions, of any of the properties, businesses or assets of the Company or
any Subsidiary of the Company, whether owned on the Issue Date or thereafter
acquired; provided, however, that "Asset Sale" shall not include (i) any
disposition of Inventory Receivables, 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 (other than the creation of a Permitted Lien in connection with a
Drilling Production Payment or a Drilling Program, which in either case shall be
treated as an Asset Sale hereunder).
"Attributable Debt" in respect of a Sale and Leaseback Transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with
2
<PAGE> 11
GAAP, or, in the event that such rate of interest is not reasonably
determinable, discounted at the rate of interest borne by the Notes) 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" means Title 11, U.S.C., or any similar Federal, state
or foreign law for the relief of debtors generally.
"Board of Directors" means, 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.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Borrowing Base" means, as of any date, an amount equal to the sum of
(a) 85% of the book value of all Accounts owned by the Company and its
Subsidiaries (excluding any Accounts that are more than 90 days past due, less
(without duplication) the allowance for doubtful accounts attributable to such
current Accounts) calculated on a consolidated basis and in accordance with
GAAP, and (b) 70% of the current market value of all Inventory owned by the
Company and its Subsidiaries as of such date. To the extent that information is
not available as to the amount of Accounts as of a specific date, the Company
may utilize, to the extent reasonable, the most recent available information for
purposes of calculating the Borrowing Base.
"Business Day" means a day that is not a Legal Holiday.
"Capital Expenditures" of a Person means expenditures (whether paid in
cash or accrued as a liability) by such Person or any of its Subsidiaries that,
in conformity with GAAP, are or would be included in "capital expenditures,"
"additions to property, plant, or equipment" or comparable items in the
consolidated financial statements of such Person consistent with prior
accounting practices.
"Capital Lease" as applied to any Person, means any lease of any
property (whether real, personal, or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"Capital Stock" means, 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" means 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" means U.S. Legal Tender.
3
<PAGE> 12
"Cash Collateral" means Collateral in the form of U.S. Legal Tender to
be deposited in the Collateral Account.
"Cash Collateral Account" means a custodial account maintained by the
Trustee, for the benefit of the Noteholders, into which Cash Collateral is
deposited pursuant to Section 12.7.
"Cash Equivalents" means (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 any 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 any 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 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 or an Eligible
Institution, provided, however, that such deposits and certificates support
bonds, letters of credit and other similar types of obligations incurred are in
the ordinary course of business, (h) deposits, including deposits denominated in
foreign currency, with any Eligible Institution; provided, however, that all
such deposits do not exceed $10 million in the aggregate at any one time, and
(i) demand or fully insured time deposits used in the ordinary course of
business with commercial banks insured by the Federal Deposit Insurance
Corporation.
"Change of Control" means the occurrence of any the following events:
(i) (A) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
for purposes of this clause (i) such Person shall be deemed to have
"beneficial ownership" of all shares Voting Stock that any such Person
has the right to acquire, whether such right is exercisable immediately
or only after the passage of time or the occurrence of an event)
directly or indirectly, of more than 35% of the total voting power of
the Voting Stock of the Company, other than any such "person" that is
the beneficial owner of more than 35% of the total voting power of the
Voting Stock as of the Issue Date.
(ii) during any period of two consecutive years following the
Issue Date, individuals who at the beginning of such period constituted
the Board of Directors of the Parent (together with any new directors
whose election by such Board of Directors or whose nomination for
election by the stockholders of the Company was approved by a vote of
66-2/3% of the directors of the Company then still in office who were
either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any
reason to constitute a majority of the board of directors of the
Company then in office; or
(iii) the merger or consolidation of the Company with or into
another Person or the merger of another Person with or into the
Company, or the sale of all or substantially all the assets of the
Company to another Person (other than, in each case, a Person that is
controlled by the Company, and, in the case of any such merger or
consolidation, the securities of the Company that are outstanding
immediately prior to such transaction and which represent 100% of the
aggregate voting power of the Voting Stock of the Company are changed
into or exchanged for cash, securities or property, unless
4
<PAGE> 13
pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of
the surviving Person or transferee that represent immediately after
such transaction, at least a majority of the aggregate voting power of
the Voting Stock of the surviving Person or transferee;
unless, at the time of the occurrence of an event specified in clause (i), (ii)
or (iii), the Notes have an Investment Grade Rating; provided, however, that if
at any time within 120 days after such occurrence, the Notes cease having an
Investment Grade Rating, such event shall be a "Change of Control."
"Collateral" means (a) the assets of the Company which are mortgaged or
pledged for the benefit of the Holders pursuant to the terms of the Security
Documents, (b) the assets of any Guarantor (or any other Person) that are
mortgaged or pledged for the benefit of the Holders pursuant to the terms of the
Security Documents, and (c) the Guarantees.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties now assigned to it under the TIA, then the body performing such duties at
such time.
"Common Stock" means the Company's common stock, $0.01 par value per
share.
"Company" means TransTexas Gas Corporation, a Delaware corporation,
being the party named as such in this Indenture, until a successor replaces it
pursuant to this Indenture, and thereafter means such successor.
"Company Entities" means the Company and each of its Subsidiaries.
"Consolidated EBITDA" of any Person for any period, unless otherwise
defined herein, means (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 Charge Coverage Ratio" on any date (the
"Transaction Date") means, with respect to any Person, the ratio, on a pro forma
basis, of (i) the aggregate amount of Consolidated EBITDA of such Person
(attributable to continuing operations and businesses and exclusive of the
amounts attributable to operations and businesses discontinued or disposed of,
on a pro forma basis as if such operations and businesses were discontinued or
disposed of on the first day of the Reference Period) for the Reference Period
to (ii) the aggregate Consolidated Fixed Charges of such Person (exclusive of
amounts attributable to discontinued operations and businesses on a pro forma
basis as if such operations and businesses were discontinued or disposed of on
the first day of the Reference Period, but only to the extent that the
obligations giving rise to such Consolidated Fixed Charges would no longer be
obligations contributing to such Person's Consolidated Fixed Charges subsequent
to the Transaction Date) during the Reference Period; provided, however, that
for purposes of such computation, in calculating Consolidated EBITDA and
Consolidated Fixed Charges, (a) the transaction giving rise to the need to
calculate the Consolidated Fixed Charge Coverage Ratio shall be assumed to have
occurred on the first day of the Reference Period, (b) the incurrence of any
Debt or issuance of Disqualified
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<PAGE> 14
Capital Stock during the Reference Period or subsequent thereto and on or prior
to the Transaction Date shall be assumed to have occurred on the first day of
such Reference Period, (c) Consolidated Interest Expense attributable to any
Debt (whether existing or being incurred) bearing a floating interest rate shall
be computed as if the rate in effect on the Transaction Date had been the
applicable rate for the entire period, unless such Person or any of its
Subsidiaries is a party to a Swap Obligation (that remains in effect for the
12-month period after the Transaction Date) that has the effect of fixing the
interest rate on the date of computation, in which case such rate (whether
higher or lower) shall be used, and (d) if the Company or any Subsidiary of the
Company has repaid, repurchased, defeased or otherwise discharged any Debt or
Disqualified Capital Stock since the beginning of the period measured by the
four full fiscal quarters ended immediately before the Transaction Date or if
any Debt is to be repaid, repurchased, defeased or otherwise discharged (in each
case other than Debt incurred under any revolving credit facility unless such
Debt has been permanently repaid and has not been replaced) on the Transaction
Date, EBITDA and Consolidated Fixed Charges for such period shall be calculated
on a pro forma basis as if such discharge had occurred on the first day of such
period and as if the Company or such Subsidiary has not earned the interest
income which has actually accrued during such period in respect of cash or Cash
Equivalents used to repay, repurchase, defease or otherwise discharge such Debt.
"Consolidated Fixed Charges" of any Person for any period means
(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, (iii) one-third of the Consolidated Operating Lease
Obligations for such period, and (iv) fees paid, accrued, or scheduled to be
paid or accrued during such period by such Person and its Subsidiaries in
respect of performance bonds or other guarantees of payment. For purposes of
clause (ii) above, dividend requirements shall be increased to an amount
representing the pre-tax earnings that would be required to cover such dividend
requirements; accordingly, the increased amount shall be equal to a fraction,
the numerator of which is such dividend requirements and the denominator of
which is 1 minus the applicable actual combined effective Federal, state, local,
and foreign income tax rate of such Person and its Subsidiaries (expressed as a
decimal), on a consolidated basis, for the fiscal year immediately preceding the
date of the transaction giving rise to the need to calculate Consolidated Fixed
Charges.
"Consolidated Interest Expense" of any Person means, for any period,
the aggregate interest (without duplication), whether expensed or capitalized,
paid, accrued, or scheduled to be paid or accrued during such period in respect
of all Debt of such Person and its consolidated Subsidiaries (including (i)
amortization of deferred financing costs and original issue discount and
non-cash interest payments or accruals, (ii) the interest portion of all
deferred payment obligations, calculated in accordance with the effective
interest method, and (iii) all commissions, discounts, other fees, and charges
owed with respect to letters of credit and banker's acceptance financing and
costs associated with Swap Obligations, in each case to the extent attributable
to such period determined on a consolidated basis in accordance with GAAP. For
purposes of this definition, (x) interest on a Capitalized Lease Obligation
shall be deemed to accrue at an interest rate reasonably determined to be the
rate of interest implicit in such Capitalized Lease Obligation in accordance
with GAAP (including Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board), and (y) Consolidated Interest Expense
attributable to any Debt represented by the guarantee by such Person or a
Subsidiary of such Person other than with respect to Debt of such Person or a
Subsidiary of such Person shall be deemed to be the interest expense
attributable to the item guaranteed.
"Consolidated Net Income" of any Person for any period means the net
income (loss) of such Person and its consolidated Subsidiaries for such period,
determined in accordance with GAAP, excluding (without
6
<PAGE> 15
duplication) (i) all extraordinary, unusual and nonrecurring gains (but not
losses), (ii) the net income, if positive, of any other Person, other than a
consolidated Subsidiary, in which such Person or any of its consolidated
Subsidiaries has an interest, except to the extent of the amount of any
dividends or distributions actually paid in cash to such Person or a
consolidated Subsidiary of such Person during such period, but not in excess of
such Person's pro rata share of such other Person's aggregate net income earned
during such period or earned during the immediately preceding period and not
distributed during such period, (iii) the net income, if positive, of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition, and (iv) the net income, if positive, of any Subsidiary of
such Person to the extent that the declaration or payment of dividends or
similar distributions is not at the time permitted by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute,
rule, or governmental regulation applicable to such Subsidiary.
"Consolidated Operating Lease Obligations" means, for any period, the
aggregate amount of all obligations for rental paid or accrued under all
Operating Leases of the Company and its Subsidiaries as lessee (net of sublease
income), all as determined on a consolidated basis in conformity with GAAP.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Debt" means, 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 to 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 Swap
Obligations, (d) for the payment of money relating to a Capitalized Lease
Obligation, and (e) the Attributable Debt associated with any Sale and Leaseback
Transaction; (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 (to the extent of such guaranty or other 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; provided, however,
that, notwithstanding the foregoing, "Debt" shall include obligations related to
Drilling Production Payments, whether denominated as Dollar-Denominated
Production Payments or Volumetric Production Payments, but shall not include
Dollar-Denominated Production Payments or Volumetric Production Payments related
to Drilling Programs.
"Default" means an event or condition, the occurrence of which is, or
with the lapse of time or giving of notice or both would be, an Event of
Default.
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<PAGE> 16
"Depository" means the Person specified in Section 2.3 hereof as the
Depository with respect to the Notes issuable in global form, until a successor
shall have been appointed and become such pursuant to the applicable provision
of this Indenture, and, thereafter, "Depository" shall mean or include such
successor.
"Disqualified Capital Stock" means, 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 the maturity date of the Notes.
"Dollar-Denominated Production Payments" means production payment
obligations recorded as liabilities in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Drilling Production Payment" means a Dollar-Denominated Production
Payment or a Volumetric Production Payment conveyed to a third party in
accordance with the provisions of Sections 4.11 and 4.14.
"Drilling Program" means any current or future arrangement between the
Company or any Subsidiary of the Company and another Person pursuant to which
(i) such Person agrees, or has, prior to the Issue Date, agreed, to drill,
complete or perform operations to enhance recovery from, a well or wells on
mineral interests owned by the Company or such Subsidiary and (ii) the Company
or such Subsidiary agrees, or has, prior to the Issue Date, agreed, to convey or
assign to such Person an interest in such well or wells in accordance with
clause (l) of the definition of "Permitted Liens."
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less than $500 million and 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" means and includes, as to any Person, all of such Person's
now owned or hereafter acquired Vehicles, drilling rigs, workover rigs, fracture
stimulation equipment, well site compressors, rolling stock and related
equipment and other assets accounted for as equipment by such Person on its
financial statements, all proceeds thereof (from insurance or otherwise), 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.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"Event of Default" shall have the meaning specified in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Exchange Assets" means assets acquired by the Company or any
Subsidiary of the Company in exchange for assets of the Company or such
Subsidiary, respectively, in connection with an Asset Sale, which acquired
assets include proved reserves with a value that, together with the cash or Cash
Equivalents received therefor by the Company or any of its Subsidiaries, is
equal to or greater than the value of the proved reserves included in the assets
disposed of by the Company or such Subsidiary in connection with such Asset
Sale;
8
<PAGE> 17
provided, however, that during any fiscal year the Company or any of its
Subsidiaries can collectively acquire assets (other than proved reserves, cash
or Cash Equivalents) with a fair market value of up to $20 million in exchange
for assets of the Company or such Subsidiaries that include proved reserves, and
such assets acquired by the Company or such Subsidiaries shall constitute
"Exchange Assets" hereunder.
"Extended DIP Facility" means the Credit Agreement, dated as of April
27, 1999, among the Company, the lenders party thereto, and Credit Suisse First
Boston Management Corporation as Administrative Agent, as amended to the date
hereof and further amended and extended in accordance with the Plan.
["EXTENDED DIP FACILITY INTERCREDITOR AGREEMENT" MEANS ________________
___________.]
"First Lien Debt" means any Debt or other obligation secured by a
Permitted Lien described in clause (c), (d), (e), (f), (i), (j), (k), (l), (n)
to the extent that the Incurrence of the Permitted Lien to which such clause (n)
relates is one of the other clauses listed here, (o), (r), (s), or (t) , (w), or
(x) of the definition of "Permitted Liens," including, in each case, any
refinancings thereof.
"GAAP" means generally accepted accounting principles as in effect in
the United States on the Issue Date applied on a basis consistent with that used
in the preparation of the most recent audited financial statements of the
Company.
"Guarantee" shall have the meaning provided in Section 13.1.
"Guarantor" means (i) each Subsidiary of the Company joining in the
execution of this Indenture and the Notes for the purposes of evidencing its
Guarantee and of agreeing to bound by the terms of this Indenture, (ii) each
Subsidiary of the Company that becomes (or is required to become) a guarantor of
the obligations of the Company under the Notes and this Indenture in accordance
with Section 4.16, and (iii) each Subsidiary of the Company executing a
supplemental indenture in which such Subsidiary agrees to become and be a
guarantor of the obligations of the Company under the Notes and this Indenture
and to be bound by the terms of this Indenture.
"Hedging Subsidiary" means a Subsidiary of the Company engaged solely
in the business of facilitating Permitted Hedging Transactions with the Company
or any of its Subsidiaries.
"Holder" means the Person in whose name a Note is registered on the
Registrar's books.
"Hydrocarbons" means oil, natural gas, condensate, and natural gas
liquids.
"Incur" shall have the meaning specified in Section 4.11.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Insurance Proceeds" means 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 Company or any Guarantor 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.
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<PAGE> 18
"Intercreditor Agreements" means [THE EXTENDED DIP FACILITY
INTERCREDITOR AGREEMENT, THE POST CONFIRMATION CREDIT FACILITY, AND] the
intercreditor agreements permitted by Section 12.2(d).
"Interest Payment Date" means the stated due date of an installment of
interest on the Notes.
"Interest Rate or Currency Agreement" of any Person means 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" means and includes all of the Company's, and each of the
Company's Subsidiaries', now owned or hereafter acquired casing, drill pipe and
other supplies accounted for as inventory by the Company on its consolidated
financial statements (excluding any Hydrocarbons), all proceeds thereof (from
insurance or otherwise), and all documents of title, books, records, ledger
cards, files, correspondence, and computer files, tapes, disks and related data
processing software that at any time evidence or contain information relating to
the foregoing.
"Investment" by any Person in any other Person means (without
duplication) (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 issued by 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) other than as permitted
under Section 4.16 and Article XIII the entering into of any guarantee of, or
other credit support or 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" means, 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).
"Issue Date" means the date of first issuance of the Notes under the
Indenture.
"Junior Preferred Stock" means the Company's junior preferred stock,
$1.00 par value.
"Legal Holiday" shall have the meaning provided in Section 14.8.
"Lien" means 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).
"Material Change" means an increase or decrease of more than 10% since
the then most recent Reserve Report in the discounted future net cash flows
(excluding changes that result from changes in prices) from proved
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<PAGE> 19
oil and gas reserves of the Company and its consolidated Subsidiaries (before
any state or federal income tax); provided, however, that the following will be
excluded from the Material Change calculation: (i) any acquisitions since the
then most recent Reserve Report of oil and gas reserves that have been estimated
by independent petroleum engineers and on which a report or reports have been
prepared by such independent petroleum engineers within 12 months of the
acquisition, (ii) any reserves added since the then most recent Reserve Report
attributable to the drilling or recompletion of wells not included in previous
reserve estimates, and (iii) any disposition of properties existing on the date
of then most recent Reserve Report that have been disposed of.
"Maturity Date," when used with respect to any Note, means the date on
which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity, on a Change of Control Payment Date
(as defined in Section 11.1(a)), or by declaration of acceleration, call for
redemption or otherwise.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means each mortgage, deed of trust, trust deed, deed to
secure debt, assignment, assignment of production, security agreement, financing
statement or similar document, however styled, executed by the Company and/or
any one or more of the Guarantors, or any other Person, for the benefit of the
Holders primarily for the purpose of creating or granting a Lien on real
property and/or Hydrocarbons, or any interests therein (but excluding Equipment,
Inventory and Receivables, which shall be excepted from the Lien thereof), to
secure all or any part of (a) the obligations of the Company pursuant to this
Indenture, any one or more of the Security Documents, and/or the Notes, and/or
(b) the obligations of such Guarantor under its Guarantee.
"Net Cash Proceeds" means an amount equal to the aggregate amount of
cash received by the Company and its Subsidiaries in respect of an Asset Sale,
less the sum of (i) all reasonable out-of-pocket fees, commissions, and other
expenses incurred in connection with such Asset Sale, including the amount
(estimated in good faith by the Company) of income, franchise, sales and other
applicable taxes to be paid, payable or accrued by the Company or any Subsidiary
of the Company (in each case as estimated in good faith by the Company or such
Subsidiary without giving effect to tax attributes unrelated to such Asset Sale)
in connection with such Asset Sale, and (ii) the aggregate amount of cash so
received which is used to retire any then existing Debt of the Company or its
Subsidiaries (other than the Notes), as the case may be, which is required by
the terms of such Debt to be repaid in connection with such Asset Sale.
"Net Proceeds" means (a) in the case of any sale by a Person of
Qualified Capital Stock, the aggregate net cash proceeds received by such Person
from the sale of Qualified Capital Stock (other than to a Subsidiary) after
payment of reasonable out-of-pocket expenses, commissions and discounts incurred
in connection therewith, and (b) in the case of any exchange, exercise,
conversion or surrender of any outstanding securities or Debt of such Person for
or into shares of Qualified Capital Stock of such Person, the net book value of
such outstanding securities as adjusted on the books of such Person or Debt of
such Person to the extent recorded in accordance with GAAP, in each case, on the
date of such exchange, exercise, conversion or surrender (plus any additional
amount required to be paid by the holder of such Debt or securities to such
Person upon such exchange, exercise, conversion or surrender and less (i) any
and all payments made to the holders of such Debt or securities and (ii) all
other expenses incurred by such Person in connection therewith, in each case, in
so far as such payments or expenses are incident to such exchange, exercise,
conversion, or surrender).
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<PAGE> 20
"Net Working Capital" of any Person means (i) all current assets of
such Person and its consolidated Subsidiaries, minus (ii) all current
liabilities of such Person and its consolidated Subsidiaries other than the
current portion of long term debt, each item to be determined in conformity with
GAAP.
"Net Worth" of any Person means, 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 Property" shall have the meaning specified in clause (t) in the
definition of the term "Permitted Liens" set forth in Section 1.1.
"Nominee" means any Person who has or holds any right, title or
interest in any oil and gas or mineral lease as a nominee for the Company or any
of its Subsidiaries.
"Nominee Property" means any property, lease, interest or other asset
with respect to which any Person has or holds any right, title or interest as a
Nominee.
"Noteholder" means the Person in whose name a Note is registered on the
Registrar's book.
"Note Redemption" means a redemption of Notes by the Company pursuant
to Article III.
"Note Repurchase" means a purchase of Notes by the Company pursuant to
the provisions of Section 4.14(b) et seq.
"Notes" means the 15% Senior Secured Notes due 2004, as supplemented
from time to time in accordance with the terms hereof, issued under this
Indenture.
"NYSE" means the New York Stock Exchange.
"Officer" means, with respect to the Company, the Chairman of the
Board, the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary of the
Company.
"Officers' Certificate" means, with respect to the Company, a
certificate signed by two Officers of the Company or by an Officer and an
Assistant Secretary of the Company and otherwise complying with the requirements
of Sections 14.4 and 14.6.
"Operating Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which is not
a Capital Lease or a lease of a mineral interest.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
14.4 and 14.6. Unless otherwise required by the Trustee, the counsel may be
outside counsel to the Company.
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<PAGE> 21
"Paying Agent" shall have the meaning specified in Section 2.3.
"Permitted Hedging Transactions" means non-speculative transactions in
futures, forwards, swaps or option contracts (including both physical and
financial settlement transactions) engaged in by the Company or its Subsidiaries
as part of their normal business operations as a risk-management strategy or
hedge against adverse changes in the prices of natural gas, condensate, or oil;
provided, however, that such transactions do not, on a monthly basis, relate to
more than 90% of the Company Entities' average net hydrocarbon production (mcfe)
per month for the most recent 3-month period measured at the time of such
incurrence; and, provided further, that, at the time of such transaction (i) the
counterparty to any such transaction is an Eligible Institution or a Person that
has an Investment Grade Rating, or (ii) such counterparty's obligation pursuant
to such transaction is unconditionally guaranteed in full by, or secured by a
letter of credit issued by, an Eligible Institution or a Person that has an
Investment Grade Rating.
"Permitted Investment" means, when used with reference to the Company
and its Subsidiaries, (i) trade credit extended to Persons in the ordinary
course of business; (ii) purchases of Cash Equivalents; (iii) Investments by the
Company or its wholly owned Subsidiaries in wholly owned Subsidiaries of the
Company; (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 $500,000 in the aggregate
outstanding at any time; (vii) margin deposits in connection with Permitted
Hedging Transactions; (viii) [intentionally omitted]; (ix) Investments and
expenditures made in the ordinary course of business by the Company and its
Subsidiaries, and of a nature that, at the time of expenditure, is customary in
the oil and gas business as a means of actively exploiting, exploring for,
acquiring, developing, processing, gathering, marketing or transporting oil or
gas through agreements, transactions, interests or arrangements which permit a
Person to share risks or costs, comply with regulatory requirements regarding
local ownership or satisfy other objectives customarily achieved through the
conduct of the oil and gas business jointly with third parties, including,
without limitation, (a) ownership interests in oil and gas properties or
gathering systems and (b) Investments and expenditures in the form of or
pursuant to operating agreements, processing agreements, farm-in agreements,
farm-out agreements, development agreements, area of mutual interest agreements,
unitization agreements, pooling arrangements, joint bidding agreements, service
contracts, joint venture agreements, partnership agreements (whether general or
limited), subscription agreements, stock purchase agreements and other similar
agreements with third parties (including Unrestricted Subsidiaries); provided,
however, that in the case of any joint venture engaged in processing, gathering,
marketing or transporting oil or gas, (i) all Debt of such joint venture that
would not otherwise constitute Debt of one of the Company Entities shall be
deemed Debt of the Company in proportion to its direct or indirect ownership
interest in such joint venture, and (ii) such joint venture shall be reasonably
anticipated, at the time of Investment, to enhance the value of the reserves of
the Company Entities or marketability of production from such reserves; (x) a
guaranty by any Subsidiary of the Company permitted under Section 4.11(f); (xi)
deposits permitted by the definition of Permitted Liens or any extension,
renewal, or replacement of any of them, (xii) an Investment in Capital Stock
resulting from an Asset Sale pursuant to Section 4.14; (xiii) other Investments,
provided, however, that such Investments do not exceed $1 million in the
aggregate at any time.
"Permitted Liens" means (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 Company 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, however, that (1) the underlying obligations are not overdue for a
period of more than 45 days, or (2) such Liens
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<PAGE> 22
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 Company
Entities in accordance with GAAP; (c) pledges of assets or deposits of cash or
Cash Equivalents to secure (1) the performance of bids, trade contracts (other
than borrowed money), leases, statutory obligations, surety bonds, performance
bonds and other obligations of a like nature incurred in the ordinary course of
business (or to secure reimbursement obligations or letters of credit in support
of such bonds) in an aggregate amount not in excess of 5% of the SEC PV10
indicated on the Company's most recent Reserve Report at the time such pledges
or deposits are made, (2) appeal or supercedeas bonds (or to secure
reimbursement obligations or letters of credit in support of such bonds) in an
amount not to exceed $10 million at any one time outstanding, or (3) pledges or
deposits made in the ordinary course of business in connection with worker's
compensation, unemployment insurance, and other types of social security
legislation, property insurance and liability insurance; (d) Liens encumbering
customary initial deposits and margin deposits securing Swap Obligations or
Permitted Hedging Transactions and Liens encumbering contract rights under
Permitted Hedging Transactions; (e) pledges of assets to secure margin
obligations, settlement obligations, reimbursement obligations or letters of
credit in connection with Permitted Hedging Transactions; provided, however,
that, at the time such pledge is made (or, if such pledge secures future
Permitted Hedging Transactions, at the time any such Permitted Hedging
Transaction is entered into), the maximum aggregate exposure under such
Permitted Hedging Transactions does not exceed the greater of (1) $10 million or
(2) 5% of the SEC PV10 indicated on the Company's then most recent Reserve
Report;] (f) easements, rights-of-way, zoning, similar restrictions and other
similar encumbrances or title defects incurred in the ordinary course of
business which, in the aggregate, are not material in amount, and which do not
in any case materially detract from the value of the property subject thereto
(as such property is used by any of the Company Entities) or materially
interfere with the ordinary conduct of the business of any of the Company
Entities; (g) Liens arising by operation of law in connection with judgments,
only to the extent, for an amount and for a period not resulting in an Event of
Default with respect thereto; (h) (1) Liens securing Debt or other obligations
not in excess of $3 million, and (2) Liens existing on the date of the
Indenture; (i) Liens securing (1) obligations to prepetition secured creditors
in classes 2, 5, 6A or 6B under the Plan, (2) Debt incurred pursuant to Section
4.11(k), or (3) refinancing Debt incurred pursuant to Section 4.11(g) with
respect to subclaims (1) or (2) of this clause; (i) [intentionally omitted]; (j)
Liens granted on (1) Equipment to the extent granted to secure Debt incurred
pursuant to Section 4.11 or (2) Inventory or Receivables; (k) Liens granted in
connection with the Presale of Gas, provided, however, that all of the proceeds
from such Presale of Gas shall be applied to a Note Repurchase or to a Note
Redemption; (l) Liens created on acreage drilled or to be drilled pursuant to
Drilling Programs, on Hydrocarbons produced therefrom and on the proceeds of
such Hydrocarbons to secure the Company's obligations thereunder, provided,
however, that (1) the number of wells included in such program commenced in any
fiscal year does not exceed 30 per fiscal year (plus the number of wells
included in programs commenced in prior years but not yet completed), (2) such
obligations are limited to a percentage of production from such wells, (3) such
Liens survive only until the Person to whom such Lien was granted has received
production with a value equal to the costs, expenses and fees related to
property and services provided or paid for by such Person plus an agreed-upon
interest component, and (4) such Liens secure obligations that are nonrecourse
to each of the Company or its Subsidiaries; (m) Liens on the assets of any
entity existing at the time such assets are acquired by any of the Company
Entities, whether by merger, consolidation, purchase of assets or otherwise so
long as such Liens (1) are not created, incurred or assumed in contemplation of
such assets being acquired by any of the Company Entities and (2) do not extend
to any other assets of any of the Company or its Subsidiaries; (n) any
extension, renewal, or replacement of Liens created pursuant to any of clauses
(a) through (g), (i), (k) through (m), or (q) through (t) of this definition,
provided, however, that such Liens would have otherwise been permitted under
such clauses, and provided further, that the Liens permitted by this clause (n)
do not secure any additional Debt or encumber any additional property; (o) Liens
securing (1) Royalty Payment Obligations and (2) Drilling Production Payments;
(p) Liens on the assets of any of the Company Entities in favor of another
Company Entity; (q) [INTENTIONALLY OMITTED]; (r) Liens on the proceeds of any
property subject
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<PAGE> 23
to a Permitted Lien or on deposit accounts containing any such proceeds; (s)
Liens on the proceeds of any property that is not Collateral; (t) Liens
(including extensions and renewals thereof) on real or personal property,
acquired after the Issue Date ("New Property"); provided, however, that (1) such
Lien is created solely for the purpose of securing Debt incurred to finance the
cost (including the cost of improvements or construction) of New Property
subject thereto and such Lien is created prior to or within six months after the
later of the acquisition, the completion of construction, or the commencement of
full operation of such New Property, (2) the principal amount of the Debt
secured by such Lien does not exceed 100% of such cost including costs and fees
related to the financing thereof, and (3) any such Lien shall not extend to or
cover any property or assets other than such item of New Property, any
improvements on such New Property and any throughput, capacity or similar
agreements related to the operation of such New Property; (u) Liens of the
Trustee under this Indenture; and (v) Liens under the Security Documents ; (w)
Liens securing the Extended DIP Facility; and (x) Liens securing the Post
Confirmation Credit Facility.
"Person" means any corporation, individual, joint stock company, joint
venture, partnership, unincorporated association, governmental regulatory
entity, country, state, or political subdivision thereof, trust, municipality,
or other entity.
"Plan" means the Company's Second Amended Plan of Reorganization, dated
September 29, 1999, in case No. 99-21550-C-11, in the United States Bankruptcy
Court for the Southern District of Texas, Corpus Christi Division.
"Pledged Stock" means the Capital Stock of the Subsidiaries of the
Company pledged pursuant to any of the Security Documents.
"Post Confirmation Credit Facility" means a credit facility secured by
a Lien on the Collateral prior to the Lien securing the Notes and pari passu
with the Lien securing the Extended DIP Facility.
["POST CONFIRMATION CREDIT FACILITY INTERCREDITOR AGREEMENT" MEANS
____________________.]
"Preferred Stock" means, with respect to any Person, any class or
classes (however designated) of Capital Stock of such Person that is preferred
as to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person over shares
of Capital Stock of any other class of such corporation.
"Presale of Gas" means any advance payment agreement or other
arrangement pursuant to which the Company or any Guarantor, having received full
payment of the purchase price for a specified quantity of Hydrocarbons prior to
the first scheduled date of delivery, is required to deliver, in one or more
installments subsequent to the date of such agreement or arrangement, such
quantity of Hydrocarbons to the purchaser of such Hydrocarbons pursuant to and
during the term of such agreement or arrangement; provided, however, that the
term "Presale of Gas" shall not include (i) any such agreement or other
arrangement covering deliveries of Hydrocarbons for a period not exceeding three
calendar months and pursuant to which the Company or such Guarantor has received
full payment of the purchase price within 120 days of the last scheduled date of
delivery, (ii) a transaction to the extent and only to the extent that it
results in the creation of any Permitted Lien under clauses (l) or (o) of the
definition of "Permitted Liens," (iii) Permitted Hedging Transactions, or (iv)
an Asset Sale involving Hydrocarbon reserves.
"principal amount" when used with respect to the Notes means the
principal amount of such Debt as indicated on the face of such Debt instrument.
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<PAGE> 24
"Property" means any right or interest in or to property or assets of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Receivables" means and includes, as to any Person, any and all of such
Person's now owned or hereafter acquired Accounts, all products and proceeds
thereof, and all books, records, ledger cards, files, correspondence, and
computer files, tapes, disks or software that at any time evidence or contain
information relating to such Person's Accounts.
"Record Date" means a Record Date specified in the Notes regardless of
whether such Record Date is a Business Day.
"Redemption Date" means, when used with respect to any Note to be
redeemed, the date fixed for such redemption pursuant to this Indenture and
Paragraph 5 in the form of Note attached hereto as Exhibit A.
"Redemption Price" when used with respect to any Note to be redeemed,
means the redemption price for such redemption pursuant to Paragraph 5 in the
form of Note attached hereto as Exhibit A, which shall include, without
duplication, accrued and unpaid interest to the Redemption Date.
"Reference Period" with regard to any Person means the four full fiscal
quarters of such Person ended on or immediately preceding any date upon which
any determination is to be made pursuant to the terms of the Notes or the
Indenture.
"Refinancing Debt" shall have the meaning specified in Section 4.11(g).
"Registrar" shall have the meaning specified in Section 2.3.
"Registration Rights Agreement" means the Registration Rights Agreement
dated [______________], by and among [__________________________________].
"Related Business" means (i) the exploration for, acquisition of,
development of, production, transportation, gathering, and processing (in
connection with natural gas and natural gas liquids only) of, crude oil, natural
gas, condensate, and natural gas liquids; provided, however, that the Related
Business shall not include any refining or distilling of Hydrocarbons other than
processing and fractionating natural gas and natural gas liquids, (ii) the
drilling and energy services business and pipeline services business, (iii)
owning and operating a Hedging Subsidiary, or (iv) owning or operating
facilities designed for separation, dehydration, treatment, stabilization,
processing or storage of Hydrocarbons and related operations.
"Release Request" means a written request of the Company (or with
respect to the Security Documents, the grantor of the Security Interest
thereunder) in the form of an Officers' Certificate delivered pursuant to
Article XII.
"Reserve Report" means a report prepared by independent petroleum
engineers with respect to Hydrocarbon reserves in accordance with guidelines
published by the SEC.
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<PAGE> 25
"Restricted Investment" means any direct or indirect Investment by the
Company or any Subsidiary of the Company other than a Permitted Investment.
"Restricted Payment" means, 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 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 a Person solely in shares of
Qualified Capital Stock of such Person 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 defeasance, redemption, repurchase or other acquisition or
retirement for value of Capital Stock of a Person payable in or from any
combination of (A) shares of Qualified Capital Stock of such Person and (B) the
Net Proceeds of a concurrent sale of Qualified Capital Stock of such Person, in
each case to the extent such Qualified Capital Stock is at least as junior in
ranking as the Capital Stock retired, (iii) any dividends made pursuant to the
certificates of designation of the Senior Preferred Stock and the Junior
Preferred Stock, (iv) any dividend, distribution, or other payment to the
Company from any of its Subsidiaries, (v) any defeasance, redemption,
repurchase, or other acquisition or retirement for value, in whole or in part,
of any Subordinated Debt of such Person payable in or from any combination of
(A) shares of Qualified Capital Stock of such Person and (B) the Net Proceeds of
a concurrent sale of Qualified Capital Stock, or both, (vi) any payments or
distributions made pursuant to and in accordance with the Plan, or (vii) 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(g).
"Revolving Credit Facility" means any revolving credit facility between
the Company, on the one hand, and any one or more banks or other lenders, on the
other hand.
"Royalty Payment Obligations" means (i) royalties, overriding royalties
(including those granted in connection with Drilling Programs), revenue
interests, net revenue interests, net profit interests, and reversionary
interests, (ii) the interests of others in pooling or unitization agreements,
production sales contracts and operating agreements, (iii) Liens arising under,
in connection with or related to farm-out, farm-in, joint operating, pooling,
unitization or area of mutual interest agreements or other similar or customary
arrangements, agreements or interests, and (iv) similar burdens on the property
of the Company or any Subsidiary of the Company; each as incurred in the
ordinary course of business and to the extent such burdens are limited in
recourse to (x) the properties subject to such interests or agreements, (y) the
Hydrocarbons produced from such properties, and (z) the proceeds of such
Hydrocarbons.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"Sale and Leaseback Transaction" means an arrangement relating to
property owned on the Issue Date or thereafter acquired whereby the Company or a
Subsidiary of the Company transfers such property to a Person and leases it back
from such Person.
"SEC" means the Securities and Exchange Commission.
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"SEC PV10" means the standardized measure of future net cash flows
discounted at 10%, determined in all material respects in accordance with the
rules and regulations of the SEC, including the assumption of the continuation
of existing economic conditions and estimated by applying period-end gas and
condensate prices, adjusted for future price changes as allowed by contract, to
estimated future production of period-end proved reserves.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Security Agreement" means each security agreement, pledge agreement,
assignment, financing statement or similar document, however styled, executed by
the Company and/or any one or more of the Guarantors, or any other Person, for
the benefit of the Holders primarily for the purpose of creating or granting a
Lien on personal property (other than [EQUIPMENT,] Inventory and Receivables),
which shall be excepted from the Lien thereof) to secure all or any part of (a)
the obligations of the Company pursuant to this Indenture, any one or more of
the Security Documents, and/or the Notes, and/or (b) the obligations of such
Guarantor under its Guarantee.
"Security Documents" means [(A)] each Mortgage, each Security
Agreement, and each other agreement relating to the mortgage, pledge or
assignment of assets to secure all or any part of (i) the obligations of the
Company pursuant to this Indenture, any one or more of the Security Documents,
and/or the Notes, and/or (ii) the obligations of a Guarantor under its
Guarantee, whether executed before, on or after the Issue Date [, AND (B) EACH
INTERCREDITOR AGREEMENT].
"Security Interests" means the Liens on the Collateral created by the
Security Documents in favor of the Trustee for the benefit of the Holders.
"Senior Debt" means, with respect to any Person, any Debt that is not
Subordinated Debt.
"Senior Preferred Stock" means the Company's senior preferred stock,
$1.00 par value.
"Services Agreement" means the Services Agreement among TNGC Holdings
and its Subsidiaries, as in effect on the Issue Date.
"Shared Collateral" means the Collateral securing the Notes and the
Extended DIP Facility and/or the Post Confirmation Credit Facility.
"Special Record Date" for payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity," when used with respect to any Note, means
[_________________].
"Subordinated Debt" means Debt that (i) requires no payment of
principal prior to or on the date on which all principal of and interest on the
Notes is paid in full, and (ii) is subordinate and junior in right of payment to
the Notes in the event of a liquidation.
"Subordination Agreement" means each instrument of subordination
executed and delivered or to be executed and delivered by the Trustee (and any
trustee or collateral agent under or with respect to any of the Security
Documents) pursuant to Section 12.2(b).
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"Subordination Request" means a written request of the Company (or with
respect to the Security Documents, the grantor of the Security Interest
thereunder) in the form of an Officers' Certificate delivered pursuant to
Section 12.2(b).
"Subsidiary" with respect to any Person, means (i) a corporation with
respect to which such Person or its Subsidiaries owns, directly or indirectly,
at least fifty percent of such corporation's Capital Stock with voting power,
under ordinary circumstances, to elect directors, 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 a majority of the directors or other governing body of such other
Person; provided, however, that a joint venture an investment in which would
constitute a Permitted Investment under clause (ix) of the definition thereof.
"Substitute Collateral" means property that is substituted for
Collateral in accordance with Section 12.6.
"Surviving Person" shall have the meaning specified in Section 5.1(a).
"Swap Obligation" of any Person means 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.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of the execution of this Indenture.
"TNGC" means TNGC Holdings Corporation, a Delaware corporation.
["TRANSAMERICAN" MEANS TRANSAMERICAN NATURAL GAS CORPORATION, A TEXAS
CORPORATION.]
"Trust Officer" means any officer within the corporate trust department
(or any successor group) of the Trustee including any vice president, assistant
vice president, secretary, assistant secretary or any other officer or assistant
officer of the Trustee customarily performing functions similar to those
performed by the Persons who at that time shall be such officers, and also
means, with respect to a particular corporate trust matter, any other officer of
the corporate trust department (or any successor group) of the Trustee to whom
such trust matter is referred because of his knowledge of and familiarity with
the particular subject.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"U.S.C." means the United States Code, as amended.
"U.S. Government Obligations" means direct non-callable obligations of,
or non-callable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
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"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Vehicles" means all trucks, automobiles, trailers and other vehicles
covered by a certificate of title.
"Volumetric Production Payments" means production payment obligations
recorded as deferred revenue in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Voting Stock" means Capital Stock of a Person having generally the
right to vote in the election of directors of such Person.
"Weighted Average Life" means, as of the date of determination, with
respect to any debt instrument, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such debt instrument
multiplied by the amount of such principal payment by (ii) the sum of all such
principal payments.
Section 1.2 Incorporation by Reference of TIA. Whenever this Indenture
refers to a provision of the TIA, such provision is incorporated by reference in
and made a part of this Indenture. The following TIA terms used in this
Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture securityholder" means a Holder or a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the Notes means the Company and any other obligor on the
Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
Section 1.3 Rules of Construction. Unless the context otherwise
requires:
(l) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words
in the plural include the singular;
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(5) provisions apply to successive events and
transactions;
(6) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(7) references to Sections or Articles means reference to
such Section or Article in this Indenture, unless
stated otherwise.
ARTICLE II
THE NOTES
Section 2.1 Form and Dating. The Notes and the Trustee's certificate of
authentication, in respect thereof, shall be substantially in the form of
Exhibit A, the terms of which are incorporated in and made a part of this
Indenture. The Notes may have notations, legends or endorsements required by
law, stock exchange rule or usage. The Company and the Trustee shall approve the
form of the Notes and any notation, legend or endorsement on them. Any such
notations, legends or endorsements not contained in the form of Note attached as
Exhibit A hereto shall be delivered in writing to the Trustee. Each Note shall
be dated the date of its authentication.
The terms and provisions contained in the form of Note shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby. In the event of any inconsistency between the Notes and this Indenture,
this Indenture controls.
Section 2.2 Execution and Authentication. Two Officers shall sign, or
one Officer shall sign and one Officer or any Assistant Secretary shall attest
to, the Notes for the Company by manual or facsimile signature. The Company's
seal shall be impressed, affixed, imprinted or reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note was an Officer at the time
of such execution but no longer holds that office at the time the Trustee
authenticates the Note, the Note shall be valid nevertheless and the Company
shall nevertheless be bound by the terms of the Notes and this Indenture.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note but such signature
shall be conclusive evidence that the Note has been authenticated pursuant to
the terms of this Indenture.
The Trustee shall authenticate Notes for original issue in the
aggregate principal amount of up to $200,000,000 upon a written order of the
Company in the form of an Officers' Certificate. The Officers' Certificate shall
specify the amount of Notes to be authenticated and the date on which the Notes
are to be authenticated. The aggregate principal amount of Notes outstanding at
any time may not exceed $200,000,000, except as provided in Section 2.7. Upon
the written order of the Company in the form of an Officers' Certificate, the
Trustee shall authenticate Notes in substitution of Notes originally issued to
reflect any name change of the Company.
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The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Notes. Unless otherwise provided in the appointment, an
authenticating agent may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company, any Guarantor, or any of their respective
Subsidiaries.
Notes shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
Section 2.3 Registrar and Paying Agent. The Company shall maintain an
office or agency in the Borough of Manhattan in the City of New York, New York,
where Notes may be presented for registration of transfer or for exchange
("Registrar") and an office or agency in the Borough of Manhattan in the City of
New York, New York, where Notes may be presented for payment ("Paying Agent").
Notices and demands to or upon the Company in respect of the Notes may be served
as is provided in Section 14.2. The Company or any Affiliate of the Company may
act as Registrar or Paying Agent, except that, for the purposes of Articles III,
VIII and XI and Sections 4.14 and 4.16, neither the Company, any Guarantor, nor
any Affiliate of the Company shall act as Paying Agent. The Registrar shall keep
a register of the Notes and of their transfer and exchange. The Company may have
one or more co-Registrars and one or more additional Paying Agents. The term
"Paying Agent" includes any additional Paying Agent. The Company hereby
initially appoints the Trustee as Registrar and Paying Agent, and the Trustee
hereby initially agrees so to act.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
notify the Trustee in writing in advance of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee
shall act as such.
Section 2.4 Paying Agent to Hold Assets in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that each
Paying Agent shall hold in trust for the benefit of Holders or the Trustee all
assets held by the Paying Agent for the payment of principal of, or interest on,
the Notes (whether such assets have been distributed to it by the Company or any
other obligor on the Notes), and shall notify the Trustee in writing of any
Default in making any such payment. If the Company or any Affiliate of the
Company acts as Paying Agent, it shall segregate such assets and hold them as a
separate trust fund for the benefit of the Holders or the Trustee. The Company
at any time may require a Paying Agent to distribute all assets held by it to
the Trustee and account for any assets disbursed and the Trustee may at any time
during the continuance of any payment Default, upon written request to a Paying
Agent, require such Paying Agent to distribute all assets held by it to the
Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Company to the
Paying Agent, the Paying Agent (if other than the Company, or any Affiliate of
the Company) shall have no further liability for such assets.
Section 2.5 Noteholder Lists. The Trustee shall preserve in as current
a form as is reasonably practicable the most recent list available to it of the
names and addresses of Holders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee on or before the third Business Day preceding each
Interest Payment Date and at such other times as the Trustee may request in
writing a list in such form and as of such date as the Trustee reasonably may
require of the names and addresses of Holders.
Section 2.6 Transfer and Exchange. When Notes are presented by a Holder
to the Registrar with a request to register the transfer of the Notes or to
exchange such Notes for an equal principal amount of Notes of other authorized
denominations, the Registrar shall register the transfer or make the exchange as
requested
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<PAGE> 31
if its requirements for such transactions are met; provided, however, that the
Notes so presented have been duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed by
such Holder or by his attorney, duly authorized in writing. The signature of the
Holder or his duly authorized attorney must be guaranteed by a participant in
the Securities Transfer Agents Medallion Program, the Stock Exchanges Medallion
Program or the New York Stock Exchange Inc. Medallion Signature Program. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Notes at the Registrar's request. All Notes
issued upon any registration of transfer or exchange of Notes shall be legal,
valid and binding obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
No service charge shall be made to a Holder for any registration of
transfer or exchange, but the Company or the Trustee may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange (without transfer to another Person)
pursuant to Sections [2.10, 3.7, 4.14, [9.5], AND ARTICLE XI] of this
Indenture).
The Company shall not be required (i) to issue, register the transfer
of or exchange Notes during a period beginning at the opening of business 15
days before the day of any selection of Notes for redemption under Section 3.2
hereof and ending at the close of business on the day of selection, (ii) to
register the transfer of or exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being redeemed in
part, or (iii) to register the transfer of or exchange a Note between a record
date and the next succeeding interest payment date.
Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for all
purposes, and neither the Trustee, any Agent nor the Company shall be affected
by notice to the contrary.
Section 2.7 Replacement Notes. If a mutilated Note is surrendered to
the Trustee or if the Holder of a Note claims and submits an affidavit or other
evidence, satisfactory to the Company and the Trustee, to the Trustee to the
effect that the Note has been lost, destroyed or wrongfully taken, the Company
shall issue and the Trustee shall authenticate a replacement Note if the
Trustee's requirements are met. If required by the Trustee or the Company, such
Holder must provide an indemnity bond or other indemnity, sufficient in the
judgment of both the Company and the Trustee, to protect the Company, the
Trustee or any Agent from any loss which any of them may suffer if a Note is
replaced. The Company and the Trustee may charge such Holder for its reasonable,
out-of-pocket expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company.
Section 2.8 Outstanding Notes. Notes outstanding at any time are all
the Notes that have been authenticated by the Trustee except those canceled by
it, those delivered to it for cancellation, and those described in this Section
2.8 as not outstanding. A Note does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Note, except as provided in
Section 2.9.
If a Note is replaced pursuant to Section 2.7 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of
such Note and replacement thereof pursuant to Section 2.7.
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If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of the Company) holds U.S. Legal Tender or U.S.
Government Obligations sufficient to pay all of the principal and interest due
on the Notes payable on that date, then on and after that date such Notes cease
to be outstanding and interest on them ceases to accrue.
Section 2.9 Treasury Notes. In determining whether the Holders of the
required principal amount of Notes have concurred in any direction, amendment,
supplement, waiver or consent, Notes owned by the Company and Affiliates of the
Company shall be disregarded, except that, for the purposes of determining
whether the Trustee shall be protected in relying on any such direction,
amendment, supplement, waiver or consent, only Notes that the Trustee knows or
has reason to know are so owned shall be disregarded.
Section 2.10 Temporary Notes. Until definitive Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate temporary
Notes. Temporary Notes shall be substantially in the form of definitive Notes
but may have variations that the Company reasonably and in good faith considers
appropriate for temporary Notes. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate definitive Notes in exchange for
temporary Notes. Until so exchanged, the temporary Notes shall in all respects
be entitled to the same benefits under this Indenture as permanent Notes
authenticated and delivered hereunder.
Section 2.11 Cancellation. The Company at any time may deliver Notes to
the Trustee for cancellation. The Registrar and the Paying Agent shall forward
to the Trustee any Notes surrendered to them for transfer, exchange or payment.
The Trustee, or at the direction of the Trustee, the Registrar or the Paying
Agent (other than the Company or any Affiliate of the Company), and no one else,
shall cancel and, at the written direction of the Company, shall dispose of all
Notes surrendered for transfer, exchange, payment or cancellation. Subject to
Section 2.7, the Company may not issue new Notes to replace Notes it has paid or
delivered to the Trustee for cancellation. No Notes shall be authenticated in
lieu of or in exchange for any Notes cancelled as provided in this Section 2.11,
except as expressly permitted in the form of Note and as permitted by this
Indenture.
Section 2.12 Defaulted Interest. Interest on any outstanding Note which
is payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Note (or one or more
predecessor Notes) is registered at the close of business on the Record Date for
such interest.
Any interest on any outstanding Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date plus, to the
extent lawful, any interest payable on the defaulted interest (herein called
"Defaulted Interest") shall forthwith cease to be payable to the registered
Holder on the relevant Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Notes (or their respective
predecessor Notes) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the Trustee in
writing of the amount of Defaulted Interest proposed to be paid on each
Note and the date of the proposed payment, and at the same time the
Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as provided in this clause (1). Thereupon
the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which
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shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to each
Holder at his address set forth upon the registry books of the Company
on the 10th day prior to such Special Record Date. The Trustee may, in
its discretion, in the name and at the expense of the Company, cause a
similar notice to be published at least once in a newspaper,
customarily published in the English language on each Business Day and
of general circulation in the Borough of Manhattan, the City of New
York, but such publication shall not be a condition precedent to the
establishment of such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid
to the Persons in whose names the Notes (or their respective
predecessor Notes) are registered on such Special Record Date and shall
no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this
clause accompanied by an Opinion of Counsel stating that the manner of
payment complies with this clause, such manner shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Note shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Note.
Section 2.13 Computation of Interest. Interest on the Notes will be
computed on the basis of a 360-day year consisting of twelve 30-day months.
ARTICLE III
REDEMPTION
Section 3.1 Right of Redemption. Redemption of Notes, as permitted or
required by any provision of this Indenture, shall be made in accordance with
such provision and this Article III. The Notes may be redeemed at the election
of the Company, as a whole or from time to time in part, at any time on or after
the Issue Date, at the applicable Redemption Prices specified in Paragraph 5 of
the form of Note attached as Exhibit A hereto, set forth therein under the
caption "Optional Redemption," in each case, including accrued and unpaid
interest to the Redemption Date.
Section 3.2 Notices to Trustee. If the Company elects to redeem Notes
pursuant to Paragraph 5 of the Notes, it shall notify the Trustee in writing of
the Redemption Date and the principal amount of Notes to be redeemed and whether
it wants the Trustee to give notice of redemption to the Holders.
The Company shall give each notice to the Trustee provided for in this
Section 3.2 at least 30 days before the Redemption Date (unless a shorter notice
shall be satisfactory to the Trustee).
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Section 3.3 Selection of Notes to Be Redeemed. If less than all of the
Notes are to be redeemed pursuant to Paragraph 5 thereof, the Trustee shall
select the Notes to be redeemed pro rata, by lot or in such other manner as in
its sole discretion it deems appropriate and fair, and in such manner as
complies with any applicable legal and stock exchange requirements.
The Trustee shall make the selection from the Notes outstanding and not
previously called for redemption and shall promptly notify the Company in
writing of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the principal amount thereof to be redeemed.
Notes in denominations of $1,000 may be redeemed only in whole. The Trustee may
select for redemption portions (equal to $1,000 or any integral multiple
thereof) of the principal of Notes that have denominations larger than $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.4 Notice of Redemption. At least 30 days but not more than 60
days before a Redemption Date, the Company shall mail a notice of redemption by
first class mail, postage prepaid, to the Trustee and each Holder whose Notes
are to be redeemed. At the Company's request, the Trustee shall give the notice
of redemption in the Company's name and at the Company's expense. Each notice of
redemption shall identify the Notes to be redeemed and shall state the following
and such other matters as the Trustee shall deem proper:
(1) the Redemption Date;
(2) the Redemption Price, including the amount of accrued
and unpaid interest to be paid upon such redemption;
(3) the name, address and telephone number of the Paying
Agent;
(4) that Notes called for redemption must be surrendered
to the Paying Agent at the address specified in such
notice to collect the Redemption Price;
(5) that, unless the Company defaults in its obligation
to deposit U.S. Legal Tender with the Paying Agent in
accordance with Section 3.6, interest on Notes called
for redemption ceases to accrue on and after the
Redemption Date and the only remaining right of the
Holders of such Notes is to receive payment of the
Redemption Price, including accrued and unpaid
interest, upon surrender to the Paying Agent of the
Notes called for redemption and to be redeemed;
(6) if any Note is being redeemed in part, the portion of
the principal amount, equal to $1,000 or any integral
multiple thereof, of such Note that will not be
redeemed and that, after the Redemption Date and upon
surrender of such Note, a new Note or Notes in
aggregate principal amount equal to the unredeemed
portion thereof will be issued;
(7) if less than all the Notes are to be redeemed, the
identification of the particular Notes (or portion
thereof) to be redeemed, as well as the aggregate
principal amount of such Notes to be redeemed and the
aggregate principal amount of Notes to be outstanding
after such partial redemption;
(8) the CUSIP number of the Notes to be redeemed; and
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(9) that the notice is being sent pursuant to this
Section 3.4 and pursuant to the redemption provisions
of Paragraph 5 of the Notes.
Section 3.5 Effect of Notice of Redemption. Once notice of redemption
is mailed in accordance with Section 3.4, Notes called for redemption become due
and payable on the Redemption Date and at the Redemption Price, including
accrued and unpaid interest. Upon surrender to the Trustee or Paying Agent, such
Notes called for redemption shall be paid at the Redemption Price, including
interest, if any, accrued and unpaid on the Redemption Date; provided, however,
that if the Redemption Date is after a regular Record Date and on or prior to
the Interest Payment Date, the accrued interest through the date of redemption
shall be payable to the Holder of the redeemed Notes registered on the relevant
Record Date; and provided, further, that if a Redemption Date is a Legal
Holiday, payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
Upon compliance by the Company with the provisions of this Article III,
including but not limited to Section 3.6, interest on the Notes called for
redemption will cease to accrue on and after the Redemption Date, regardless of
whether such Notes are presented for payment.
Section 3.6 Deposit of Redemption Price. On or prior to the Redemption
Date, the Company shall deposit with the Paying Agent (other than the Company or
an Affiliate of the Company) U.S. Legal Tender sufficient to pay the Redemption
Price of, including accrued and unpaid interest on, all Notes to be redeemed on
such Redemption Date (other than Notes or portions thereof called for redemption
on that date that have been delivered by the Company to the Trustee for
cancellation). The Paying Agent shall promptly return to the Company any U.S.
Legal Tender so deposited which is not required for that purpose upon the
written request of the Company.
If the Company complies with the preceding paragraph and the other
provisions of this Article III, interest on the Notes to be redeemed will cease
to accrue on the applicable Redemption Date, regardless of whether such Notes
are presented for payment. Notwithstanding anything herein to the contrary, if
any Note surrendered for redemption in the manner provided in the Notes shall
not be so paid upon surrender for redemption because of the failure of the
Company to comply with the preceding paragraph, interest shall continue to
accrue and be paid from the Redemption Date until such payment is made on the
unpaid principal and, to the extent lawful, on any interest not paid on such
unpaid principal, in each case at the rate and in the manner provided in Section
4.1 and the Note.
Section 3.7 Notes Redeemed in Part. Upon surrender of a Note that is to
be redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder, without service charge, a new Note or
Notes equal in principal amount to the unredeemed portion of the Note
surrendered.
ARTICLE IV
COVENANTS
Section 4.1 Payment of Notes. The Company shall pay the principal of
and interest on the outstanding Notes on the dates and in the manner provided in
the Notes to the Trustee at its New York agent's office unless otherwise
instructed in writing by the Trustee. An installment of principal of or interest
on the Notes shall be considered paid on the date it is due if the Trustee or
Paying Agent (other than the Company or an Affiliate of the Company) holds for
the benefit of the Holders, on or before 12:00 noon, New York, New York time on
that
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date, U.S. Legal Tender deposited and designated for and sufficient to pay the
installment. The Company shall pay any and all amounts, including without
limitation, liquidated damages, if any, on the dates and in the manner required
under the Registration Rights Agreement.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Notes compounded
semi-annually, to the extent lawful.
Notwithstanding anything to the contrary contained in this Indenture,
the Company or the Trustee may, to the extent required by law, deduct or
withhold income or other similar taxes imposed by the United States of America
from principal, premium or interest payments on the Notes.
Section 4.2 Maintenance of Office or Agency. The Company shall maintain
in the Borough of Manhattan in the City of New York, New York, an office or
agency where Notes may be presented or surrendered for payment, where Notes may
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 14.2.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan in the City of New York, New York, for such purposes. The Company
shall give prior written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
The Company hereby initially designates the corporate trust office of the
Trustee in the Borough of Manhattan in the City of New York, New York, as such
office of the Company.
Section 4.3 Limitation on Restricted Payments. The Company shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly, make
any Restricted Payment.
Section 4.4 Corporate Existence. Subject to Article V, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate or other existence of
each of its Subsidiaries in accordance with the respective organizational
documents of each of them and the rights (charter and statutory) and corporate
franchises of the Company and each of its Subsidiaries; provided, however, that
the Company shall not be required to preserve, with respect to itself, any right
or franchise, and with respect to any of its Subsidiaries, any such existence,
right or franchise, if (a) the Board of Directors of the Company shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and (b) the loss thereof is not disadvantageous in any
material respect to the Holders.
Section 4.5 Payment of Taxes and Other Claims. The Company shall, and
shall cause each of its Subsidiaries to, pay or discharge or cause to be paid or
discharged, before the same shall become delinquent all taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon the Company or any of its
Subsidiaries or any of their respective properties and assets; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment or charge whose amount,
applicability or validity is being
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contested in good faith by appropriate proceedings and for which disputed
amounts adequate reserves have been established in accordance with GAAP.
Section 4.6 Maintenance of Properties and Insurance.
(a) Each of the Company and its Subsidiaries shall cause the properties
used or useful to the conduct of its business and the business of each of its
Subsidiaries to be maintained and kept in good condition, repair and working
order (reasonable wear and tear excepted) and supplied with all necessary
equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in its reasonable
judgment may be necessary, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
(b) Each of the Company and its Subsidiaries shall provide, or shall
cause to be provided, for itself and each of its Subsidiaries, insurance
(including appropriate self-insurance) against loss or damage of the kinds that,
in its reasonable, good faith opinion, are adequate and appropriate for the
conduct of its business and the business of such Subsidiaries in a prudent
manner, with reputable insurers or with the government of the United States of
America or an agency or instrumentality thereof, in such amounts, with such
deductibles, and by such methods as is customary, in its reasonable, good faith
opinion, and adequate and appropriate for the conduct of its business and the
business of its Subsidiaries in a prudent manner for companies engaged in a
similar business. In addition, all such insurance shall be payable to the
Trustee as loss payee, as its interests may appear, under a "standard" or
"Texas" loss payee clause. Without limiting the foregoing, each of the Company
and its Subsidiaries shall (i) keep all of its physical property insured with
hazard insurance on an "all risks" basis, with broad form flood and earthquake
coverages, with a full replacement cost endorsement and an "agreed amount"
clause in an amount equal to 100% of the full replacement cost of such property,
(ii) maintain all such workers' compensation or similar insurance as may be
required by law, and (iii) maintain, in amounts and with deductibles equal to
those generally maintained by businesses engaged in similar activities in
similar geographic areas, general public liability insurance against claims of
bodily injury, death or property damage occurring on, in or about the properties
of the Company and its Subsidiaries.
All policies of insurance shall provide for at least ten days' prior
written cancellation notice to the Trustee. In the event of failure by the
Company and its Subsidiaries to provide and maintain insurance as described
herein; provided, however, the Trustee may, at its option, provide such
insurance and charge the amount thereof to the Company and its Subsidiaries. The
Company and its Subsidiaries shall furnish the Trustee with certificates of
insurance and policies evidencing compliance with the foregoing insurance
provision.
Section 4.7 Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee within 60 days after the
end of each of its fiscal quarters, or 105 days after the end of a fiscal
quarter that is also the end of a fiscal year, an Officers' Certificate
complying with Section 314(a)(4) of the TIA and stating that a review of its
activities and the activities of its Subsidiaries during the preceding fiscal
quarter has been made under the supervision of the signing Officers with a view
to determining whether the Company and its Subsidiaries have kept, observed,
performed and fulfilled its obligations (excluding those obligations addressed
by Section 12.3) under this Indenture and further stating, as to each such
Officer signing such certificate, regardless of whether the signer knows of any
failure by the Company or any Subsidiary of the Company to comply with any
conditions or covenants in this Indenture, or of the occurrence of any Default,
and, if such signer does know of such a failure to comply or Default, the
certificate shall describe such failure or Default with particularity.
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(b) The Company shall deliver to the Trustee within 105 days after the
end of each of its fiscal years a written report of a firm of independent
certified public accountants with an established national reputation stating
that in conducting their audit for such fiscal year, nothing has come to their
attention that caused them to believe that the Company or any Subsidiary of the
Company was not in compliance with the provisions set forth in Section 4.3,
4.11, 4.14 or 4.16.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, immediately upon becoming aware of any Default or Event
of Default under this Indenture, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto. The Trustee shall not be deemed to have knowledge of
a Default or an Event of Default unless one of its trust officers receives
notice of the Default giving rise thereto from the Company or any of the
Holders.
(d) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, promptly after the occurrence thereof, an Officers'
Certificate informing the Trustee in reasonable detail of (i) any change in the
composition of the Board of Directors of the Company or any of its Subsidiaries,
and/or (ii) any amendment to the charter or bylaws of the Company or any of its
Subsidiaries.
Section 4.8 SEC Reports and TIA Compliance. Whether or not the Company
is subject to the reporting requirements of Section 13 or Section 15(d) of the
Exchange Act, the Company shall deliver to the Trustee and each Holder, within
15 days after it is or would have been (if the Company were subject to such
reporting requirements) required to file such with the SEC, annual and quarterly
financial statements substantially equivalent to financial statements that would
have been included in the reports filed with the SEC if the Company were subject
to the reporting requirements of Section 13 or Section 15(d) of the Exchange
Act, including, with respect to annual information only, a report thereon by the
Company's independent certified public accountants as such would be required in
such reports to the SEC, and, in each case, together with a management's
discussion and analysis of financial condition and results of operations which
would be so required and, unless the SEC will not accept such reports, file with
the SEC the annual, quarterly and other reports which it is or would have (if it
were subject to such reporting obligations) been required to file with the SEC.
The Company shall also comply with the other provisions of TIA Section 314(a).
Section 4.9 Limitation on Status as Investment Company or Public
Utility Company. The Company shall not, and shall not permit any of its
Subsidiaries to, become an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or a "holding company," or "public
utility company" (as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended) or otherwise become subject to regulation under
the Investment Company Act or the Public Utility Holding Company Act.
Section 4.10 Limitation on Transactions with Affiliates.
(a) The Company shall not, and shall not permit any of its Subsidiaries
to, enter directly or indirectly into, or permit to exist, any transaction or
series of related transactions with any Affiliate (including, without
limitation: (i) the sale, lease, transfer or other disposition of properties,
assets or securities to such Affiliate, (ii) the purchase or lease of any
property, assets or securities from such Affiliate (iii) an Investment in such
Affiliate and (iv) entering into or amending any contract or agreement with or
for the benefit of an Affiliate (each, an "Affiliate Transaction")), except for
(A) transactions made in good faith, the terms of which are (x) fair and
reasonable to the Company or such Subsidiary, as the case may be, (y) at least
as favorable as the terms which could be obtained by the Company or such
Subsidiary, as the case may be, in a comparable transaction made on an arm's
length basis with Persons who are not Affiliates and (z) such transaction must
first
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be unanimously approved by the Board of Directors of the Company or its
Subsidiary which is the transacting party pursuant to a Board Resolution, as
fair and reasonable to the Company or such Subsidiary, as the case may be, and
on terms which are at least as favorable as the terms which could be obtained by
the Company or such Subsidiary, as the case may be, on an arm's length basis
with Persons who are not Affiliates, (B) transactions between the Company and
any of its Wholly Owned Subsidiaries or transactions between Wholly Owned
Subsidiaries of the Company, (C) transactions pursuant to the Notes, the
Security Documents, the Services Agreement and the Registration Rights
Agreements, in each case, as amended, and (D) any employee compensation
arrangement or ordinary course expense advance.
(b) Without limiting the foregoing provisions of Section 4.10(a), with
respect to any Affiliate Transaction or series of Affiliate Transactions (other
than any Affiliate Transaction described clauses (B), (C), or (D) of Section
4.10(a)) with an aggregate value in excess of $5 million, the Company must first
obtain a favorable written opinion as to the fairness of such transaction to the
Company or such Subsidiary, as the case may be, from a financial point of view,
from a nationally recognized investment banking or "big 5" accounting firm.
Section 4.11 Limitation on Incurrences of Additional Debt and Issuances
of Disqualified Capital Stock. Except as set forth in this Section 4.11, from
and after the Issue Date, the Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee, or
otherwise become liable for, contingently or otherwise (to "Incur" or, as
appropriate, an "Incurrence"), any Debt or issue any Disqualified Capital Stock,
except:
(a) Debt evidenced by the Notes or the Guarantees;
(b) Subordinated Debt of the Company solely to any wholly owned
Subsidiary of the Company, or Debt of any wholly owned Subsidiary of the Company
solely to the Company or to any wholly owned Subsidiary of the Company;
provided, however, that if any Subsidiary holding such Debt, for any reason, is
no longer deemed a Subsidiary of the Company, any outstanding Debt Incurred by
the Company or another Subsidiary pursuant to this Section 4.11(b) shall
constitute a new Incurrence of Debt and be subject to the restrictions of
Section 4.11.
(c) Debt outstanding under a Revolving Credit Facility in an aggregate
principal amount at any one time not to exceed the Borrowing Base, plus any
amount outstanding under the Revolving Credit Facility to the extent incurred
pursuant to Section 4.11(k);
(d) Debt in an aggregate principal amount outstanding not to exceed at
any one time $125 million, provided, however, that the aggregate principal
amount outstanding under the Extended DIP Facility and/or the Post Confirmation
Credit Facility shall not exceed $52.5 million, plus any amount outstanding
under the Post Confirmation Credit Facility to the extent incurred pursuant to
Section 4.11(k);
(e) Debt of the Company secured by a Permitted Lien that meets the
requirements of clause (c), (d), or (e) of the definition of "Permitted Liens"
set forth in Section 1.1;
(f) any guaranty of Debt permitted by clauses (c), (d), or (k) hereof,
which guaranty shall not be included in the determination of the amount of Debt
which may be incurred pursuant to (c), (d), or (k) hereof;
(g) The Company may Incur Debt as an extension, renewal, replacement,
or refunding of any item of the Debt permitted to be incurred by Section
4.11[k], Debt existing on the Issue Date (other than the Extended DIP Facility
or the Post Confirmation Credit Facility) or this Section 4.11(g) (each such
item of Debt is referred
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to as "Refinancing Debt"), provided, however, that (1) the maximum principal
amount of each item of Refinancing Debt (or, if such item of Refinancing Debt is
issued with original issue discount, the original issue price of such item of
Refinancing Debt) permitted under this clause (g) may not exceed the lesser of
(x) the principal amount of the item of Debt being extended, renewed, replaced,
or refunded plus reasonable financing fees and other associated reasonable
out-of-pocket expenses including consent payments, premium, if any, and related
fees, in each case other than those paid to a Affiliate (collectively,
"Refinancing Fees"), or (y) if such item of Debt being extended, renewed,
replaced, or refunded was issued at an original issue discount, the original
issue price, plus amortization of the original issue discount as of the time of
the Incurrence of such item of Refinancing Debt plus Refinancing Fees, (2) each
item of Refinancing Debt has a Weighted Average Life and a final maturity that
is equal to or greater than the related Debt being extended, renewed, replaced,
or refunded at the time of such extension, renewal, replacement, or refunding,
and (3) each item of Refinancing Debt shall rank with respect to the Notes to an
extent no less favorable in respect thereof to the Holders than the related Debt
being refinanced;
(h) Debt represented by trade payables or accrued expenses, in each
case incurred on normal, customary terms in the ordinary course of business, not
overdue for a period of more than 45 days (or, if overdue for a period of more
than 45 days, being contested in good faith and by appropriate proceedings and
adequate reserves with respect thereto being maintained on the books of Trans
Texas in accordance with GAAP) and not constituting any amounts due to banks or
other financial institutions;
(i) Swap Obligations of the Company;
(j) [intentionally omitted]
(k) Debt of the Company to prepetition secured creditors in classes 2,
5, 6A or 6B under the Plan, or surety bonds, letters of credit or reimbursement
obligations related to or constituting collateral securing the Company's
obligations thereunder;
(l) the Company may enter into an agreement for the Presale of Gas for
cash if the net proceeds from such sale are used to make a Note Redemption;
(m) letters of credit and reimbursement obligations relating thereto to
the extent collateralized by cash or Cash Equivalents; and
(n) [intentionally omitted]
Debt incurred and Disqualified Capital Stock issued by any Person that
is not a Subsidiary of the Company, which Debt or Disqualified Capital Stock is
outstanding at the time such Person becomes a Subsidiary of, or is merged into,
or consolidated with the Company or one of its Subsidiaries, as the case may be,
shall be deemed to have been incurred or issued, as the case may be, at the time
such Person becomes a Subsidiary of, or is merged into, or consolidated with the
Company or one of its Subsidiaries.
For the purpose of determining compliance with this Section 4.11, (A)
if an item of Debt meets the criteria of more than one of the types of Debt
described in the above clauses, the Company or the Subsidiary in question shall
have the right to determine in its sole discretion the category to which such
Debt applies and shall not be required to include the amount and type of such
Debt in more than one of such categories and may elect to apportion such item of
Debt between or among any two or more of such categories otherwise applicable,
and (B) the amount of any Debt which does not pay interest in cash or which was
issued at a discount to face
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value shall be deemed to be equal to the amount of the liability in respect
thereof determined in accordance with GAAP.
Section 4.12 Limitations on Restricting Subsidiary Dividends. The
Company shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, create, assume, or suffer to exist any consensual encumbrance or
restriction on the ability of any Subsidiary of the Company to pay dividends or
make other distributions on the Capital Stock of any Subsidiary of the Company,
except encumbrances and restrictions existing under this Indenture and any
agreement of a Person acquired by the Company or a Subsidiary of the Company,
which restrictions existed at the time of acquisition, were not put in place in
anticipation of such acquisition and are not applicable to any Person or
property, other than the Person or any property of the Person so acquired.
Section 4.13 Limitation on Liens. The Company shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, Incur, or suffer to
exist any Lien upon any of its respective property or assets, whether now owned
or hereafter acquired, which property or assets constitute Collateral, other
than Permitted Liens. For the purpose of determining compliance with this
Section 4.13, if a Lien meets the criteria of more than one of the types of
Permitted Liens, the Company or the Subsidiary in question shall have the right
to determine in its sole discretion the category of Permitted Lien to which such
Lien applies, shall not be required to include such Lien in more than one of
such categories, and may elect to apportion such Lien between or among any two
or more categories otherwise applicable.
Section 4.14 Limitation on Asset Sales.
(a) The Company shall not, and shall not permit any of its Subsidiaries
to, consummate an Asset Sale unless (A) an amount equal to the Net Cash Proceeds
therefrom is (i) applied to a Note Redemption, (ii) used to make cash payments
in the ordinary course of business and consistent with past practices that are
not otherwise prohibited by this Indenture, provided, however, that the
aggregate amount so used pursuant to this clause (ii) from and after the Issue
Date does not exceed $3 million (without duplication of amounts used to acquire
any Capital Assets in accordance with clause (iii) of this Section 4.14(a)
below), (iii) used for Capital Expenditures in a Related Business within 180
days after the date of such Asset Sale; or (iv) with respect to an Asset Sale by
the Company or any of its Subsidiaries resulting from (x) the damage to or
destruction of assets for which insurance proceeds are paid or (y) condemnation,
eminent domain or similar type proceedings, in each case, used for Capital
Expenditures in a Related Business within 360 days after the date of such Asset
Sale; and (B) in the case of any Asset Sale or series of related Asset Sales for
total proceeds in excess of $1 million, at least 85% of the value of the
consideration for such Asset Sale consists of cash, Cash Equivalents or Exchange
Assets, or any combination thereof.
(b) To the extent of the balance of such Net Cash Proceeds remaining
after application in accordance with Section 4.14(a), the Company shall make an
offer to the Holders to purchase Notes pursuant to and subject to the conditions
contained in this Indenture. Notwithstanding the foregoing provision of this
paragraph, the Company and its Subsidiaries shall not be required to apply any
Net Cash Proceeds in accordance with this Section 4.14(b) except to the extent
that the aggregate Net Cash Proceeds from all Asset Sales which are not applied
in accordance with Section 4.14(a) or with this Section 4.14(b) exceeds $5
million. Pending application of Net Cash Proceeds pursuant to this Section
4.14(b), such Net Cash Proceeds shall be invested in Permitted Investments.
(c) In the event of an Asset Sale that requires the purchase of Notes
pursuant to Section 4.14(b), the Company shall be required to purchase Notes
tendered pursuant to an offer by the Company for the Notes (the
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<PAGE> 42
"Repurchase Offer") at a purchase price of 100% of their principal amount
(without premium) plus accrued but unpaid interest in accordance with the
procedures (including prorating in the event of oversubscription) set forth in
Section 4.14(d). The Company shall not be required to make a Repurchase Offer to
purchase Notes pursuant to this Section 4.14 if the Net Cash Proceeds available
therefor is less than $5 million (which lesser amount shall be carried forward
for purposes of determining whether such an Offer is required with respect to
the Net Cash Proceeds from any subsequent Asset Sale).
(d) (1) Promptly, and in any event within 20 days after the Company
becomes obligated to make a Repurchase Offer, the Company shall be obligated to
deliver to the Trustee and send, by first-class mail to each Holder, a written
notice stating that the Holder may elect to have his Notes purchased by the
Company either in whole or in part (subject to prorating as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Repurchase Date") and shall contain such information
concerning the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum will
include (i) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q of the Company and any Current
Report on Form 8-K of the Company filed subsequent to such Quarterly Report,
other than Current Reports describing Asset Sales otherwise described in the
offering materials (or corresponding successor reports), (ii) a description of
material developments in the Company's. business subsequent to the date of the
latest of such Reports, (iii) if material, appropriate pro forma financial
information, and (iv) all instructions and materials necessary to tender Notes
pursuant to the Repurchase Offer, together with the information contained in
clause (3) of this Section 4.14(d).
(2) Not later than the date upon which written notice of a
Repurchase Offer is delivered to the Trustee as provided below, the Company
shall deliver to the Trustee an Officers' Certificate as to (i) the amount of
the Repurchase Offer (the "Repurchase Offer Amount") , (ii) the allocation of
the Net Cash Proceeds from the Asset Sales pursuant to which such Offer is being
made, and (iii) the compliance of such allocation with the provisions of Section
4.06(b). On such date, the Company shall also irrevocably deposit with the
Trustee or with a paying agent (or, if the Company is acting as its own paying
agent, segregate and hold in trust) in cash or Cash Equivalents, maturing on the
last day prior to the Repurchase Date or on the Repurchase Date if funds are
immediately available by opening of business, an amount equal to the Repurchase
Offer Amount to be held for payment in accordance with the provisions of this
Section 4.14. Upon the expiration of the period for which the Repurchase Offer
remains open (the "Repurchase Offer Period"), the Company shall deliver to the
Trustee for cancellation the Notes or portions thereof which have been properly
tendered to and are to be accepted by the Company. The Trustee shall, on the
Repurchase Date, mail or deliver payment to each tendering Holder in the amount
of the purchase price. In the event that the aggregate purchase price of the
Notes delivered by the Company to the Trustee is less than the Repurchase Offer
Amount applicable to the Notes so delivered, the Trustee shall deliver the
excess to the Company immediately after the expiration of the Repurchase Offer
Period for application in accordance with this Section 4.14, including, during
the period ending 180 days after such delivery, the provisions of Section
4.14(a).
(3) Holders electing to have a Note purchased shall be required to
surrender the Note, with an appropriate form duly completed, to the Company at
the address specified in the notice at least three Business Days prior to the
Repurchase Date. Holders shall be entitled to withdraw their election if the
Trustee or the Company receives not later than one Business Day prior to the
Repurchase Date, a telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Note which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Note
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purchased. If at the expiration of the Offer Period the aggregate principal
amount of Notes surrendered by Holders exceeds the Repurchase Offer Amount, the
Company shall select the Notes to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only Notes in
denominations of $1,000, or integral multiples thereof, shall be purchased).
Each Holder whose Notes are purchased only in part shall be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered by
such Holder.
(4) At the time the Company delivers Notes to the Trustee
which are to be accepted for purchase pursuant to this Section 4.14, the Company
shall also deliver to the Trustee an Officers' Certificate stating that such
Notes are to be accepted by the Company pursuant to and in accordance with the
terms of this Section 4.14. A Note shall be deemed to have been accepted for
purchase at the time the Trustee, directly or through an agent, mails or
delivers payment therefor to the surrendering Holder.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14 (e) of the Exchange Act and any other securities laws
or regulations in connection with the purchase of Notes pursuant to this Section
4.14. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section 4.14, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section 4.14 by virtue of such compliance.
(f) Notwithstanding the foregoing limitations on Asset Sales and
restrictions on and requirements for the use of Net Cash Proceeds therefrom, the
Company and its Subsidiaries, as the case may be, may at any time and from time
to time effect any of the following transactions, and the Net Cash Proceeds, if
any, realized from any of the following transactions shall not be subject to the
application requirements of Section 4.14(a) or Section 4.14(b):
(i) the Company or any Subsidiary of the Company may convey,
sell, lease, transfer, or otherwise dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Company or to a wholly
owned Subsidiary of the Company;
(ii) the Company and its Subsidiaries may engage in Asset
Sales not otherwise permitted in clauses (i) or (iii) through (vi) of
this Section 4.14(f), provided, however, that the aggregate proceeds
from all such Asset Sales and the fair market value of all assets sold
pursuant to this clause (ii) does not exceed $1 million in any
twelve-month period;
(iii) the Company and its Subsidiaries may engage in Asset
Sales incident to and resulting from a transaction expressly permitted
under Section 5.1;
(iv) the Company and its Subsidiaries may sell, assign, lease,
license, transfer, abandon or otherwise dispose of (a) damaged, worn
out, unserviceable or other obsolete property in the ordinary course of
business, or (b) other property no longer necessary for the proper
conduct of their business;
(v) the Company and its Subsidiaries may engage in Asset Sales
(a) in connection with the settlement of litigation or the payment of
judgments, or (b) the Net Cash Proceeds of which are used in connection
with the settlement of litigation or for the payment of judgments;
provided, however, that the aggregate value of assets transferred
pursuant to clauses (a) and (b) preceding from and after the Issue Date
does not exceed $10 million;
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(vi) the Company and its Subsidiaries may convey, sell,
transfer or otherwise dispose of Hydrocarbons or other mineral products
in the ordinary course of business; and
(vii) the Company and its Subsidiaries may convey, sell,
transfer or otherwise dispose of Drilling Production Payments and
interests related to Drilling Programs; provided, however, that an
amount equal to the Net Cash Proceeds of each such conveyance, sale,
transfer or other disposition shall be used for Capital Expenditures or
to make a Repurchase Offer.
(g) For the purpose of determining compliance with this Section 4.14
with respect to the application or use of the Net Cash Proceeds of any Asset
Sale consummated by the Company or any Subsidiary of the Company, if such Net
Cash Proceeds would be eligible for application or use under or pursuant to more
than one of the categories of application or use permitted under Section 4.14(a)
or Section 4.14(f), without, for purposes of determining such eligibility only,
giving effect to any specific limitation on the amount or the aggregate amount
of Net Cash Proceeds that may be applied or used under any otherwise eligible
category of application or use in effect at the time such application is to be
effected, the Person in question consummating such Asset Sale shall have the
right to determine in its sole discretion the eligible category or categories of
application or use pursuant to which all or any portion of such Net Cash
Proceeds shall be applied or used, and may, at its option and in its sole
discretion, elect either (i) to effect the application or use of the full amount
of such Net Cash Proceeds pursuant to any one of such eligible categories of
application or use permitted under Section 4.14(a) or Section 4.14(f), subject,
however, to any limitation on the amount or the aggregate amount that may be
applied or used under such eligible category of application or use in effect at
the time such application or use is effected, or (ii) to effect the application
or use of such Net Cash Proceeds by apportioning the full amount of such Net
Cash Proceeds to be applied or used between or among any two or more of such
eligible categories of application or use permitted under Section 4.14(a) or
Section 4.14(f) in such amounts and order of application or use as the Person in
question consummating such Asset Sale may determine in its sole discretion,
subject, however, as to each portion of such Net Cash Proceeds apportioned for
application or use under any one of such eligible categories of application or
use, to any limitation on the amount or the aggregate amount of Net Cash
Proceeds that may be applied or used under such eligible category of application
or use in effect at the time such application or use is effected.
Section 4.15 Waiver of Stay, Extension or Usury Laws. The Company and
each Guarantor covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law or any usury law or other
law which would prohibit or forgive the Company or any Guarantor from paying all
or any portion of the principal of or interest on the Notes as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
It is the intention of the parties hereto to comply strictly with
applicable usury laws; accordingly, not withstanding any provision to the
contrary in this Indenture or in any of the documents securing the payment of
the Notes or otherwise relating thereto, in no event shall this Indenture or
such documents require or permit the payment, charging, taking, reserving, or
receiving of any sums constituting interest under applicable laws which exceed
the maximum amount permitted by such laws. If any such excess interest is
contracted for, charged, taken, reserved, or received in connection with the
Notes or in any of the documents securing the payment thereof or otherwise
relating thereto, or in any communication by the Holders or any other Person to
the Company or any other Person, or in the event all or part of the principal or
interest on the Notes shall be prepaid
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<PAGE> 45
or accelerated, so that under any of such circumstances or under any other
circumstance whatsoever the amount of interest contracted for, charged, taken,
reserved, or received on the amount of principal actually outstanding from time
to time under the Notes shall exceed the maximum amount of interest permitted by
applicable usury laws, then in any such event it is agreed as follows: (i) the
provisions of this paragraph shall govern and control, (ii) any such excess
shall be deemed an accidental and bona fide error and canceled automatically to
the extent of such excess, and shall not be collected or collectible, (iii) any
such excess which is or has been paid or received notwithstanding this paragraph
shall be credited against the then unpaid principal balance on the Notes or
refunded to the Company, at the Holders' option, and (iv) the effective rate of
interest shall be automatically reduced to the maximum lawful rate allowed under
applicable laws as construed by courts having jurisdiction hereof or thereof.
Without limiting the foregoing, all calculations of the rate of interest
contracted for, charged, taken, reserved, or received in connection herewith
which are made for the purpose of determining whether such rate exceeds the
maximum lawful rate shall be made to the extent permitted by applicable laws by
amortizing, prorating, allocating and spreading during the period of the full
term of the Notes, including all prior and subsequent renewals and extensions,
all interest at any time contracted for, charged, taken, reserved, or received.
The terms of this paragraph shall be deemed to be incorporated in every
document, security instrument, and communication relating to this Indenture and
the Notes.
Section 4.16 Guarantee by Subsidiaries. If the Company or any of its
Subsidiaries shall make Investments in an aggregate amount, or otherwise
transfer (including by capital contribution) or cause to be transferred, in a
manner otherwise permitted pursuant to this Indenture, any assets (tangible or
intangible), businesses, divisions, real property, or equipment having a book
value as shown in the Company's most recent consolidated balance sheet or the
notes thereto (or if greater, a fair market value at the time of transfer) in
excess of $1 million in or to any Subsidiary of the Company, that is not a
Guarantor, the Company shall cause such transferee Subsidiary (a) to guarantee
payment of the Notes by executing a Guarantee, (b) to execute the appropriate
Security Documents, in substantially the form of the relevant Security Documents
executed and delivered on or about the Issue Date, necessary to grant a security
interest in all of the assets of such Subsidiary (other than Equipment,
Inventory and Receivables, which shall be excepted from the Lien thereof) to
secure such Guarantee, and (c) to execute a supplemental indenture in which such
Subsidiary agrees to become and be a Guarantor and to be bound by the terms of
this Indenture. If the Company or any of its Subsidiaries shall subsequently
sell or otherwise transfer all of the Capital Stock of such Subsidiary held by
the Company or any of its Subsidiaries, the Guarantee (and the related Security
Documents) required hereby shall be withdrawn or canceled.
The liability of each Guarantor under its Guarantee (and the related
Security Documents) will be limited to the amount of its Adjusted Net Assets.
Each Guarantor that makes a payment under or by reason of its Guarantee of the
Notes shall be entitled to assert a claim for reimbursement from each other
Guarantor of the Notes in an amount not to exceed the product of (x) the other
Guarantor's Adjusted Net Assets multiplied by (y) a fraction, the numerator of
which is the other Guarantor's Adjusted Net Assets and the denominator of which
is the sum of the Adjusted Net Assets of all Guarantors of the Notes.
Section 4.17 Intentionally Omitted.
Section 4.18 Limitations on Line of Business. The Company shall not,
and shall not permit any Subsidiary of the Company to, directly or indirectly
engage to any substantial extent in any line or lines of business activity other
than a Related Business or such other business activities as are reasonably
related or incidental thereto.
Section 4.19 Separate Existence and Formalities. The Company hereby
covenants and agrees that:
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(a) it will maintain procedures designed to prevent commingling of the
funds of the Company and its Subsidiaries.
(b) all actions taken by the Company and its Subsidiaries will be taken
pursuant to authority granted by the Board of Directors of the Company and its
Subsidiaries, to the extent required by law or the Company's and its
Subsidiaries' Certificate of Incorporation or By-laws;
(c) the Company and its Subsidiaries will maintain separate records and
books of account and such records and books of account shall be separate from
those of any other Person in each case in accordance with GAAP;
(d) the Company and its Subsidiaries will maintain correct minutes of
the meetings and other corporate proceedings of the owners of its Capital Stock
and the Board of Directors and otherwise comply with requisite corporate
formalities required by law;
(e) the Company and its Subsidiaries will not knowingly mislead any
other Person as to the identity or authority of the Company and its
Subsidiaries; and
(f) it will maintain procedures designed to assure that all written
communications of the Company and its Subsidiaries, including, without
limitation, letters, invoices, purchase orders, contracts, statements and
applications, will appropriately identify the entity on whose behalf such
communication is made.
Section 4.20 Intentionally Omitted.
Section 4.21 Intentionally Omitted.
Section 4.22 Intentionally Omitted.
Section 4.23 Limitation on Assets Held by Nominees. Within 270 days of
the acquisition of any Nominee Property by any Nominee (to the extent the
aggregate expenditures for all then existing Nominee Property does not exceed
$500,000), the Company shall cause such Nominee to assign and transfer to the
Company, or such of its Subsidiaries, as the case may be, all of such Nominee's
right, title and interest in and to such Nominee Property.
Section 4.24 Intentionally Omitted.
Section 4.25 Intentionally Omitted.
Section 4.26 Intentionally Omitted.
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ARTICLE V
SUCCESSOR CORPORATION
Section 5.1 When the Company May Merge, Etc.
(a) The Company shall not, and shall not permit any of its Subsidiaries
to, consolidate with or merge with or into any other Person, or, directly or
indirectly, sell, lease, assign, transfer or convey all or substantially all of
its assets (computed on a consolidated basis), to another Person or group of
Persons acting in concert, whether in a single transaction or through a series
of related transactions, unless:
(1) either (a) the Company or such Subsidiary, as the case may be,
shall be the continuing Person, or (b) the Person (if other than the Company)
formed by such consolidation or into which the Company or such Subsidiary, as
the case may be, is merged or to which all or substantially all of the
properties and assets of the Company or such Subsidiary, as the case may be, are
transferred as an entirety or substantially as an entirety (the Company or such
Subsidiary, as the case may be, or such other Person being hereinafter referred
to as the "Surviving Person") shall be a corporation or partnership organized
and validly existing under the laws of the United States, any State thereof or
the District of Columbia, and shall expressly assume, by an indenture
supplemental hereto and any supplements to any Security Documents as the Trustee
in its sole discretion may require, executed and delivered to the Trustee on or
prior to the consummation of such transaction, in form satisfactory to the
Trustee, all the obligations of the Company or such Subsidiary, as the case may
be, under the Notes, the Security Documents, and this Indenture;
(2) No Default or Event of Default shall exist or shall occur
immediately after giving effect to such transaction;
(3) immediately after giving effect to such transaction, on a pro forma
basis, (x) the Net Worth of the Surviving Person is at least equal to the Net
Worth of such predecessor or transferring entity immediately prior to such
transaction, and (y) the Surviving Person immediately after giving effect on a
pro forma basis to the Consolidated Fixed Charges of the Surviving Person, (A)
the Consolidated Fixed Charge Coverage Ratio of the Surviving Person for the
Reference Period is greater than 2.5 to 1, and (B) the Surviving Person's
Adjusted Consolidated Tangible Assets are equal to or greater than 150% of the
total consolidated principal amount or accreted value, as the case may be, of
Debt of the Surviving Person.
(4) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
assignment, or transfer and such supplemental indenture comply with this Article
V and that all conditions precedent herein provided relating to such transaction
have been satisfied; and
(5) at the time of or within 120 days after the occurrence of the event
specified above, the Notes have not been or are not downgraded by S&P, Moody's,
or any successor rating agencies to either entity to a rating below that which
existed immediately prior to the time the event specified above is first
publicly announced.
For purposes of this Section 5.1, the Consolidated Fixed Charge
Coverage Ratio shall be determined on a pro forma consolidated basis (giving
effect to such transaction) for the four fiscal quarters immediately preceding
such transaction.
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(b) For purposes of clause (a), the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company, on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
(c) Notwithstanding anything contained in the foregoing to the
contrary, any Subsidiary of the Company with a Net Worth greater than zero may
merge into the Company (or a wholly owned Subsidiary of the Company) at any
time, provided, however, that the Company shall have delivered to the Trustee an
Officers' Certificate stating that such Subsidiary has a Net Worth greater than
zero and such merger does not result in a Default or an Event of Default
hereunder.
Section 5.2 Successor Corporation Substituted. Upon any consolidation
or merger, or any transfer of assets in accordance with Section 5.1, the
Surviving Person formed by such consolidation or into which the Company is
merged or to which such transfer is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
and under the Security Documents with the same effect as if such Surviving
Person had been named as the Company herein. When a Surviving Person duly
assumes all of the obligations of the Company pursuant hereto and pursuant to
the Notes, the predecessor shall be released from such obligations.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1 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 any Note as and when
the same becomes due and payable, and the continuance of such default for a
period of thirty (30) days;
(b) default in the payment of all or any part of the principal of (or
premium, if any, applicable to), the Notes when and as the same becomes due and
payable at maturity, redemption, by acceleration, or otherwise, including any
payment due by reason of a Change of Control;
(c) default in the observance or performance of, or breach of, any
covenant, agreement or warranty of the Company or any of its Subsidiaries
contained in the Notes or this Indenture or any of the Security Documents, 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 Company
or any of its Subsidiaries with an aggregate principal amount in excess of $5
million if by reason of such default the principal of such Debt and all accrued
and unpaid interest thereon have been declared due and payable, or failure to
pay such Debt at its stated maturity, provided, however, that a waiver by all of
the lenders of such debt of such default shall constitute a waiver hereunder for
the same period;
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(e) a decree, judgment, or order by a court of competent jurisdiction
shall have been entered adjudging the Company or any of its Subsidiaries as
bankrupt or insolvent, or ordering relief against the Company 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 Company 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 Company, 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 Company 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 Company or any Subsidiary, which, in the aggregate, equal or
exceed $5 million at any one time shall, be entered against the Company 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); or
(h) except as caused by a release effected pursuant to and in
accordance with this Indenture, any of the Security Documents shall for any
reason cease to be in full force and effect other than pursuant to the terms
thereof (except where no material adverse effect to the Holders would result),
or shall cease to give the Trustee, for the ratable benefit of the Holders 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 Liens, rights, powers and privileges shall not have a material adverse
effect on the Holders.
If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee must, within 90 days after the occurrence of such default,
give to the Holders notice of such Default; provided, however, that, except in
the case of Default in payment of principal of, premium, if any, or interest on
the Notes, the Trustee will be protected in withholding such notice if it in
good faith determines that the withholding of such notice is in the interest of
the Holders.
A Default under clause (c) above (other than in the case of any
Defaults under Sections 4.3, 4.11, 4.14 or 5.1, which Defaults shall become
Events of Default without the notice specified in this paragraph or in Section
4.7(c) and upon the passage of 10 days) is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in principal amount
of the outstanding Notes notify the Company and the Trustee of the Default, and
the Company 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
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Default." Such notice shall be given by the Trustee if so requested by the
Holders of at least 25% in principal amount of the Notes then outstanding.
In the case of any Event of Default pursuant to the provisions of this
Section 6.1 occurring by reason of any willful action (or inaction) taken (or
not taken) by or on behalf of the Company or any Subsidiary with the intention
of avoiding the period of time the Notes are not optionally redeemable or the
payment of the premium which the Company would have to pay if the Company then
had elected to redeem the Notes pursuant to Paragraph 5 of the Notes, an
equivalent premium (or, in the case of an Event of Default prior to the time
optional redemptions are permitted, to the extent permitted by law, a premium
equal to the stated interest rate of the Notes multiplied by the quotient of (i)
the number of full years left to maturity plus one, divided by (ii) five) shall
also become and be immediately due and payable to the extent permitted by law,
anything in this Indenture or in the Notes to the contrary notwithstanding.
Section 6.2 Acceleration of Maturity Date; Rescission and Annulment. If
an Event of Default (other than an Event of Default specified in Section 6.1(e)
or Section 6.1(f) relating to the Company or any of its Subsidiaries) occurs and
is continuing, then, and in every such case, unless the principal of all of the
Notes shall have already become due and payable, either the Trustee or the
Holders of not less than 25% in aggregate principal amount of then outstanding
Notes, by a notice in writing to the Company (and to the Trustee if given by
Holders) (an "Acceleration Notice"), may declare all of the principal of the
Notes, determined as set forth below, including in each case accrued interest
thereon, to be due and payable immediately. If an Event of Default specified in
Section 6.1(e) or (f) relating to the Company or any of its Subsidiaries occurs,
all principal and accrued interest on the Notes shall be immediately due and
payable on all outstanding Notes without any declaration or other act on the
part of the Trustee or the Holders.
At any time after such a declaration of acceleration being made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter provided in this Article VI, the Holders of a
majority in aggregate principal amount of then outstanding Notes, by written
notice to the Company and the Trustee, may waive, on behalf of all Holders, any
such declaration of acceleration if:
(a) the Company has paid or deposited with the Trustee a sum sufficient
to pay:
(1) all accrued but unpaid interest on all Notes,
(2) the principal of (and premium, if any, applicable to) any
Notes which would become due otherwise than by such declaration of
acceleration, and accrued but unpaid interest thereon at the rate borne
by the Notes,
(3) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Notes, and
(4) all sums paid or advanced by the Trustee hereunder and the
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel; and
(b) all Events of Default, other than the non-payment of the principal
of, premium, if any, and interest on Notes which have become due solely by such
declaration of acceleration, have been cured or waived as provided in Section
6.12.
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Notwithstanding the previous sentence of this Section 6.2, no waiver
shall be effective for any Event of Default or event which with notice or lapse
of time or both would be an Event of Default with respect to any covenant or
provision which cannot be modified or amended without the consent of (x) 66 2/3%
in aggregate principal amount of the Notes, or (y) the affected Holder of each
of the outstanding Notes, unless (x) 66 2/3% in aggregate principal amount of
the Notes, or (y) all such affected Holders, respectively, agree, in writing, to
waive such Event of Default or event. No such waiver shall cure or waive any
subsequent default or impair any right consequent thereon.
Section 6.3 Collection of Indebtedness and Suits for Enforcement by
Trustee. The Company covenants that if an Event of Default in payment of
principal, premium or interest specified in clause (a) or clause (b) of Section
6.1 occurs and is continuing, the Company shall, upon demand of the Trustee, pay
to it, for the benefit of the Holders of such Notes, the whole amount then due
and payable on such Notes for principal, premium (if any) and interest, and, to
the extent that payment of such interest shall be legally enforceable, interest
on any overdue principal (and premium, if any) and on any overdue interest, at
the rate borne by the Notes, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including
compensation to, and expenses, disbursements and advances of the Trustee, its
agents and counsel.
If the Company fails to pay such amounts within 10 days of such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company or any other obligor upon the Notes,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
The Trustee shall also be authorized to take whatever additional action
at law or in equity may appear to be necessary or desirable to collect the
monies necessary to pay the principal, premium (if any) and interest on the
Notes.
Section 6.4 Trustee May File Proofs of Claim. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Notes or the property of the Company
or of such other obligor or their creditors, the Trustee (irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company or any obligor for the payment of
overdue principal or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise to take any and all actions under the TIA,
including:
(a) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel) and of the Holders allowed in such judicial proceeding, and
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(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any debtor-in-possession or Custodian or other similar official in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee and, in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment, or composition affecting the Notes or
the rights of any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
Section 6.5 Trustee May Enforce Claims Without Possession of Notes. All
rights of action and claims under this Indenture or the Notes may be prosecuted
and enforced by the Trustee without the possession of any of the Notes or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust in favor of the Holders, and any recovery of judgment shall, after
provision for the payment of compensation to, and expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Notes in respect of which such judgment has been recovered.
Section 6.6 Priorities. Subject to the provisions of the Intercreditor
Agreements, any money collected by the Trustee pursuant to this Article VI shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal, premium
(if any) or interest, upon presentation of the Notes and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to Section
7.7;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any) and interest on, the Notes in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Notes for principal, premium (if any) and interest respectively;
and
THIRD: To whomsoever may be lawfully entitled thereto, the remainder,
if any.
Section 6.7 Limitation on Suits. No Holder of any Note shall have any
right to order or direct the Trustee to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(b) the Holders of not less than 25% in principal amount of then
outstanding Notes shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own name as Trustee
hereunder;
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(c) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities to be incurred
or reasonably probable to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
Section 6.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest. Notwithstanding any other provision of this Indenture, the
Holder of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of, and premium (if any) and interest on, such
Note on the Interest Payment Date or Maturity Dates of such payments as
expressed in such Note and to institute suit for the enforcement of any such
payment after such respective dates, and such rights shall not be impaired
without the consent of such Holder.
Section 6.9 Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Notes in Section 2.7, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 6.10 Delay or Omission Not Waiver. No delay or omission by the
Trustee or by any Holder of any Note to exercise any right or remedy arising
upon any Event of Default shall impair the exercise of any such right or remedy
or constitute a waiver of any such Event of Default. Every right and remedy
given by this Article VI or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
Section 6.11 Control by Holders. The Holder or Holders of a majority in
aggregate principal amount of then outstanding Notes shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred upon the
Trustee, provided, however, that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture,
(b) the Trustee shall not determine that the action so directed would
be unjustly prejudicial to the Holders not taking part in such direction or that
such action may involve the Trustee in personal liability, and
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(c) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
Section 6.12 Waiver of Past Default. Subject to Section 6.8, the Holder
or Holders of not less than a majority in aggregate principal amount of the
outstanding Notes may, on behalf of all Holders, prior to the declaration of the
maturity of the Notes, waive any past default hereunder and its consequences,
except a default:
(a) in the payment of the principal of, premium, if any, or interest
on, any Note as specified in clauses (a) and (b) of Section 6.1, or
(b) in respect of a covenant or provision hereof which, under Article
IX, cannot be modified or amended without the consent of the Holder of each
outstanding Note affected or 66 2/3% in aggregate principal amount of the Notes
at the time outstanding, as the case may be; provided, however, that such a
default may be waived by the consent of Holders of each outstanding Note
affected or 66 2/3% in aggregate principal amount of the Notes outstanding, as
the case may be.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.
Section 6.13 Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted to be taken by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Company, to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in aggregate principal amount of
the outstanding Notes, or to any suit instituted by any Holder for enforcement
of the payment of principal of, or premium (if any) or interest on, any Note on
or after the respective Maturity Date expressed in such Note (including, in the
case of redemption, on or after the Redemption Date).
Section 6.14 Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then and in
every case, subject to any determination in such proceeding, the Company, the
Trustee and the Holders shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the Trustee
and the Holders shall continue as though no such proceeding had been instituted.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
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Section 7.1 Duties of Trustee.
(a) If a Default or an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of a Default or an Event of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no
covenants or obligations shall be implied in or read into this
Indenture which are adverse to the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.1.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.2 or Section 6.11.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders or in
the exercise of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to subsections (a), (b), (c), (d), and (f) of this Section
7.1.
(f) The Trustee shall not be liable for interest on any assets received
by it except as the Trustee may agree in writing with the Company. Assets held
in trust by the Trustee need not be segregated from other assets except to the
extent required by law.
(g) The Trustee shall execute and deliver [the Intercreditor Agreements
and] any Subordination Agreements as provided in Section 12.2.
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Section 7.2 Rights of Trustee. Subject to Section 7.1:
(a) The Trustee may rely and shall be fully protected in acting or
refraining from acting on any document believed by it to be genuine and to have
been signed or presented by the proper Person. The Trustee need not investigate
any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel,
which shall conform to Sections 14.4 and 14.6. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
certificate or opinion.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture, or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Whenever by the terms of this Indenture, the Trustee shall be
required to transmit notices or reports to any or all Holders, the Trustee shall
be entitled to rely on the information provided by the Registrar as to the names
and addresses of the Holders as being correct. If the Registrar is other than
the Trustee, the Trustee shall not be responsible for the accuracy of such
information.
Section 7.3 Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Notes and may otherwise
deal with the Company, its Subsidiaries, or their respective Affiliates with the
same rights it would have if it were not Trustee. Any Agent may do the same with
like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer. The Trustee makes no representation
as to the validity or adequacy of this Indenture or the Notes and it shall not
be accountable for the Company's use of the proceeds from the Notes, and it
shall not be responsible for (i) the use or application of any funds received by
a Paying Agent other than the Trustee, (ii) any statement in the Notes, other
than the Trustee's certificate of authentication, or (iii) the sufficiency of
the collateral for the Notes.
The Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any covenants, conditions or agreements on the
part of the Company hereunder or in any Security Documents, except as
specifically set forth herein or therein.
Section 7.5 Notice of Default. If a Default or an Event of Default
occurs and is continuing and if it is known to the Trustee pursuant to Section
4.7(c), the Trustee shall mail to each Noteholder notice of the
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uncured Default or Event of Default within 90 days after such Default or Event
of Default occurs. Except in the case of a Default or an Event of Default in
payment of principal (or premium, if any,) of, or interest on, any Note
(including all payments due on any Maturity Date), the Trustee may withhold the
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or responsible officers of the Trustee in good
faith determines that withholding the notice is in the interest of the Holders.
Section 7.6 Reports by Trustee to Holders. Within 60 days after each
May 15 beginning with the May 15 following the date of this Indenture, the
Trustee shall, if required, mail to each Noteholder a brief report dated as of
such May 15 that complies with TIA Section 313(a). The Trustee also shall comply
with TIA Sections 313(b) and 313(c).
A copy of each report at the time of its mailing to Noteholders shall
be mailed to the Company and filed with the SEC and each stock exchange, if any,
on which the Notes are listed.
Section 7.7 Compensation and Indemnity. The Company shall pay to the
Trustee from time to time compensation for its services (in whatever capacity
rendered) in accordance with the Trustee's fee schedule, as may be amended from
time to time. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by it. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents, accountants, experts and
counsel.
The Company shall indemnify the Trustee (in its capacity as Trustee)
and each of its officers, directors, attorneys-in-fact and agents for, and hold
it harmless against, any claim, demand, expense (including but not limited to,
compensation, disbursements and expenses of the Trustees' agents and counsel),
loss or liability incurred by it without negligence or bad faith on its part,
arising out of or in connection with the administration of this trust and its
rights or duties hereunder including the reasonable costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The Trustee shall
notify the Company promptly of any claim asserted against the Trustee for which
it may seek indemnity. The Company shall defend the claim and the Trustee shall
provide reasonable cooperation at the Company's expense in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable fees
and expenses of such counsel; provided, however, that the Company will not be
required to pay such fees and expenses if it assumes the Trustee's defense and
there is no conflict of interest as reasonably determined by the Trustee between
the Company and the Trustee in connection with such defense. The Company need
not pay for any settlement made without its written consent, which shall not be
unreasonably withheld. The Company need not reimburse any expense or indemnify
against any loss or liability to the extent incurred by the Trustee through its
negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Notes on all assets held or collected by
the Trustee, in its capacity as Trustee, except assets held in trust to pay
principal (and premium, if any,) or interest on particular Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(e) or Section 6.1(f) occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.7 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's obligations pursuant to Article VIII and any rejection or
termination of this Indenture under any Bankruptcy Law.
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Section 7.8 Replacement of Trustee. The Trustee may resign by so
notifying the Company in writing. The Holder or Holders of a majority in
principal amount of the outstanding Notes may remove the Trustee by so notifying
the Company and the Trustee in writing and may appoint a successor trustee with
the Company's consent. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver, Custodian, or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in principal amount of the Notes may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided, however, that all sums owing to the Trustee provided for in
Section 7.7 have been paid, the retiring Trustee shall transfer all property
held by it as Trustee to the successor Trustee, subject to the lien provided in
Section 7.7, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's obligations under Section 7.7 shall continue for the benefit
of the retiring Trustee.
Section 7.9 Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the resulting,
surviving or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise eligible hereunder,
be the successor Trustee.
Section 7.10 Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA Sections 310(a)(1), 310(a)(2) and
310(a)(5). The Trustee shall comply with TIA Section 310(b).
Section 7.11 Preferential Collection of Claims against Company. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
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Section 7.12 No Bond. The Trustee shall not be required to give any
bond or surety in respect to the execution of its trusts, powers, rights and
duties under this Indenture or otherwise in respect of the premises.
Section 7.13 Condition to Action. Notwithstanding anything elsewhere in
this Indenture to the contrary, the Trustee shall have the right, but shall not
be required, to demand, in respect of the authentication of any Notes or any
other action within the purview of this Indenture, any showings, certificates,
opinions, or other information, or corporate action or evidence thereof in
addition to that by the terms hereof required, as a condition of such action by
the Trustee if reasonably deemed desirable by the Trustee for the purpose of
establishing the right to the authentication of any Notes or the taking of any
other action by the Trustee.
Section 7.14 Investment. The Trustee shall not be responsible or liable
for any loss suffered in connection with any investment of funds made by it at
the direction of the Company.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1 Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at its option at any time within the final year of the Stated
Maturity of the Notes, elect to have Section 8.2 or, at any time, Section 8.3
applied to all outstanding Notes upon compliance with the conditions set forth
below in this Article VIII.
Section 8.2 Legal Defeasance and Discharge. Upon the Company's exercise
under Section 8.1 of the option applicable to this Section 8.2, the Company
shall be deemed to have been discharged from its obligations with respect to all
outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.5 and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive solely from the trust fund described in
Section 8.4, and as more fully set forth in such section, payments in respect of
the principal of, premium, if any, and interest on such Notes when such payments
are due, (b) the Company's obligations with respect to such Notes under Sections
2.4, 2.6, 2.7, 2.10 and 5.2, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (d) this Article VIII. Subject to compliance with this Article
VIII, the Company may exercise its option under this Section 8.2 notwithstanding
the prior exercise of its option under Section 8.3 with respect to the Notes.
Section 8.3 Covenant Defeasance. Upon the Company's exercise under
Section 8.1 of the option applicable to this Section 8.3, the Company shall be
released from its obligations under the covenants contained in Sections 4.3,
4.6, 4.7, 4.8, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16, 4.18, 4.19, and 4.22 and
Article V, and in the Security Documents with respect to the outstanding Notes
on and after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Notes shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder. For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Notes, the Company need to comply with and shall have no
liability in respect of any term, condition or limitation set forth
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in any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document, but, except as
specified above, the remainder of this Indenture and such Notes shall be
unaffected thereby. In addition, upon the Company's exercise under Section 8.1
of the option applicable to this Section 8.3, Sections 6.1(c) (with respect to
the covenants referenced in the first sentence of this Section 8.3) through
6.1(h) shall not constitute Events of Default.
Section 8.4 Conditions to Legal or Covenant Defeasance. The following
shall be the conditions to the applicable of either Section 8.2 or Section 8.34
to the outstanding Notes:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 who shall agree to comply with the provisions of this Article VIII
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of such Notes, (a) U.S. Legal Tender in an
amount, or (b) U.S. Government Obligations which through the scheduled payment
of principal and interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment, U.S. Legal
Tender in an amount, or (c) a combination thereof, in such amounts, as in each
case will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge and which shall be supplied by
the Trustee (or other qualifying trustee) to pay and discharge (i) the principal
of, premium, if any, and interest on the outstanding Notes on the stated
maturity or on the applicable redemption date, as the case may be, of such
principal or installment of principal, premium, if any, or interest; provided
that the Trustee shall have been irrevocably instructed to apply such Legal
Tender and the proceeds of such U.S. Government obligations to said payments
with respect to the Notes.
(b) In the case of an election under Section 8.2, the Company shall
have delivered to the Trustee an Opinion of counsel in the United States
reasonably satisfactory to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date hereof, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based thereon
such opinion shall confirm that, the Holders of the outstanding Nots will not
recognize income, gain or loss for Federal income tax purposes as a result of
such Legal Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance has not occurred;
(c) In the case of an election under Section 8.3, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States to the
effect that the Holders of the outstanding Notes will not recognize income, gain
or loss for Federal income tax purposes as a result of such Covenant Defeasance
and will be subject to Federal income tax in the same amount, in the same manner
and at the same times as would have been the case if such Covenant Defeasance
had not occurred;
(d) No Default or Event of Default with respect to the Notes shall have
occurred and be continuing on the date of such deposit or, in so far as Sections
6.2(e) or 6.2(f) is concerned, at any time in the period ending on the 91st day
after the date of such deposit (it being understood that this condition shall
not be deemed satisfied until the expiration of such period);
(e) Such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company, the Guarantors, or
any of their Subsidiaries is a party or by which it or its properties is bound;
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(f) In the case of an election under either Section 8.2 or 8.3, the
Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit made by the Company pursuant to its election under Section 8.2
or 8.3 was not made by the Company with the intent of preferring the Holders
over other creditors of the Company or with the intent of defeating, hindering,
delaying or defrauding creditors of the Company or others; and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel in the United States, each stating that
all conditions precedent providing for relating to either the Legal Defeasance
under Section 8.2 or the Covenant Defeasance under Section 8.3 (as the case may
be) have been complied with as contemplated by this Section 8.4.
Section 8.5 Deposited U.S. Legal Tender and U.S. Government Obligations
to be Held in Trust; Other Miscellaneous Provisions. Subject to Section 8.6, all
U.S. Legal Tender and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section 8.5, the "Trustee") pursuant to Section 8.4 in
respect of the outstanding Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Notes and this Indenture, to
the payment, either directly or through any Paying Agent as the Trustee may
determine, to the Holders of such Nots of all sums due and to become due thereon
in respect of principal, premium, if any, and interest, but such money need not
be segregated from other funds except to the extent required by law.
Anything in this Article VIII to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any U.S. Legal Tender or U.S. Government Obligations held by it
as provided in Section 8.4 which, in the opinion of a nationally recognized firm
of independent public accountants expressed in written certification thereto
delivered to the Trustee (which may be the opinion delivered upon Section
8.4(a)), are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.6 Repayment to Issuers. Any money deposited with the Trustee
or any Paying Agent, or then held by the Company, in trust for the payment for
the principal of premium, if any, or interest on any Notes and remaining
unclaimed for two years after such principal, and premium, if any, or interest
has become due and payable shall be paid to the Company on its request; and the
Holder of such Notes shall thereafter look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Trustee or
such Paying Agent before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
form the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Issuers.
Section 8.7 Reinstatement. If the Trustee or Paying Agent is unable to
apply any U.S. Legal Tender or U.S. Government Obligations in accordance with
Section 8.2 or 8.3, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under this Indenture and
the Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.2 or Section 8.3 until such time as the Trustee or Paying
Agent is permitted to apply all such money in accordance with Section 8.2 or
Section 8.3, as the case may be; provided, however, that if the Company makes
any payment of principal of, premium, if any, or interest on any Notes because
of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Notes to receive such payment from the Cash held
by the Trustee or Paying Agent.
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Section 8.8 Termination of Obligations Upon Cancellation of the Notes.
In addition to the Company's rights under Sections 8.2 and 8.3, the Company and
the Guarantors may terminate all of their obligations under this Indenture
(subject to Section 8.7) when:
(1) all Notes theretofore authenticated and delivered (other
than Notes which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.7) have been delivered
to the Trustee for cancellation, and the Company or a Guarantor has
paid or caused to be paid all sums payable hereunder by the Company; or
(2) (i) all Notes not heretofore delivered to the Trustee for
cancellation otherwise have become due and payable or, within 30 days
will become due and payable or subject to redemption as set forth under
Article III and the Company has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in the trust for such purpose
an amount of money sufficient to pay and discharge the entire
indebtedness on the Notes not heretofore delivered to the Trustee for
cancellation, including all principal, premium, if any, and accrued
interest (and liquidated damages, if any), (ii) the Company has paid
all sums payable by it under this Indenture, (iii) the Company has
delivered irrevocable instructions to the Trustee to apply the
deposited money toward the payment of the Notes at the Maturity Date,
and (iv) the Holders of the Notes have a valid perfected, exclusive
security interest in such trust.
In addition, the Company shall deliver to the Trustee an
Officers' Certificate and an Opinion of Counsel (who is not in-house
counsel to the Company or any of its Subsidiaries), each stating that
all conditions precedent specified herein relating to the satisfaction
and discharge of this Indenture have been complied with and that such
satisfaction and discharge will not result in a breach or violation of,
or constitute a Default under, this Indenture or any other instrument
to which the Company, any Guarantor or any of their Subsidiaries is a
party or by which it or their property is bound.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1 Supplemental Indentures Without Consent of Holders. Without
the consent of any Holder, the Company, when authorized by Board Resolutions,
and the Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto or a restatement hereof or amendments to or
restatements of the Security Documents [OR THE INTERCREDITOR AGREEMENTS]
(COLLECTIVELY, THE "OTHER DOCUMENTS"), in form satisfactory to the Trustee, for
any of the following purposes:
(a) to cure any ambiguity, defect, or inconsistency, or to
make any other provisions with respect to matters or questions arising
under this Indenture or the Security [OTHER] Documents which shall not
be inconsistent with the provisions of this Indenture, provided,
however, that such action pursuant to this clause (a) shall not
adversely affect the interests of any Holder in any respect;
(b) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company or to make any other change that does not adversely affect
the rights of any Holder, provided, however, that the Company has
delivered to the Trustee an
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Opinion of Counsel stating that such change does not adversely affect
the rights of any Holder;
(c) to provide for additional collateral for the Notes;
(d) to evidence the succession of another Person to the
Company and the assumption by any such successor of the obligations of
the Company herein and in the Notes in accordance with Article V;
(e) to comply with the TIA; or
(f) to restate this Indenture or any of the Other Documents so
that it reflects this Indenture or such Other Document, as the case may
be, as originally executed as amended by all amendments and supplements
hereto or thereto through the date of such restatement and contains
only the then effective provisions of this Indenture or such Other
Document, as the case may be.
Section 9.2 Amendments, Supplemental Indentures and Waivers with
Consent of Holders. Subject to Section 6.8 and the last sentence of this
paragraph, with the consent of the Holders of not less than a majority in
aggregate principal amount of then outstanding Notes, by written act of said
Holders (including an electronic mechanism utilized by the Depository Trust
Company as a means of receiving consents or tenders of securities) delivered to
the Company and the Trustee, the Company, when authorized by Board Resolutions,
and the Trustee may amend or supplement this Indenture, the Notes or any of the
Security Documents or enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or the Notes or of modifying
in any manner the rights of the Holders under this Indenture or the Notes,
provided, however, that no such amendment or modification may, without the
consent of the Holders of not less than 66 2/3 in aggregate principal amount of
the Notes at the time outstanding, (i) amend or modify the provisions (including
the definitions of the defined terms used therein) of Sections 4.14 or of
Articles XI, XII or XIII in a manner adverse to the Holders, or (ii) amend or
supplement any of the Security Documents in a manner adverse to the Holders.
Subject to Section 6.8 and the last sentence of this paragraph, the Holder or
Holders of not less than a majority in aggregate principal amount of then
outstanding Notes may waive compliance by the Company with any provision of this
Indenture or the Notes. Notwithstanding any of the above, however, no such
amendment, supplemental indenture or waiver shall, without the consent of the
Holder of each outstanding Note affected thereby:
(a) change the Stated Maturity or the payment date of any installment
of principal of, or the payment date of any installment of interest on, any
Note;
(b) reduce the principal amount of any Note or the rate of interest
thereon or any premium payable upon the redemption thereof;
(c) make the principal of, or the interest on, any Note payable with
anything or in any manner other than as provided for in this Indenture
(including changing the place of payment where, or the coin or currency in
which, any Note or any premium or the interest thereon is payable) and the Notes
as in effect on the date hereof;
(d) reduce the percentage of principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver of any provision of this
Indenture or the Notes;
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(e) reduce the rate or extend the time for payment of interest on any
Note;
(f) (i) alter the redemption provisions (including the definitions of
the defined terms used therein) of Article III or of Paragraph 5 of the Notes,
or (ii) after the date upon which a Change of Control Offer (as defined in
Section 11.1(b)) is required to be made, reduce the Change in Control Purchase
Price (as defined in Section 11.1(a)) or otherwise alter the terms or provisions
of Article XI; in any case, in a manner adverse to any Holder;
(g) make any changes in the provisions concerning waivers of Defaults
or Events of Default by Holders of the Notes (except to increase any required
percentage or to provide that certain other provisions hereof cannot be modified
or waived without the consent of the Holders of each outstanding Note affected
thereby) or the rights of Holders to recover the principal or premium of,
interest on, or redemption payment with respect to, any Note; or
(h) make any changes in Section 6.4, 6.7 or this third sentence of this
Section 9.2.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.
After an amendment, supplement or waiver under this Section 9.2 or
Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article IX, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
Section 9.3 Compliance with TIA. Every amendment, waiver or supplement
of this Indenture or the Notes shall comply with the TIA as then in effect.
Section 9.4 Revocation and Effect of Consents. Until an amendment,
waiver or supplement becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Note or
portion of a Note that evidences the same debt as the consenting Holder's Note,
even if notation of the consent is not made on any Note. However, any such
Holder or subsequent Holder may revoke the consent as to his Note or portion of
his Note by written notice to the Company or the Person designated by the
Company as the Person to whom consents should be sent if such revocation is
received by the Company or such Person before the date on which the Trustee
receives an Officers' Certificate certifying that the Holders of the requisite
principal amount of Notes have consented (and not theretofore revoked such
consent) to the amendment, supplement or waiver.
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The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, regardless of whether such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Noteholder; provided, however, that any such waiver shall not impair
or affect the right of any Holder to receive payment of principal and premium of
and interest on a Note, on or after the respective dates set for such amounts to
become due and payable expressed in such Note, or to bring suit for the
enforcement of any such payment on or after such respective dates.
Section 9.5 Notation on or Exchange of Notes. If an amendment,
supplement or waiver changes the terms of a Note, the Trustee may require the
Holder of the Note to deliver it to the Trustee or require the Holder to put an
appropriate notation on the Note. The Trustee may place an appropriate notation
on the Note about the changed terms and return it to the Holder. Alternatively,
if the Company or the Trustee so determines, the Company in exchange for the
Note shall issue and the Trustee shall authenticate a new Note that reflects the
changed terms. Any failure to make the appropriate notation or to issue a new
Note shall not affect the validity of such amendment, supplement or waiver.
Section 9.6 Trustee to Sign Amendments, Etc. The Trustee shall execute
any amendment, supplement, restatement or waiver authorized pursuant to this
Article IX, provided, however, that the Trustee may, but shall not be obligated
to, execute any such amendment, supplement, restatement or waiver which affects
the Trustee's own rights, duties or immunities under this Indenture. The Trustee
at the expense of the Company shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement, restatement or waiver authorized pursuant to this
Article IX is authorized or permitted by this Indenture.
ARTICLE X
MEETINGS OF NOTEHOLDERS
Section 10.1 Purposes for Which Meetings May Be Called. A meeting of
Noteholders may be called at any time and from time to time pursuant to the
provisions of this Article X for any of the following purposes:
(a) to give any notice to the Company or to the Trustee, or to give any
directions to the Trustee, or to waive or to consent to the waiving of any
Default or Event of Default hereunder and its consequences, or to take any other
action authorized to be taken by Noteholders pursuant to any of the provisions
of Article VI;
(b) to remove the Trustee or appoint a successor Trustee pursuant to
the provisions of Article VII;
(c) to consent to an amendment, supplement or waiver pursuant to the
provisions of Section 9.2; or
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(d) to take any other action (i) authorized to be taken by or on behalf
of the Holder or Holders of any specified aggregate principal amount of the
Notes under any other provision of this Indenture, or authorized or permitted by
law, or (ii) which the Trustee deems necessary or appropriate in connection with
the administration of this Indenture.
Section 10.2 Manner of Calling Meetings. The Trustee may at any time
call a meeting of Noteholders to take any action specified in Section 10.1, to
be held at such time and at such place in the City of New York, New York or
elsewhere as the Trustee shall determine. Notice of every meeting of
Noteholders, setting forth the time and place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be mailed by the
Trustee, first-class postage prepaid, to the Company and to the Holders at their
last addresses as they shall appear on the registration books of the Registrar,
not less than 10 nor more than 60 days prior to the date fixed for a meeting.
Any meeting of Noteholders shall be valid without notice if the Holders
of all Notes then outstanding are present in Person or by proxy, or if notice is
waived before or after the meeting by the Holders of all Notes outstanding, and
if the Company and the Trustee are either present by duly authorized
representatives or have, before or after the meeting, waived notice.
Section 10.3 Call of Meetings by Company or Holders. In case at any
time the Company, pursuant to a Board Resolution, or the Holders of not less
than 25% in aggregate principal amount of the Notes then outstanding, shall have
requested the Trustee to call a meeting of Noteholders to take any action
specified in Section 10.1, by written request setting forth in reasonable detail
the action proposed to be taken at the meeting, and the Trustee shall not have
mailed the notice of such meeting within 20 days after receipt of such request,
then the Company or the Holders of Notes in the amount above specified may
determine the time and place in the City of New York, New York or elsewhere for
such meeting and may call such meeting for the purpose of taking such action, by
mailing or causing to be mailed notice thereof as provided in Section 10.2, or
by causing notice thereof to be published at least once in each of two
successive calendar weeks (on any Business Day during such week) in a newspaper
or newspapers printed in the English language, customarily published at least
five days a week of a general circulation in the City of New York, State of New
York, the first such publication to be not less than 10 nor more than 60 days
prior to the date fixed for the meeting.
Section 10.4 Who May Attend and Vote at Meetings. To be entitled to
vote at any meeting of Noteholders, a Person shall (a) be a registered Holder of
one or more Notes, or (b) be a Person appointed by an instrument in writing as
proxy for the registered Holder or Holders of Notes. The only Persons who shall
be entitled to be present or to speak at any meeting of Noteholders shall be the
Persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
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Section 10.5 Regulations May Be Made by Trustee; Conduct of the
Meeting; Voting Rights; Adjournment. Notwithstanding any other provision of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any action by or any meeting of Noteholders, in regard to proof of
the holding of Notes and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, and submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall think appropriate.
Such regulations may fix a record date and time for determining the Holders of
record of Notes entitled to vote at such meeting, in which case those and only
those Persons who are Holders of Notes at the record date and time so fixed, or
their proxies, shall be entitled to vote at such meeting regardless of whether
they shall be such Holders at the time of the meeting.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.3, in which case the Company
or the Noteholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the Holders of a majority in principal
amount of the Notes represented at the meeting and entitled to vote.
At any meeting each Noteholder or proxy shall be entitled to one vote
for each $1,000 principal amount of Notes held or represented by him; provided,
however that no vote shall be cast or counted at any meeting in respect of any
Notes challenged as not outstanding and ruled by the chairman of the meeting to
be not then outstanding. The chairman of the meeting shall have no right to vote
other than by virtue of Notes held by him or instruments in writing as aforesaid
duly designating him as the proxy to vote on behalf of other Noteholders. Any
meeting of Noteholders duly called pursuant to the provisions of Section 10.2 or
Section 10.3 may be adjourned from time to time by vote of the Holder or Holders
of a majority in aggregate principal amount of the Notes represented at the
meeting and entitled to vote, and the meeting may be held as so adjourned
without further notice.
Section 10.6 Voting at the Meeting and Record to Be Kept. The vote upon
any resolution submitted to any meeting of Noteholders shall be by written
ballots on which shall be subscribed the signatures of the Holders of Notes or
of their representatives by proxy and the principal amount of the Notes voted by
the ballot. The permanent chairman of the meeting shall appoint two inspectors
of votes, who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting their
verified written reports in duplicate of all votes cast at the meeting. A record
in duplicate of the proceedings of each meeting of Noteholders shall be prepared
by the secretary of the meeting and there shall be attached to such record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more Persons having knowledge of the facts, setting
forth a copy of the notice of the meeting and showing that such notice was
mailed as provided in Section 10.2 or published as provided in Section 10.3. The
record shall be signed and verified by the affidavits of the permanent chairman
and the secretary of the meeting and one of the duplicates shall be delivered to
the Company and the other to the Trustee to be preserved by the Trustee, the
latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.7 Exercise of Rights of Trustee or Noteholders May Not Be
Hindered or Delayed by Call of Meeting. Nothing contained in this Article X
shall be deemed or construed to authorize or permit, by reason
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of any call of a meeting of Noteholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to the
Noteholders under any of the provisions of this Indenture or of the Notes.
ARTICLE XI
RIGHT TO REQUIRE REPURCHASE
Section 11.1 Repurchase of Notes at Option of the Holder Upon Change of
Control.
(a) In the event that a Change of Control occurs, each Holder shall
have the right, at such Holder's option, upon the terms and conditions of this
Article XI, to require the Company to repurchase all or any part of such
Holder's Notes (provided, however, that the principal amount of such Notes at
maturity must be $1,000 or an integral multiple thereof) on a date that is no
later than 60 Business Days after the occurrence of a Change of Control (the
date on which the repurchase is effected being referred to herein as the "Change
of Control Payment Date"), at a cash purchase price (the "Change of Control
Purchase Price") equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, on and including the Change of Control Payment Date.
(b) Within 20 Business Days after the Company knows, or reasonably
should know, of the occurrence of a Change of Control, the Company shall make an
irrevocable unconditional offer (a "Change of Control Offer") to the Holders to
purchase for U.S. Legal Tender all of the Notes pursuant to the offer described
in clause (c) of this Section 11.1 at the Change of Control Purchase Price.
Within five Business Days after each date upon which the Company knows, or
reasonably should know, of the occurrence of a Change of Control requiring the
Company to make a Change of Control Offer pursuant to this Section 11.1, the
Company shall so notify the Trustee.
(c) Notice of a Change of Control Offer shall be sent, at least 20
Business Days prior to the Final Change of Control Put Date (as defined below),
by first class mail, by the Company to each Holder at its registered address,
with a copy to the Trustee. The notice to the Holders shall contain all
instructions and materials required by applicable law and shall contain or make
available to Holders other information material to such Holders' decision to
tender Notes pursuant to the Change of Control Offer. The notice, which shall
govern the terms of the Offer, shall state:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's Notes at
a purchase price in cash equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date
to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change
of Control (including information with respect to pro forma historical
income, cash flow and capitalization, each after giving effect to such
Change of Control);
(3) that the Change of Control Offer is being made pursuant to
such notice and this
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Section 11.1 and that all Notes, or portions thereof, tendered will be
accepted for payment;
(4) [intentionally omitted]
(5) the Change of Control Purchase Price, the Change of
Control Payment Date and the Final Change of Control Put Date (as
defined below);
(6) that any Note, or portion thereof, not tendered or
accepted for payment will continue to accrue interest, if interest is
then accruing;
(7) that, unless the Company defaults in depositing U.S. Legal
Tender with the Paying Agent in accordance with the last paragraph of
this clause (c), or payment is otherwise prevented, any Note, or
portion thereof, accepted for payment pursuant to the Change of Control
Offer shall cease to accrue interest after the Change of Control
Payment Date;
(8) that Holders electing to have a Note, or portion thereof,
purchased pursuant to a Change of Control Offer will be required to
surrender the Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the Paying Agent
(which may not for purposes of this Section 11.1, notwithstanding
anything in this Indenture to the contrary, be the Company or any
Affiliate of the Company) at the address specified in the notice prior
to the close of business on the third Business Day prior to the Change
of Control Payment Date (the "Final Change of Control Put Date");
(9) that Holders will be entitled to withdraw their election
if the Paying Agent receives, prior to the close of business on the
Final Change of Control Put Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of the Notes the Holder is withdrawing and a statement
containing a facsimile signature that such Holder is withdrawing his
election to have such principal amount of Notes purchased;
(10) that Holders whose Notes were purchased only in part will
be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered; and
(11) a brief description of the events resulting in such
Change of Control.
On or before the Change of Control Payment Date, the Company shall (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Change of Control Offer prior to the close of business on the Final Change of
Control Put Date, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the Change of Control Purchase Price (including accrued and
unpaid interest) of all Notes so tendered, and (iii) deliver or cause to be
delivered to the Trustee Notes so accepted together with an Officers'
Certificate listing the Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to the Holders of Notes so
accepted payment in an amount equal to the Change of Control Purchase Price
(including accrued and unpaid interest), and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Note equal in principal
amount to any unpurchased portion of the Note surrendered. Any Notes not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date. Any such Change of Control Offer shall comply with all applicable
provisions of Federal
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and state laws, rules and regulations, including, if and to the extent
applicable, with the requirements of Section 14(a) of the Exchange Act and any
other securities laws or regulations applicable in connection with the
repurchase of Securities pursuant to this Section, and, if such laws, rules or
regulations require or prohibit any action inconsistent with the foregoing,
compliance by the Company with such laws, rules and regulations will not
constitute a breach of the Company's obligations with respect to the foregoing.
ARTICLE XII
SECURITY
Section 12.1 Grant of Security Interest. In order to secure the payment
and performance of all obligations of the Company with respect to the Notes
including the due and punctual payment of the principal of, interest on and
premium, if any, on the Notes when and as the same shall become due and payable,
whether on an interest payment date, at a Maturity Date, by acceleration, call
for redemption or otherwise, and interest on the overdue principal and interest,
if any, of the Notes, each of the Company and each Guarantor hereby covenants to
execute, deliver and file of record for the benefit of the Holders, the Security
Documents to which it is a party and this Indenture. The Security Documents
shall grant to the Trustee a security interest in the collateral therein
described and when filed shall be deemed hereby incorporated by reference herein
to the same extent and as fully as if set forth in their entirety at this place,
and reference is made hereby to each Security Document for a more complete
description of the terms and provisions thereof. Each Holder, by accepting a
Note, agrees to all of the terms and provisions of the Security Documents and
the Trustee agrees to all of the terms and provisions of the Security Documents
signed by it.
Section 12.2 Trustee's Execution of Intercreditor Agreements and
Subordination Agreements.
(a) The Trustee, at the Company's expense, will execute, deliver, file
and record, all instruments and do all acts and other things as may be
reasonably necessary to provide pursuant to the Intercreditor Agreement(s) among
other things, that (i) the Liens securing the Security Interests will be junior
to the Liens on Shared Collateral securing the Debt and other obligations of the
Company under the Extended DIP Facility and under the Post Confirmation Credit
Facility, (ii) that in the event of any judicial or non-judicial foreclosure (or
conveyance in lieu thereof), any cash or other assets paid by reason thereof
will be applied, after payment of reasonable costs and expenses relating to
obtaining such proceeds, to the payment of the Debt outstanding under the
Extended DIP Facility and to the payment of the Debt outstanding under the Post
Confirmation Credit Facility, as the case may be, and only after the Debt
outstanding under the Extended DIP Facility and to the payment of the Debt
outstanding under the Post Confirmation Credit Facility, as the case may be, has
been paid in full, to the payment of the Notes, and (iii) that determinations
regarding the exercise of remedies against the Shared Collateral will be made by
a majority of the outstanding principal amount of [_________________]. The
Intercreditor Agreements will provide that nothing contained therein will impair
or affect the right of the Holders of the Notes to institute suit for the
enforcement of any payment thereon as and when due.
(b) Upon receipt of a Subordination Request, the Trustee (and any
lender, trustee or collateral agent under or with respect to any of the Security
Documents), at the Company's expense, will execute and deliver, within five
Business Days from the receipt of such Subordination Request, any instruments
deemed by the Company (or with respect to the Security Documents, the grantor of
the Security Interest thereunder) to be
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reasonably necessary or reasonably appropriate to subordinate the Security
Interests to Permitted Liens securing any First Lien Debt, if the provisions of
this Section 12.2(b) have been complied with. Any such Subordination Request
shall request the Trustee (and any such lender, trustee or collateral agent
under or with respect to any of the Security Documents) to execute one or more
specifically described instruments of subordination (which instruments of
subordination accompany such Subordination Request) and shall certify (i) that
no Event of Default has occurred and is continuing, and (ii) that one of the
conditions of this Section 12.2(b) set forth below has been, or simultaneously
with or immediately following the subordination will be, fulfilled:
(i) the Company (or with respect to the Security Documents,
the grantor of the Security Interest thereunder) represents in the
Subordination Request that the Lien to which the Security Interests are
to be subordinated is a Permitted Lien securing only a Debt or other
obligation that constitutes First Lien Debt; or
(ii) Holders of not less than 66 2/3% of principal amount of
the then outstanding Notes have consented in writing to the
subordination of the Security Interests to such Lien.
(c) The Trustee, at the Company's expense, will cooperate reasonably
with the Company (or with respect to the Security Documents, the grantor of the
Security Interest thereunder) in doing all such acts and things required by the
preceding provisions of this Section 12.2.
(d) The subordination of the Security Interests pursuant to the
provisions of Section 12.2(b) shall be deemed not to impair the Security
Interests in contravention of the provisions of this Indenture.
Section 12.3 Recording; Opinions of Counsel.
(a) The Company has executed, delivered, filed and recorded and shall
execute, deliver, file and record, all instruments and documents, and has done
and shall do all such acts and other things, at the expense of the Company, as
are reasonably necessary to subject the Collateral to the Security Interests. As
soon as practicable, the Company shall execute, deliver, file and record all
instruments and do all acts and other things as may be reasonably necessary or
advisable to perfect, maintain and protect the Security Interests.
(b) The Company shall cause TIA Section 314(b), relating to Opinions of
Counsel regarding the Lien of the Security Documents, and TIA Section 314(d),
relating to (x) the release of Collateral from the Lien of the Security
Documents and (y) Officers' Certificates or other documents regarding fair value
of the Collateral, to be complied with to the extent applicable. Any certificate
or opinion required by TIA Section 314(d) may be made by an Officer of the
Company or any other obligor upon the Notes, as applicable, to the extent
permitted by TIA Section 314(d).
(c) The Company shall furnish to the Trustee, within 30 days after the
end of the Company's first fiscal year after the date hereof, within 30 days
after the end of each fiscal year thereafter, and at least 30 days prior to the
expiration of any financing statements filed in connection with the Security
Interests, an Officers' Certificate, dated as of such date, (i) stating that
either (A) all action has been taken with respect to the recording, registering,
filing, rerecording and refiling of this Indenture, all supplemental indentures,
the Security
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Documents, financing statements, continuation statements and all other
instruments of further assurance as are necessary and desirable fully to
maintain, protect and preserve the Security Interests and the rights of the
Holders and the Trustee hereunder and under the Security Documents and reciting
the details of such action or referring to prior Officers' Certificates in which
such details are given, or (B) no such action is necessary to maintain, preserve
and protect the Security Interests and the rights of the Holders and the Trustee
hereunder and under the Security Documents during such period, (ii) stating
either (A) that, with respect to the trademarks and service marks, all filings
with the United States Patent and Trademark Office, any state office or other
appropriate governmental body necessary to maintain, protect and preserve the
Security Interests in the trademarks and service marks have been made, or (B)
that no such action is necessary, and (iii) stating what, if any, action of the
forgoing character is necessary during the fiscal year so as to maintain,
protect and preserve the rights of the Holders and the Trustee hereunder and
under the Security Documents.
Section 12.4 Disposition of Certain Collateral Without Requesting
Release.
(a) Notwithstanding the provisions of Sections 12.5, 12.6, 12.7, 12.8
and 12.14, the Company (or with respect to the Security Documents, the grantor
of the Security Interest thereunder) may, without requesting or receiving the
consent of the Trustee (and any lender, trustee or collateral agent under any of
the Security Documents):
(i) sell, assign, transfer, license or otherwise dispose of,
free from the Security Interests, any personal property constituting
Collateral that has become worn out, obsolete, or unserviceable, upon
replacing the same with machinery or equipment constituting Collateral
not necessarily of the same character but, at the time of such sale,
assignment, transfer, license or other disposition, being of at least
equal value and utility as the property so disposed of, which property
shall without further action become Collateral subject to the Security
Interests;
(ii) (A) sell, assign, transfer, license or otherwise dispose
of, free from the Security Interests, assets in the ordinary course of
business and consistent with past practices, or (B) make cash payments
(including repayments of Debt permitted to be incurred hereby) that are
not otherwise prohibited by this Indenture;
(iii) sell, assign, lease, license, transfer, abandon or
otherwise dispose of, free from the Security Interests, (A) damaged,
worn out or other obsolete property in the ordinary course of business,
or (B) other property no longer necessary for the proper conduct of its
business; and
(iv) dispose of Collateral, free from the Security Interests,
pursuant to clause (i), (ii), (iv) or (vi) of Section 4.14(f).
(b) Notwithstanding the provisions of subsection (a) above: (x) the
Company (or with respect to the Security Documents, the grantor of the Security
Interest thereunder) shall not dispose of or transfer (by lease, assignment,
sale or otherwise) Collateral pursuant to the provisions of Section 12.4(a)(ii)
or (iii), having, in the good faith judgment of the Company (or with respect to
the Security Documents, the grantor of the Security Interest thereunder) and, if
required by the TIA, an Appraiser, a fair value of 5% or more of the aggregate
fair value of all Collateral then existing in any transaction or any series of
related transactions without complying with Section 12.5, and (y) the right of
the Company (or with respect to the Security Documents, the grantor of
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the Security Interest thereunder) to rely upon the provisions of Sections
12.4(a)(ii) and 12.4(a)(iii) from the date of this Indenture to December 31,
[1999] and for each twelve-month period thereafter beginning on January 1 (a
"Twelve-Month Period") shall be conditioned upon the Company (or with respect to
the Security Documents, the grantor of the Security Interest thereunder)
delivering to the Trustee, on or before January 30, [2000] and thereafter within
30 days following the end of such Twelve-Month Period, an Officers' Certificate
to the effect that the proceeds of all of such dispositions, collections and
cash payments which involve Collateral during such Twelve-Month Period (other
than those such dispositions, collections or payments wherein the Company (or
with respect to the Security Documents, the grantor of the Security Interests
thereunder) has complied with Section 12.5) were used by the Company (or with
respect to the Security Documents, the grantor of the Security Interest
thereunder) in connection with their businesses and in accordance with the terms
of Section 4.14 herein..
(c) Any disposition of Collateral made in compliance with the
provisions of this Section 12.4 shall be deemed not to impair the Security
Interests in contravention of the provisions of this Indenture.
Section 12.5 Requesting Release of Collateral.
(a) Upon receipt of a Release Request, the Trustee shall execute and
deliver, within five Business Days from the receipt of such Release Request, any
instruments deemed by the Company (or with respect to the Security Documents,
the grantor of the Security Interests thereunder) to be reasonably necessary or
reasonably appropriate to release all or a part of the Collateral from the
Security Interests, if the provisions of this Section 12.5 have been complied
with. Any such Release Request shall request the Trustee to execute one or more
specifically described release instruments (which release instruments shall
accompany such Release Request) and shall certify (i) that no Event of Default
has occurred and is continuing (or with respect to a Release Request relating to
any of the Security Documents, that no event of default has occurred and is
continuing under the applicable Security Document) and (ii) that one of the
conditions of this Section 12.5(a) set forth below (specifying such condition)
has been fulfilled, and if such specified condition is described in clause (i),
(ii), or (iii) below, that the conditions of Section 12.4, Section 12.6 or
Section 12.7, if applicable, have been, or simultaneously with or immediately
following the release will be, fulfilled:
(i) the Collateral will be disposed of in compliance with
Section 12.4;
(ii) there is a substitution of Substitute Collateral in
accordance with Section 12.6;
(iii) there is a deposit of Cash Collateral in a Cash
Collateral Account in accordance with Section 12.7;
(iv) the Collateral to be released will be used within five
business days either to make redemptions or purchases of Notes which
will be delivered to the Trustee for cancellation;
(v) the Collateral is to be released in connection with an
Asset Sale made in compliance with Section 4.14;
(vi) all of the conditions precedent to the termination of the
Security Document under which the Lien in the Collateral to be released
was created, or to the release of such Collateral from the Lien created
by such Security Document, as set forth in such Security Document, have
been satisfied;
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(vii) Holders of not less than 66 2/3% in principal amount of
the then outstanding Notes have consented in writing to such release of
Collateral from the Security Interests; and
(viii) [Intentionally Omitted];
(ix) [Intentionally Omitted];
(x) [Intentionally Omitted];
(xi) the Collateral to be released secures debt or other
obligations that constitute First Lien Debt and the Company (or with
respect to releases under the Security Documents, the grantor of the
Security Interest thereunder) has satisfied all the requirements for
obtaining subordination of the Security Interests therein pursuant to
Section 12.2(b) and such Collateral is (or will be, upon obtaining such
release) encumbered by a Lien permitted pursuant to the terms of
clauses (i), (l), or (o) of the definition of Permitted Liens.
(xii) [Intentionally Omitted];
(xiii) [Intentionally Omitted];
(xiv) [Intentionally Omitted];
(b) As a condition to any release of Collateral under this Section
12.5, the Company shall deliver to the Trustee any certificate or opinion
required by TIA Section 314(d), as to the fair value to the obligor of any
Substitute Collateral and as to the fair value of any Collateral to be released,
or by TIA Section 314(c), as to the fulfillment of any condition precedent to
such release, dated as of a date not more than 60 days prior to the date of
substitution or release. Such certificate or opinion shall state that the
proposed release of Collateral will not impair the Security Interests in
contravention of the provisions of this Indenture. The Person delivering such
certificate or opinion must be independent with respect to the Company if
required by TIA Section 314(d).
(c) In addition to any certificates or opinions required by Section
12.5(b), as a condition to any release of Collateral pursuant to Section 12.6 or
12.7, the Company (or with respect to releases under the Security Documents, the
grantor of the Security Interest thereunder) shall deliver to the Trustee an
Opinion of Counsel to the effect that, in the opinion of such counsel, subject
to necessary qualifications, exceptions or limitations, the Trustee is
authorized to execute and deliver the instruments requested and such execution
and delivery will not result in a violation of the terms hereof or any violation
of applicable law and that either (a) all such instruments and documents have
been duly and validly executed and delivered and have been properly recorded and
filed so as to make effective the Security Interest intended to be created by
this Indenture and the Security Documents in the Substitute Collateral or Cash
Collateral to be substituted for the Collateral to be released, and reciting the
details of such action or referring to prior Opinions of Counsel in which such
details are given, or (b) no such action is necessary to make the Security
Interest in such Substitute Collateral or Cash Collateral effective.
(d) At the request of the Company (or with respect to releases under
the Security Documents, the grantor of the Security Interest thereunder), the
Trustee shall, in lieu of releasing any Collateral pursuant to this
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Section 12.5, execute and deliver a Subordination Agreement with respect to such
Collateral.
(e) Any release or subordination of Collateral made in compliance with
the provisions of this Section 12.5 shall be deemed not to impair the Security
Interests in contravention of the provisions of this Indenture.
Section 12.6 Substitute Collateral Other Than Cash Collateral. Subject
to the provisions of Section 4.18:
(a) The Company (or with respect to releases under the Security
Documents, the grantor of the Security Interest thereunder) may, at its option,
obtain a release of Collateral by subjecting other proposed Collateral to the
respective Security Interests in place of and in exchange for such Collateral to
be released, all in accordance with the provisions and conditions of Section
12.5 and this Section 12.6. The Trustee shall not be bound to ascertain or
inquire as to the Company's (or with respect to substitutions of Collateral
under the Security Documents, the applicable grantor's) title in and to any such
Substitute Collateral or as to the existence of any Liens or encumbrances on any
such Substitute Collateral.
(b) The Company (or with respect to substitutions of Collateral under
the Security Documents, the grantor of the Security Interest) may substitute
Collateral pursuant to this Section 12.6, if all of the following conditions are
met:
(1) the Company (or with respect to substitutions of
Collateral under the Security Documents, the grantor of the Security
Interest thereunder) complies with Section 12.5(a) and the Company (or
with respect to substitutions of Collateral under the Security
Documents, the grantor of the Security Interest thereunder) delivers a
Release Request to the Trustee stating, in addition to the other
requirements of Section 12.5, that the Company (or with respect to
substitutions of Collateral under the Security Documents, the grantor
of the Security Interest thereunder), as the case may be, intends to
substitute the property specifically described therein for the
Collateral specifically described therein;
(2) the fair value of the proposed Substitute Collateral is at
least equal to the fair value of the Collateral to be released and, if
and only if the fair value of Collateral to be released, and the fair
value of all other Collateral released without an Appraisal pursuant to
this Section 12.6 during the then current calendar year, exceeds 1% of
the aggregate principal amount of the Notes, the Company shall deliver
to the Trustee an Appraisal stating that the Appraised Value of the
real property Collateral to be released or the dollar amount of the
Cash Collateral to be released is less than or equal to the Appraised
Value of such proposed Substitute Collateral; and
(3) the Security Interests in the Substitute Collateral are
effective pursuant to the Security Documents and Section 12.3.
(c) Any release of Collateral made in compliance with the provisions of
this Section 12.6 shall be deemed not to impair the Security Interests in
contravention of the provisions of this Indenture.
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Section 12.7 Substitution of Cash Collateral.
(a) The Company (or with respect to substitutions of Collateral under
the Security Documents, the grantor of the Security Interest thereunder) may, at
its option, obtain a release of Collateral by delivering to the Trustee, for
deposit into the Cash Collateral Account, Cash Collateral in an amount at least
equal to the fair value of the Collateral to be released (less, if applicable,
the related "First Lien Amount," being the amount equal to aggregate amount,
computed as of the date of the Release Request submitted in connection with the
proposed substitution, that the Company (or such grantor) would be required to
pay to the holders of First Lien Debt secured by such Collateral in order to
release such Collateral from any Permitted Liens on such Collateral securing
First Lien Debt), all in accordance with the provisions and conditions of
Section 12.5 and this Section 12.7.
(b) The Company (or with respect to substitutions of Collateral under
the Security Documents, the grantor of the Security Interest thereunder), may
substitute Cash Collateral pursuant to this Section 12.7, if all of the
following conditions are met:
(1) the Company (or with respect to substitutions of
Collateral under the Security Documents, the grantor of the Security
Interest thereunder) complies with Section 12.5(a), and the Company (or
with respect to substitutions of Collateral under the Security
Documents, the grantor of the Security Interest thereunder) delivers a
Release Request to the Trustee stating, in addition to the other
requirements of Section 12.5, that the Company (or with respect to
substitutions of Collateral under the Security Documents, the grantor
of the Security Interest thereunder), as the case may be, intends to
substitute the amount of Cash Collateral specifically set forth therein
for the Collateral specifically described therein;
(2) the amount of the proposed Cash Collateral is at least
equal to the fair value of the Collateral to be released (less the
related First Lien Amount, if any), and, if and only if the fair value
of the Collateral to be released (less the related First Lien Amount,
if any), and the fair value of all other Collateral released without an
Appraisal pursuant to this Section 12.7 during the then current
calendar year (less the respective First Lien Amounts, if any, related
thereto), exceeds 1% of the aggregate principal amount of the Notes,
the Company (or with respect to substitutions of Collateral under the
Security Documents, the grantor of the Security Interest) shall deliver
to the Trustee an Appraisal stating that the Appraised Value of the
Collateral to be released (less the related First Lien Amount, if any)
is less than or equal to the dollar amount of such proposed Cash
Collateral to be substituted; and
(3) Cash Collateral in at least the amount necessary to
satisfy the condition set forth in Section 12.7(b)(2) is delivered to
the Trustee for deposit into the Cash Collateral Account.
(c) Any release of Collateral made in compliance with the provisions of
this Section 12.7 shall be deemed not to impair the Security Interests in
contravention of the provisions of this Indenture.
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Section 12.8 Release Upon Defeasance or Satisfaction and Discharge of
this Indenture.
(a) In the event that the Company delivers an Officers' Certificate
certifying that all of the provisions of either Section 8.2 or Section 8.3 have
been satisfied, the Trustee shall disclaim and give up any and all rights it has
in or to the Collateral, and any rights it has under the Security Documents
(subject to Section 8.7).
(b) Any release of Collateral made in compliance with the provisions of
this Section 12.8 shall be deemed not to impair the Security Interests in
contravention of the provisions of this Indenture.
Section 12.9 Reliance on Opinion of Counsel. The Trustee shall, before
taking any action under this Article XII, be entitled to receive an Opinion of
Counsel at the expense of the Company, stating the legal effect of such action,
and that such action will not be in contravention of the provisions hereof, and
such opinion shall be full protection to the Trustee for any action taken or
omitted to be taken in reliance thereon; provided, however, that the Trustee's
action under this Article XII shall at all times be and remain subject to its
duties and protections under Article VII.
Section 12.10 Purchaser May Rely. A purchaser in good faith of the
Collateral or any part thereof or interest therein which is purported to be
transferred, granted or released by the Trustee as provided in this Article XII
(i) shall not be obligated to ascertain the validity of the transfer, grant or
release, and may rely on the authority of the Trustee to execute the document
evidencing such transfer, grant or release, (ii) shall not be obligated to
inquire as to the satisfaction of any conditions precedent to the exercise of
such authority, and (iii) shall not be obligated to determine whether the
application of the purchase price therefor complies with the terms hereof.
Section 12.11 Payment of Expenses. Without limiting Section 7.7, on
demand of the Trustee, the Company forthwith shall pay or satisfactorily provide
for all reasonable expenditures incurred by the Trustee under this Article XII.
In the event that the Company (or with respect to any Security Documents, the
grantor of the Security Interest thereunder) makes a Release Request more often
than once a month, the Trustee and the Company shall negotiate an additional
reasonable fee for each such request. All such sums referred to in this Section
12.11 shall be a Lien upon the Collateral and shall be secured thereby.
Section 12.12 Trustee's Duties. The powers and duties conferred upon
the Trustee by this Article XII are solely to protect the Security Interests and
shall not impose any duty upon the Trustee to exercise any such powers except as
expressly provided in this Indenture. The Trustee shall be under no duty to the
Company (or with respect to any Security Documents, the grantor of the Security
Interest thereunder) whatsoever to make or give any presentment, demand for
performance, notice of non-performance, protest, notice of protest, notice of
dishonor, or other notice or demand in connection with any Collateral, or to
take any steps necessary to preserve any rights against prior parties except as
expressly provided in this Indenture. The Trustee shall not be liable to the
Company (or with respect to any Security Documents, the grantor of the Security
Interest thereunder) for failure to collect or realize upon any or all of the
Collateral, or for any delay in so doing, nor shall the Trustee be under any
duty to the Company (or with respect to any Security Documents, the grantor of
the Security Interest thereunder) to take any action whatsoever with regard
thereto. The Trustee shall have no duty to the Company (or with respect to any
Security Documents, the grantor of the Security Interest thereunder) to comply
with any recording, filing, or other legal requirements necessary to establish
or maintain the validity, priority or enforceability of the Security Interests
in, or the Trustee's rights in or to, any of the Collateral.
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Section 12.13 Authorization of Actions to be Taken by the Trustee Under
the Security Documents. The Trustee may, in its sole discretion and without the
consent of the Holders, but subject to Article VII [AND THE TERMS OF THE
INTERCREDITOR AGREEMENTS], take all actions it deems necessary or appropriate in
order to enforce or effect the Security Documents. Such actions shall include,
but not be limited to, enforcing or effecting any term or provision of the
Security Documents [OR ADVISING, INSTRUCTING OR OTHERWISE DIRECTING THE
COLLATERAL AGENT UNDER THE INTERCREDITOR AGREEMENTS WITH RESPECT TO THE
ENFORCEMENT OF ANY TERM OR PROVISION OF THE SECURITY DOCUMENTS]. Subject to the
provisions of the Security Documents [(AND THE INTERCREDITOR AGREEMENTS)], the
Trustee shall have the power to institute and to maintain such suits and
proceedings as it may deem expedient to prevent any impairment of the Collateral
by any acts which may be unlawful or in violation of the Security Documents or
this Indenture, and such suits and proceedings as the Trustee may deem expedient
to preserve or protect its interests and the interests of the Holders in the
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security hereunder or be prejudicial to the interests of the
Holders or of the Trustee). In addition, the Trustee may act upon any
Subordination Request or Release Request by the Company (or with respect to any
Security Documents, the grantor of the Security Interest thereunder) on behalf
of the Company.
ARTICLE XIII
GUARANTEE
Section 13.1 Guarantee.
(a) In consideration of good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, each Subsidiary of the Company
joining in the execution of this Indenture and the Notes for the purpose of
evidencing its Guarantee and its agreement to be bound by the terms of this
Indenture, and each Subsidiary of the Company that becomes a Guarantor in
accordance with Section 4.16 and/or that executes a supplemental indenture in
which such Subsidiary agrees to become and be a Guarantor and to be bound by the
terms of this Indenture, jointly and severally, hereby unconditionally
guarantees to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee, irrespective of the validity or enforceability of this
Indenture, the Notes or the obligations of the Company under this Indenture or
the Notes, that: (i) the principal of and interest (and premium, if any) on the
Notes will be paid in full when due, whether at the maturity or interest payment
date, by acceleration, call for redemption, upon a Change of Control Offer,
purchase or otherwise, and interest on the overdue principal and interest, if
any, of the Notes, if lawful, and all other obligations of the Company to the
Holders or the Trustee under this Indenture or the Notes will be promptly paid
in full or performed, all in accordance with the terms of this Indenture and the
Notes, and (ii) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, they will be paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
maturity, by acceleration, call for redemption, upon a Change of Control Offer,
purchase or otherwise (such guarantees being the "Guarantee"). Each Guarantor
acknowledges and agrees with and for the benefit of the Holders of the Notes
that the Guarantee of such Guarantor shall be secured by a perfected security
interests in substantially all of the assets of the Guarantor (except Inventory,
Equipment and Receivables). The Guarantee is a guarantee of payment and not of
collection.
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Failing payment when due of any amount so guaranteed for whatever
reason, the Guarantors shall be jointly and severally obligated to pay the same
whether or not the failure to so pay is or becomes an Event of Default.
(b) Each Guarantor agrees that (i) its obligations with regard to this
Guarantee shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any delays in obtaining or realizing upon (or failures to
obtain or realize upon) collateral, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstances that might
otherwise constitute a legal or equitable discharge or defense of a guarantor,
and (ii) this Guarantee will not be discharged except by complete performance of
the obligations contained in the Notes and this Indenture. Each of the
Guarantors hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company or right to require the
prior disposition of the assets of the Company to meet its obligations, protest,
notice and all demands whatsoever and covenants that this Guarantee will not be
discharged except by complete performance of the obligations contained in the
Notes and this Indenture.
(c) If any Holder or the Trustee is required by any court or otherwise
to return to either the Company or any Guarantor, or to any Custodian, trustee,
or similar official acting in relation to either the Company or any Guarantor,
any amount paid by either the Company or any of the Guarantors to the Trustee or
such Holder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each of the Guarantors agrees that it will
not be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby until all of such obligations are
paid in full.
(d) Each of the Guarantors agrees that (i) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Section 6.2 for
the purposes of the Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration as to the Company of any of the
obligations guaranteed by the Guarantee, and (ii) in the event of any
declaration of acceleration of those obligations as provided in Section 6.2,
those obligations (regardless of whether due and payable) will forthwith become
due and payable by each of the Guarantors for the purpose of the Guarantee.
Section 13.2 Execution and Delivery of Guarantee. To evidence the
Guarantee and its obligations thereunder as set forth in Section 13.1, each of
the Guarantors agrees that a notation of such Guarantee substantially in the
form annexed hereto as Exhibit B shall be endorsed on each Note authenticated
and delivered by the Trustee, and that this Indenture (or a supplement hereto)
shall be executed on behalf of such Guarantor by two Officers or an Officer and
an Assistant Secretary of such Guarantor.
Each of the Guarantors agrees that the Guarantee and its obligations
thereunder as set forth in Section 13.1 shall remain in full force and effect
and apply to all the Notes notwithstanding any failure to endorse on each Note a
notation of such Guarantee.
If an Officer whose facsimile signature is on a Note no longer holds
that office at the time the Trustee authenticates the Note on which the
Guarantee is endorsed, the Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Guarantee set forth in
this Indenture on behalf of the Guarantors.
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Section 13.3 Limitation of Guarantor's Liability. Each Guarantor and,
by its acceptance hereof, each Holder hereby confirms that it is the intention
of all such parties that the guarantee by such Guarantor pursuant to the
Guarantee not constitute a fraudulent transfer or conveyance for purposes of any
federal or state law. To effectuate the foregoing intention, the Holders and
each Guarantor hereby irrevocably agree that the obligations of each Guarantor
under the Guarantee shall be limited to the maximum amount as will, after giving
effect to all other contingent and fixed liabilities of such Guarantor and after
giving effect to any collections from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under its
Guarantee or pursuant to Section 13.4, result in the obligations of such
Guarantor under the Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. This Section 13.3 is for the
benefit of the creditors of each Guarantor. The provisions of this Section 13.3
shall survive until the Notes have been fully paid or deemed to have been fully
paid within the meaning of this Indenture.
Section 13.4 Contribution. In order to provide for just and equitable
contribution among the Guarantors, the Guarantors agree, inter se, that in the
event any payment or distribution is made by any Guarantor (a "Funding
Guarantor") under the Guarantee, such Funding Guarantor shall be entitled to a
contribution from each other Guarantor in a pro rata amount based on the
Adjusted Net Assets of each Guarantor (including the Funding Guarantor) for all
payments, damages and expenses incurred by that Funding Guarantor in discharging
the Company's obligations with respect to the Notes or any other Guarantor's
obligations with respect to the Guarantee.
Section 13.5 Rights Under the Guarantee.
(a) No payment by any Guarantor pursuant to the provisions hereof to
the Trustee shall entitle such Guarantor to any payment out of any Collateral
held by the Trustee under the Indenture or any Security Documents.
(b) Each of the Guarantors waives notice of the issuance, sale and
purchase of the Notes and notice from the Trustee or the Holders from time to
time of any of the Notes of their acceptance and reliance on this Guarantee.
(c) Notwithstanding any payment or payments made by the Guarantors by
reason of the Guarantee, the Guarantors shall not be subrogated to any rights of
the Trustee or any Holder of the Notes against the Company until all the Notes
shall have been fully paid or deemed to have been fully paid within the meaning
of this Indenture. Any payment made by the Guarantors by reason of this
Guarantee shall be in all respects subordinated to the full and complete payment
or discharge under the Indenture of all obligations guaranteed hereby, and no
payment by the Guarantors by reason of this Guarantee shall give rise to any
claim of the Guarantors against the Trustee or any Holder. Unless and until the
Notes shall have been fully paid or deemed to have been fully paid within the
meaning of the Indenture, neither the Guarantors nor any of them will assign or
otherwise transfer any such claim against the Company to any other Person.
(d) No set-off, counterclaim, reduction or diminution of any obligation
or any defense of any kind or nature (other than performance by the Guarantor of
its obligation hereunder) which the Guarantor may have or assert against the
Trustee or any Holder of any Notes shall be available hereunder to the Guarantor
against the Trustee.
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(e) The Guarantor agrees to pay all costs, expense and fees, including
all reasonable attorneys' fees, which may be incurred by the Trustee in
enforcing or attempting to enforce the Guarantee or protecting the rights of the
Trustee or the Holders of Notes, if any, in accordance with this Indenture.
Section 13.6 Severability. In case any provision of the Guarantee shall
be invalid, illegal or unenforceable, that portion of such provision that is not
invalid, illegal or unenforceable shall remain in effect, and the validity,
legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 TIA Controls. If any provision of this Indenture limits,
qualifies, or conflicts with the duties imposed by operation of the TIA, the
imposed duties, upon qualification of this Indenture under the TIA, shall
control.
Section 14.2 Notices. Any notices or other communications to the
Company or the Trustee required or permitted hereunder shall be in writing, and
shall be sufficiently given if made by hand delivery, by telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company:
TransTexas Gas Corporation
1300 North Sam Houston Parkway East, Suite 310
Houston, Texas 77032
Attention: Edwin B. Donahue
if to the Trustee:
Firstar Bank, N.A.
Corporate Trust Department
101 East Fifth Street, 12th Floor
St. Paul, Minnesota 55101-1860
Attention: Frank Leslie
The Company or the 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 Company or the 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).
Any notice or communication mailed to a Noteholder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registration books of the Registrar and shall be sufficiently given to
him if so mailed within the time prescribed.
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Failure to mail a notice or communication to a Noteholder or any defect
in it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication is mailed in the manner provided above, it is duly
given, regardless of whether the addressee receives it.
Section 14.3 Communications by Holders with Other Holders. Noteholders
may communicate pursuant to TIA Section 312(b) with other Noteholders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and any other Person shall have the protection of TIA
Section 312(c).
Section 14.4 Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Company to the Trustee to take any action
under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of such counsel, all
such conditions precedent have been complied with.
Section 14.5 Intentionally Omitted.
Section 14.6 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to regardless of whether such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such Person, such
condition or covenant has been complied with; provided, however, that with
respect to matters of fact an Opinion of Counsel may rely on an Officers'
Certificate or certificates of public officials.
Section 14.7 Rules by Trustee, Paying Agent, Registrar. The Trustee may
make reasonable rules for action by or at a meeting of Noteholders. The Paying
Agent or Registrar may make reasonable rules for its functions.
Section 14.8 Legal Holidays. A "Legal Holiday" used with respect to a
particular place of payment is a Saturday, a Sunday or a day on which banking
institutions at such place are not required to be open. If a payment date is a
Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
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Section 14.9 Governing Law. THIS INDENTURE AND THE NOTES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. INSOFAR AS THIS INDENTURE RELATES TO
THE SECURITY DOCUMENTS OR THE CREATION, PERFECTION OR FORECLOSURE OF LIENS AND
THE ENFORCEMENT OF RIGHTS AND REMEDIES AGAINST THE COLLATERAL UNDER THE SECURITY
DOCUMENTS, IT SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION SPECIFIED IN
SUCH DOCUMENTS. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS INDENTURE AND THE NOTES AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THEY MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH
THEY 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 TRUSTEE OR ANY
NOTEHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER
JURISDICTION.
Section 14.10 No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of any of the Company or any of its Subsidiaries. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
Section 14.11 No Recourse against Others. A director, officer,
employee, stockholder or incorporator, as such, of the Company or any of its
Subsidiaries shall not have any liability for any obligations of the Company or
such Subsidiary under the Notes, the Guarantee, or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creations. Each Noteholder by accepting a Note waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Notes.
Section 14.12 Successors. All agreements of the Company and each
Guarantor in this Indenture and the Notes shall bind its successor. All
agreements of the Trustee in this Indenture shall bind its successor.
Section 14.13 Duplicate Originals. All parties may sign any number of
copies or counterparts of this Indenture. Each signed copy or counterpart shall
be an original, but all of them together shall represent the same agreement.
Section 14.14 Severability. In case any one or more of the provisions
in this Indenture or in the Notes shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
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<PAGE> 84
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 14.15 Table of Contents, Headings, Etc. The Table of Contents,
Cross-Reference Table and headings of the Articles and the Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the terms
or provisions hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
TRANSTEXAS GAS CORPORATION
By:
--------------------------------------
Name:
Title:
[Seal]
Attest:
---------------------------
[INITIAL GUARANTOR(S)]
By:
--------------------------------------
Name:
Title:
[Seal]
Attest:
---------------------------
[FIRSTAR BANK, N.A.],
as Trustee
By:
--------------------------------------
Name:
Title:
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<PAGE> 86
EXHIBIT A
[FORM OF SENIOR SECURED NOTE]
TRANSTEXAS GAS CORPORATION
15% SENIOR SECURED NOTE DUE 2004
No. $
CUSIP [------------]
TransTexas Gas Corporation, a Delaware 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
______________________, or registered assigns, the principal sum of
________________ Dollars, on [__________,____].
Interest Payment Dates: [______] 15 and [______] 15, commencing [_____]
15, [______].
Record Dates: [______] 1 and [______] 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.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
Dated:
TRANSTEXAS GAS CORPORATION
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
Trustee's Certificate of Authentication:
This is one of the Notes referred to
in the within-mentioned Indenture:
Firstar Bank, N.A., as Trustee
A-1
<PAGE> 87
By:
--------------------------------
Authorized Signature
A-2
<PAGE> 88
(BACK OF NOTE)
TRANSTEXAS GAS CORPORATION
15% Senior Secured Note due 2004
1. Interest.
TransTexas Gas Corporation, a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at a rate of 15%
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 a rate of [---]%
per annum compounded semi-annually.
The Company will pay interest semi-annually on [______] 15 and
[______] 15 of each year (each, an "Interest Payment Date"), commencing [______]
15, [______]. Interest on the Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the date of
issuance of the Notes. Interest on the Notes will be computed on the basis of a
360-day year consisting of twelve 30-day months.
2. Method of Payment.
The Company shall pay interest on the Notes (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders must
surrender Notes to a Paying Agent to collect principal payments. Except as
provided below, the Company shall pay principal and interest in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and interest by wire transfer of Federal
funds, or interest by its check payable in such U.S. Legal Tender. The Company
shall deliver any such interest payment to the Paying Agent who shall remit such
payment to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, Firstar Bank of Minnesota, N.A. (the "Trustee") will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders. The Company or an Affiliate of it
may, subject to certain exceptions, act as Paying Agent, Registrar or
co-Registrar.
4. Indenture.
The Company issued the Notes under an Indenture, dated as of [________
___, ______] (the "Indenture"), among the Company and the Trustee. Capitalized
terms herein are used as defined in the Indenture unless otherwise defined
herein. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
in effect on the date of the Indenture. The Notes are subject to all such terms,
and Holders of Notes are referred to the Indenture and said Act for a statement
of them. The Notes are senior secured obligations of the Company limited in
aggregate principal amount to $200,000,000.
A-3
<PAGE> 89
5. Optional Redemption.
The Notes may be redeemed in whole or from time to time in part at any
time on and after June 15, 2000, at the option of the Company, at the Redemption
Price (expressed as a percentage of principal amount) set forth below with
respect to the indicated Redemption Date, in each case, together with any
accrued but unpaid interest to the Redemption Date.
<TABLE>
<CAPTION>
If redeemed during
the 12-month period
beginning [______] 15 Redemption Price
--------------------- ----------------
<S> <C>
____ . . . . . . . . . 115%
____ . . . . . . . . . 112%
____ . . . . . . . . . 109%
____ . . . . . . . . . 106%
____ and thereafter. . 103%
</TABLE>
Any such redemption will comply with Article III of the Indenture.
6. Notice of Redemption.
Notice of redemption will be mailed by first class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at his registered address. Notes in denominations larger
than $1,000 may be redeemed in part.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Notes called for redemption shall have
been deposited with the Paying Agent on such Redemption Date the Notes called
for redemption will cease to bear interest and the only right of the Holders of
such Notes will be to receive payment of the Redemption Price and any accrued
and unpaid interest to the Redemption Date.
7. Denominations; Transfer; Exchange.
The Notes are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. A Holder may register the transfer of,
or exchange Notes in accordance with, the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any Notes
selected for redemption.
8. Persons Deemed Owners.
The registered Holder of a Note may be treated as the owner of it for
all purposes.
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<PAGE> 90
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. Thereafter, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
If the Company at any time deposits into an irrevocable trust with the
Trustee U.S. Legal Tender or U.S. Government Obligations sufficient to pay the
principal of and interest on the Notes to redemption or maturity and complies
with the other provisions of the Indenture relating thereto, the Company will be
discharged from certain provisions of the Indenture and the Notes (including the
financial covenants, but excluding its obligation to pay the principal of and
interest on the Notes).
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Notes then outstanding, and any
existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Notes then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture or the Notes
to, among other things, cure any ambiguity, defect or inconsistency (provided,
however, that such amendment or supplement does not adversely affect the rights
of any Holder of a Note).
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and its Subsidiaries to, among other things, Incur additional Debt or
issue Disqualified Capital Stock, make payments in respect of its Capital Stock,
enter into transactions with Affiliates, incur Liens, sell assets, change the
nature of its business, merge or consolidate with any other Person and sell,
lease, transfer or otherwise dispose of substantially all of its properties or
assets. The limitations are subject to a number of important qualifications and
exceptions. The Company must deliver a quarterly report to the Trustee on
compliance with such limitations.
13. Change of Control.
In the event there shall occur any Change of Control, each Holder of
Notes shall have the right, at such Holder's option but subject to the
limitations and conditions set forth in the Indenture, to require the Company to
purchase on the Change of Control Payment Date in the manner specified in the
Indenture, all or any part (in integral multiples of $1,000) of such Holder's
Notes at a Change of Control Purchase Price equal to 101% of the principal
amount thereof, together with accrued and unpaid interest, if any, on and
including the Change of Control Payment Date.
14. Successors.
When a successor assumes all the obligations of its predecessor under
the Notes and the Indenture, the predecessor will be released from those
obligations.
A-5
<PAGE> 91
15. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate combined principal amount of the Notes and
the Company's Senior Secured Discount Notes then outstanding may declare all the
Notes to be due and payable immediately in the manner and with the effect
provided in the Indenture. Holders of Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, Holders of a majority in aggregate principal amount of the
Notes then outstanding may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of Notes notice of any continuing
Default or Event of Default (except a Default in payment of principal, premium,
if any, or interest, including a Default at any Maturity Date), if it determines
that withholding notice is in their interest.
16. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such,
past, present or future, of the Company or any of its Subsidiaries or any
successor corporation shall have any liability for any obligation of the Company
or such Subsidiary under the Notes or the Indenture or for any claim based on,
in respect of or by reason of, such obligations or their creation. Each Holder
of a Note by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
17. Authentication.
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
18. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Note
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act). Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Indenture.
19. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
A-6
<PAGE> 92
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Signature
---------------- --------------------------------------
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee*
- --------------------
* NOTICE: The signature must be guaranteed by an institution which is a
member of one of the following recognized signature guarantee
programs:
(1) The Securities Transfer Agent Medallion Program (STAMP);
(2) The New York Stock Exchange Medallion Program (MSP);
(3) The Stock Exchange Medallion Program (SEMP).
A-7
<PAGE> 93
OPTION OF HOLDER TO ELECT PURCHASE
[ ] CHECK HERE, if you want to elect to have this Note purchased in
its entirety by the Company pursuant to Article XI of the
Indenture.
[ ] CHECK HERE, if you want to elect to have only part of this Note
purchased by the Company pursuant to Article XI of the Indenture,
and state the principal amount (in integral multiples of $1,000)
of this Note that you want to be purchased:
$
-----------------------
Date: Signature
---------------- --------------------------------------
(Sign exactly as your name appears on
the face of this Note)
Your Social Security or Tax Identification Number:
------------------------
Signature Guarantee:*
- -----------------
* NOTICE: The signature must be guaranteed by an institution which is a member
of one of the following recognized signature guarantee programs:
(1) The Securities Transfer Agent Medallion Program (STAMP);
(2) The New York Stock Exchange Medallion Program (MSP);
(3) The Stock Exchange Medallion Program (SEMP).
A-8
<PAGE> 94
EXHIBIT B
FORM OF GUARANTEE
For value received, [__________________________], a [________]
corporation, hereby unconditionally guarantees jointly and severally with any
current and future guarantors to the Holder of the Note upon which this
Guarantee is endorsed the due and punctual payment of the principal of, premium,
if any, and interest on such Note when and as the same shall become due and
payable according to the terms of such Note. The Guarantee of the Note upon
which this Guarantee is endorsed will not become effective until the Trustee
signs the certificate of authentication on such Note.
[ ]
-----------------------------------
By:
-------------------------------
Attest:
--------------------
B-1
<PAGE> 1
EXHIBIT T3E
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
In re:
TRANSTEXAS GAS CORPORATION, )
TRANSAMERICAN ENERGY ) CASE NO. 99-21550-C-11
CORPORATION, TRANSAMERICAN ) (Jointly Administered)
REFINING CORPORATION, )
Debtors.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
September 29, 1999
JORDAN, HYDEN, GARDERE & WYNNE, L.L.P.
WOMBLE & CULBRETH, P.C. John Nabors
Shelby Jordan Deirdre B. Ruckman
Bank America Towers 3000 Thanksgiving Tower
500 N. Shoreline, Suite 900 1601 Elm Street
Corpus Christi, TX 78471 Dallas, TX 75201
COUNSEL FOR DEBTORS SPECIAL COUNSEL FOR
DEBTORS
<PAGE> 2
TransTexas Gas Corporation ("TransTexas"), TransAmerican Energy
Corporation ("TEC") and TransAmerican Refining Corporation ("TARC")
(collectively, the "Debtors"), as debtors in possession under Chapter 11 of the
Bankruptcy Code hereby propose and File this First Amended Joint Disclosure
Statement for each of their Plans under Chapter 11 of the Bankruptcy Code.
THE DEBTORS URGE ALL HOLDERS OF CLAIMS AND INTERESTS IN IMPAIRED
CLASSES RECEIVING BALLOTS TO ACCEPT THE PLANS.
AS A RESULT OF NEGOTIATIONS WITH THE DEBTORS, THE CREDITORS' COMMITTEE
AND THE BONDHOLDER COMMITTEE SUPPORT ACCEPTANCE OF THE PLANS. THE SUBDEBT
COMMITTEE DOES NOT SUPPORT ACCEPTANCE OF THE PLANS.
THIS DISCLOSURE STATEMENT IS DESIGNED TO PROVIDE ADEQUATE INFORMATION
TO ENABLE HOLDERS OF CLAIMS AGAINST AND INTERESTS IN THE DEBTORS TO MAKE AN
INFORMED JUDGMENT ON WHETHER TO ACCEPT OR REJECT THE PLANS. ALL HOLDERS OF
CLAIMS AND INTERESTS ARE HEREBY ADVISED AND ENCOURAGED TO READ THIS DISCLOSURE
STATEMENT AND THE PLANS IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE
PLANS. PLAN SUMMARIES AND STATEMENTS MADE IN THIS DISCLOSURE STATEMENT ARE
QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE PLANS, WHICH ARE ANNEXED HERETO
AS APPENDICES 3 TO 5, OTHER APPENDICES ANNEXED HERETO AND OTHER DOCUMENTS
REFERENCED AS FILED WITH THE COURT BEFORE OR CONCURRENTLY WITH THE FILING OF
THIS DISCLOSURE STATEMENT. FURTHERMORE, THE PROJECTED FINANCIAL INFORMATION
CONTAINED HEREIN HAS NOT BEEN THE SUBJECT OF AN AUDIT. SUBSEQUENT TO THE DATE
HEREOF, THERE CAN BE NO ASSURANCE THAT: (A) THE INFORMATION AND REPRESENTATIONS
CONTAINED HEREIN WILL CONTINUE TO BE MATERIALLY ACCURATE; OR (B) THIS
DISCLOSURE STATEMENT CONTAINS ALL MATERIAL INFORMATION.
ALL HOLDERS OF IMPAIRED CLAIMS AND IMPAIRED INTERESTS SHOULD READ AND
CONSIDER CAREFULLY THE MATTERS DESCRIBED IN THIS DISCLOSURE STATEMENT AS A
WHOLE, INCLUDING THE SECTION ENTITLED "RISK FACTORS," PRIOR TO VOTING ON THE
PLANS. IN MAKING A DECISION TO ACCEPT OR REJECT THE PLANS, EACH HOLDER OF A
CLAIM OR INTEREST MUST RELY ON ITS OWN EXAMINATION OF THE DEBTORS AS DESCRIBED
IN THIS DISCLOSURE STATEMENT AND THE TERMS OF THE PLANS, INCLUDING THE MERITS
AND RISKS INVOLVED. IN ADDITION, CONFIRMATION AND CONSUMMATION OF THE PLANS ARE
SUBJECT TO CONDITIONS PRECEDENT THAT COULD LEAD TO DELAYS IN CONSUMMATION OF
THE PLANS. THERE CAN BE NO ASSURANCE THAT EACH OF THESE CONDITIONS WILL BE
SATISFIED OR
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page (ii)
<PAGE> 3
WAIVED (AS PROVIDED IN THE PLANS) OR THAT THE PLANS WILL BE CONSUMMATED. EVEN
AFTER THE EFFECTIVE DATE, DISTRIBUTIONS UNDER THE PLANS MAY BE SUBJECT TO
SUBSTANTIAL DELAYS FOR HOLDERS OF CLAIMS AND INTERESTS THAT ARE DISPUTED.
THIS DISCLOSURE STATEMENT HAS BEEN APPROVED BY ORDER OF THE BANKRUPTCY
COURT AS CONTAINING ADEQUATE INFORMATION OF A KIND AND IN SUFFICIENT DETAIL TO
ENABLE HOLDERS OF CLAIMS AND INTERESTS TO MAKE AN INFORMED JUDGMENT WITH
RESPECT TO VOTING TO ACCEPT OR REJECT THE PLANS. HOWEVER, THE BANKRUPTCY
COURT'S APPROVAL OF THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE A
RECOMMENDATION OR DETERMINATION BY THE BANKRUPTCY COURT WITH RESPECT TO THE
MERITS OF THE PLANS.
WITH THE EXCEPTION OF HISTORICAL INFORMATION, SOME MATTERS DISCUSSED
HEREIN, INCLUDING THE PROJECTIONS AND VALUATION ANALYSIS DESCRIBED HEREIN ARE
"FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. SUCH FORWARD LOOKING STATEMENTS ARE SUBJECT TO
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM FUTURE RESULTS EXPRESSED OR IMPLIED BY SUCH FORWARD
LOOKING STATEMENTS.
NO PARTY IS AUTHORIZED BY THE DEBTORS TO GIVE ANY INFORMATION OR MAKE
ANY REPRESENTATIONS WITH RESPECT TO THE PLANS OR THE REORGANIZATION SECURITIES
OTHER THAN THAT WHICH IS CONTAINED IN THIS DISCLOSURE STATEMENT. NO
REPRESENTATIONS OR INFORMATION CONCERNING THE DEBTORS, THEIR FUTURE BUSINESS
OPERATIONS OR THE VALUE OF THEIR PROPERTIES HAVE BEEN AUTHORIZED BY THE
DEBTORS, OTHER THAN AS SET FORTH HEREIN. ANY INFORMATION OR REPRESENTATIONS
GIVEN TO OBTAIN YOUR ACCEPTANCE OR REJECTION OF THE PLANS WHICH ARE DIFFERENT
FROM OR INCONSISTENT WITH THE INFORMATION OR REPRESENTATIONS CONTAINED HEREIN
AND IN THE PLANS SHOULD NOT BE RELIED UPON BY ANY HOLDERS OF CLAIMS AND
INTERESTS IN VOTING ON THE PLANS.
THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION
1125 OF THE BANKRUPTCY CODE AND NOT IN ACCORDANCE WITH FEDERAL OR STATE
SECURITIES LAWS OR OTHER APPLICABLE NONBANKRUPTCY LAW. ENTITIES HOLDING OR
TRADING IN OR OTHERWISE PURCHASING, SELLING OR TRANSFERRING CLAIMS AGAINST,
INTERESTS IN OR
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page (iii)
<PAGE> 4
SECURITIES OF, THE DEBTORS SHOULD EVALUATE THIS DISCLOSURE STATEMENT ONLY IN
LIGHT OF THE PURPOSE FOR WHICH IT WAS PREPARED.
THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION") OR BY ANY STATE
SECURITIES COMMISSION OR SIMILAR PUBLIC, GOVERNMENTAL OR REGULATORY AUTHORITY,
AND NEITHER SUCH COMMISSION NOR ANY SUCH AUTHORITY HAS PASSED UPON THE ACCURACY
OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN.
UNTIL THE EFFECTIVE DATE, WITH RESPECT TO CONTESTED MATTERS, ADVERSARY
PROCEEDINGS AND OTHER PENDING OR THREATENED ACTIONS (WHETHER OR NOT PENDING),
THIS DISCLOSURE STATEMENT AND THE INFORMATION CONTAINED HEREIN SHALL NOT BE
CONSTRUED AS AN ADMISSION OR STIPULATION BY ANY ENTITY, BUT RATHER AS
STATEMENTS MADE IN SETTLEMENT NEGOTIATIONS GOVERNED BY RULE 408 OF THE FEDERAL
RULES OF EVIDENCE AND ANY OTHER RULE OR STATUTE OF SIMILAR IMPORT.
THIS DISCLOSURE STATEMENT SHALL NEITHER BE ADMISSIBLE IN ANY
PROCEEDING INVOLVING A DEBTOR OR ANY OTHER PARTY NOR BE CONSTRUED TO BE
PROVIDING ANY LEGAL, BUSINESS, FINANCIAL OR TAX ADVICE. EACH HOLDER OF A CLAIM
OR INTEREST SHOULD, THEREFORE, CONSULT WITH ITS OWN LEGAL, BUSINESS, FINANCIAL
AND TAX ADVISORS AS TO ANY SUCH MATTERS CONCERNING THE SOLICITATION, THE PLANS
OR THE TRANSACTIONS CONTEMPLATED THEREBY.
THE TERMS OF THE PLANS GOVERN IN THE EVENT OF ANY INCONSISTENCY WITH
THE SUMMARIES THEREOF IN THIS DISCLOSURE STATEMENT.
This Disclosure Statement, the Plans annexed hereto as Appendices "3"
to "5" (and the other appendices hereto), the accompanying form of Ballots, if
any, and the related materials delivered together herewith are being furnished
by the Debtors to their respective holders of Impaired Claims and Impaired
Interests pursuant to section 1125 of the Bankruptcy Code, in connection with
the solicitation by the Debtors of votes to accept or reject the Debtors' Plans
(and the transactions contemplated thereby), as described herein.
INCORPORATION OF DOCUMENTS BY REFERENCE
This Disclosure Statement incorporates by reference certain documents
relating to the Debtors that are not presented herein or delivered herewith.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page (iv)
<PAGE> 5
The following documents are incorporated by reference herein:
1. Annual Report of TransTexas on Form 10-K for the fiscal year
ended January 31, 1999.
2. Quarterly Reports of TransTexas on Form 10-Q for the fiscal
quarters ended April 30, 1999 and July 31, 1999.
3. Current Report of TransTexas on Form 8-K dated April 19,
1999.
4. Proxy Statement of TransTexas dated June 1, 1999.
5. Annual Report of TEC on Form 10-K for the fiscal year ended
January 31, 1998.
6. Quarterly Reports of TEC on Form 10-Q for the fiscal quarters
ended April 30, 1998, July 31, 1998 and October 31, 1998.
7. Current Reports of TEC on Form 8-K, dated August 31, 1998,
September 1, 1998, December 11, 1998, December 15, 1998,
February 23, 1999, April 20, 1999, May 3, 1999, July 9, 1999,
August 2, 1999 and September 1, 1999.
8. Annual Report of TARC on Form 10-K for the fiscal year ended
January 31, 1998.
9. Quarterly Reports of TARC on Form 10-Q for the fiscal
quarters ended April 30, 1998, July 31, 1998 and October 31,
1998.
10. Current Reports of TARC on Form 8-K, dated August 31, 1998,
September 1, 1998, December 11, 1998, December 15, 1998,
April 20, 1999, July 9, 1999, August 2, 1999 and September 1,
1999.
11. Registration Statement of TARC on Form S-4/A as filed with
the Commission on January 25, 1999 (No. 333-53821).
All documents and reports subsequently Filed by the Debtors pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), prior to the date hereof shall be deemed to be
incorporated by reference herein and shall be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein, or contained in this Disclosure
Statement, shall be deemed to be modified or superseded for purposes of this
Disclosure Statement to the extent that a statement contained herein or in any
subsequently Filed document that also is deemed to be incorporated herein
modifies or supersedes such statement. Any statement so modified or
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page (v)
<PAGE> 6
superseded shall not be deemed to constitute a part of this Disclosure
Statement, except as so modified or superseded.
AVAILABLE INFORMATION
Each of the Debtors has Filed reports and other information with the
Commission pursuant to the requirements of the Exchange Act. Such reports and
other information can be inspected and copied at the public reference
facilities maintained by the Commission at its offices at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and Seven World Trade Center, New York, New York 10048.
Copies of such materials can be obtained by mail from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains an
Internet Web site that contains reports and other information regarding the
Debtors and other registrants that File electronically with the Commission. The
Internet address of the Commission's Web site is http://www.sec.gov. In
addition, certain documents Filed in the Chapter 11 Cases are available at the
following Web site: http://www.transtexasgascorpreorg.com.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page (vi)
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
I. INTRODUCTION AND SUMMARY............................................................................Page 1
A. The Solicitation...............................................................................Page 1
B. Recommendations................................................................................Page 2
C. Summary of the Plans...........................................................................Page 2
1. The TEC Plan...............................................................................Page 3
2. The TARC Plan..............................................................................Page 3
3. The TransTexas Plan........................................................................Page 3
D. Voting Procedures and Requirements............................................................Page 14
E. Votes Required for Acceptance; Confirmation...................................................Page 15
E. Effective Date of the Plans...................................................................Page 16
II. BACKGROUND.........................................................................................Page 17
A. General.......................................................................................Page 17
B. Capital Structure.............................................................................Page 17
C. Capitalization................................................................................Page 19
D. Information Regarding TransTexas Common Stock.................................................Page 20
E. Business of the Debtors.......................................................................Page 21
F. Prior Transactions............................................................................Page 32
G. Events Leading to Chapter 11 Filings..........................................................Page 36
H. Filing of Chapter 11 Cases....................................................................Page 37
III. THE CHAPTER 11 CASES...............................................................................Page 37
A. Continuation of Business; Stay of Litigation..................................................Page 37
B. Significant Events During the Chapter 11 Cases................................................Page 38
1. First Day Orders..........................................................................Page 38
2. Change of Venue...........................................................................Page 40
3. Appointment of creditors' committees......................................................Page 40
4. Retention of Professionals................................................................Page 40
5. Payments to Royalty Owners................................................................Page 41
6. Rejection of Contracts....................................................................Page 41
7. Removal of Litigation.....................................................................Page 41
8. Other Litigation..........................................................................Page 42
9. 341 Meeting...............................................................................Page 45
10. Motion for Procedures to Determine Mechanic's Lien Claims.................................Page 45
11. Denial of Formation of Mineral Property Owners Committee..................................Page 45
12. SubDebt Committee's Avoidance Claims......................................................Page 45
13. Claims Process and Bar Date...............................................................Page 46
</TABLE>
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page (vii)
<PAGE> 8
<TABLE>
<S> <C>
IV. THE PLANS..........................................................................................Page 47
A. General.......................................................................................Page 47
B. Classification and Treatment of Claims and Interests Under the Plans..........................Page 48
1. Treatment of Administrative Expenses and Certain Priority Claims..........................Page 49
2. Treatment of Claims and Interests under the TEC Plan:.....................................Page 50
3. Treatment of Claims and Interests under the TARC Plan:....................................Page 51
4. Treatment of Claims and Interests under the TransTexas Plan:..............................Page 52
5. Principal Plan Documents..................................................................Page 60
6. Reorganization Securities.................................................................Page 62
7. Cancellation and Surrender of Existing Securities; Cancellation of
Indentures................................................................................Page 75
8. Employee Benefit Plans....................................................................Page 76
C. Securities Law Matters........................................................................Page 76
1. Exemption from Securities Act Registration................................................Page 76
2. Registration Rights.......................................................................Page 77
3. Registration of Reorganization Securities; Listing of Reorganization
Securities................................................................................Page 77
D. Executory Contracts and Unexpired Leases......................................................Page 78
E. Conditions to Occurrence of the Effective Date of the Plans. ................................Page 79
F. Exemption From Certain Transfer Taxes.........................................................Page 80
G. Section 1125 of the Bankruptcy Code...........................................................Page 80
H. Effects of Confirmation of the Plans..........................................................Page 80
1. TransTexas................................................................................Page 80
2. TEC and TARC..............................................................................Page 82
3. Indemnification...........................................................................Page 82
4. Injunction................................................................................Page 83
5. Revesting.................................................................................Page 83
6. Retention and Enforcement of Causes of Action.............................................Page 84
I. Distributions Under the Plans.................................................................Page 84
1. Time of Distributions Under the Plans.....................................................Page 84
2. Rounding..................................................................................Page 84
3. Compliance with Tax Requirements..........................................................Page 85
4. Distribution of Undeliverable or Unclaimed Property.......................................Page 85
5. Set-Offs..................................................................................Page 85
6. Allocation of Consideration...............................................................Page 86
7. Manner of Payment.........................................................................Page 86
8. Disbursing Agent..........................................................................Page 86
J. Procedures for Resolving Disputed Claims......................................................Page 86
1. Objections to Claims......................................................................Page 86
2. Payments and Distributions With Respect to Disputed Claims or Interests...................Page 86
</TABLE>
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page (viii)
<PAGE> 9
<TABLE>
<S> <C>
K. Dissolution of Creditors' Committee and SubDebt Committee.....................................Page 87
L. Other Provisions of the Plans.................................................................Page 87
1. Retention of Jurisdiction.................................................................Page 87
2. Amendment and Modification to the Plans...................................................Page 89
3. Withdrawal and Revocation of the Plans....................................................Page 89
V. PROJECTIONS........................................................................................Page 89
VI. RISK FACTORS.......................................................................................Page 91
A. TransTexas' Business Risks....................................................................Page 91
1. Tax Issues. .............................................................................Page 91
2. Financial Condition of TransTexas; Payment at Maturity....................................Page 92
3. Contractual Restrictions in Post-Confirmation Environment.................................Page 93
4. Mandatory Conversion of Preferred Stock...................................................Page 93
5. Environmental Regulation and Litigation...................................................Page 93
6. Adequacy of Collateral; Risks of Foreclosure..............................................Page 93
7. Lien Priority.............................................................................Page 94
8. Potential Tax Liabilities.................................................................Page 94
9. Risks Related to Projections and Estimates................................................Page 95
10. Absence of Public Market for the Reorganization Securities................................Page 96
11. Substantial Capital Requirements..........................................................Page 96
12. Ability to Replace Short-Lived Reserves..................................................Page 97
13. Natural Gas Price Fluctuations and Markets................................................Page 97
14. Competition...............................................................................Page 98
15. Drilling Risks............................................................................Page 98
16. Operating Hazards and Uninsured Risks.....................................................Page 98
17. Government Regulations....................................................................Page 98
18. Lack of Complete Year 2000 Compliance.....................................................Page 98
19. No Control of Operations of TCR Holding Corporation; Potential
Elimination of Value of TCR Holding Preferred Stock......................................Page 100
B. Bankruptcy Risks.............................................................................Page 101
1. Objection to Classifications.............................................................Page 101
2. Risk of Nonconfirmation of the Plans.....................................................Page 101
3. Nonoccurrence of Effective Date of the Plans.............................................Page 101
4. Potential Effect of Bankruptcy on Certain Relationships..................................Page 101
C. Liquidity Risks..............................................................................Page 102
1. Restrictions on Transfer.................................................................Page 102
2. Potential Illiquidity of Reorganization Securities.......................................Page 102
</TABLE>
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page (ix)
<PAGE> 10
<TABLE>
<S> <C>
VII. CONFIRMATION OF THE PLANS.........................................................................Page 102
A. Voting Procedures and Requirements...........................................................Page 102
B. Acceptance...................................................................................Page 106
C. Confirmation of the Plans....................................................................Page 107
1. The Best Interests Test..................................................................Page 107
2. Feasibility..............................................................................Page 109
D. Non-Acceptance and Cramdown..................................................................Page 109
1. The Plans are Fair and Equitable.........................................................Page 110
2. No Unfair Discrimination.................................................................Page 110
E. Confirmation Hearing.........................................................................Page 111
VIII. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF PLANS............................................Page 111
A. Liquidation Under Chapter 7..................................................................Page 111
B. Alternative Plans............................................................................Page 111
IX. MANAGEMENT OF REORGANIZED TRANSTEXAS..............................................................Page 112
A. New Board of Directors.......................................................................Page 112
B. Senior Management of Reorganized TransTexas..................................................Page 112
C. Management Agreement.........................................................................Page 114
D. Employee Benefits............................................................................Page 114
X. CERTAIN FEDERAL INCOME TAX CONSEQUENCES...........................................................Page 115
XI. CONCLUSION AND RECOMMENDATION.....................................................................Page 133
</TABLE>
APPENDICES
Appendix 1 - Glossary
Appendix 2 - TransTexas Proforma Financial Projections
Appendix 3 - Second Amended Plan of Liquidation under Chapter 11 of the
Bankruptcy Code proposed by TransAmerican Energy Corporation
Appendix 4 - Second Amended Plan of Reorganization under Chapter 11 of the
Bankruptcy Code proposed by TransTexas Gas Corporation
Appendix 5 - Second Amended Plan of Liquidation under Chapter 11 of the
Bankruptcy Code proposed by TransAmerican Refining Corporation
Appendix 6 - Summary Liquidation Analysis
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page (x)
<PAGE> 11
I. INTRODUCTION AND SUMMARY
The following introduction and summary is qualified in its entirety
by, and should be read in conjunction with, the more detailed information and
financial statements and notes thereto appearing elsewhere in this Disclosure
Statement. References herein to a "fiscal" year refer to the fiscal years of
the Debtors ended the last day of January in the calendar year indicated. All
capitalized terms used in this Disclosure Statement have the meanings ascribed
to such terms in the Glossary attached hereto as Appendix "1" and in the Plans,
except as otherwise indicated.
A. The Solicitation.
On September 29, 1999, the Debtors Filed their respective Plans with
the United States Bankruptcy Court for the Southern District of Texas, Corpus
Christi Division. The Debtors Filed the Disclosure Statement with the
Bankruptcy Court pursuant to Section 1125 of title 11 of the Bankruptcy Code
and in connection with the Solicitation with respect to the Plans.
On September 29, 1999, the Bankruptcy Court determined that this
Disclosure Statement contains "adequate information" in accordance with section
1125 of the Bankruptcy Code. Pursuant to section 1125(a)(1) of the Bankruptcy
Code, "adequate information" is defined as "information of a kind, and in
sufficient detail, as far as reasonably practicable in light of the nature and
history of the debtors and the condition of the debtors' books and records,
that would enable a hypothetical reasonable investor typical of holders of
claims or interests of the relevant class to make an informed judgment about
the plan. 11 U.S.C. Section 1125(a)(1).
On November 9, 1999, the Bankruptcy Court has scheduled a hearing to
consider confirmation of the Plans for before the Honorable Richard Schmidt,
United States Bankruptcy Court Judge at 9:00 a.m. Central Time. The hearing may
be adjourned from time to time without further notice other than by
announcement in the Bankruptcy Court on the scheduled date of such hearing. Any
objections to confirmation of the Plans must be in writing and must be Filed
with the Clerk of the Bankruptcy Court and served on the counsel listed below
to ensure RECEIPT by them on or before November 1, 1999 at 4:30 p.m. Central
Time. Bankruptcy Rule 3007 governs the form of any such objection. Counsel on
whom objections must be served are:
Jordan, Hyden, Womble & Culbreth, P.C. Gardere & Wynne, L.L.P.
800 N. Shoreline, Suite 900 1601 Elm Street, Suite 3000
Corpus Christi, Texas 78471 Dallas, Texas 75201
(361) 884-5678 (214) 999-3000
Attn: Shelby Jordan Attn: Deirdre B. Ruckman
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 1
<PAGE> 12
Bracewell & Patterson, L.L.P. Cadwalader. Wickersham & Taft
711 Louisiana, Suite 2900 100 Maiden Lane
Houston, Texas 77002 New York, New York 10038
(713) 221-1107 (212) 504-6240
Attn: Alfredo R. Perez Attn: Michael J. Sage
Counsel for Unsecured Creditors Committee Counsel for Bondholder Committee
Pillsbury Madison & Sutro LLP United States Trustee
650 Town Center Drive, 7th Floor 515 Rusk, Room 3401A
Costa Mesa, California 92625-7122 3rd Floor
Attn: Craig A. Barbarosh Houston, Texas 77002
Counsel for SubDebt Committee (713) 718-4650
Attn: Diane Livingstone
B. Recommendations.
THE DEBTORS RECOMMEND THAT EACH PERSON ENTITLED TO VOTE ON THE PLANS
VOTE TO ACCEPT THE PLANS.
With respect to its Plan, TransTexas believes that: (i) the TransTexas
Plan provides the best possible result for the holders of Claims and Interests;
(ii) with respect to each Impaired Class of Claims or Interests, the
distributions under the TransTexas Plan are greater than the amounts that would
be received if TransTexas were to liquidate under Chapter 7 of the Bankruptcy
Code; and (iii) acceptance of the TransTexas Plan is in the best interest of
holders of Claims and Interests.
In arriving at its conclusions, TransTexas considered (i) the limited
alternatives available to TransTexas to restructure its respective debts, (ii)
its estimated liquidation value, (iii) the rights, in both payment and security
position, of creditors of TransTexas and (iv) the present status of the oil and
gas industry.
With respect to their respective Plans, each of TEC and TARC believes
that its Plan provides for an orderly liquidation of its Estate and that
acceptance of such Plan is in the best interests of holders of Claims and
Interests of its Estate.
C. Summary of the Plans.
Set forth in detail elsewhere in this Disclosure Statement is a
description of the technical aspects of the classification of Claims and
Interests, the relative allocations of property to holders of such Claims and
Interests, the methodology as to how such property is to be distributed, the
risks inherent in the proposed Plans, and the applicable bankruptcy and tax
consequences of the proposed liquidation of TEC and TARC and the reorganization
of TransTexas. The Plans are complex and were arrived at after lengthy
discussions between the Debtors and certain of their senior secured
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 2
<PAGE> 13
creditors and other parties in interest and are based upon the Debtors'
analysis of all claims, an evaluation of the relative merits of potential
conflicting claims and a compromise between such claims consistent with the
goals of the Bankruptcy Code. The Debtors believe that the following broad
overview of what creditors and equity holders will receive under the Plans will
be helpful in your consideration of whether you wish to accept or reject the
appropriate plan. This summary does not purport to be complete and should only
be relied upon for voting purposes when read in conjunction with the Plans and
the Disclosure Statement in their entirety. In the event of any inconsistency
between the Plans and the Plan Documents, on the one hand, and this Disclosure
Statement, on the other hand, the Plans and the Plan Documents shall control
and take precedence with respect to such inconsistency.
1. The TEC Plan
The TEC Plan provides that TEC will be liquidated and that the
creditors of TEC will receive distributions as follows: (i) holders of the
Bondholder DIP Secured Claims will receive no Distributions under the TEC Plan;
(ii) holders of allowed Priority Claims will receive payment in full, in Cash;
(iii) holders of the TEC Senior Secured Note Claims will receive their Ratable
Proportion of all of the Collateral pledged by TEC that secures the TEC Senior
Secured Notes and all Distributions TEC would have been entitled to receive
under the TransTexas Plan and the TARC Plan; (iv) holders (other than
Affiliates of TEC) of Allowed General Unsecured Claims will receive their
Ratable Proportion of $5,000; and (v) the Interests held by TEC common
stockholders will be canceled.
2. The TARC Plan
The TARC Plan provides that TARC will be liquidated and that the
creditors of TARC will receive Distributions as follows: (i) holders of the
Bondholder DIP Secured Claims will receive no Distributions under the TARC
Plan; (ii) holders of allowed Priority Claims will be paid in full; (iv)
holders of the TARC Senior Secured Note Claims will receive their Ratable
Proportion of all of the Collateral pledged by TARC that secures the TARC
Senior Secured Note; (v) holders of Allowed General Unsecured Claims will
receive their Ratable Proportion of the Litigation Trust; (vi) holders of TARC
Subordinated Note Claims will receive, pursuant to a compromise and settlement
by and between Firstar and First Union their Ratable Proportion of 17.5% of the
funds held in the Interest Reserve Accounts, less reasonable fees and expenses
payable to First Union and its attorneys, plus their Ratable Proportion of the
Litigation Trust; and (vii) the TARC Common Stock Interests will be canceled.
3. The TransTexas Plan
The TransTexas Plan provides for the reorganization of its
business and provides generally that the creditors of TransTexas will receive
distributions as follows: (i) holders of allowed Priority Claims shall receive
payment in full in Cash; (ii) holders of Secured Tax Claims shall
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 3
<PAGE> 14
receive at the option of TransTexas (a) equal Cash payments every six months
for six years plus 12% interest on the unpaid balance or (b) payment in full in
Cash; (iii) holders of TransTexas Senior Secured Note Claims shall receive (a)
all of the New Senior Secured Notes; (b) all of the New Senior Preferred Stock,
(c) all of the New Junior Preferred Stock, (d) all of the New Common Stock, (e)
all of the New Warrants; and (f) an amount of Cash equal to the Maximum GUC
Cash Amount; (iv) the holders of the GMAC Secured Claim shall be assumed such
treatment shall be Impaired; (v) holders of allowed Miscellaneous Secured
Claims shall receive at the option of the Debtor (a) such treatment as will
leave such holder Unimpaired, (b) payment in full in Cash, or (c) return of
such holder's Collateral in the possession of TransTexas; (vi) each holder of a
Mineral Interest Secured Claim shall receive at such holder's election (a)
equal Cash payments over five years totaling the principal amount of its Claim
plus simple interest at the Plan Rate and a continuing Lien securing such Claim
or (b) Cash in an amount equal to 40% of the Allowed Amount of its Claim; (vii)
each holder of a M&M Lien Secured Claim shall receive equal Cash payments over
five years totaling the principal amount of its Claim, plus simple interest at
the Plan Rate and a continuing Lien securing such Claim, (viii) holders of the
TransTexas Senior Secured Note Deficiency Claim shall receive no Distribution
under the Plan; (ix) holders of Allowed General Unsecured Claims shall receive
no Distribution on account of their General Unsecured Claims (but see full
discussion in next paragraph); (x) holders of TransTexas Subordinated Note
Claims shall receive no Distributions on account of their TransTexas
Subordinated Note Claims; (xi) subject to acceptance of the Plan by their
Class, holders of Allowed Convenience Claims that elect to reduce their claims
to $500.00 or less, shall receive payment in full, in Cash; (xii) Production
Payment Holder Claims shall receive such treatment as shall leave their Claims
Unimpaired; and (xiii) holders of Allowed Interests will receive no
Distribution on account of their Interests.
Subject to the occurrence of the Effective Date, the holders of
the Allowed TransTexas Senior Secured Note Claims have agreed to reallocate and
direct Reorganized TransTexas to distribute certain of the Distributions it
receives as a Class 3 Claimant, as follows: (i) each holder of an Allowed
TransTexas Subordinated Note Claim shall receive its Ratable Proportion of 80
million shares of New Junior Preferred Stock; (ii) each holder of an Allowed
General Unsecured Claim shall receive (a) Cash in an amount equal to its
Ratable Proportion of the Maximum GUC Cash Amount and (b) its Ratable
Proportion of five million shares of New Senior Preferred Stock (subject to
Sections 6.10 and 7.20 of the TransTexas Plan); (iii) each holder of the
TransTexas Old Common Stock that is not an Affiliate of the Debtor shall
receive its Ratable Proportion of (a) 4.2% of the New Common Stock and (b)
109,375 New Warrants; and (iv) John R. Stanley, or his designee shall receive
19.8% of New Common Stock and 515,625 New Warrants.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 4
<PAGE> 15
The following Table I sets forth a quick reference guide to the
classification and treatment of Allowed Claims against and Allowed Interests in
the Debtors. Table I is a summary only and is subject in all respects to the
specific provisions of the Plans.
TABLE I
QUICK REFERENCE GUIDE TO CLASSIFICATION OF CLAIMS AGAINST
AND INTERESTS IN THE DEBTORS
TEC
<TABLE>
<CAPTION>
CLASS ESTIMATE OF
CLAIMS/INTERESTS DESCRIPTION ALLOWED CLAIMS/INTERESTS* GENERAL DESCRIPTION OF CLASS
- ---------------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C>
Class 1 Claims TEC Senior Secured $1,605,000,000 Secured Claims of the holders of the TEC Senior
Note Claims Secured Notes
Class 2 Claims General Unsecured $695,000 any Claim, including the TEC Senior Secured
Claims Note Deficiency Claim, that is not an
Administrative Expense, a Priority or a Secured
Claim
Class 3 Interests TEC Common Stock 9,000 shares all issued and outstanding shares of the common
stock of TEC, $0.01 par value, as of the Petition
Date
</TABLE>
*Principal amount
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 5
<PAGE> 16
TARC
<TABLE>
<CAPTION>
CLASS ESTIMATE OF
CLAIMS/INTERESTS DESCRIPTION ALLOWED CLAIMS/INTERESTS* GENERAL DESCRIPTION OF CLASS
- ---------------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C>
Class 1 Claims TARC Senior Secured $920,000,000 the Secured Claims of the holders of the TARC
Note Claims Senior Secured Notes
Class 2 Claims General Unsecured $5,832,000 any Claim that is not an Administrative Expense,
Claims a Priority, a Secured Claim, a TARC Senior
Secured Note Claim or a TARC Subordinated
Note Claim
Class 3 Claims TARC Subordinated $200,000,000 the Claims of the holders of the TARC
Note Claims Subordinated Notes
Class 4 Interests TARC Common Stock 32,690,970 shares all issued and outstanding shares of, and warrants
Interests to purchase, common stock of TARC, $0.01 par
value, as of the Petition Date
</TABLE>
*Principal amount
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 6
<PAGE> 17
TRANSTEXAS
<TABLE>
<CAPTION>
CLASS ESTIMATE OF
CLAIMS/INTERESTS DESCRIPTION ALLOWED CLAIMS/INTERESTS* GENERAL DESCRIPTION OF CLASS
- ---------------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C>
Class 1 Claims Priority Claims $100,000 any Claim entitled to priority pursuant to Section
507(a) of the Bankruptcy Code, other than (a) an
Administrative Claim; or (b) a Priority Tax Claim
Class 2 Claims Secured Tax Claims $10,300,000 a Secured Claim of a Governmental Unit for
taxes
Class 3 Claims TransTexas Senior $300,000,000 any Claim of a holder of a TransTexas Senior
Secured Note Claims Secured Note
Class 4 Claims GMAC Secured Claim $4,000,000 the Secured Claim of GMAC
Class 5 Claims Miscellaneous Secured $7,400,000 any Claim that is secured other than Secured Tax
Claims Claims, Bondholder DIP Secured Claims,
TransTexas Senior Secured Note Claims, GMAC
Secured Claims, Mineral Interest Secured Claims
and M&M Lien Secured Claims
Class 6A Claims Mineral Interest Secured $1,800,000 an Allowed Secured Claim of a Mineral Interest
Claims Claimant
Class 6B Claims M&M Lien Secured Nominal an Allowed Secured Claim of a M&M Lien
Claims Claimant
Class 7 Claims TransTexas Senior $175,000,000 deficiency claim of the holder of the TransTexas
Secured Note Senior Secured Note
Deficiency Claim
</TABLE>
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 7
<PAGE> 18
<TABLE>
<CAPTION>
CLASS ESTIMATE OF
CLAIMS/INTERESTS DESCRIPTION ALLOWED CLAIMS/INTERESTS* GENERAL DESCRIPTION OF CLASS
- ---------------- ----------- ------------------------- ----------------------------
<S> <C> <C> <C>
Class 8 Claims General Unsecured $100,000,000 any general unsecured Claim that is not an
Claims Administrative Expense, a Priority Tax Claim, a
Priority Claim, a Convenience Claim or a
Production Payment Holder Claim
Class 9 Claims TransTexas $115,800,000 any Claim of the holder of a TransTexas
Subordinated Note Subordinated Note due 2001
Claims
Class 10 Claims Convenience Claims $1,000,000 any unsecured, Nonpriority Claim against
TransTexas either (a) in a Face Amount of $500
or less or (b) in a Face Amount greater than $500
as to which the holder thereof has elected on its
Ballot to reduce such Claim prior to the
Ballot/Election Deadline
Class 11 Claims Production Payment $56,200,000 the Claims of TCW Portfolio No. 1555, DRV
Holder Claims Sub-Custody Partnership, TCW DR VI
Investment Partnership L.P. and TCW Drilling
Program, TCW DR VI Investment Partnership,
L.P. and TCW Asset Management Company
Class 12 Claims Interests 57,515,566 shares all issued and outstanding shares of the common
stock of TransTexas, $0.01 par value, as of the
Petition Date
</TABLE>
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 8
<PAGE> 19
Table II is a summary of estimated recoveries for the different
classes under the Plans and is subject in all respects to the Plans.
TABLE II
PROJECTED PROPERTY DISTRIBUTIONS UNDER THE PLANS
TEC PLAN
<TABLE>
<CAPTION>
THE HOLDER OF A: WILL RECEIVE:
- ---------------- -------------
<S> <C>
Class 1 Claim its Ratable Proportion of all of TEC's
(TEC Senior Secured Note Claim) right, title and interest in the TransTexas
Senior Secured Note and all related rights
less reasonable fees and expenses
(including attorneys' fees and expenses)
payable to Firstar, as Indenture Trustee,
for the Senior Secured Notes, and the
Bondholder Committee, the TARC Senior
Secured Note and all related rights, the
TransTexas/TEC Note and all related rights,
the TCR Secured Note and all related
rights, the TARC Common Stock, the
TransTexas Common and all Distributions TEC
would have under the TransTexas Plan and
the TARC Plan
Class 2 Claim its Ratable Proportion of $5,000; except
(General Unsecured Claim) Affiliates of TEC shall receive no
Distribution.
Class 3 Interests Canceled
(TEC Common Stock Interest)
</TABLE>
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 9
<PAGE> 20
TARC PLAN
<TABLE>
<CAPTION>
THE HOLDER OF A: WILL RECEIVE:
- ---------------- -------------
<S> <C>
Class 1 Claim all of TARC's right, title and interest in each item of Collateral which secures TARC's
(TARC Senior Secured Note Claim) obligations under the TARC Senior Secured Note and related agreements
Class 2 Claim its Ratable Proportion of the net proceeds of the Litigation Trust
(General Unsecured Claim)
Class 3 Claims pursuant to a compromise and settlement agreement by and between Firstar and First Union,
(TARC Subordinated Note Claim) its Ratable Proportion of 17 1/2% of the funds held in the Interest Reserve Accounts, less
reasonable fees and expenses (including attorneys' fees and expenses) payable to First
Union, as Indenture Trustee for the TARC Subordinated Notes, plus its Ratable Proportion
of the net proceeds of the Litigation Trust
Class 4 Interests Canceled
(TARC Common Stock Interest)
</TABLE>
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 10
<PAGE> 21
TRANSTEXAS PLAN
<TABLE>
<CAPTION>
THE HOLDER OF a: WILL RECEIVE:
- ---------------- -------------
<S> <C>
Class 1 Payment in full in cash
(Priority Claim)
Class 2 At the option of TransTexas (a) equal cash payments every six months for six years plus
(Secured Tax Claim) 12% interest on the unpaid balance and a continuing lien in its Collateral or (b) payment
in full in cash
Class 3 The New Senior Secured Notes, the New Senior Preferred Stock, the New Junior Preferred
(TransTexas Senior Secured Note Claim) Stock, the New Common Stock, the New Warrants, cash equal to the Maximum GUC Cash
Amount**
Class 4 Assumption of the loan as amended
(GMAC Secured Claim)
Class 5 At the option of the Debtor: (a) such treatment as will leave the holder unimpaired (b)
(Miscellaneous Secured Claim) payment in full, in cash, (c) return of such holder's collateral or (d) deferred cash
payments and a continuing lien in accordance with Section 1129(b) of the Bankruptcy Code
Class 6A At the Holder's election (a) equal cash payments over five years totaling the principal
(Mineral Interest Secured Claim) amount of its claim plus simple interest at the Plan Rate and a continuing lien securing
such claim or (b) cash in an amount equal to 40% of the allowed amounts of its claim
Class 6B Equal cash payments over five years totaling the principal amount of its claim plus
(M&M Lien Secured Claim) simple interest at the Plan Rate and retention of its Lien securing such claim
</TABLE>
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 11
<PAGE> 22
<TABLE>
<CAPTION>
THE HOLDER OF a: WILL RECEIVE:
- ---------------- -------------
<S> <C>
Class 7 No Distribution
(TransTexas Senior Secured Note
Deficiency Claim)
Class 8 No Distribution**
(General Unsecured Claim)
Class 9 No Distribution**
(TransTexas Subordinated Note Claim)
Class 10 Claims in amount of $500 or less shall receive payment in full, in cash; or those
(Convenience Claim) Holders of claims that elect to reduce their claims to $500 shall receive payment in
full, in cash
Class 11 Unimpaired
(Production Payment Holder Claim)
Class 12 Cancelled**
(Interest)
</TABLE>
**Subject to the occurrence of the Effective Date, the holder of the Allowed
TransTexas Senior Secured Note Claim has agreed to reallocate and direct
Reorganized TransTexas to distribute certain of the Distributions it receives
as a Class 3 Claimant, as follows: (i) each holder of an Allowed TransTexas
Subordinated Note Claim shall receive its Ratable Proportion of 80 million
shares of New Junior Preferred Stock; (ii) each holder of an Allowed General
Unsecured Claim shall receive Cash in an amount equal to (a) its Ratable
Proportion of the Maximum GUC Cash Amount and (b) its Ratable Proportion of
five million shares of New Senior Preferred Stock; (iii) each holder of the
TransTexas Old Common Stock that is not an Affiliate of the Debtor shall
receive its Ratable Proportion of (a) 4.2% of the New Common
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 12
<PAGE> 23
Stock and (b) 109,375 New Warrants; and (iv) John R. Stanley or his designee
shall receive 19.8% of the New Common Stock and 515,625 New Warrants.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 13
<PAGE> 24
D. Voting Procedures and Requirements.
Pursuant to provisions of the Bankruptcy Code, only classes of Claims
or Interests in a Debtor that are Impaired and that may receive Distributions
under the terms and provisions of the Plan are entitled to vote to accept or
reject the respective Plan. Classes of Claims or Interests that are Impaired
but receive no Distributions on account of their Claims or Interests are deemed
to have not accepted the respective Plan and are not entitled to vote on the
respective Plan. Classes of Claims or Interests that are not Impaired are
deemed to have accepted the respective Plans and are not entitled to vote on
the respective Plans.
Under the TEC Plan, the Claims in Classes 1 and 2 and the Interest in
Class 3 are Impaired. Classes 1 and 2 are entitled to vote to accept or reject
the TEC Plan. Class 3 does not vote and is deemed not to have accepted the TEC
Plan because their Interests are canceled under the TEC Plan.
Under the TARC Plan, the Claims in Classes 1, 2 and 3 and the
Interests in Class 4 are Impaired. Classes 1, 2, and 3 are entitled to vote to
accept or reject the TARC Plan. Class 4 does not vote and is deemed not to have
accepted the TARC Plan because their Interests are canceled.
Under the TransTexas Plan, the Claims in Classes 1 and 11 are
Unimpaired and are deemed to have accepted the Plan. The Claims in Classes 2,
3, 4, 5, 6A, 6B, 7, 8, 9, 10, and 12 are Impaired. Classes 2, 3, 4, 5, 6A, 6B
and 10 are entitled to vote to accept or reject the TransTexas Plan. Classes 7,
8, and 9 do not vote and are deemed not to have accepted the TransTexas Plan by
virtue of not receiving any Distributions on account of their Claims under the
TransTexas Plan. The Interests of the holders of Class 12 Interests are deemed
not to have accepted the TransTexas Plan because their Interests are canceled.
Some holders of Claims and Interests might hold Claims and/or
Interests in more than one Impaired Class and in more than one Plan and must
vote separately for each Class in each Plan. Such holders will receive a
separate Ballot for all of their Claims and/or Interests in each Class (in
accordance with the records of the respective Debtors) and should complete and
sign each Ballot separately.
If you hold a Claim in the TEC Chapter 11 Case in Class 1 or Class 2,
a Ballot is enclosed in the materials forwarded to you along with this
Disclosure Statement.
If you hold a Claim in the TARC Chapter 11 Case in Classes 1, 2, or 3,
a Ballot is included in the materials forwarded to you along with this
Disclosure Statement.
If you hold a claim in the TransTexas Case in Classes 2, 3, 4, 5, 6A,
6B and 10, a Ballot is included in the materials forwarded to you along with
this Disclosure Statement.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 14
<PAGE> 25
If you hold Claims or Interests in more than one Class or in more than
one Plan, you will receive a separate Ballot for each such Claim or Interest.
AFTER REVIEWING THE DISCLOSURE STATEMENT AND THE PLANS, PLEASE
INDICATE YOUR VOTE ON THE ENCLOSED BALLOT (OR BALLOTS) AND RETURN IT (THEM) IN
THE ENVELOPE PROVIDED IN A MANNER CALCULATED TO ENSURE RECEIPT NO LATER THAN
4:00 P.M. CENTRAL TIME ON NOVEMBER 4, 1999, THE BALLOT/ELECTION DEADLINE.
EXCEPT TO THE EXTENT TRANSTEXAS SO DETERMINES OR AS PERMITTED BY THE
BANKRUPTCY COURT PURSUANT TO BANKRUPTCY RULE 3018, BALLOTS THAT ARE NOT
RECEIVED BY THE BALLOTING AGENT BY 4:00 P.M. CENTRAL TIME ON NOVEMBER 4, 1999
WILL NOT BE ACCEPTED OR USED BY THE DEBTORS IN CONNECTION WITH THE DEBTORS'
REQUEST FOR CONFIRMATION OF THE THEIR RESPECTIVE PLANS. CONSISTENT WITH THE
PROVISIONS OF BANKRUPTCY RULE 3018, THE BANKRUPTCY COURT HAS FIXED OCTOBER 1,
1999, AS THE RECORD DATE FOR DETERMINATION OF HOLDERS OF RECORD OF CLAIMS AND
INTERESTS WHO ARE ENTITLED TO VOTE ON THE PLANS. IF YOU ARE THE BENEFICIAL BUT
NOT RECORD HOLDER OF A TEC BONDHOLDER CLAIM, YOUR BALLOTS SHOULD BE RETURNED AS
INSTRUCTED BY THE AGENT OR RECORD HOLDER, IF ANY. ALL OTHER BALLOTS OR
ELECTIONS SHOULD BE RETURNED DIRECTLY TO THE DEBTORS BY MAIL IN THE
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE PROVIDED HEREWITH AS FOLLOWS:
D.F. KING & CO., INC.
77 WATER STREET, 20TH FLOOR
NEW YORK, NY 10005
If your Ballot is not signed and returned as described, it will not be
counted.
Do not return any evidence of indebtedness of your Claim against TEC,
TARC or TransTexas, (i.e., Senior Notes) or Interests in TEC, TARC or
TransTexas (i.e., stock certificates) with your Ballot. For further information
on casting your Ballot, please see Article VII of this Disclosure Statement.
If you have any questions about the procedure for voting, if a Ballot
is not included and you believe you are a holder of a Claim or Interest in one
or more of the Classes listed above or if you have received a damaged Ballot or
have lost your Ballot, you should contact: Simon Ward at (281) 987-8600.
E. Votes Required for Acceptance; Confirmation.
The Bankruptcy Code defines acceptance of a Plan by an Impaired class
of Claims as acceptance by holders of at least two-thirds in dollar amount, and
more than one-half in number, of the Claims of that class which actually cast
ballots. The Bankruptcy Code defines acceptance of a Plan by an Impaired class
of Interests as acceptance by holders of at least two-thirds in amount of the
Interests of that class that actually cast ballots. The vote of a holder of a
Claim or Interest may
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 15
<PAGE> 26
be disregarded if the Bankruptcy Court determines, after notice and hearing,
that the acceptance or rejection was not solicited or procured in good faith.
In addition to this voting requirement, section 1129 of the Bankruptcy
Code requires that a Plan be accepted by each holder of a Claim or Interest in
an Impaired class or that the Plan be found by the Bankruptcy Court to provide
the holder with at least as much value on account of its claim as it would
receive on a liquidation of the respective Debtor under Chapter 7 of the
Bankruptcy Code.
Confirmation of a Debtor's Plan will make the Plan binding upon the
respective Debtor, holders of Claims against and Interests in such Debtor and
other parties in interest regardless of whether they have accepted the Plan,
and such holders of Claims and/or Interests will be prohibited from receiving
payment from, or seeking recourse against, any assets that are distributed to
other such holders of Claims and/or Interests under the confirmed Plan. In
addition, Confirmation of a Plan will enjoin creditors and Interest holders
from taking a wide variety of actions on account of a debt, claim, liability,
interest or right that arose prior to the Confirmation Date. As of the
Effective Date of the TransTexas Plan, confirmation will also operate as a
discharge of all Claims against and Interests in TransTexas, to the full extent
authorized by section 1141(d) of the Bankruptcy Code. Section 1141(d) of the
Bankruptcy Code provides, generally, that except as otherwise provided in a
Plan or order confirming a Plan, Confirmation of a Plan (i) discharges
TransTexas from any debt that arose before the date of such confirmation,
including a debt of a kind specified under specified sections of the Bankruptcy
Code (such as rejection damages claims), whether or not a proof of claim based
on such debt is Filed or deemed Filed, whether or not such Claim is Allowed,
and whether or not the holder of such Claim has accepted the Plan, and (ii)
terminates all rights and interests of equity security holders provided for by
the Plan.
E. Effective Date of the Plans.
The Plans will not be consummated immediately upon confirmation, but
only upon the Effective Date. The Effective Date will not occur unless various
conditions to the occurrence of the Effective Date are satisfied (or waived
pursuant to, and in accordance with, the terms in the Plans). Certain of the
conditions to the occurrence of the Effective Date may be waived by the Debtors
with the prior written consent of the Bondholder Committee. There is no
assurance, however, that Debtors would waive any such conditions or the
Bondholder Committee would consent to the waiver. The Confirmation Orders may
be vacated if the conditions to the respective Effective Dates are not timely
met or waived.
Because of the conditions to the occurrence of the Effective Date
provided in the Plans, a delay will occur between Confirmation of the Plans and
the Effective Date. There is no assurance that the conditions to the Effective
Date will be fulfilled, or that any waivable condition which is not fulfilled
will in fact be waived. The Plans provides that it is a condition to the
occurrence of the Effective Date of the Plans that each of the conditions set
forth in Section 9.01 of the TEC Plan,
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 16
<PAGE> 27
Section 10.01 of the TARC Plan and Section 10.01 of the TransTexas Plan has
been satisfied or waived.
The implementation of the Plans involves certain risks and, similarly,
the businesses in which Reorganized TransTexas is and will continue to be
engaged involve certain risks. For a discussion of these risks, see Article VI,
"RISK FACTORS."
The Debtors currently believe that all conditions to the occurrence of
the Effective Date of the Plans will likely be satisfied within thirty (30)
days of the Confirmation Date, and that the Effective Date of the Plans is
likely to occur by December 31, 1999.
II. BACKGROUND
A. General
TEC is a holding company incorporated in Delaware in July 1994 to hold
certain shares of common stock of TransTexas and all of the outstanding capital
stock of TARC. TransTexas was formed in Delaware in May 1993 for the purpose of
owning and operating certain oil and gas and transmission assets previously
owned and operated by TransAmerican. TARC was formed in Texas in September 1987
to hold and operate the refinery assets of TransAmerican. As of December 15,
1998, TARC no longer owns the refinery assets and has no business operations.
The Debtors' chief executive offices are located at 1300 North Sam Houston
Parkway East, Houston, Texas 77032.
B. Capital Structure
TEC owns 72.3% of the outstanding common stock of TransTexas and 100%
of the outstanding common stock of TARC (89% assuming exercise of all
outstanding warrants to purchase common stock). TARC owns preferred stock of
TCR Holding that, in addition to its liquidation preference, represents a 30.4%
residual equity interest in TCR Holding. TransTexas owns 100% of the
outstanding capital stock of Galveston Bay Processing Corporation and other,
immaterial subsidiaries.
TEC has outstanding $1.605 billion of TEC Senior Secured Notes.
TransTexas has outstanding (i) the $450 million principal amount TransTexas
Senior Secured Note payable to TEC, (ii) the TransTexas/TEC Note in the
principal amount of $6.5 million payable to TEC and (iii) TransTexas
Subordinated Notes in the aggregate principal amount of $115.8 million. TARC
has outstanding the TARC Senior Secured Note in the principal amount of $920
million payable to TEC and the TARC Subordinated Notes in the aggregate
principal amount of $200 million. TCR Holding has outstanding the TCR Secured
Note in the principal amount of $43.5 million payable to TEC.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 17
<PAGE> 28
The following chart depicts the organizational and capital structure
of the Debtors before consummation of the Plans ($ in millions):
[CHART]
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 18
<PAGE> 29
C. Capitalization
The following tables set forth the capitalization of the Debtors as of
July 31, 1999 (in thousands of dollars):
TEC
<TABLE>
<S> <C>
Liabilities subject to compromise $1,629,133
----------
Stockholder's equity:
Common Stock --
Paid-in capital 289,334
Accumulated deficit (55)
----------
Total stockholder's equity 289,279
----------
$1,918,412
----------
</TABLE>
TARC
<TABLE>
<S> <C>
Liabilities subject to compromise $1,130,371
----------
Stockholder's equity:
Common Stock 300
Paid-in capital 597,023
Accumulated deficit (569,924)
----------
Total stockholder's equity 27,399
----------
$1,157,770
==========
</TABLE>
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 19
<PAGE> 30
TRANSTEXAS
<TABLE>
<S> <C>
Long-term debt, less current maturities $ --
Production payments, less current portion 49,796
Liabilities subject to compromise 727,752
Stockholders' deficit:
Common stock 740
Additional paid-in capital (capital deficit) 20,615
Accumulated deficit (229,627)
--------
(208,272)
Treasury stock (262,405)
--------
Total stockholders' deficit (470,677)
--------
$306,871
========
</TABLE>
D. Information Regarding TransTexas Common Stock
As of September 22, 1999, there were 57,515,566 shares of Common Stock
issued and outstanding and held by approximately 158 holders of record. Prices
for the Old Common Stock of TransTexas are currently quoted on Nasdaq's Over
The Counter Bulletin Board under the symbol "TTGGQ." TransTexas' common stock
traded on the New York Stock Exchange ("NYSE") under the symbol "TTG" from
October 30, 1997 until trading was suspended on April 19, 1999 due to
TransTexas' bankruptcy filing. TransTexas' common stock was delisted from the
NYSE on June 8, 1999. From March 10, 1994 until October 30, 1997, TransTexas'
common stock traded on the Nasdaq National Market tier of The Nasdaq Stock
Market under the symbol "TTXG." The following table sets forth, on a per-share
basis for the periods indicated, the range of high and low bid prices for
TransTexas' common stock as reported by Bloomberg L.P.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 20
<PAGE> 31
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
Fiscal year ended January 31, 1998:
<S> <C> <C>
Third Quarter .................................................... $ 18.750 $ 13.500
Fourth Quarter ................................................... 19.125 13.500
Fiscal year ended January 31, 1999:
First Quarter .................................................... $ 16.938 $ 11.688
Second Quarter ................................................... 12.375 6.813
Third Quarter .................................................... 6.688 0.875
Fourth Quarter ................................................... 4.500 1.813
Fiscal year ending January 31, 2000:
First Quarter* ................................................... $ 1.688 $ 0.375
Second Quarter* .................................................. 0.563 0.300
Third Quarter (through September 22, 1999) ....................... 0.594 0.375
</TABLE>
- -----------------------
*Price information is not available from April 20, 1999 through May 12, 1999.
E. Business of the Debtors
TEC
TEC is a holding company with no direct business operations. TEC
currently owns 72.3% of the outstanding common stock of TransTexas and 89% of
the outstanding common stock of TARC, assuming exercise of all outstanding
common stock purchase warrants. TEC is indirectly wholly owned by
TransAmerican.
TARC
Prior to December 15, 1998, TARC owned a refinery located in the Gulf
Coast region along the Mississippi River approximately 20 miles from New
Orleans, Louisiana. As a result of the TARC Transaction (described below), TARC
no longer owns the refinery, but maintains a non-controlling equity interest in
TCR Holding Corporation, a Delaware corporation ("TCR Holding"). TCR Holding
owns a controlling equity interest in Orion Refining Corporation, a Delaware
corporation ("Orion"), the corporation that owns the refinery.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 21
<PAGE> 32
TRANSTEXAS
TransTexas is engaged in the exploration for and development and
production of natural gas and condensate, primarily in South Texas and along
the upper Gulf Coast. TransTexas' long-term goal is to convert unproven acreage
to proved reserves through drilling in underexploited areas. TransTexas owns
100% of the outstanding common stock of Galveston Bay Processing Corporation
and certain other, immaterial subsidiaries.
As of February 1, 1999, TransTexas' net proved reserves, as estimated
by Netherland, Sewell & Associates, Inc., were 161 Bcfe. As of July 31, 1999,
TransTexas owned approximately 417,700 gross (263,890 net) acres of mineral
interests. TransTexas' average net daily natural gas production for the twelve
months ended July 31, 1999 was approximately 97 MMcfd, for a total net
production of 35.5 Bcf of natural gas. TransTexas' average net daily liquids,
condensate and oil production for the twelve months ended July 31, 1999 was
approximately 4,876 Bpd, for a total net production of 1,780 MBbls of
condensate and oil.
Operating Areas
TransTexas' primary areas of operations as of July 31, 1999 are:
Eagle Bay. In November 1996, TransTexas reached an agreement with an
unaffiliated third party to jointly conduct exploration of geological prospects
in the Galveston Bay area. The parties have drilled six out of 10 prospects
identified in the area, the first of which is known as Eagle Bay.
In January 1998, TransTexas announced that it had successfully
drilled, completed and flow- tested its first well in Eagle Bay, the State
Tract 331 #1, located approximately one mile off the coast of San Leon, Texas,
in a water depth of less than 10 feet. This discovery well flow tested at a
gross rate of 76.4 MMcfd of natural gas and 11,002 Bpd of condensate and oil.
TransTexas has successfully drilled, completed and produced three
additional wells, the State Tract 331 #3, the State Tract 352 #1, and the State
Tract 330 #1. These confirmation wells flow- tested at gross rates of 41 MMcfd
of natural gas and 10,700 Bpd of condensate, 53.9 MMcfd of natural gas and
6,264 Bpd of condensate and 43.4 MMcfd of natural gas and 4,800 Bpd of
condensate, respectively. In early March 1999, State Tract 331 #3 ceased
production due to down- hole problems. TransTexas is currently considering a
workover or side-track of this well.
As of July 31, 1999, the Eagle Bay Field was producing at a rate of 73
MMcfd of natural gas and 9,100 Bpd of condensate. As of July 31, 1999,
TransTexas owned a 75% working interest covering approximately 5,393 gross
(5,288 net) acres in the Eagle Bay area.
In order to facilitate commercial production of natural gas and oil
from the Eagle Bay field and other contemplated production in the Galveston Bay
area, in July 1998, Galveston Bay
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 22
<PAGE> 33
Processing Corporation, a wholly owned subsidiary of TransTexas, completed
construction of onshore production facilities at Winnie, Texas, approximately
60 miles east of Houston. These facilities are designed to separate produced
natural gas and condensate streams, dehydrate and treat natural gas and
stabilize condensate produced from the Eagle Bay field. Production from Eagle
Bay is currently transported to Winnie through a third-party pipeline that
crosses Galveston Bay.
TransTexas intends to drill additional wells in Eagle Bay as a part of
its strategy to further increase reserves and production, and has identified
drilling locations from 3-D seismic data.
Other Galveston Bay Prospects. TransTexas has also drilled exploratory
wells on five other prospects in the Galveston Bay area. All of these were
unsuccessful. However, one of these prospects, TroutPoint, indicated the
potential of hydrocarbons. This prospect is currently being redrilled as the
Sheldon #1-R. As of July 31, 1999, TransTexas owned a 75% working interest
covering approximately 9,339 gross (8,836) net acres in the Galveston Bay area
prospects, including Eagle Bay.
Bob West North. In late 1994, TransTexas made a natural gas discovery
in the Bob West North area of southern Zapata County, Texas. As of July 31,
1999, TransTexas had drilled 56 wells and completed 53 wells in the area. As of
July 31, 1999, TransTexas' mineral interests in Bob West North consisted of a
100% working interest in 14,257 gross (12,658 net) acres. For the twelve months
ended July 31, 1999, TransTexas produced 11.8 Bcf (8.2 Bcf net) from the Bob
West North area at an average net daily rate of 22 MMcfd. Recently obtained 3-D
seismic data indicates the potential for additional drilling locations to
further develop productive reservoirs in the area.
Fandango South. As of July 31, 1999, TransTexas had drilled 13 wells,
completed nine wells and was drilling one well in the Fandango South field
located in Jim Hogg County, Texas. For the twelve months ended July 31, 1999,
TransTexas produced 1.5 Bcf (1.1 Bcf net) of natural gas from this field, at an
average net daily rate of 3 MMcfd. As of July 31, 1999, TransTexas held a 98%
working interest in approximately 5,503 gross (5,503 net) acres in Fandango
South.
Wharton and Austin Counties. In 1995, TransTexas entered into an
agreement with an unaffiliated third party acting as operator, to jointly
develop the mineral rights in the shallow Frio and Miocene sands in Wharton
County, Texas. As of July 31, 1999, 62 wells had been drilled in shallow
formations in the area, 26 of which had been completed. As of July 31, 1999,
TransTexas held a 75% working interest in the shallow mineral rights in
approximately 40,549 gross (37,757 net) acres in Wharton County.
TransTexas also acquired mineral rights covering deeper Yegua and
Wilcox formations in Wharton County and adjacent Austin County. As of July 31,
1999, TransTexas had drilled 14, and completed 10, deeper wells in the area,
including the Joel Hudgins #1, the Rees-Gifford #1, the Obenhaus #2 and the
Noska #1. As of July 31, 1999, TransTexas was completing one well and drilling
one additional well. TransTexas intends to drill additional wells in the Yegua
and Wilcox
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 23
<PAGE> 34
formations as a part of its strategy to further increase reserves and
production, and has identified drilling locations from 3-D seismic data. As of
July 31, 1999, TransTexas held a 98% working interest in the mineral rights
below the top of the Yegua formation in approximately 54,063 gross (49,639 net)
acres.
For the twelve months ended July 31, 1999, TransTexas' Wharton County
properties produced 6.4 Bcf (4.3 Bcf net) of natural gas, at an average net
daily rate of 12 MMcfd.
Live Oak County. In June 1998, TransTexas announced that it had
drilled, completed and flow-tested its first well in Live Oak County, Texas,
the McNeil #1. This discovery well flow-tested at a rate of 19.2 MMcfd of
natural gas. Production commenced in August 1998. TransTexas intends to drill
additional wells to develop the field as a part of its strategy to further
increase reserves and production, and has identified potential drilling
locations from 3-D seismic data. For the twelve months ended July 31, 1999,
TransTexas' Live Oak County properties produced 1.4 Bcf (0.9 Bcf net) of
natural gas, at an average daily rate of 2 MMcfd. As of July 31, 1999,
TransTexas held a 79% working interest in approximately 8,019 gross (7,947 net)
acres in Live Oak County.
Other Areas. TransTexas has also made discoveries of natural gas and
oil in other prospects that, as of July 31, 1999, were in the preliminary
stages of development drilling but which management believes have the potential
to increase reserves and production.
TransTexas owns a 100% working interest in 14,415 gross (14,286 net)
acres in Chambers County, Texas. As of July 31, 1999, TransTexas had drilled
seven wells and completed four wells in Chambers County. TransTexas has
conducted a 3-D seismic survey covering approximately 31 square miles that
indicates multiple prospective drilling locations. For the twelve months ended
July 31, 1999, TransTexas' Chambers County properties produced 4.4 Bcf (2.8 Bcf
net) of natural gas, at an average daily rate of 8 MMcfd.
TransTexas holds a 98% working interest in approximately 11,197 gross
(7,949 net) acres in the La Grulla area of Starr County, Texas. As of July 31,
1999, TransTexas had drilled 38 wells and completed 19 wells in La Grulla. For
the twelve months ended July 31, 1999, TransTexas' La Grulla properties
produced 1.5 Bcf (1.1 Bcf net) at an average net daily rate of 3 MMcfd.
Exploration and Production Operations
The exploration and production activities of TransTexas consist of
geological evaluation of current and prospective properties, the acquisition of
mineral interests in prospects and the development and operation of leased
properties for the production and sale of natural gas, condensate and crude
oil. TransTexas' technical staff consists of geologists, geophysicists and
engineers. TransTexas' technical staff selects drilling locations based on the
interpretation of available well data, enhanced by 3-D and 2-D seismic data.
TransTexas operates substantially all of its producing
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 24
<PAGE> 35
properties. TransTexas believes that this experience is especially important in
south and upper coastal Texas, which are geologically complex.
During the five years ended January 31, 1999, TransTexas completed
approximately 69% of 533 wells. As of January 31, 1999, TransTexas was drilling
three gross (two net) wells. As of January 31, 1999, TransTexas had a total of
127 productive wells. TransTexas had a working interest in the following
numbers of wells that were drilled during the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED JANUARY 31,
---------- ----------------------
ENDED
-----
JULY 31, 1999 1999 1998 1997
---------------- --------------- ----------------- ------------------
GROSS NET GROSS NET GROSS NET GROSS NET
----- --- ----- --- ----- --- ----- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Exploratory Wells(1):
Productive(2)............ 1 1 9 9 13 11 36 33
Non-Productive........... 4 3 6 5 16 14 45 41
% Productive............. 20% 25% 60% 63% 45% 44% 44% 45%
Development Wells(1):
Productive(2)............ -0- -0- 14 12 47 43 67 66
Non-Productive........... -0- -0- 9 9 31 27 3 3
% Productive............. -0- -0- 61% 58% 60% 62% 96% 96%
</TABLE>
- --------------------------
(1) The number of net wells is the sum of the fractional working interests
owned in gross wells.
(2) Productive wells consist of producing wells and wells capable of
production, including gas wells awaiting pipeline connection. Wells
that are completed in more than one producing zone are counted as one
well.
The following table sets forth information with respect to net
production and average unit prices and costs for the periods indicated:
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 25
<PAGE> 36
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED JANUARY 31,
ENDED
JULY 31, 1999 1999 1998 1997
------------- ---- ---- ----
<S> <C> <C> <C> <C>
Production:
Gas (Bcf)(1) .......................... 14.8 35.6 72.4 153.6
NGLs (MMgals) ......................... 16.9 8.4 62.4 174.2
Condensate (MBbls) .................... 913 1,120 619 604
Average sales prices:
Gas (dry (per Mcf)(2) ................. $ 2.07 $ 2.10 $ 2.09 $ 2.14
NGLs (per gallon) ..................... .25 .21 .29 .36
Condensate (per Bbl) .................. 15.82 11.91 19.20 21.54
Average lifting cost per Mcfe(3) ....... (4) .37 .34 .29
</TABLE>
- -------------
(1) Net gas production volumes for the years ended January 31, 1998 and
1997, include 7.3 and 32.0 Bcf delivered pursuant to volumetric
production payments.
(2) Average prices for the years ended January 31, 1998 and 1997, include
7.3 Bcf and 32.0 Bcf delivered pursuant to volumetric production
payments. The average gas price for TransTexas' undedicated production
for these periods was $2.10 per Mcf and $2.39 per Mcf, respectively.
(3) Condensate and oil are converted to a common unit of measure on the
basis of six Mcf of natural gas to one barrel of condensate or oil.
The components of production costs may vary substantially among wells
depending on the methods of recovery employed and other factors. The
calculation of average lifting cost per Mcfe for the years ended
January 31, 1998 and 1997, includes volumes delivered to third parties
under volumetric production payments.
(4) Not available.
Drilling Services Division
On April 30, 1998, TransTexas sold its oilfield stimulation, cementing
and coiled tubing equipment and related facilities to an unaffiliated third
party for a sales price of $30 million, subject to post-closing adjustments.
For the year ended January 31, 1999, TransTexas recorded a $10.5 million
pre-tax gain as a result of this sale.
On June 26, 1998, TransTexas sold its drilling rigs and related
facilities to an unaffiliated third party for a sales price of $75 million. On
August 17, 1998, TransTexas sold its remaining well services assets to an
unaffiliated third party for a sales price of $20.5 million. TransTexas
recorded pre-tax gains of $51.2 million and $5.3 million, respectively, as a
result of these sales. As a result of these sales, TransTexas no longer
operates in the drilling services segment.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 26
<PAGE> 37
Natural Gas Transportation and Processing
As a part of the Lobo Sale, TransTexas divested the majority of its
pipeline assets and no longer transports or processes a significant amount of
natural gas for third parties. TransTexas believes that there is currently
adequate pipeline transportation capacity for its hydrocarbon production in all
of its operating areas, other than certain capacity constraints at Eagle Bay as
discussed below. TransTexas intends to build or contract for additional
pipeline capacity as future needs require. However, there can be no assurance
that TransTexas will have funds available to build additional pipeline
capacity.
In July 1998, Galveston Bay Processing Corporation completed
construction of onshore production facilities at Winnie, Texas, approximately
60 miles east of Houston. These facilities are designed to separate produced
natural gas and condensate streams, dehydrate and treat natural gas and
stabilize condensate from TransTexas' Eagle Bay field. Natural gas is
transported by third-party pipeline from Winnie to Port Arthur or Beaumont
where it is processed to remove natural gas liquids. TransTexas markets
condensate and oil to third parties at the Winnie facility.
TransTexas has entered into agreements for the gathering,
transportation, processing and sale of natural gas produced from its Galveston
Bay prospects. Current capacity constraints for transportation do not allow for
optimal flow rates from the Eagle Bay field. TransTexas is negotiating
additional agreements in order to increase available capacity for
transportation of natural gas from the Eagle Bay field to Winnie.
In June 1998, TransTexas and Duke Field Services, Inc. entered into a
three-year contract to extract natural gas liquids from the high-Btu natural
gas stream leaving the Winnie production facilities. TransTexas can elect, at
its discretion on a monthly basis, whether to process the natural gas to
recover natural gas liquids. TransTexas' decision whether to process the
natural gas is based on prevailing market prices. During fiscal 1999,
TransTexas produced 8.4 MMgals of natural gas liquids.
Natural Gas Marketing
TransTexas sells its natural gas on the spot market on an
interruptible basis or pursuant to long-term contracts at market prices. For
the year ended January 31, 1999, five purchasers accounted for a total of 71%
of the consolidated natural gas, condensate and NGLs revenues of TransTexas.
TransTexas believes that the loss of any single purchaser would not have a
material adverse effect on TransTexas due to the availability of other
purchasers for TransTexas' production at comparable prices.
In June 1998, TransTexas entered into gas purchase agreements with
Tejas Gas Marketing, LLC and PanEnergy Marketing Company, which set forth the
terms and conditions covering the sale by TransTexas of substantially all of
its gas production from the Eagle Bay field in Galveston
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 27
<PAGE> 38
County, Texas. The agreements provide for deliveries in excess of 50,000 MMBtu
per day at a price calculated from an industry index. The agreements have terms
of five years and two years, respectively.
Production Payments
In February 1998, TransTexas entered into a production payment
drilling program agreement with an unaffiliated third party for the
reimbursement of certain drilling costs with respect to wells drilled by
TransTexas. Pursuant to the agreement, upon the approval of the third party of
a recently drilled or currently drilling well for inclusion in the program, the
third party will commit to the reimbursement of all or a portion of the cost of
such well, up to an aggregate maximum for all such wells of $75 million. The
program wells are subject to a dollar-denominated production payment equal to
the primary sum of such reimbursed costs, plus an amount equivalent to a 15%
annual interest rate on the unpaid portion of such primary sum. As of July 31
1999, the outstanding balance of the production payment was $44.0 million.
In September 1998, TransTexas sold to an unaffiliated third party a
term overriding royalty in the form of a dollar-denominated production payment
in certain of TransTexas' producing properties for net proceeds of $10 million.
The production payment calls for the repayment of the primary sum plus an
amount equivalent to a 16% annual interest rate on the unpaid portion of such
primary sum. As of July 31, 1999, the outstanding balance of the production
payment was $8.1 million.
To the extent permitted by the Post-Confirmation Credit Facility, the
Extended Bondholder DIP Facility, and the New Senior Secured Notes Indenture,
Reorganized TransTexas intends to fund drilling expenses incurred by it after
the Effective Date that are not covered by cash from operations through the
sale of production payments.
Hedging
From time to time, TransTexas has entered into commodity price swap
agreements (the "Hedge Agreements") to reduce its exposure to price risk in the
spot market for natural gas. These Hedge Agreements were accounted for as
hedges and, accordingly, any gains and losses were deferred and recognized in
the respective month as physical volumes were sold. For the fiscal year ended
January 31, 1998, TransTexas made net settlement payments totaling
approximately $7.4 million to the counterparty pursuant to the Hedge
Agreements. As of January 31, 1999, TransTexas had no Hedge Agreements or other
derivative instruments outstanding.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 28
<PAGE> 39
Competition
TransTexas encounters significant competition from major oil and gas
companies and independent operators in the acquisition of desirable undeveloped
natural gas leases and in the sale of natural gas. Many of its competitors are
large, well-established companies with substantially greater capital and human
resources than TransTexas' and which, in many instances, have been engaged in
the energy business for a much longer time than TransTexas.
The primary bases for competition in the natural gas and oil
exploration and production businesses are available capital and the costs
involved in finding and developing gas and oil resources combined with
commodity sales prices and market access.
Employees
As of July 31, 1999, TransTexas had approximately 190 employees.
TransTexas may engage the services of independent geological, engineering, land
and other consultants from time to time. None of TransTexas' employees are
parties to a collective bargaining agreement.
Governmental Regulation
TransTexas' gas exploration, production and related operations are
subject to extensive rules and regulations promulgated by federal and state
agencies. Failure to comply with such rules and regulations can result in
substantial penalties. The regulatory burden on the gas industry increases
TransTexas' cost of doing business and affects its profitability. Because such
rules and regulations are frequently amended or reinterpreted, TransTexas is
unable to predict the future cost or impact of complying with such laws.
The State of Texas (through the Texas Railroad Commission) and many
other states require permits for drilling operations, drilling bonds and
reports concerning operations, and impose other requirements related to the
exploration and production of natural gas. Such states also have statutes or
regulations addressing conservation matters, including provisions for the
unitization or pooling of gas properties, the establishment of maximum rates of
production from gas wells and the regulation of spacing, plugging and
abandonment of such wells. The statutes and regulations of the State of Texas
limit the rate at which natural gas can be produced from TransTexas'
properties. Management believes that these statutes and regulations have not
materially impacted TransTexas' results of operations; however, there can be no
assurance that such statutes and regulations will not affect TransTexas'
operating results in the future.
The Federal Energy Regulatory Commission ("FERC") has implemented
regulations that affect the economics of natural gas production, transportation
and sales. The FERC continues to promulgate revisions to various aspects of the
rules and regulations affecting those segments of the natural gas industry,
most notably interstate natural gas transmission companies, that remain subject
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 29
<PAGE> 40
to the FERC's jurisdiction. These initiatives may also affect the intrastate
transportation of gas under certain circumstances. The stated purpose of many
of these regulatory changes is to promote competition among the various sectors
of the gas industry. The ultimate impact on TransTexas of these complex and
overlapping rules and regulations, many of which are repeatedly subjected to
judicial challenge and interpretation, cannot accurately be predicted.
Environmental Matters
TransTexas' operations and properties are subject to extensive
federal, state, and local laws and regulations relating to the generation,
storage, handling, emission, transportation, and discharge of materials into
the environment. Permits are required for various of TransTexas' operations,
and these permits are subject to revocation, modification, and renewal by
issuing authorities. TransTexas also is subject to federal, state, and local
laws and regulations that impose liability for the cleanup or remediation of
property which has been contaminated by the discharge or release of hazardous
materials or wastes into the environment. Governmental authorities have the
power to enforce compliance with their regulations, and violations are subject
to fines or injunctions, or both. Certain aspects of TransTexas' operations may
not be in compliance with applicable environmental laws and regulations, and
such noncompliance may give rise to compliance costs and administrative
penalties. It is not anticipated that TransTexas will be required in the near
future to expend amounts that are material to the financial condition or
operations of TransTexas by reason of environmental laws and regulations, but
because such laws and regulations are frequently changed and, as a result, may
impose increasingly strict requirements, TransTexas is unable to predict the
ultimate cost of complying with such laws and regulations.
Acreage and Productive Wells
The following table sets forth TransTexas' total developed and
undeveloped acreage and productive wells as of July 31, 1999:
<TABLE>
<CAPTION>
DEVELOPED UNDEVELOPED PRODUCTIVE
ACREAGE ACREAGE WELLS(1)
------- ------- --------
<S> <C> <C> <C>
Gross........................................................ 19,100 398,589 117
Net(2)....................................................... 16,487 247,400 101
</TABLE>
(1) Of the total productive wells, 108 gross (99 net) were gas wells and 9
gross (2 net) were oil wells. As of July 31, 1999, TransTexas had
interests in 2 productive wells which had multiple completions.
(2) The number of net acres and net wells is the sum of the fractional
working interests owned in gross acres and gross wells, respectively.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 30
<PAGE> 41
Reserves
TransTexas' estimated net proved reserves and proved developed
reserves of natural gas (billions of cubic feet) and condensate (millions of
barrels) are shown in the table below:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
---------------------------------------------------------------------
1999 1998 1997
-------------------- -------------------- -------------------
GAS OIL GAS OIL GAS OIL
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Proved reserves:
Beginning of year .................. 348.7 15.9 919.7 5.7 1,139.1 2.9
Increase (decrease) during
the year attributable to:
Revisions of previous estimates .... (127.1)(1) (9.7) (103.8) (1.0) 6.5 .1
Extensions, discoveries and other
additions ........................ 26.1 2.0 123.7 15.1 90.3 3.6
Sales of reserves .................. (91.4) (.5) (525.8) (3.3) (204.9) (.4)
Purchase of reserves ............... -- -- -- -- 11.3 .1
Production ......................... (35.6) (1.1) (65.1) (.6) (122.6) (.6)
------- ------- ------- ------- ------- -------
End of year ........................... 120.7 6.6 348.7 15.9 919.7 5.7
======= ======= ======= ======= ======= =======
Proved developed reserves:
Beginning of year .................. 134.3 4.2 381.5 2.4 425.3 .9
End of year ........................ 87.8 5.0 134.3 4.2 381.5 2.4
</TABLE>
- -----------------------------
(1) Reserve estimates were revised downward principally as a result of
additional seismic information which indicated more highly faulted
structures in certain key properties causing reserves to be
reclassified from proved to probable.
Proved reserves are the estimated quantities of natural gas,
condensate and oil that geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions. Proved developed reserves are
proved reserves that can be expected to be recovered through existing wells
with existing equipment and operating methods. The estimation of reserves
requires substantial judgment on the part of petroleum engineers, resulting in
imprecise determinations, particularly with respect to recent discoveries. The
accuracy of any reserve estimate depends on the quality of available data and
engineering and geological interpretation and judgment. Results of drilling,
testing and production after the date of the estimate may result in revisions
of the estimate. Accordingly, estimates of reserves are often materially
different from the quantities of natural gas, condensate and oil that are
ultimately recovered, and these estimates will change as future production and
development information becomes available. The reserve data represent estimates
only and should not be construed as being exact.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 31
<PAGE> 42
Title to Properties/Liens and Claims
As is customary in the oil and gas industry, TransTexas performs only
a preliminary title investigation before leasing undeveloped properties.
Accordingly, working interest percentages and gross and net acreage amounts for
undeveloped properties are preliminary. However, a title opinion is typically
obtained before the commencement of drilling operations and any material
defects in title are remedied prior to the time actual drilling of a well on
the lease is commenced. TransTexas has not obtained title opinions on all of
its properties. TransTexas is uncertain as to the impact that failure to obtain
a title opinion has on its title to developed properties. TransTexas'
properties are subject to customary royalty interests, liens incident to
operating agreements, liens for current taxes and other burdens.
F. Prior Transactions
The Lobo Sale
On May 29, 1997, TransTexas sold the stock of TransTexas Transmission
Corporation, its subsidiary that owned substantially all of TransTexas' Lobo
Trend producing properties and related pipeline transmission systems, for an
adjusted sales price of approximately $1.1 billion (the "Lobo Sale"). With
proceeds from the Lobo Sale, TransTexas repaid certain indebtedness and other
obligations, including production payments. The remaining net proceeds were
used for the redemption or repurchase of TransTexas' Senior Secured Notes due
2002 and for general corporate purposes.
The TEC Transaction
On June 13, 1997, TEC completed a private offering (the "TEC Notes
Offering") of $475 million aggregate principal amount of 11 1/2% Senior Secured
Notes due 2002 and $1.13 billion aggregate principal amount of 13% Senior
Secured Discount Notes due 2002 (collectively, the "TEC Senior Secured Notes")
for net proceeds of approximately $1.3 billion.
On June 13, 1997, TEC made intercompany loans to TransTexas in the
principal amount of $450 million (the "TransTexas Intercompany Loan") and to
TARC in the original amount of $676 million (the "TARC Intercompany Loan" and,
together with the TransTexas Intercompany Loan, the "Intercompany Loans"). The
TransTexas Intercompany Loan was secured initially by a security interest in
substantially all of the assets of TransTexas other than inventory, receivables
and equipment. The TARC Intercompany Loan was secured initially by a security
interest in substantially all of TARC's assets other than inventory,
receivables and equipment.
On June 13, 1997, TransTexas completed a tender offer for its then
outstanding senior secured notes for 111 1/2% of their principal amount (plus
accrued and unpaid interest). Approximately $785.4 million principal amount of
senior secured notes were tendered and accepted by TransTexas. The senior
secured notes remaining outstanding were called for redemption on June 30, 1997
pursuant to the terms of the indenture under which they were issued.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 32
<PAGE> 43
On June 19, 1997, TransTexas completed an exchange offer, pursuant to
which it exchanged approximately $115.8 million aggregate principal amount of
its 13 3/4% Series C Senior Subordinated Notes due 2001 (the "TransTexas Series
C Subordinated Notes") for all of its outstanding 13 1/4% Senior Subordinated
Notes due 2003 (the "Old TransTexas Subordinated Notes"). On October 10, 1997,
TransTexas completed a registered exchange offer resulting in the issuance of
$115.8 million aggregate principal amount of its 13 3/4% Series D Senior
Subordinated Notes due 2001 (the "TransTexas Subordinated Notes") in exchange
for all of the outstanding TransTexas Series C Subordinated Notes.
In June 1997, TransTexas implemented a share repurchase program
pursuant to which it repurchased common stock from its public stockholders and
from TEC and TARC. Pursuant to the share repurchase program, approximately 3.9
million shares were repurchased from public stockholders for an aggregate
purchase price of approximately $61.4 million, and approximately 12.6 million
shares were repurchased from TARC and TEC for an aggregate purchase price of
approximately $201 million. The share repurchase program was terminated in
December 1997.
In December 1997, TEC obtained consents from the holders of the TEC
Notes to certain amendments to the TEC Senior Secured Notes Indenture governing
the TEC Notes and related documents. These amendments, among other things,
allowed for the release to TransTexas of approximately $136.6 million in funds
previously dedicated to the share repurchase program. TransTexas paid a fee of
$14 million to holders of the TEC Notes in connection with the consent
solicitation.
On June 13, 1997, TARC completed a tender offer for the (i) TARC
Mortgage Notes for 112% of their principal amount (plus accrued and unpaid
interest) and (ii) TARC Discount Notes for 112% of their accreted value. TARC
Mortgage Notes and TARC Discount Notes (the "TARC Notes") with an aggregate
carrying value of $423 million were tendered to and accepted by TARC at a cost
to TARC of approximately $437 million (including accrued interest, premiums and
other costs).
On February 17, 1998, TARC redeemed approximately $7 million in
aggregate principal amount of TARC Notes pursuant to the terms of the indenture
governing the TARC Notes. On January 16, 1998, TARC deposited pursuant to an
irrevocable trust agreement approximately $9.8 million for defeasance of the
remaining TARC Notes outstanding after the redemption. The remaining TARC Notes
were redeemed on February 15, 1999.
On June 13, 1997, TEC completed a tender offer for the then
outstanding common stock purchase warrants of TARC ("1995 Warrants") at a price
of $4.50 per warrant. Pursuant to the tender offer, TEC purchased 7,320,552
1995 Warrants for an aggregate purchase price of approximately $33 million.
TransAmerican subsequently purchased 163,679 1995 Warrants for an aggregate
purchase price of approximately $0.7 million. In December 1997, TransAmerican
sold 11,100 1995 Warrants to an unaffiliated third party. The remaining 1995
Warrants owned by
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 33
<PAGE> 44
TransAmerican, as well as the 1995 Warrants purchased by TEC in the tender
offer, were contributed to TARC and canceled. As of April 30, 1999, there were
22,119 1995 Warrants outstanding.
In connection with the offering of the TEC Senior Secured Notes,
TransAmerican contributed 3.7 million shares of TransTexas common stock to TEC.
Concurrently, TEC paid a dividend to TransAmerican in the amount of $23
million. A portion of the dividend was used to repay the debt of an affiliate,
which had been secured by a pledge of the 3.7 million shares of TransTexas
common stock.
The TARC Transaction
Prior to December 15, 1998, TARC owned a large petroleum refinery
located in the Gulf Coast region along the Mississippi River, approximately 20
miles from New Orleans, Louisiana.
In February 1995, TARC began a construction and expansion program
designed to reactivate the refinery and increase its complexity. From February
1995 through May 1997, TARC spent approximately $251 million on the
construction and expansion Program, procured a majority of the essential
equipment required and completed substantially all of the process design
engineering and a substantial portion of the remaining engineering necessary
for its completion. In order to capitalize on the progress on the refinery, in
June 1997 TARC commenced a modified two-phase construction and expansion
program, which had a budget of $427 million.
Beginning in June 1997, TARC experienced unanticipated cost increases
which resulted in additional capital being required to complete the refinery.
The TARC Transaction was consummated on December 15, 1998 in order to
provide additional capital for construction of the refinery. Pursuant to the
TARC Transaction,
(i) TARC issued $150 million of 15% Senior Secured Notes
("New Notes") to certain institutional investors (the "New Lenders"). The New
Notes were secured by a security interest in and a lien against the Refinery
Assets. The security interest in the Refinery Assets securing the TARC
Intercompany Note was released pursuant to consents obtained from the TEC
Bondholders.
(ii) TARC transferred the Refinery Assets to TCR Holding in
exchange for (x) all the capital stock of TCR Holding, including: (a) Class A
Participating Preferred Stock, Series A (the "Series A Preferred Stock"), (b)
Class A Participating Preferred Stock, Series B (together with the Series A
Preferred Stock, the "TCR Voting Preferred Stock"), (c) Class B Junior
Non-Voting Participating Preferred Stock, (d) Class C Junior Non-Voting
Participating Preferred Stock, (e) Class D Junior Non-Voting Participating
Preferred Stock, (f) Class E Junior Non-Voting Participating Preferred Stock,
(g) Class A Voting Common Stock, Series A (the "TCR Voting Common Stock"), and
(h) Class B Non-Voting Common Stock, and (y) the assumption of debt and other
specified
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 34
<PAGE> 45
obligations of TARC, including the New Notes, the TARC/TEC Note and
approximately $36 million in debt secured by certain tank storage and terminal
facilities.
(iii) TCR Holding transferred the Refinery Assets to Orion
and Orion assumed the debt and other obligations of TARC assumed by TCR Holding
other than the TARC/TEC Note.
(iv) TARC sold certain shares of TCR Holding capital stock to
the New Lenders, TEC Bondholders and certain holders of the TARC Subordinated
Notes. TARC retained preferred stock of TCR Holding that provided for dividend
payments designed to permit TARC to repay the TARC Senior Secured Note and the
TARC Subordinated Notes and representing 35% of the residual equity and 41% of
the voting power of TCR Holding. TARC retained the right to repurchase certain
shares of the TCR Holding capital stock it sold for two years for $5 million
or, in certain circumstances, nominal consideration. As a result of subsequent
issuances of securities by TCR Holding, the residual equity interest
represented by the TCR Holding preferred stock owned by TARC has been reduced
to 30.4%.
(v) Orion sold shares of its preferred stock to the New
Lenders.
(vi) The TCR Holding stockholders and Orion stockholders
entered into stockholders agreements effectively placing control of TCR Holding
and Orion in the hands of the New Lenders.
(vii) With the consent of the TEC Bondholders and the holders
of the TARC Subordinated Notes, the TCR Voting Preferred Stock held by TARC was
pledged to secure the TARC Senior Secured Note and collaterally assigned to
secure the TEC Senior Secured Notes. The Orion common stock held by TCR Holding
was pledged to secure the TARC/TEC Note and collaterally assigned to secure the
TEC Notes. The holders of the TCR Voting Preferred Stock have the right, in
certain circumstances, to require TCR Holding to sell Orion common stock held
by it, or any assets received on exchange or sale therefor, and apply the
proceeds to reduce the liquidation preference and certain accrued but unpaid
dividends on the TCR Voting Preferred Stock.
According to press releases issued by Orion, subsequent to the TARC
Transaction additional capital was required to complete construction of the
refinery. Orion has incurred additional debt, but the necessity for further
capital and the plan for raising such capital has not been disclosed. TARC does
not have the wherewithal to value its equity interest in TCR Holding, which is
pledged to secure the TARC Senior Secured Note. TARC has evaluated the
potential for recovery under a fraudulent transfer action with respect to the
TARC Transaction, and has concluded that no benefit would accrue to the estate
as a result of such an action, if successful. TARC has been advised by counsel
for the Committee that after its investigation with respect to the TARC
Transaction, the Committee has concluded that no benefit would accrue to the
estate as a result of such action, if successful.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 35
<PAGE> 46
G. Events Leading to Chapter 11 Filings.
Capital Expenditures/Development Costs
Since August 1, 1997, TransTexas spent over $400 million as either
capital expenditures or operation expenditures in the exploration and
development of oil and gas properties. Over the same time frame, TransTexas
also paid approximately $60 million in royalty payments to mineral interest
owners. In early 1998, TransTexas discovered a significant field in Galveston
Bay, now known as Eagle Bay Field. Completion of the exploration and
confirmation wells in Eagle Bay was difficult, time consuming and expensive.
The location of the field and the composition of the production stream required
substantial expenditures on the infrastructure for the transportation,
treatment and separation of the Eagle Bay hydrocarbons. By the end of 1998,
TransTexas had spent over $36 million on development and infrastructure for the
Eagle Bay Field. While the field was being developed, commodity prices
collapsed, severely cutting cash flow. The new field was not yet well-enough
developed to provide sufficient production to meet cash demands.
Commodity Price Collapse/Deteriorating Industry Conditions
Until early April 1999, energy prices were precipitously lower than in
the fall of 1997 and, although they have recovered somewhat since then, the
damage sustained by the industry has been far-reaching. Crude oil futures went
down as low as $10.72 per barrel. Prices for physical delivery of West Texas
Intermediate in the first calendar quarter of 1999 averaged $13.16 per barrel,
down 36% from 1997 when prices were over $20 per barrel. Natural gas, which
represents more than 70% of TransTexas' revenues, averaged $1.80 per Mcfe in
the first quarter, down 40% from late 1997. Physical delivery prices at the
Houston ship channel went as low as $1.60 per Mcfe in the first quarter. By
early 1999, the domestic U.S. oil and gas business had incurred asset
write-downs in excess of $11 billion, resulting from the crash in commodity
prices. The U.S. rig count reached a 52-year low. The April 23 rig count of 488
is the lowest since record keeping began in 1940. The industry is undergoing a
major restructuring, including the acquisitions and mergers of major oil
companies as well as large independents.
Failed Property Sales
In January 1998, to provide the capital required to develop the Eagle
Bay discovery, TransTexas began soliciting offers for the sale of certain of
its South Texas properties. In late May 1998, TransTexas received a letter of
intent for $150 million from a major integrated oil company. In September 1998,
the buyer adjusted the sales price to $105 million. In the fall of 1998, the
buyer abruptly terminated negotiations. Weeks later, that company announced its
acquisition by another major oil company.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 36
<PAGE> 47
In late 1998, TransTexas began aggressively soliciting other bidders
for the South Texas properties. The collapse of commodity prices had an adverse
effect on the ability of TransTexas to market the properties. During the same
time-frame, TransTexas was attempting to finance the costs of the
infrastructure for Eagle Bay. Because of TransTexas' weakened financial
condition, negotiations failed.
H. Filing of Chapter 11 Cases.
By late March 1999, TransTexas was not generating and did not expect
to generate in the near future cash flows necessary to meet its financial
obligations. In January 1999, the plaintiff in a lawsuit obtained a $7.25
million judgment against TransTexas and began aggressively pursuing its
collection efforts. During this period, TransTexas continued efforts to sell
properties to alleviate its liquidity problems. Although TransTexas had
potential buyers for several of its properties, it was precluded from
consummating sales because a default existed under the TEC Senior Secured Notes
Indenture as a result of the aging of TransTexas' accounts payable. TEC
attempted to obtain waivers under its Indenture to permit such sales. During
the course of its discussions with certain of the holders of the TEC Senior
Secured Notes concerning the proposed waivers, and after consultation with its
financial and legal advisors, the Board of Directors of TransTexas concluded
that a complete restructuring of its financial obligations was necessary and
decided that a Chapter 11 filing provided the most favorable means to
accomplish the restructuring.
All of the events and circumstances discussed above with respect to
TransTexas' liquidity problems had a corollary effect on TEC's ability to meet
its obligations under the TEC Senior Secured Notes. Further, because
substantially all of the properties owned by TransTexas and TARC are subject to
liens securing the TEC Senior Secured Notes, the Boards of Directors of TEC and
TARC decided that Chapter 11 filings by the respective companies afforded a
means to the comprehensive restructuring of the obligations of the companies.
III. THE CHAPTER 11 CASES
A. Continuation of Business; Stay of Litigation.
On April 19, 1999, TransTexas commenced its Chapter 11 Case. On April
20, 1999, TEC and TARC commenced their Chapter 11 Cases. The Chapter 11 Cases
are being jointly administered for procedural purposes only. Since their
respective Petition Dates, the Debtors have continued to operate as
Debtors-In-Possession subject to the supervision of the Bankruptcy Court in
accordance with the Bankruptcy Code. The Debtors are authorized to operate in
the ordinary course of business. Transactions out of the ordinary course of
business must have Bankruptcy Court approval. In addition, the Bankruptcy Court
has supervised the Debtors' employment of attorneys, accountants and other
professionals.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 37
<PAGE> 48
An immediate effect of the filing of the bankruptcy Petitions was the
imposition of the automatic stay under the Bankruptcy Code which, with limited
exceptions, enjoined the commencement or continuation of all collection efforts
by creditors, the enforcement of liens against the Debtors and litigation
against the Debtors. This injunction remains in effect, unless modified or
lifted by order of the Bankruptcy Court, until consummation of the Debtors'
respective Plans.
B. Significant Events During the Chapter 11 Cases.
1. First Day Orders. TransTexas submitted numerous so-called
"first day orders," along with supporting motions, to the Bankruptcy Court,
which were approved. These first day orders included, among others: (i) orders
authorizing the retention of Young Conaway Stargatt & Taylor, LLP as bankruptcy
counsel and Gardere & Wynne, L.L.P. as special counsel to the Debtors; (ii) an
order authorizing the retention of PricewaterhouseCoopers LLP as accountants
and consultants to the Debtors; (iii) an order authorizing TransTexas to pay
certain prepetition employee wages, reimbursable expenses and benefits and
workers' compensation benefits; (iv) an order authorizing the Debtors to
maintain their prepetition bank accounts, business forms, stationery, checks,
and cash management system and granting additional time to comply with the
investment guidelines of section 345 of the Bankruptcy Code; (v) an order
extending the time by which the Debtors had been required to File certain
information, including schedules and lists; (vi) an order determining adequate
assurance of payment for future utility services and restraining utility
companies from discontinuing, altering or refusing service; (vii) an order
authorizing payment of certain sales and use taxes; (viii) an interim order
authorizing the incurrence of post-petition debt; (ix) an order authorizing
TransTexas to mail initial notices and to File a list of creditors in lieu of a
matrix; and (x) an order directing the joint administration of Debtors' Chapter
11 Cases. Some of the First Day Orders are summarized below:
(a) Prepetition Wage and Benefits Order. The Bankruptcy Court
approved an order authorizing TransTexas to pay certain prepetition (i)
employee wages, salaries and other compensation and reimbursable employee
expenses, (ii) employee medical, dental and similar benefits and (iii) workers'
compensation benefits. TransTexas believed such relief was necessary to avoid
serious disruption to its business at a critical juncture in TransTexas'
reorganization. Payments made pursuant to such order will reduce the amount of
Allowed Priority Claims and Allowed General Unsecured Claims.
(b) Bondholder DIP Facility. On April 27, 1999, the
Bankruptcy Court granted interim approval of a debtor-in-possession financing
facility pursuant to which the Bondholder Lenders provided TransTexas with
post-petition financing of up to $30 million to be used by TransTexas for its
working capital and general corporate requirements. TEC and TARC guaranteed the
obligations under the Bondholder DIP Facility. As Collateral for the Bondholder
DIP Facility, the Debtors pledged all of their assets except for TransTexas'
accounts and inventory. The interim approval allowed TransTexas to immediately
make borrowings of up to $6 million under the
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 38
<PAGE> 49
Bondholder DIP Facility and on April 28, 1999 TransTexas borrowed $6 million
from the Bondholder Lenders. On June 17, 1999, the Bankruptcy Court granted
final approval of the Bondholder DIP Facility. Section 5.2(a) of the Bondholder
DIP Facility provided that, as a condition to subsequent advances under such
facility, among other things, the Debtors shall have each Filed a plan of
reorganization in form and substance satisfactory to the Bondholder Lenders,
acting in their reasonable discretion. On July 27, 1999, TransTexas borrowed
$14 million from the Bondholder Lenders. On September 21, 1999, TransTexas
borrowed an additional $10 million from one of the Bondholder Lenders. The
Bondholder DIP Facility will mature on the earlier of (i) October 20, 1999, or
(ii) the Effective Date of the TransTexas Plan. Pursuant to the Bankruptcy
Court's approval of the Bondholder DIP Facility, the Bondholder Lenders have an
administrative claim with priority over virtually all other Claims in the
Chapter 11 Cases, including Administrative Expenses (subject to certain
carve-outs) and a lien that is senior to substantially all liens, claims,
interests and encumbrances arising before or after the Petition Date.
(c) GMAC DIP Facility. On June 7, 1999 the Bankruptcy Court
granted interim approval of a debtor-in-possession financing facility pursuant
to which GMAC provided TransTexas with post petition financing of up to $10
million. As Collateral for the GMAC DIP Facility, TransTexas pledged its
accounts and inventory. On June 17, 1999, the Bankruptcy Court granted final
approval of the GMAC DIP Facility. The GMAC DIP Facility will mature on October
20, 1999. Pursuant to the Bankruptcy Court's approval of the GMAC DIP Facility,
GMAC has an Administrative Expense (subject to certain carve outs) and a lien
on TransTexas' accounts and inventory that is senior to all liens, claims and
encumbrances on TransTexas' accounts and inventory.
On June 21, 1999, Zurich Insurance Company, as beneficiary,
drew down $2,793,660 on a letter of credit issued by GMAC for the account of
TransTexas.
The DIP Facilities include certain restrictive covenants that
apply to TransTexas, including restrictions on other indebtedness, liens, sales
of assets, dividends and distributions, capital expenditures, mergers,
acquisitions, divestitures, reorganizations, payments of pre-petition debt
(with certain exceptions) and transactions with affiliates, and requirements
regarding satisfaction of certain financial ratios and insurance coverage. The
DIP Facilities also include typical events of default, and entry of an order
granting relief to the Bondholder Lenders from the automatic stay if there is,
among other things, a conversion of the Chapter 11 Cases into cases under
Chapter 7 of the Bankruptcy Code and/or a change of ownership or control of
TransTexas.
The proceeds from the DIP Facilities have been used to pay
for, among other things:
(i) the postpetition operating expenses incurred by
TransTexas in the ordinary course of its business;
(ii) the fees of Professionals retained by TransTexas and
the Creditors' Committee in these Cases; and
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 39
<PAGE> 50
(iii) Permitted Pre-Petition Claim Payments.
Pursuant to the Final DIP Orders, the Creditors' Committee
reserved its right to object to and/or challenge within 120 days from the date
the Committee was appointed: (i) the perfection of the liens and security
interests of Firstar and the TEC Bondholders, and the prepetition liens of GMAC
in and to the Collateral under their prepetition financing facilities; and (ii)
the validity, allowability or status of the indebtedness incurred under the
prepetition financing facilities, or the validity, extent or priority of the
liens and security interests of the prepetition lenders in and to the
collateral under the prepetition financing facility. The SubDebt Committee
contends, and Debtors and the Bondholder Committee dispute, that the SubDebt
Committee has 120 days from the date the SubDebt Committee was appointed to
object to and/or challenge items (i) and (ii) of this section.
2. Change of Venue. Upon the motion of various creditors and
parties in interest, and after a hearing held by the United States Bankruptcy
Court for the District of Delaware (the "Delaware Court") on May 20, 1999, the
Delaware Court transferred venue of the Debtors' Chapter 11 Cases to the United
States Bankruptcy Court for the Southern District of Texas, Corpus Christi
Division.
3. Appointment of creditors' committees. On May 6, 1999, the
United States Trustee for the District of Delaware appointed the following
Entities to the Creditors' Committee: (i) First Union National Bank, Indenture
Trustee; (ii) Halliburton Energy Services, Inc.; (iii) Bank One, N.A.,
Indenture Trustee, (iv) Entex Gas Marketing Company; (v) Newpark Drilling
Fluids, Inc.; (vi) B&G Crane Services; (vii) Zurich American Insurance Company;
(viii) Texas Gas Plants, L.P. and (ix) Hanson Production Company. Entex Gas
Marketing Company and B&G Crane Services subsequently resigned. On June 17,
1999, the United States Trustee for the Southern District of Texas added two
members to the Creditor's Committee: Schlumberger Technology and Key Energy
Services, Inc. On August 31, 1999, the United States Trustee for the Southern
District of Texas appointed the following Entities to the SubDebt Committee:
(i) BankOne, N.A., Indenture Trustee; (ii) CFSC Wayland Advisors, Inc. and
(iii) Alliance Capital Management Corp. Bank One, N.A. resigned from the
Creditors' Committee. On September 15, 1999, Credit Suisse First Boston
Corporation Filed a motion requesting the Court to appoint it as a member of
the SubDebt Committee. The Court denied the motion.
4. Retention of Professionals. At the commencement of the
Chapter 11 Cases, the Debtors retained Young Conaway Stargatt & Taylor, LLP, as
bankruptcy counsel and Gardere & Wynne, L.L.P., as special counsel. When the
Cases were transferred to Corpus Christi, Texas the Debtors substituted Jordan,
Hyden, Womble & Culbreth, P.C. for Young Conaway Stargatt & Taylor, as
bankruptcy counsel. In addition, the Debtors retained PricewaterhouseCoopers,
LLP to assist in a variety of areas and issues relating to the Chapter 11 Case.
During the pendency of the Chapter 11 Cases, it has also been
necessary for TransTexas to retain other professionals to assist in a variety
of discrete projects.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 40
<PAGE> 51
Section 328 of the Bankruptcy Code authorizes any official
committee (e.g. the Creditors' Committee and the SubDebt Committee) to employ
professionals. The following are the professionals who have been retained by
the Creditors' Committee by order of the Bankruptcy Court: Bracewell &
Patterson, LLP as counsel to the Creditors Committee; Arthur Andersen LLP as
special accountants and consultants and Miller & Lentz. The SubDebt Committee
retained Pillsbury Madison & Sutro LLP and Beck, Redden & Secrest as its
counsel and Crossroads LLC as its financial advisors.
5. Payments to Royalty Owners. The total unpaid prepetition
amounts owing to Mineral Interest Claimants as of April 18, 1999, is
$11,485,440. In order to avoid forfeiture of certain oil and gas leases an
order was entered on June 17, 1999 authorizing TransTexas to make payment on
Claims of certain owners of Mineral Interests in the amount of $1,852,331
leaving an unpaid prepetition amount owing of approximately $9,630,000.
6. Rejection of Contracts. TransTexas has Filed fourteen
motions to reject burdensome executory contracts and leases in order to reduce
Administrative Expenses. To date, orders have been entered granting all but
three of these motions.
7. Removal of Litigation. TransTexas has Filed sixteen
notices of removal to remove litigation pending in state and federal district
court to the bankruptcy court. On April 29, 1999, TransTexas Filed a notice of
removal to remove the lawsuit captioned Henry & Luz Hein Minerals L.C. v.
TransTexas Gas Corporation, et al., to the United States Bankruptcy Court for
the Southern District of Texas, Corpus Christ Division. In the lawsuit, Hein
Minerals asserts claims based on failure timely to meet certain operational
obligations. On July 12, 1999, the bankruptcy court heard arguments of counsel
on Hein Minerals' motion for remand, and the court has taken the matter under
advisement.
On June 4, 1999, TransTexas Filed notices of removal
to remove two lawsuits captioned BWS Vacuum Service Inc vs. Adobe Energy Inc. ,
et al., and Donald Schoenfield vs. Adobe Energy Inc. et al., to the United
States Bankruptcy Court for the Southern District of Texas, Corpus Christi
Division. Both lawsuits involve breach of contract claims. TransTexas has
reached a settlement with the plaintiff in the Schoenfield suit, and Filed a
motion for approval of the settlement on September 21, 1999. The plaintiff in
the BWS suit has filed a motion to sever TransTexas as a defendant and remand
as to Adobe Energy. A hearing on the motion to sever and remand is set for
September 27, 1999.
On July 19, 1999, TransTexas Filed twelve notices of
removal to remove actions pending in Texas and Louisiana state courts. Of
these, all but three were removed to the United States Bankruptcy Court for the
Southern District of Texas, Corpus Christi Division. Two were removed to the
same court, but in the Laredo Division. These two suits were subsequently
transferred to the Corpus Christi Division. One suit, previously pending in a
Louisiana state court, was removed to the United States Bankruptcy Court for
the Eastern District of Louisiana. In that
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suit, the plaintiff's motion to remand and TransTexas' motion to transfer venue
to the United States Bankruptcy Court for the Southern District of Texas,
Corpus Christi Division, have not yet been set for hearing. One of the removed
suits asserts claims for personal injury. Three of the removed suits involve
disputes regarding royalty payments, including one action in which the
plaintiff seeks certification of a plaintiff class. The remaining eight suits
seek foreclosure of liens and related relief. The plaintiff in one of those
remaining eight suits, Weatherford U.S., L.P., has agreed to dismiss its claims
against TransTexas without prejudice, and a joint motion for dismissal was
filed by the parties on September 21, 1999.
In addition, on or about July 16, 1999, Veritas
Energy Services, Inc., et al., a co-defendant with TransTexas in a lawsuit
pending in a Texas state court captioned Betsy Cardenas, et al. vs. Veritas
Energy Services, Inc., et al., filed a notice of removal on or about July 16,
1999, to remove the litigation to the United States District Court for the
Southern District of Texas, Laredo Division. On July 21, 1999, the Court
entered an order extending the deadline for removal of additional litigation
until September 17, 1999.
On September 17, 1999, TransTexas Filed a notice of
removal to remove a suit pending in the 229th Judicial District Court of Starr
County, Texas, Case No. 96-32, captioned Nora Olga Hernandez v. Starr County
Exploration, Inc. TransTexas is not a party to the suit, but Defendant Starr
County Exploration has alleged an indemnity claim against TransTexas for the
claims asserted by Plaintiff. The suit alleges claims based on injuries
incurred by an employee of TransTexas in the scope of his employment.
8. Other Litigation. On June 12, 1999, TransTexas Filed its
complaint commencing TransTexas Gas Corporation vs. Zurich Insurance Company,
Adversary No. 99-2202. By the Complaint, TransTexas sought temporary and
permanent injunctive relief, turnover of property of the estate, estimation of
claims for allowance purposes and a determination of the extent and priority of
liens claimed by Zurich Insurance Company in property of the estate. The
bankruptcy court denied TransTexas' request for temporary injunctive relief.
Zurich moved for a stay of the adversary proceeding and for limited relief from
the automatic stay of 11 U.S.C. Section 362 to permit binding arbitration to
proceed. The bankruptcy court granted Zurich's motion to permit the arbitration
to proceed.
On June 24, 1999, Mitchell Gas Services LP filed its
complaint commencing Mitchell Energy Gas Services LP vs. TransTexas Gas
Corporation, et al., Adversary No. 99-2203. The adversary proceeding is an
interpleader action seeking a resolution of the rights and priorities regarding
proceeds from the production of oil and gas among TransTexas, royalty owners,
working interest owners, taxing authorities and TransTexas' lenders. TransTexas
has answered the complaint and cross-claims asserted by co-defendants. The case
remains pending.
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On July 1, 1999, TransTexas Filed its complaint
commencing TransTexas Gas Corporation vs. Certain Underwriters At Lloyd's and
Other Insurance Companies, Adversary No. 99-2204, to recover property of the
estate, in particular, TransTexas' right to payment under indemnity provisions
of two insurance policies for losses incurred in two well blowouts at the Trout
Point prospect in Galveston Bay. The defendants filed their answer and demand
for jury trial. On September 8, 1999, the defendants filed a motion to withdraw
the reference from the Bankruptcy Court to the District Court. A hearing on the
motion to withdraw the reference and on the defendants' demand for a jury trial
is set for September 27, 1999. On September 14, 1999, TransTexas Filed a motion
requesting the Bankruptcy Court to appoint a mediator. The Bankruptcy Court
ordered the parties to select a mediator in the case. The case remains pending.
On July 2, 1999, TransTexas Filed its complaint
commencing TransTexas Gas Corporation vs. Hanson Production Company and Neil E.
Hanson, Adversary No. 99-2205, for a declaratory judgment and to avoid
preferential transfer. In the adversary proceeding, TransTexas sought a
declaration that its rights under an oil and gas lease remain in effect.
TransTexas also sought to avoid a contingent interest claimed by Hanson
Production in certain real property transferred to TransTexas as a preferential
transfer under 11 U.S.C. Section 547. The parties reached a settlement of their
disputes, and a motion for approval of their settlement was granted by the
Bankruptcy Court by order entered on August 27, 1999. A proposed order to
dismiss the adversary proceeding has been submitted and awaits entry by the
Bankruptcy Court.
On July 28, 1999, TransTexas Filed its emergency
motion for authority to transfer and convey to Davis Petroleum interests in
certain oil and gas wells, production equipment and related real estate
pursuant to 11 U.S.C. Section 363. TransTexas asserts that it is obligated to
convey such property to Davis pursuant to certain pre-bankruptcy contracts
entered into by TransTexas and Davis, and that conveyance of the property to
Davis will confer a significant benefit to TransTexas' estate in the form of
additional joint interest billings to be paid by Davis. On August 16, 1999, the
Court granted the motion as to all parties, except Firstar and the Bondholder
Committee, subject to certain conditions. As to Firstar and the Bondholder
Committee, the hearing on the motion was continued. TransTexas now believes
that Firstar and the Bondholder Committee will consent to that motion.
TransTexas intends to File a second motion with respect to Davis Petroleum
that, together with the current motion, TransTexas believes will resolve all
currently existing disputes between TransTexas and Davis Petroleum.
The United States Coast Guard commenced an
administrative proceeding before the United States Department of Transportation
against TARC alleging that TARC failed to comply with certain federal noticing
statutes and regulations involving the transmission of natural gas. The Coast
Guard seeks damages of $700,000.
On July 28, 1999, Firstar Filed its complaint
commencing Firstar Bank of Minnesota, N.A., as Indenture Trustee for Senior
Secured Noteholders of TransAmerican Energy
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Corporation vs. TransAmerican Energy Corporation, TransAmerican Refining
Corporation and First Union National Bank, as Indenture Trustee for
Subordinated Noteholders of TransAmerican Refining Corporation, Adversary No.
99-2215. In its Complaint, Firstar seeks a declaration that it is entitled to
payment of funds held in an "Interest Reserve Fund" account maintained at First
Union in the name of TARC. Firstar alleges that the Interest Reserve Fund was
established by TARC pursuant to the TARC Subordinated Notes Indenture in
connection with the issuance by TARC of the TARC Subordinated Notes, for the
purpose of paying semi-annual interest installments due under the TARC
Subordinated Notes. Firstar further alleges that, by virtue of provisions in
the TARC Subordinated Notes Indenture making payments to holders of the TARC
Subordinated Notes subordinate to the "Senior Debt" of TARC, Firstar is
entitled to payment of the amounts held in the Interest Reserve Fund because of
alleged defaults by TARC under the TARC/TEC Note pledged to Firstar as
collateral for the TEC Senior Secured Notes. In addition to declaratory relief,
Firstar also seeks imposition of a constructive trust on the Interest Reserve
Fund, monetary damages from First Union and attorneys' fees. Firstar and First
Union have agreed to a compromise and settlement of this complaint which
settlement is embodied in the TARC Plan. Under the settlement the holders of
the TARC Subordinated Notes will receive 17 1/2% of the funds held in the
Interest Reserve Accounts for distribution after payment of First Union's
reasonable fees and expenses (including attorneys' fees and expenses), plus
their Ratable Proportion of the net proceeds received by the Litigation Trust.
The balance of the funds in the Interest Reserve Accounts will be paid to
Firstar for distribution to the TEC Bondholders under the TEC Plan after
payment of reasonable attorneys' fees and expenses of Firstar and the
Bondholder Committee. The TARC Plan provides both Firstar and First Union with
general releases from the Debtors and Creditors. Confirmation of the TARC Plan
will constitute approval by the Bankruptcy Court of this compromise and
settlement pursuant to Bankruptcy Rule 9019. If required by the Court, the
payment of fees and expenses to Firstar, First Union and their attorneys will
be subject to application to, and approval by, the Bankruptcy Court.
On September 3, 1999, eight adversary proceedings
were Filed against TransTexas Gas Corporation and/or its secured lenders by
plaintiffs claiming mineral royalty interests or working interests in oil and
gas leases held by TransTexas. In two of the cases, the plaintiffs claim to be
working interest owners in oil and gas properties with TransTexas that are
operated by TransTexas. The plaintiffs seek judgments that they have secured
interests in oil and gas production as well as the proceeds therefrom under
Section 9.319 of the Texas Business & Commerce Code; that the production and
proceeds are not estate assets; that the plaintiffs are entitled to an
accounting; and that their interests are superior to those of TransTexas and its
lenders. In the remaining cases, the plaintiffs are royalty owners in certain
oil and gas properties held by TransTexas and under various leases. The
plaintiffs seek enforcement of their alleged security interests in the oil and
gas production and proceeds under Section 9.319, a judgment establishing a
superior interest to TransTexas' lenders and an accounting for all production.
TransTexas' answers are due in early October 1999.
On September 14, 1999, Firstar Bank, N.A., as
Indenture Trustee, Filed its complaint commencing Firstar Bank, N.A. vs.
TransAmerican Refining Corporation, Adversary No.
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99-2226. In its complaint, Firstar alleges that TCR Holding Corporation ("TCR")
has defaulted on the obligation it assumed from TARC under that certain
promissory note issued by TARC to TEC in the face amount of $50 million and
collaterally assigned by TEC to Firstar. Firstar seeks to recover the entire
balance due on the TARC/TEC Note, and a judgment of foreclosure on the
collateral pledged by TARC and TCR for the TARC Note consisting of certain
preferred stock of TCR and common stock of TransContinental Refining
Corporation, now know as Orion. TransTexas' answer is due on October 14, 1999.
9. 341 Meeting. A meeting pursuant to Section 341 of the
Bankruptcy Code for each Debtor was held in Corpus Christi on June 29, 1999. On
July 16, 1999 a continued meeting was held in Houston, Texas.
10. Motion for Procedures to Determine Mechanic's Lien
Claims. On September 17, 1999, TransTexas Filed a motion requesting the
Bankruptcy Court to enter an order, pursuant to the Court's authority under
Section 105(a) of the Bankruptcy Code, Federal Rule of Bankruptcy Procedure
9019(b) and Federal Rule of Evidence 706, establishing procedures for the
efficient and cost-effective determination of numerous Claims asserted against
TransTexas' estate and property by M&M Lien Claimants. This procedure does not
deal with Claims of Mineral Property Claimants. The requested procedures will
permit the amount, priority and allowance of such claims to be determined
efficiently and with reduced impact on finite judicial and administrative
resources. Once the Court approves the requested procedures, all M&M Lien
Claimants will receive a copy of the Court's order containing the procedures. No
hearing has been set on the motion.
11. Denial of Formation of Mineral Property Owners Committee.
On or about August 2, 1999, a group of mineral property owners Filed a Motion
for the Appointment of a Mineral Property Holders Committee. Numerous parties
in interest objected to the motion, including the United States Trustee, the
Debtor, the Creditors' Committee and the Debtors' DIP lenders. After hearings
on August 24 and 27, 1999, the Court denied the motion, and subsequently denied
the mineral property owners' motion for reconsideration.
12. SubDebt Committee's Avoidance Claims. The SubDebt
Committee asserts that certain transactions among TransTexas, TEC, and the TEC
Bondholders constitute avoidable fraudulent transfers of TransTexas property or
have given rise to avoidable obligations of TransTexas or may be equitably
subordinated or recast as equity. The Court will address the merits and
defenses of these issues at the Confirmation Hearing. The transactions involved
are described herein at section II. F. Prior Transactions -- the TEC
Transactions.
The SubDebt Committee asserts that TransTexas
received inadequate consideration for the TransTexas Intercompany Loan and for
the shares of common stock that it repurchased. The SubDebt Committee contends
that through these transactions TEC recast its equity stake in TransTexas into
debt secured by all assets of TransTexas, and the SubDebt Committee argues that
as a result of these transactions TransTexas was left with negative working
capital and
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unreasonably small capital to operate its business and to pay its debts as they
became due. The SubDebt Committee intends to litigate these issues in
opposition to any effort to obtain confirmation of the TransTexas Plan. Upon
information and belief, they will argue that the TransTexas Plan cannot be
confirmed because the TransTexas Plan is based on the assumption that the TEC
Transactions are not avoidable. The SubDebt Committee is expected to argue that
it is entitled to (i) have the transfers and obligations avoided as fraudulent
transfers and obligations under Bankruptcy Code Section 548(a)(1) and
applicable state law; (ii) equitably subordinate the TransTexas Intercompany
Loan and Debt pursuant to to Bankruptcy Code Section 510 and related state law
doctrines; and/or (iii) recast the TransTexas Intercompany Loan from debt to
equity. Among other remedies, the SubDebt Committee argues that they will be
entitled to be relieved of the impact of a provision in the Indenture under
which their bonds were issued which subordinates the TransTexas bonds to
intercompany obligations. If the SubDebt Committee is successful in its actions
it contends the TransTexas Plan cannot be confirmed.
The Debtors and certain of the holders of the
TransTexas Subordinated Notes constituting at least 40% of the TransTexas
Subordinated Note Claims disagree with the foregoing assertions of the SubDebt
Committee.
The Debtors believe and will demonstrate to the
Court, if necessary, at the Confirmation Hearing that there is no colorable
claim for fraudulent transfers or equitable subordination with respect to the
transactions that arose from the June 1997 debt offerings. Further, the Debtors
intend to demonstrate that the Claims asserted by the SubDebt Committee were
thoroughly investigated and considered by the Debtors before and after the June
1997 transaction.
13. Claims Process and Bar Date. The Debtors Filed with the
Bankruptcy Court their schedules of assets and liabilities and statements of
financial affairs on June 14, 1999. The Bankruptcy Court established September
27, 1999 (the "Bar Date") as the deadline for filing proofs of Claim, except
with respect to certain specified Governmental Claims and Rejection Claims,
against the Debtors.
The Debtors will review all Claims Filed and develop and
analyze a database of all Claims asserted against them. Each proof of Claim and
proof of Interest will be analyzed to determine whether to object to the
allowance of such Claims or Interests.
The Claims asserted against the Debtors are materially in
excess of the total amount of Allowed Claims estimated by TransTexas in the
development of the TransTexas Plan because, among other things, certain Claims:
(i) are Filed in duplicate; (ii) consist of amendments to previously Filed
Claims; (iii) are asserted against multiple Debtors or assert Claims in excess
of the amount actually owed; (iv) do not allege an obligation of TransTexas;
(v) assert contingent Claims against multiple Debtors; and/or (vi) include
postpetition interest and other disallowable charges.
TransTexas intends to File motions objecting to, among
others, those Claims that are:
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(A) duplicative;
(B) superseded by amended Claims;
(C) erroneously asserted against multiple Debtors;
(D) not obligations of TransTexas;
(E) Filed after the Bar Date; or
(F) in excess of the amount actually owed, as evidenced
by TransTexas' books and records.
TransTexas projects that the Claims asserted against it will
be resolved in and reduced to an amount that approximates TransTexas' estimates
of Allowed Claims contained in this Disclosure Statement. However, the actual
aggregate amount of Allowed Claims in any Class may differ significantly from
TransTexas' estimates thereof and any variance from such estimates will affect
Distribution in certain Classes.
IV. THE PLANS
THE FOLLOWING IS A SUMMARY OF CERTAIN SIGNIFICANT PROVISIONS OF THE
PLANS. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED INFORMATION SET FORTH IN THE PLANS. TO THE EXTENT THAT THE TERMS OF
THE DISCLOSURE STATEMENT VARY WITH THE TERMS OF THE PLANS AND THE PLAN
DOCUMENTS, THE TERMS OF THE PLANS AND THE PLAN DOCUMENTS SHALL BE CONTROLLING.
A. General.
Chapter 11 is the principal business reorganization chapter of the
Bankruptcy Code. Under Chapter 11, a debtor is authorized to reorganize its
business for the benefit of itself and its creditors and stockholders.
Formulation of a plan is the principal objective of Chapter 11. In
general, a plan (i) divides Claims and Interests into separate classes, (ii)
specifies the property that each class is to receive under the plan and (iii)
contains other provisions necessary to the reorganization of the Debtor.
Additionally, the Bankruptcy Code allows a debtor to File a plan of liquidation
which allows for the orderly liquidation of the assets of a debtor.
Chapter 11 does not require each holder of a claim or interest to
vote in favor of a plan in order for the Bankruptcy Court to confirm a plan.
However, a plan must be accepted by the holders of at least one class of claims
that is impaired (as defined above) without considering the votes of "insiders"
within the meaning of the Bankruptcy Code.
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Distributions to be made under the Plans will be made after
Confirmation of the Plans, on the Effective Date or as soon thereafter as is
practicable, or at such other time or times specified in the Plans.
B. Classification and Treatment of Claims and Interests Under
the Plans.
Section 1123(a)(1) of the Bankruptcy Code requires that the Plans
classify the Claims (other than administrative expenses and priority tax
Claims) and the Interests. Section 1122 of the Bankruptcy Code also provides
that, except for certain claims classified for administrative convenience, a
plan may place a Claim or Interest in a particular class only if such Claim or
Interest is substantially similar to the other Claims or Interests of such
class. The Debtors believe they have classified all Claims and Interests in
compliance with the provisions of section 1122 of the Bankruptcy Code. If a
creditor or interest holder challenges such classification of Claims or
Interests and the Bankruptcy Court finds that a different classification is
required for the Plans to be confirmed, the Debtors, to the extent permitted by
the Bankruptcy Court, intend to make such reasonable modifications to the
classification of Claims or Interests under the Plans to provide for whatever
classification might be required by the Bankruptcy Court for confirmation.
EXCEPT TO THE EXTENT THAT SUCH MODIFICATION OF CLASSIFICATION
ADVERSELY AFFECTS THE TREATMENT OF A HOLDER OF A CLAIM OR INTEREST AND REQUIRES
RESOLICITATION, ACCEPTANCE OF THE PLANS BY ANY HOLDER OF A CLAIM OR INTEREST
PURSUANT TO THIS SOLICITATION WILL BE DEEMED TO BE A CONSENT TO THE PLANS'
TREATMENT OF SUCH HOLDER OF A CLAIM OR INTEREST REGARDLESS OF THE CLASS AS TO
WHICH SUCH HOLDER OF A CLAIM OR INTEREST IS ULTIMATELY DEEMED TO BE A MEMBER.
The Bankruptcy Code also requires that each of the Debtors' Plans
provide the same treatment for each Claim or Interest of a particular class
unless the holder of a particular Claim or Interest agrees to a less favorable
treatment of its Claim or Interest. The Debtors believe that they have complied
with such standard. If the Bankruptcy Court finds otherwise, it could deny
confirmation of the offending Plan if the holders of Claims or Interests
affected do not consent to the treatment afforded them under such Plan.
The TEC Plan categorizes the Claims against and Interests in TEC into
three Classes. The TARC Plan categorizes the Claims against and Interests in
TARC into four Classes. The TransTexas Plan categorizes the Claims against and
Interests in TransTexas into twelve Classes. In accordance with the Bankruptcy
Code, Administrative Expenses and Priority Tax Claims are not classified into
Classes. Each Plan also provides that expenses incurred by the respective
Debtor during the Chapter 11 Cases will be paid in full and specifies the
manner in which the Claims and Interests in each Class are to be treated.
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1. Treatment of Administrative Expenses and Certain
Priority Claims.
(a) Administrative Expenses. Administrative Expenses consist
of (a) any cost or expense of administration of the Chapter 11 Cases allowable
under section 503(b) of the Bankruptcy Code, including, without limitation, the
fees and expenses of the Professionals employed by the Debtors and the
Creditors' Committee, (b) a Claim given the status of an Administrative Expense
by Final Order of the Bankruptcy Court and (c) all fees or charges assessed
against the Debtors' estates under title 28, United States Code, section 1930.
Such Administrative Expenses include, for example, costs incurred in the
operation of the Debtors' businesses after the commencement of the Chapter 11
Cases, postpetition taxes, if any, and certain other obligations arising after
the commencement of the Chapter 11 Cases.
Assuming that neither significant litigation nor objections
are Filed with respect to the Plans and assuming the Plans are confirmed in
December 1999, TEC estimates unpaid Administrative Expenses as of the Effective
Date not to exceed $20,000; TARC estimates unpaid Administrative Expenses as of
the Effective Date not to exceed $100,000 and TransTexas estimates unpaid
Administrative Expenses as of the Effective Date not to exceed $1.2 million
exclusive of Administrative Expenses in respect of the Bondholder DIP Facility
and the GMAC DIP Facility. Such amount also includes the statutory fees payable
to the United States Trustee, which the Debtors estimate should not be
material. TransTexas' estimate of Administrative Expenses does not include
amounts that will be payable in the ordinary course of business by Reorganized
TransTexas.
Under the Debtors' Plans, each holder of an allowed
Administrative Expense (including, without limitation, all compensation and
reimbursement of expenses pursuant to sections 327, 328, 329, 330, 331,
503(b)(1), 503(b)(4) or 1103 of the Bankruptcy Code) will be paid 100% of the
unpaid allowed amount of such Administrative Expense in Cash on or as soon as
reasonably practicable after the later of: (a) the Effective Date; or (b) the
date such Administrative Expense becomes Allowed, provided, however, that an
allowed Administrative Expense representing obligations incurred in the
ordinary course of business consistent with past practices, shall be paid in
full or performed by TransTexas or Reorganized TransTexas, as the case may be,
in accordance with its terms and conditions, in the ordinary course of
business.
(b) Bondholder DIP Secured Claims. These Claims consist of
the Debtor-In-Possession loans and other financial accommodations provided
pursuant to the Credit Agreement among the Debtor, as Borrower, and TEC and
TARC, as guarantors, and the Bondholder Lenders dated as of April 27, 1999, as
amended, and all ancillary agreements and instruments thereto. The Debtors
estimate that the aggregate principal amount of these Claims will not exceed
$30 million. Unless otherwise agreed by the holders of the Bondholder DIP
Secured Claims and the Debtor or Reorganized Debtor, on the Effective Date,
each holder of an Allowed Bondholder DIP Secured Claim shall receive its
Ratable Proportion of (a) Cash, in an amount equal to two-thirds of the sum of
(i) the principal amount owing under the Bondholder DIP Facility on the
Effective Date, (ii) all
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interest accruing thereon in accordance with the Bondholder DIP Facility and
(iii) all fees and other charges relating thereto in accordance with the
Bondholder DIP Facility and (b) Claims and entitlements under the Extended
Bondholder DIP Facility.
(c) Priority Tax Claims. A Priority Tax Claim is any Claim
against the Debtors are of the type specified in section 507(a)(8) of the
Bankruptcy Code. These Claims consist of certain unsecured Claims of
governmental units for taxes. TEC believes it does not have any Allowed
Priority Tax Claims. TARC believes it does not have any Allowed Priority Tax
Claims. TransTexas estimates that its Priority Tax Claims will not exceed
$390,000.
Under the TransTexas Plan, with respect to each Allowed
Priority Tax Claim, at the option of TransTexas upon prior written consent of
the Bondholders' Committee, and following the Effective Date, at the option of
Reorganized TransTexas, the holder of an Allowed Priority Tax Claim will be
entitled to receive on account of such Allowed Priority Tax Claim: (a) equal
Cash payments made on the last Business Day of every six (6) month period
following the Effective Date, over a period not exceeding six (6) years after
the assessment of the tax on which such Claim is based, totaling the principal
amount of such Claim plus 12% interest on any outstanding balance from the
Effective Date; (b) such other treatment agreed to by the holder of such
Allowed Priority Tax Claim and TransTexas or Reorganized TransTexas, as the
case may be, provided such treatment is on more favorable terms to TransTexas
or Reorganized TransTexas, as the case may be, than the treatment set forth in
clause (a) hereof, upon prior written notice to the Creditors' Committee; or
(c) payment in full, in Cash, on or as soon as practicable after the later of
(i) the Effective Date or (ii) the date such Priority Tax Claim becomes an
Allowed Priority Tax Claim. TransTexas or Reorganized TransTexas, as the case
may be, will have the right, in their sole discretion, to prepay the Allowed
Priority Tax Claim without penalty of any sort or nature.
2. Treatment of Claims and Interests under the TEC
Plan:
(a) Allowed Class 1 Claims - (TEC Senior Secured Note
Claims). The TEC Senior Secured Note Claims are Allowed in full. On the
Effective Date, each holder of an Allowed TEC Senior Secured Note Claim as of
the Distribution Record Date shall receive on account of its Allowed TEC Senior
Secured Note Claim its Ratable Proportion of all of TransTexas' right, title
and interest in (i) each item of Collateral securing any of TransTexas'
obligations arising under, in respect of, or relating to, the TEC Senior
Secured Notes, the TEC Senior Secured Notes Indenture and/or any other
agreement or instrument entered into in connection therewith, including,
without limitation, all of TEC's right, title and interest in (A) the
TransTexas Senior Secured Note and all related rights, including 82 1/2% of the
funds held in the Interest Reserve Accounts, less reasonable fees and expenses
(including attorneys' fees and expenses) of Firstar and the Bondholder
Committee, (B) the TARC Senior Secured Note and all related rights, (C) the
TransTexas/TEC Note and all related rights, (D) the TCR Secured Note and all
related rights, (E) the TARC Common Stock and (F) the TransTexas Common Stock,
and (iii) all Distributions TEC would have, but for
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Section 5.01(a) of the TEC Plan, been entitled to receive pursuant to the terms
of the TransTexas Plan and the TARC Plan.
As more specifically set forth in, and without in any way
limiting, Section 8.01 of the TEC Plan, the Distributions provided in Section
5.01 of the TEC Plan are in full settlement, release and discharge of each of
the TEC Senior Secured Note Claims. Class 1 is Impaired. Holders of Allowed TEC
Senior Secured Note Claims shall be entitled to vote to accept or reject the
TEC Plan.
(b) Allowed Class 2 Claims (General Unsecured Claims).
General Unsecured Claims (except Affiliates of TEC) shall receive their Ratable
Proportion of $5,000 on their Claims. Class 2 is Impaired under the TEC Plan.
Holders of such Claims shall be entitled to vote to accept or reject the TEC
Plan.
(c) Allowed Class 3 Interests (TEC Common Stock Interests).
On the Effective Date, the Interests shall be canceled. Class 3 is Impaired
under the TEC Plan. Holders of such Interests are deemed to have rejected the
TEC Plan.
3. Treatment of Claims and Interests under the TARC
Plan:
(a) Allowed Class 1 Claim (TARC Senior Secured Note Claims).
The TARC Senior Secured Note Claims are Allowed in full. On the Effective Date,
the holder of the Allowed TARC Senior Secured Note Claims as of the
Distribution Record Date shall receive on account of its Allowed TARC Senior
Secured Note Claims all of TARC's right, title and interest in each item of the
Collateral securing any of TARC's obligations arising under, in respect of, or
relating to the TARC Senior Secured Note, the TARC Senior Secured Loan
Agreement and/or any other agreement or instrument entered into in connection
therewith, including, without limitation, all of TARC's right, title and
interest in the TCR Preferred Stock. Class 1 is Impaired. Holders of Allowed
TARC Senior Secured Note Claims shall be entitled to vote to accept or reject
the TARC Plan.
(b) Allowed Class 2 Claims (General Unsecured Claims). Each
holder of an Allowed General Unsecured Claim shall receive on account of its
Allowed General Unsecured Claim, its Ratable Proportion of the Litigation
Trust. Class 2 is Impaired under the Plan. Holders of such Claims shall be
entitled to vote to accept or reject the TARC Plan.
On the Confirmation Date a Litigation Trust shall be
established for the purpose of pursuing Claims of the Debtor or its Creditors
against Bill Elder, WWL-TV, A. H. Belo and any other defendant in the case
styled TARC and John Stanley v. Bill Elder, WWL-TV, A. H. Belo, currently
pending in the 19th District Court, East Baton Rouge Parish, LA. The Litigation
Trust will be governed by a Litigation Trust Agreement and will be implemented
by the Estate Representative who shall serve as the trustee of the Litigation
Trust.
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(c) Allowed Class 3 Claims (TARC Subordinated Note Claims).
The TARC Subordinated Note Claims are allowed in full. On the Effective Date,
or as soon thereafter as is practicable, each holder of an Allowed TARC
Subordinated Note Claim as of the Distribution Record Date, pursuant to a
Compromise and Settlement Agreement by and between Firstar and First Union,
shall be entitled to receive on account of its Allowed TARC Subordinated Note
Claim its Ratable Proportion of 17 1/2% of funds held in the Interest Reserve
Accounts, less reasonable attorneys' fees and expenses payable to First Union
and its attorneys; and its Ratable Proportion of the net proceeds of the
Litigation Trust. This compromise and settlement agreement shall be deemed
approved, pursuant to Federal Bankruptcy Rule 9019, upon the confirmation of
the TARC Plan. Class 3 is Impaired. Holders of such Claims shall be entitled to
vote to accept or reject the TARC Plan.
(d) Allowed Class 4 Interests (TARC Common Stock Interests).
The holders of TARC Common Stock Interests shall receive no distributions of
any kind under the Plan in respect of those Interests. Class 4 is Impaired
under the TARC Plan. Holders of such Interests shall be deemed to have rejected
the TARC Plan.
4. Treatment of Claims and Interests under the
TransTexas Plan:
The terms of the TransTexas Plan, including the amounts of
cash, New Senior Preferred Stock, New Junior Preferred Stock, New Common Stock
and New Warrants to be issued to the various classes of creditors, including
holders of Allowed TransTexas Subordinated Note Claims, holders of Allowed
General Unsecured Claims and holders of Old Common Stock, respectively, were
determined by negotiation between TransTexas, TEC, the Creditors' Committee,
and the Bondholder Committee. In particular, the interest and dividend rates
attaching to the various securities were determined by such parties by taking
into account the total amount of the Claims of the TEC Bondholders, market
conditions, the value of TransTexas' assets, comparable company credits and
various other factors. In connection therewith, the Debtors considered the
viability of other plan alternatives. One of the premises of the TransTexas
Plan is that the value of Firstar's Secured Claim is no greater than the
consideration being distributed pursuant to Section 5.03(a) of the TransTexas
Plan.
A related premise is that certain classes receive
distributions "on account of their Claims" are receiving reallocations or gifts
pursuant to Section 5.03(b) of the TransTexas Plan. The SubDebt Committee
disagrees with each of these premises.
In addition, the amount of New Class B Common Stock and New
Warrants to be received by John R. Stanley was determined by negotiation
between John R. Stanley and the Bondholder Committee. Based on these
negotiations, as described below, the holder of the Allowed TransTexas Senior
Secured Note Claim agreed to reallocate portions of the distributions to be
received by it and direct their distribution to holders of Allowed TransTexas
Subordinated Note
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Claims, Allowed General Unsecured Claims, holders of Old Common Stock and John
R. Stanley. These reallocated distributions will not be made in respect of the
claims or equity interests of such persons. After investigation, including
consultation with independent experts, TransTexas presently believes that the
new securities issued pursuant to the Plan other than the New Senior Secured
Notes have nominal or no value. The method used in making this determination
was to add (1) the estimated fair market value of TransTexas' oil and gas
properties, as determined by Scotia Energy, (2) net working capital as of
August 31, 1999, and (3) other assets as of August 31, 1999, to arrive at a
total enterprise value. From this amount, the following sums were deducted: (1)
the Post-Confirmation Credit Facility, (2) the Extended DIP Facility, (3) New
Senior Secured Notes, (4) Tax Liens, and (5) Production Payment Liabilities.
The resulting sum leads TransTexas to believe that a value of $-0- should be
allocated to the New Senior Preferred Stock, the New Junior Preferred Stock,
the New Common Stock, and the New Warrants. The factors that could change the
foregoing include: (1) the resolution of claims, (2) the future price of oil
and gas, (3) the outcome of mediation on insurance proceeds, and (4) drilling
results.
(a) Allowed Class 1 Claims (Priority Claims). Unless
otherwise agreed by the holder of an Allowed Priority Claim and TransTexas, or
following the Effective Date, the Reorganized Debtor, each holder of an Allowed
Priority Claim shall receive an amount in Cash equal to 100% of the Allowed
amount of such Claim on account of such Allowed Priority Claim on or as soon as
practicable after the later of: (i) the Effective Date, or (ii) the date on
which such Priority Claim becomes an Allowed Priority Claim.
As more specifically set forth in, and without any way
limiting, Section 9.01 of the TransTexas Plan, the Distributions provided in
Section 5.01 of the TransTexas Plan are in full settlement, release and
discharge of each such holder's Priority Claim. Class 1 is Unimpaired. Holders
of Allowed Priority Claims shall be deemed to have accepted the TransTexas
Plan.
(b) Allowed Class 2 Claims (Secured Tax Claims). Class 2
consists of the Secured Claims of Governmental Units. TransTexas estimates that
Secured Tax Claims will aggregate approximately $10.3 million.
At the option of the Reorganized Debtor, each holder of an
Allowed Secured Tax Claim shall receive on account of its Allowed Secured Tax
Claim one of the following alternatives: (i) equal Cash payments made on the
last Business Day of every six (6) month period following the Effective Date,
over a period not exceeding six (6) years after the assessment of the tax on
which such Claim is based, totaling the principal amount of such Claim plus 12%
interest on any outstanding balance from the Effective Date and retain its Lien
until paid in full; (ii) such other treatment agreed to by the holder of such
Allowed Secured Tax Claim and the Reorganized Debtor, provided such treatment
is on more favorable terms to the Reorganized Debtor, than the treatment set
forth in clause (i) hereof; or (iii) payment in full of such Allowed Secured
Tax Claim on or as soon as practicable after the later of: (A) the Effective
Date, or (B) the date on which such Secured
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Tax Claim becomes an Allowed Secured Tax Claim. The Reorganized Debtor, shall
have the right, in its sole discretion, to prepay Allowed Secured Tax Claims
without penalty of any sort or nature.
As more specifically set forth in, and without in any way
limiting, Section 9.01 of the TransTexas Plan, the Distributions provided in
Section 5.02 of the TransTexas Plan are in full settlement, release and
discharge of each holder's Secured Tax Claim. Class 2 is Impaired. Holders of
Allowed Secured Tax Claims shall be entitled to vote to accept or reject the
TransTexas Plan.
(c) Allowed Class 3 Claim (TransTexas Senior Secured Note
Claims). Class 3 consists of the Claims of TEC which are held by the TEC
Bondholders. TransTexas estimates that the principal amount of the TransTexas
Senior Secured Note Claims will aggregate $300 million.
The TransTexas Senior Secured Note Claims are Allowed in
full. On the Effective Date, the holder of the Allowed TransTexas Senior
Secured Note Claims shall receive on account of its Allowed TransTexas Senior
Secured Note Claims: (i) all of the New Senior Secured Notes; (ii) all of the
New Senior Preferred Stock; (iii) all of the New Junior Preferred Stock; (iv)
all of the New Common Stock; (v) all of the New Warrants; and (vi) an amount in
Cash equal to the Maximum GUC Cash Amount.
Subject to the occurrence of the Effective Date, the holder
of Allowed TransTexas Senior Secured Note Claims has agreed to reallocate and
to direct the Reorganized Debtor to distribute certain of the Distributions set
forth in Section 5.03(a) of the TransTexas Plan, and the Reorganized Debtor
shall distribute such Distributions, as follows:
(i) each holder of an Allowed TransTexas Subordinated Note
Claim as of the Distribution Record Date shall receive its Ratable Proportion
of 80 million shares of New Junior Preferred Stock on the Effective Date or as
soon thereafter as is practicable;
(ii) each holder of an Allowed General Unsecured Claim shall
receive, on the earlier of the Effective Date or the date on which such Claim
becomes an Allowed General Unsecured Claim, or as soon thereafter as is
practicable: Cash in an amount equal to its Ratable Proportion of (a) the
Maximum GUC Cash Amount and (b) five million shares of New Senior Preferred
Stock;
(iii) each holder of the Old Common Stock on the Distribution
Record Date that is not an Affiliate of TransTexas shall receive its Ratable
Proportion of (a) 52,500 shares of the New Class A Common Stock (which will
constitute 4.2% of the New Common Stock) and (b) 109,375 New Warrants on the
Effective Date or as soon thereafter as is practicable; and
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(iv) John R. Stanley, or his designee, shall receive 247,500
shares of the New Class B Common Stock (which will constitute 19.8% of the New
Common Stock) and 515,625 New Warrants on the Effective Date or as soon
thereafter as is practicable.
Subject to the occurrence of the Effective Date, the holder
of the Allowed TransTexas Senior Secured Note Claims has agreed to allow
Reorganized TransTexas to retain an amount of Cash equal to the aggregate
amount not paid to the holders of Allowed General Unsecured Claims pursuant to
Section 5.03(b)(ii) of the TransTexas Plan.
As more specifically set forth in, and without in any way
limiting, Section 9.01 of the TransTexas Plan, the Distributions provided in
Section 5.03 of the TransTexas Plan are in full settlement, release and
discharge of the holder's TransTexas Senior Secured Note Claims. Class 3 is
Impaired. Holders of Allowed TransTexas Senior Secured Note Claims shall be
entitled to vote to accept or reject the TransTexas Plan.
(d) Allowed Class 4 Claim (GMAC Secured Claim). Class 4
consists of any Claim of GMAC against TransTexas arising under the GMAC Credit
Facility. TransTexas estimates the GMAC Secured Claim to be approximately $4
million. The GMAC Secured Claim is Allowed in full. On the Effective Date, the
Reorganized Debtor shall assume the GMAC Secured Claim, which shall be paid in
accordance with such terms and conditions as are agreed to in writing between
GMAC and the Reorganized Debtor (the "GMAC Post-Confirmation Agreement"). Among
other things, the GMAC Post-Confirmation Agreement shall provide that the
indebtedness and obligations of the Reorganized Debtor to GMAC shall be secured
by a first priority Lien and/or security interest in and to the Receivables and
certain other assets of the Debtor and Reorganized Debtor, as set forth with
specificity therein (the "GMAC Post-Confirmation Collateral").
Notwithstanding anything to the contrary set forth
in any other provision of this Plan, any and all Liens and/or security
interests in the assets comprising the GMAC Post-Confirmation Collateral
granted by the Debtor and Reorganized Debtor to any person or entity other than
GMAC pursuant to this Plan and the Confirmation Order or at any time thereafter
shall be subject and subordinate in all respects to the Liens and/or security
interests in the GMAC Post-Confirmation Collateral granted to GMAC pursuant to
this Plan, and the sole remedy and entitlement of each such holder of a Lien
and/or security interest in the assets comprising the GMAC Post-Confirmation
Collateral other than GMAC shall be to receive, after the occurrence of an
event of default under the Post-Confirmation Agreements, the liquidation of the
collateral granted to GMAC thereunder and repayment in full of all indebtedness
and obligations due to GMAC, the balance of such proceeds of such assets
comprising the GMAC Post-Confirmation Collateral as may remain.
The indebtedness and obligations of, and rights
granted by, the Debtor to GMAC during the period from the Confirmation Date to
the Effective Date, pursuant to the parties' pre-petition agreements, the GMAC
DIP Facility and the GMAC DIP Order shall remain in full force
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and effect with respect to the Debtor and/or the Reorganized Debtor, including
without limitation all right, title, interest, claims, liens and security
interests of GMAC in the Debtor's and/or the Reorganized Debtor's assets, which
shall be deemed continuously perfected.
In consideration for the obligations undertaken by
GMAC pursuant to the Plan, including without limitation pursuant to the
Post-Confirmation Agreement, the Confirmation Order shall provide
(collectively, the "GMAC Waiver and Injunction") that (1) every holder of a
Claim or Cause of Action against the Debtor, including without limitation all
Mineral Interest Claimants, all holders of Priority Tax Claims, all holders of
Secured Tax Claims and all Governmental Units holding Claims for property,
severance, sales, use, personal property and other taxes ("Releasors") shall be
deemed under the TransTexas Plan to have waived, released and relinquished any
and all obligations, debts, losses, damages, liabilities, contracts,
controversies, agreements, premises, claims, causes of action, and demands of
any kind whatsoever at law or in equity, direct or indirect, known or unknown,
discovered or undiscovered, asserted or unasserted against GMAC, its
affiliates, successors, assigns, employees and agents (the "GMAC Releasees")
arising out of or relating to the Debtor, Claims against the Debtor, the
Chapter 11 Case, the Plan, the Loans, advances and financial accommodations
provided to the Debtor by GMAC, the Debtor's business operations and/or
management of the affairs of the Debtor and/or its affiliates, arising at any
time on or prior to the Effective Date (the "Released Claims"), and (2) the
Releasors shall be specifically permanently enjoined and restrained from the
commencement, conduct or continuation of any action or proceeding against the
GMAC Releasees upon the Released Claims, in any manner, directly or indirectly.
Class 4 is Impaired. GMAC shall be entitled to vote
to accept or reject the TransTexas Plan.
(e) Allowed Class 5 Claims (Miscellaneous Secured Claims).
Class 5 consists of any Claim against TransTexas that is a Secured Claim other
than Secured Tax Claims, Bondholder DIP Secured Claims, TransTexas Senior
Secured Note Claims, GMAC Secured Claims, Mineral Interest Secured Claims and
M&M Lien Secured Claims.
TransTexas estimates that Miscellaneous Secured Claims will
aggregate approximately $7.4 million. Holders of Class 5 Claims may include:
Hanover Compressor Company, Home Insurance Company, International Fidelity
Insurance Co., Jefferies Analytical Trading, Risk Enterprise Management, and
Zurich Insurance Company. Each holder of a Class 5 Miscellaneous Secured Claim
will be deemed to be in a separate Class for classification, voting and
distribution purposes under the TransTexas Plan.
At the option of the Reorganized Debtor, on the Effective
Date, each holder of an Allowed Miscellaneous Secured Claim shall receive on
account of its Allowed Miscellaneous Secured Claim one of the following
alternatives: (i) the Reorganized Debtor shall execute a written
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undertaking in favor of the holder of such Claim, whereby the Reorganized
Debtor shall assume such Claim and leave unaltered such holder's legal,
equitable and contractual rights with respect to such Claim, (ii)
notwithstanding any contractual provision or applicable law that entitles the
holder of such Claim to demand or receive accelerated payment of such Claim
after the occurrence of a default, the Reorganized Debtor, shall (1) cure any
such default that occurred before or after the Petition Date, other than a
default of a kind specified in Section 365(b)(2) of the Bankruptcy Code, (2)
reinstate the maturity of such Claim as such maturity existed before such
default, (3) compensate the holder of such Claim for any damages incurred as a
result of any reasonable reliance by such holder on such contractual provision
or such applicable law or (4) execute a written undertaking in favor of such
holder, whereby the Reorganized Debtor shall assume such Claim and, except as
permitted in clauses (1), (2) and (3) hereof, shall not otherwise alter the
legal, equitable or contractual rights of such holder with respect to such
Claim, or (iii) the Reorganized Debtor shall provide such other treatment
agreed to by the holder of such Allowed Miscellaneous Secured Claim, and the
Reorganized Debtor with the prior consent of the Bondholders.
Notwithstanding the foregoing, TransTexas may elect by
sending written notice to the Bondholder Committee and to the affected Claim
holder on or before the Confirmation Date to (i) pay the holder of such Allowed
Miscellaneous Secured Claim the allowed Amount thereof in Cash; (ii) distribute
to the holder of an Allowed Claim in Class 5 the property securing such
holder's Claim, in which event such holder shall be entitled within thirty (30)
days of such election to File a proof of Claim for any deficiency entitled to
treatment as a Claim in Class 8 or be forever barred from thereafter asserting
a Deficiency Claim against TransTexas or the Reorganized Debtor; or (iii)
provide to such holder such treatment, including deferred Cash payments, as
shall be consistent with Section 1129(b) of the Bankruptcy Code.
As more specifically set forth in, and without in any way
limiting Section 9.01 of the TransTexas Plan, the Distributions provided in
Section 5.05 of the TransTexas Plan are in full settlement, release and
discharge of each holder's Miscellaneous Secured Claim. Class 5 is Impaired.
Holders of such Claims shall be entitled to vote to accept or reject the
TransTexas Plan.
(f) Allowed Class 6A Claims (Mineral Interest Secured
Claims). Class 6A consists of Mineral Interest Owners who hold Secured Claims.
TransTexas estimates that these Claims will aggregate approximately $1.8
million.
Each holder of an Allowed Mineral Interest Secured Claim
shall receive on account of its Allowed Mineral Interest Secured Claim one of
the following alternatives in accordance with the Ballot/Election submitted by
such holder or its predecessor in interest with respect to such Mineral
Interest Secured Claim on or before the Ballot/Election Deadline, on the
earlier of the Effective Date or the date on which such Claim becomes an
Allowed Mineral Interest Secured Claim, or as soon thereafter as is
practicable: (i) equal Cash payments made on the last Business Day in December
in each year following the Effective Date, over a period of five (5) years,
totaling
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the principal amount of such Claim plus simple interest on any outstanding
balance from the Effective Date calculated at the Plan Rate, and a continuing
Lien securing such Claim until paid in full, which Lien shall have the priority
and rights set forth more fully in Section 5.06 of the TransTexas Plan, or (ii)
in Cash, an amount equal to forty percent (40%) of the Allowed Mineral Interest
Secured Claim; provided, however, that each election made by a holder of an
Allowed Mineral Interest Secured Claim shall be irrevocable and binding on any
subsequent holder of such claim; and provided further, that each holder of an
Allowed Mineral Interest Secured Claim that fails to submit its Ballot/Election
on or before the Ballot/Election Deadline and otherwise in accordance with the
instructions contained therein shall be deemed to have elected to receive equal
Cash payments made on the last Business Day in December in each year following
the Effective Date, over a period of five (5) years, totaling the principal
amount of such Claim plus simple interest on any outstanding balance from the
Effective Date calculated at the Plan Rate, and a continuing Lien securing such
Claim until paid in full.
As more specifically set forth in, and without in any way
limiting, Section 9.01 of the TransTexas Plan, the Distributions provided in
Section 5.06 are in full settlement, release and discharge of each Mineral
Interest Secured Claim.
Class 6A is Impaired. Holders of such Claims shall be
entitled to vote to accept or reject the Plan. Each Mineral Interest Secured
Claim receiving treatment under Section 5.06(b) of the TransTexas Plan shall be
deemed to be in a separate Class for classification, voting and distribution
purposes.
(g) Allowed Class 6B Claims (M&M Lien Secured Claims). Class
6B consists of M&M Lien Claimants who hold Secured Claims. TransTexas believes
that the amount of Allowed M&M Lien Secured Claims will be nominal either
because the value of the relevant properties are insufficient or because of the
existence of prior, perfected liens on the relevant properties ultimately in
favor of the TEC Bondholders.
Each holder of an Allowed M&M Lien Secured Claim
shall receive on account of its Allowed M&M Lien Secured Claim, on the earlier
of the Effective Date or the date on which such Claim becomes an Allowed M&M
Lien Secured Claim, or as soon thereafter as practicable, equal Cash Payments
made on the last Business Day in December in each year following the Effective
Date, over a period of five (5) years, totaling the principal amount of such
Claim plus simple interest on any outstanding balance from the Effective Date
calculated at the Plan Rate, and a continuing Lien securing such Claim until
paid in full.
As more specifically set forth in, and without in
any way limiting, Section 9.01 of the TransTexas Plan, the Distributions
provided in Section 5.07 are in full settlement, release and discharge of each
M&M Lien Secured Claim.
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Class 6B is impaired. Holders of such Claims shall
be entitled to vote to accept or reject the Plan. Each M&M Lien Secured Claim
receiving treatment under Section 5.07(b) of the TransTexas Plan shall be
deemed to be in a separate class for classification, voting and distribution
purposes.
(h) Allowed Class 7 Claims (TransTexas Senior Secured Note
Deficiency Claims). Class 7 consists of the Deficiency Claim of the TransTexas
Senior Secured Noteholders. TransTexas estimates that these Claims will
aggregate $175 million.
The holder of the TransTexas Senior Secured Note Deficiency
Claims shall receive no Distribution on account of its TransTexas Senior
Secured Notes Deficiency Claims. Class 7 is Impaired. The holder of such Claim
shall be deemed to have rejected the TransTexas Plan.
(i) Allowed Class 8 Claims (General Unsecured Claims). Class
8 consists of all General Unsecured Claims against TransTexas. TransTexas
estimates that the aggregate amount of General Unsecured Claims that will be
allowed is approximately $100 million.
The holders of Allowed General Unsecured Claims shall receive
no Distribution on account of their General Unsecured Claims. Class 8 is
Impaired. Holders of such Claims shall be deemed to have rejected the Plan.
(j) Allowed Class 9 Claims (TransTexas Subordinated Note
Claims). Class 9 consists of the Claims of the holders of the Subordinated
Notes. TransTexas estimates that the aggregate principal amount of these Claims
will be approximately $116 million.
The holders of the TransTexas Subordinated Note Claims shall
receive no Distributions on account of their TransTexas Subordinated Note
Claims. Class 9 is Impaired. Holders of such Claims shall be deemed to have
rejected the TransTexas Plan.
(k) Allowed Class 10 Claims (Convenience Claims). Class 10
consists of any Allowed General Unsecured Claim which is (a) in an amount equal
to $500 or less or (b) in an amount greater than $500, but which is reduced to
an amount of $500 or less. TransTexas estimates that Allowed Convenience
Claims, not including Claims that are reduced to $500 in accordance with
Section 6.14 of the TransTexas Plan, will total approximately $1 million.
On the Effective Date, or as soon thereafter as is
practicable, each holder of an Allowed Convenience Claim shall receive on
account of its Allowed Convenience Claim Cash in an amount equal to 100% of its
Allowed Convenience Claim (as reduced in accordance with Section 6.14 of the
TransTexas Plan), without interest.
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As more specifically set forth in, and without in any way
limiting, Section 9.01 of the TransTexas Plan, the Distributions provided to
the holders of Convenience Claims are in full settlement, release and discharge
of each holder's Convenience Claim. Class 10 is Impaired under this Plan.
Holders of such Claims shall be entitled to vote to accept or reject the
TransTexas Plan.
(l) Allowed Class 11 Claims (Production Payment Holder
Claims). Class 11 consists of the Claims of TCW Portfolio No. 1555 DRV
Sub-Custody Partnership, L.P., TCW DR VI Investment Partnership, L.P. and TCW
which relate to a Drilling Program dated February 23, 1998; and Claims of TCW
DR VI Investment Partnership, L.P. and TCW Asset Management Company which
relate to the Production Payment Transactions dated September 30, 1998.
TransTexas estimates that the total amount of the Production Payment Claims
will be approximately $56 million.
On the Effective Date, except to the extent that a holder of
an Allowed Production Payment Holder Claim agrees to a different treatment of
such Allowed Production Payment Holder Claim, each Allowed Production Payment
Holder Claim shall be rendered Unimpaired in accordance with Section 1124 of
the Bankruptcy Code. All Allowed Production Payment Holder Claims that are not
due and payable on or before the Effective Date shall be paid in accordance
with the terms of their underlying agreement and in the ordinary course of
business of TransTexas.
As more specifically set forth in, and without in any way
limiting, Section 9.01 of the TransTexas Plan, the Distributions provided to
Allowed Production Payment Holders are in full settlement, release and
discharge of each Production Payment Holder Claim.
Class 11 is Unimpaired. Holders of such Claims shall be
deemed to have accepted the Plan.
(m) Allowed Class 12 Interests (Old Common Stock Interests).
Class 12 consists of all Interests represented by the Old Common Stock.
The holders of Old Common Stock Interests shall receive no
Distributions of any kind under the Plan in respect of those Interests. Class
12 is Impaired under the Plan. Holders of such Claims shall be deemed to have
rejected the Plan.
5. Principal Plan Documents. The following is a list of the
principal documents to be entered into by Reorganized TransTexas in connection
with the Plans. To the extent available, TransTexas will File the principal
Plan Documents with the Bankruptcy Court no later than five (5) Business Days
prior to the hearing to consider confirmation of the Plans unless otherwise
provided herein: (i) the New Secured Notes Security Documents, (ii) the New
Secured Notes, (iii) the New Senior Secured Notes Indenture, (iv) the New
Senior Preferred Stock, (v) the New Junior Preferred Stock, (vi) the New
Warrant Agreement, (vii) the New Warrants, (viii) the Registration Rights
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Agreement, (ix) the Management Agreement, (x) the Post-Confirmation Credit
Facility, (xi) the Extended Bondholder DIP Facility and, (xii) the GMAC DIP
Facility.
On or before the Confirmation Date, the appropriate Debtors
and the other parties will execute and deliver the Plan Documents. Such
documents will not be binding on TransTexas until the Effective Date has
occurred, at which time they shall become binding automatically on Reorganized
TransTexas.
The following description is qualified in its entirety by
reference to the definitive documents, the forms of which will be Filed with
the Bankruptcy Court. With respect to any inconsistency between the following
description and the actual document, the actual document will control.
(a) Certificate of Incorporation and New By-Laws. On the
Effective Date, Reorganized TransTexas will adopt its Amended Certificate of
Incorporation, the principal effects of which will be: (i) authorize 326
million shares of the New Senior Preferred Stock, (ii) authorize shares of New
Junior Preferred Stock in an amount adequate to allow reallocation of such
shares by the holders of Class 3 Claims to the holders of other Claims pursuant
to Section 5.03 of the TransTexas Plan, and to allow for dividends payable in
kind on such shares for ten years after the Effective Date, (iii) authorize 100
million shares of New Class A Common Stock; (iv) authorize 247,500 shares of
New Class B Common Stock; (v) provide for the cancellation of the Old Common
Stock and other Interests; (vi) provide for the indemnification of officers and
directors to the fullest extent permitted by section 145 of the DGCL; and (vii)
prohibit the issuance of non-voting equity securities, as and to the extent
required by section 1123(a)(6) of the Bankruptcy Code.
The Amended Certificate of Incorporation will also provide
that a director of Reorganized TransTexas will not be personally liable to
Reorganized TransTexas or its stockholders for monetary damages for any breach
of fiduciary duty as a director, except in certain cases where liability is
mandated by the DGCL. The foregoing provision has no effect on any nonmonetary
remedies that may be available to Reorganized TransTexas for non-compliance
with federal or state securities laws.
(b) On the Effective Date or as soon thereafter as is
practicable, Reorganized TransTexas shall File with the Secretary of State of
the State of Delaware in accordance with sections 103 and 303 of the DGCL, its
Amended Certificate of Incorporation. On the Effective Date, the Amended
By-Laws shall become the by-laws of the Reorganized TransTexas.
(c) Post-Confirmation Credit Agreement. TransTexas is
negotiating the terms of a proposed Post-Confirmation Credit Facility providing
for aggregate loans of up to $42.5 million in principal amount to refinance a
portion of the debt incurred under the Bondholder DIP Facility and finance the
future working capital needs of TransTexas. Any agreement entered into with
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respect to such proposed facility will be Filed with the Bankruptcy Court at
least five days prior to the date of the Confirmation Hearing.
6. Reorganization Securities. The following is a brief
summary of the terms of the Reorganization Securities that may be issued
pursuant to the TransTexas Plan. The issuance of New Senior Secured Notes, New
Senior Preferred Stock, New Junior Preferred Stock, New Common Stock and New
Warrants by Reorganized TransTexas will be authorized by and reserved under the
TransTexas Plan without the need for any further corporate action.
(a) New Senior Secured Notes. The principal terms of the New
Senior Secured Notes will be as follows:
Principal Amount: $200 million.
Interest: 15% per annum, accruing from the Effective Date,
payable semi-annually in arrears, in cash,
beginning six months after the Effective Date.
Maturity: Five years after the Effective Date.
Mandatory Redemption: None.
Optional Redemption: The New Senior Secured Notes will be
redeemable by the Reorganized Debtor, at its
option, in whole or in part, in cash, at the
redemption prices (expressed as a percentage of
the outstanding principal amount) set forth
below, together with accrued and unpaid
interest, if any, to the redemption date:
<TABLE>
<CAPTION>
If redeemed during the 12- Redemption
month period beginning Price
---------------------- -----------
<S> <C>
the Effective Date 115%
1 year after the Effective Date 112%
2 years after the Effective Date 109%
3 years after the Effective Date 106%
4 years after the Effective Date 103%
</TABLE>
Collateral: Lien on all Collateral securing the note
governed by the TransTexas Senior Secured
Loan Agreement and all assets securing the
Bondholder
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DIP Facility, subordinated to the lien
securing the Post-Confirmation Facility and
the Extended Bondholder DIP Facility.
Ranking: The New Senior Secured Notes will be senior
indebtedness of the Reorganized Debtor.
Registration: The New Senior Secured Notes will be
registered pursuant to the Shelf
Registration Statement and freely tradable
subject to applicable law.
Restrictive Covenants: The New Senior Secured Notes Indenture will
contain covenants limiting the Reorganized
Debtor's ability to (a) incur indebtedness
other than the Post-Confirmation Facility
and the Extended Bondholder DIP Facility
(in an aggregate amount not to exceed
$52,500,000), Liens of holders of Allowed
Mineral Interest Secured Claims electing to
continue such Liens under Section
5.06(a)(i) and the Ballots/Elections and
the GMAC DIP Facility, (b) engage in
transactions with affiliates and related
parties, including Mr. John R. Stanley,
absent unanimous approval of the New Board
of Directors and the furnishing of a
fairness opinion from an internationally
recognized investment bank or accounting
firm to the indenture trustee for the New
Senior Secured Notes, (c) dispose of assets
or engage in sale/leaseback transactions,
(d) issue dividends to the holders of the
New Common Stock while the New Senior
Secured Notes are outstanding, (e) change
the Reorganized Debtor's line of business,
(f) consolidate with or merge into any
other Entity or convey, transfer or lease
substantially all of the Reorganized
Debtor's assets, and (g) suffer a change of
control.
Other Provisions: The New Senior Secured Notes Indenture will
contain other customary provisions and such
Indenture will be qualified under the Trust
Indenture Act of 1939, as amended.
(b) New Senior Preferred Stock.
The New Senior Preferred Stock will be authorized by the
Amended Certificate of Incorporation of Reorganized TransTexas as a new series
of preferred stock, par value $1.00 per share. The Amended Certificate of
Incorporation will provide that no shares of New Senior Preferred Stock may be
issued other than those issued initially pursuant to the TransTexas Plan and
shares issued to pay dividends in kind on the New Senior Preferred Stock.
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Dividends. Holders of shares of New Senior Preferred Stock
will be entitled to receive, when, as and if declared by the New Board of
Directors out of funds at the time legally available therefor, dividends, as
follows: (i) subject to the right of reorganized TransTexas to pay dividends in
kind in the first two years, as described below, quarterly cash dividends, in
preference to holders of any other shares of capital stock of Reorganized
TransTexas, at an annual rate of $0.10 per share, and no more, payable
quarterly on the last day of the third, sixth, ninth and twelfth months after
the Effective Date and on successive anniversaries of such dates, except that
if any such date is a Saturday, Sunday or legal holiday, then such dividend
shall be payable on the next day that is not a Saturday, Sunday or legal
holiday. During the first two years after the Effective Date, in lieu of paying
cash dividends, Reorganized TransTexas will be entitled, at its option, to pay
dividends in kind (i.e., in additional shares of New Senior Preferred Stock
with an aggregate par value equal to the dividend amount), at an annual rate of
$0.20 per share, and no more. After the first two years following the Effective
Date, dividends will be payable in cash at an annual rate of $0.0775 per share,
and no more. Dividends will accrue and be cumulative from the Effective Date
and will be payable to holders of record as they appear on the stock books of
Reorganized TransTexas on such record dates as are fixed by the New Board of
Directors. The New Senior Preferred Stock will not be entitled to participate
in any dividends paid by Reorganized TransTexas on the New Common Stock.
The New Senior Preferred Stock will be junior as to dividends
to any series or class of Reorganized TransTexas' stock hereafter issued that
ranks senior as to dividends to the New Senior Preferred Stock ("senior
dividend stock"), and if at any time Reorganized TransTexas has failed to pay
or declare and set apart for payment accrued and unpaid dividends on any senior
dividend stock, Reorganized TransTexas may not pay any dividend on the New
Senior Preferred Stock. The New Senior Preferred Stock will have priority as to
dividends over the New Junior Preferred Stock, the New Common Stock and any
series or class of Reorganized TransTexas' stock hereafter issued that ranks
junior as to dividends to the New Senior Preferred Stock ("junior dividend
stock"), and no dividend (other than dividends payable solely in New Junior
Preferred Stock, New Common Stock or any other series or class of Reorganized
TransTexas' stock hereafter issued that ranks junior as to dividends and as to
liquidation rights to the New Senior Preferred Stock) may be declared, paid or
set apart for payment on, and no purchase, redemption or other acquisition may
be made by Reorganized TransTexas of, any junior dividend stock unless all
accrued and unpaid dividends on the New Senior Preferred Stock have been paid
or declared and set apart for payment. Reorganized TransTexas may not pay
dividends on any class or series of Reorganized TransTexas' stock having parity
with the New Senior Preferred Stock as to dividends ("parity dividend stock")
unless it has paid or declared and set apart for payment, or contemporaneously
pays or declares and sets apart for payment, all accrued and unpaid dividends
for all prior periods on the New Senior Preferred Stock; and Reorganized
TransTexas may not pay dividends on the New Senior Preferred Stock unless it
has paid or declared and set apart for payment, or contemporaneously pays or
declares and sets apart for payment, all accrued and unpaid dividends for all
prior periods on the parity dividend stock. Whenever all accrued dividends are
not paid in full on the New Senior Preferred
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Stock or any parity dividend stock, all dividends declared on the New Senior
Preferred Stock and such parity dividend stock will be declared or made pro
rata so that the amount of dividends declared per share on the New Senior
Preferred Stock and such parity dividend stock will bear the same ratio that
accrued and unpaid dividends per share on the New Senior Preferred Stock and
such parity dividend stock bear to each other. The Amended Certificate of
Incorporation will prohibit the issuance of additional preferred stock by
Reorganized TransTexas without the Consent of the holders of 75% of the shares
of the New Senior Preferred Stock.
The amount of dividends payable per share of New Senior
Preferred Stock for each quarterly dividend period will be computed by dividing
the annual dividend amount by four. The amount of dividends payable for the
initial dividend period and any period shorter than a full quarterly dividend
period will be computed on the basis of a 360-day year of twelve 30-day months.
No interest will be payable in respect of any dividend payment on the New
Senior Preferred Stock which may be in arrears.
Under Delaware law, Reorganized TransTexas may declare and pay
dividends on its shares of capital stock only out of its surplus.
Liquidation Rights. In the event of any liquidation,
dissolution or winding up of Reorganized TransTexas, holders of shares of New
Senior Preferred Stock will be entitled to receive the liquidation preference
of $1.00 per share, plus an amount equal to any accrued and unpaid dividends to
the payment date, and no more, before any payment or distribution is made to
the holders of New Junior Preferred Stock, New Common Stock or any series or
class of Reorganized TransTexas' stock hereafter issued that ranks junior as to
liquidation rights to the New Senior Preferred Stock, but the holders of the
shares of the New Senior Preferred Stock will not be entitled to receive the
liquidation preference of such shares until the liquidation preference of any
other series or class of Reorganized TransTexas' stock hereafter issued that
ranks senior as to liquidation rights to the New Senior Preferred Stock
("senior liquidation stock") has been paid in full. The holders of New Senior
Preferred Stock and all series or classes of Reorganized TransTexas' stock
hereafter issued that rank on a parity as to liquidation rights with the New
Senior Preferred Stock are entitled to share ratably, in accordance with the
respective preferential amounts payable on such stock, in any distribution
(after payment of the liquidation preference of the senior liquidation stock)
which is not sufficient to pay in full the aggregate of the amounts payable
thereon. After payment in full of the liquidation preference of the shares of
the New Senior Preferred Stock, the holders of such shares will not be entitled
to any further participation in any distribution of assets by Reorganized
TransTexas. Neither a consolidation, merger or other business combination of
Reorganized TransTexas with or into another corporation or other entity nor a
sale or transfer of all or part of Reorganized TransTexas' assets for cash,
securities or other property will be considered a liquidation, dissolution or
winding up of Reorganized TransTexas.
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Voting Rights. The holders of the New Senior Preferred Stock
will have the right, voting separately as a class, to elect four of the five
directors to the New Board of Directors of Reorganized TransTexas; provided,
that if dividends have not been paid with respect to the payments due on the
New Senior Preferred Stock commencing two (2) years after the Effective Date,
such holders will have the right, voting separately as a class, to elect all
five (5) directors to the New Board of Directors of Reorganized TransTexas.
(Such voting rights will terminate when all such dividends accrued and in
default have been paid in full or set apart for payment. The term of the fifth
director so elected will terminate immediately upon such payment or setting
apart for payment.) Holders of the New Senior Preferred Stock will have one
vote per share, voting together with the New Class A Common Stock (and the New
Junior Preferred Stock and any other series or classes of Reorganized
TransTexas' stock entitled to vote with the New Class A Common Stock), on all
matters on which holders of the New Class A Common Stock are entitled to vote
generally. In exercising such voting rights, each outstanding share of New
Senior Preferred Stock will be entitled to one vote, excluding shares held by
Reorganized TransTexas or any entity controlled by Reorganized TransTexas,
which shares shall have no voting rights.
In addition, so long as any New Senior Preferred Stock is
outstanding, Reorganized TransTexas shall not, without the affirmative vote or
consent of the holders of at least 75% of all outstanding shares of New Senior
Preferred Stock, voting separately as a class, (i) amend, alter or repeal any
provision of the Certificate of Incorporation or the Bylaws of Reorganized
TransTexas so as to affect adversely the relative rights, preferences,
qualifications, limitations or restrictions of the New Senior Preferred Stock,
(ii) authorize or issue, or increase the authorized amount of, any additional
class or series of stock, or any security convertible into stock of such class
or series, ranking senior to the New Senior Preferred Stock as to dividends or
upon liquidation, dissolution or winding up of Reorganized TransTexas or (iii)
effect any reclassification of the New Senior Preferred Stock.
Mandatory Redemption. Reorganized TransTexas will be required
to redeem the New Senior Preferred Stock on the sixth anniversary of the
Effective Date, at 100% of the liquidation preference per share.
Redemption at Option of Reorganized TransTexas. The New Senior
Preferred Stock may be redeemed for cash, in whole or in part, at any time at
the option of Reorganized TransTexas, at an initial price equal to $0.88 per
share, increasing by $0.005 per share per month to a maximum of 100% of the
liquidation preference per share; provided, however, that no redemption shall
be permitted prior to the time the New Senior Secured Notes have been retired.
If fewer than all of the outstanding shares of New Senior
Preferred Stock are to be redeemed, Reorganized TransTexas will select those to
be redeemed pro rata or by lot or in such other manner as the New Board of
Directors may determine. In the event that Reorganized TransTexas has failed to
pay accrued and unpaid dividends on the New Senior Preferred Stock, it may not
redeem any of the then outstanding shares of the New Senior Preferred Stock
until all such
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accrued and unpaid dividends and (except with respect to shares to be redeemed)
the then current quarterly dividend have been paid in full.
Notice of redemption will be mailed at least 20 days but not
more than 60 days before the redemption date to each holder of record of shares
of New Senior Preferred Stock to be redeemed at the address shown on the stock
transfer books of Reorganized TransTexas. After the redemption date, dividends
will cease to accrue on the shares of New Senior Preferred Stock called for
redemption and all rights of the holders of such shares will terminate, except
the right to receive the redemption price without interest.
Mandatory Conversion. If either (i) more than 75 million
shares of the New Senior Preferred Stock are outstanding after the sixth
anniversary of the Effective Date or (ii) two successive dividend payments have
not been paid on the New Senior Preferred Stock, one-half of the shares of the
New Senior Preferred Stock will be automatically converted into shares of the
New Class A Common Stock on the basis of .4175 share of New Class A Common
Stock for each $1 of liquidation preference of the shares of New Senior
Preferred Stock converted.
The Amended Certificate of Incorporation will contain
appropriate anti-dilution provisions with respect to the New Senior Preferred
Stock.
Restrictive Covenants. The Amended Certificate of
Incorporation will contain covenants restricting Reorganized TransTexas
comparable to the restrictive covenants contained in the New Senior Secured
Notes Indenture. See "--New Senior Secured Notes" above.
Other Provisions. The shares of New Senior Preferred Stock,
when issued as described in this Disclosure Statement, will be duly and validly
issued, fully paid and nonassessable. The holders of the shares of New Senior
Preferred Stock will have no preemptive rights with respect to any securities
of Reorganized TransTexas. The transfer agent, conversion agent and registrar
for the New Senior Preferred Stock and the transfer agent and registrar for the
New Class A Common Stock issuable upon conversion thereof will be named prior
to the Confirmation Date.
(c) New Junior Preferred Stock.
The New Junior Preferred Stock will be authorized by the
Amended Certificate of Incorporation of Reorganized TransTexas as a new series
of preferred stock, par value $1.00 per share. The Amended Certificate of
Incorporation will provide that no shares of New Junior Preferred Stock may be
issued other than those issued initially pursuant to the TransTexas Plan and
shares issued to pay dividends in kind on the New Junior Preferred Stock.
Dividends. Holders of shares of New Junior Preferred Stock
will be entitled to receive, when, as and if declared by the New Board of
Directors out of funds at the time legally available therefor, dividends, as
follows: quarterly dividends, in preference to holders of any other
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shares of capital stock of Reorganized TransTexas, at an annual rate of $0.08
per share, and no more, payable in kind (i.e., in additional shares of New
Junior Preferred Stock with an aggregate par value equal to the dividend
amount) quarterly on the last day of the third, sixth, ninth and twelfth months
after the Effective Date and on successive anniversaries of such dates, except
that if any such date is a Saturday, Sunday or legal holiday, then such
dividend shall be payable on the next day that is not a Saturday, Sunday or
legal holiday. The New Junior Preferred Stock will not be entitled to
participate in any cash dividends paid by Reorganized TransTexas. Dividends
will accrue and be cumulative from the Effective Date and will be payable to
holders of record as they appear on the stock books of Reorganized TransTexas
on such record dates as are fixed by the New Board of Directors.
The amount of dividends payable per share of New Junior
Preferred Stock for each quarterly dividend period will be computed by dividing
the annual dividend amount by four. The amount of dividends payable for the
initial dividend period and any period shorter than a full quarterly dividend
period will be computed on the basis of a 360-day year of twelve 30-day months.
No interest will be payable in respect of any dividend payment on the New
Junior Preferred Stock which may be in arrears.
Under Delaware law, Reorganized TransTexas may declare and pay
dividends on its shares of capital stock only out of its surplus.
Liquidation Rights. In the event of any liquidation,
dissolution or winding up of Reorganized TransTexas, holders of shares of New
Junior Preferred Stock will be entitled to receive the liquidation preference
of $1.00 per share, plus an amount equal to any accrued and unpaid dividends to
the payment date, and no more, before any payment or distribution is made to
the holders of New Common Stock or any series or class of Reorganized
TransTexas' stock hereafter issued that ranks junior as to liquidation rights
to the New Junior Preferred Stock, but the holders of the shares of the New
Junior Preferred Stock will not be entitled to receive the liquidation
preference of such shares until the liquidation preference of the New Senior
Preferred Stock and any other series or class of Reorganized TransTexas' stock
hereafter issued that ranks Junior as to liquidation rights to the New Junior
Preferred Stock ("Junior liquidation stock") has been paid in full. The holders
of New Junior Preferred Stock and all series or classes of Reorganized
TransTexas' stock hereafter issued that rank on a parity as to liquidation
rights with the New Junior Preferred Stock are entitled to share ratably, in
accordance with the respective preferential amounts payable on such stock, in
any distribution (after payment of the liquidation preference of the Junior
liquidation stock) which is not sufficient to pay in full the aggregate of the
amounts payable thereon. After payment in full of the liquidation preference of
the shares of the New Junior Preferred Stock, the holders of such shares will
not be entitled to any further participation in any distribution of assets by
Reorganized TransTexas. Neither a consolidation, merger or other business
combination of Reorganized TransTexas with or into another corporation or other
entity nor a sale or transfer of all or part of Reorganized TransTexas' assets
for cash,
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
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securities or other property will be considered a liquidation, dissolution or
winding up of Reorganized TransTexas.
Voting Rights. Holders of the New Junior Preferred Stock will
have one-tenth of one vote per share, voting together with the New Class A
Common Stock (and the New Senior Preferred Stock and any other series or
classes of Reorganized TransTexas' stock entitled to vote with the New Class A
Common Stock), on all matters on which holders of the New Class A Common Stock
are entitled to vote generally. In exercising such voting rights, each
outstanding share of New Junior Preferred Stock will be entitled to one-tenth
of one vote, excluding shares held by Reorganized TransTexas or any entity
controlled by Reorganized TransTexas, which shares shall have no voting rights.
No Mandatory Redemption. Reorganized TransTexas will not be
required to redeem the New Junior Preferred Stock at any time before the
liquidation of Reorganized TransTexas, at which time it will be required to
redeem the New Junior Preferred Stock at 100% of the liquidation preference per
share.
Redemption at Option of Company. The New Junior Preferred
Stock may be redeemed for cash, in whole or in part, at any time at the option
of Reorganized TransTexas, at a price of 100% of the par value per share;
provided, however, that no redemption shall be permitted prior to the time the
New Senior Secured Notes have been retired and the New Senior Preferred Stock
has been redeemed in full.
If fewer than all of the outstanding shares of New Junior
Preferred Stock are to be redeemed, Reorganized TransTexas will select those to
be redeemed pro rata or by lot or in such other manner as the New Board of
Directors may determine. In the event that Reorganized TransTexas has failed to
pay accrued and unpaid dividends on the New Junior Preferred Stock, it may not
redeem any of the then outstanding shares of the New Junior Preferred Stock
until all such accrued and unpaid dividends and (except with respect to shares
to be redeemed) the then current quarterly dividend have been paid in full.
Notice of redemption will be mailed at least 20 days but not
more than 60 days before the redemption date to each holder of record of shares
of New Junior Preferred Stock to be redeemed at the address shown on the stock
transfer books of Reorganized TransTexas. After the redemption date, dividends
will cease to accrue on the shares of New Junior Preferred Stock called for
redemption and all rights of the holders of such shares will terminate, except
the right to receive the redemption price without interest.
Mandatory Conversion. If either (i) more than 75 million
shares of the New Senior Preferred Stock are outstanding after the sixth
anniversary of the Effective Date or (ii) two successive dividend payments have
not been paid on the New Senior Preferred Stock, all of the
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shares of the New Junior Preferred Stock will be automatically converted into
shares of the New Common Stock on the basis of .04175 share of New Common Stock
for each $1 of liquidation preference of the shares of New Junior Preferred
Stock converted.
The Amended Certificate of Incorporation will contain
appropriate anti-dilution provisions with respect to the New Junior Preferred
Stock.
Other Provisions. The shares of New Junior Preferred Stock,
when issued as described in this Disclosure Statement, will be duly and validly
issued, fully paid and nonassessable. The holders of the shares of New Junior
Preferred Stock will have no preemptive rights with respect to any securities
of Reorganized TransTexas. The transfer agent, conversion agent and registrar
for the New Junior Preferred Stock and the transfer agent and registrar for the
New Common Stock issuable upon conversion thereof will be named prior to the
Confirmation hearing.
(d) New Common Stock. Pursuant to the TransTexas Plan, the
Reorganized Debtor shall reserve for issuance 1,002,500 shares of New Class A
Common Stock and 247,500 shares of New Class B Common Stock for holders of
Allowed Claims in Class 3. All Old Common Stock will be canceled pursuant to
the Plans.
The New Class A Common Stock and the New Class B Common Stock
will be identical in all respects except that the holders of the New Class B
Common Stock will have the right, voting separately as a class, to elect one
director of Reorganized TransTexas during periods in which the holders of the
New Senior Preferred Stock are not entitled to elect all five directors of
Reorganized TransTexas. The New Class B Common Stock will be automatically
converted into New Class A Common Stock upon the transfer thereof from the
initial holder thereof to any person who is not an affiliate of John R. Stanley
or a member of his family.
The New Common Stock will not be redeemable, will not have any
conversion rights and will not be subject to call. Holders of shares of New
Common Stock will have no preemptive rights to maintain their respective
percentage ownership in future offerings or sales of stock of Reorganized
TransTexas. Subject to the rights described above of holders of the New Senior
Preferred Stock and the Class B Common Stock to elect directors of Reorganized
TransTexas, holders of shares of New Common Stock will be entitled to one vote
per share on any matter submitted to a vote of stockholders of Reorganized
TransTexas. Cumulative voting will be prohibited in the election of directors.
Subject to restrictions in certain agreements, including the Post-Confirmation
Credit Facility and the New Senior Secured Notes Indenture and other agreements
that may be entered into by Reorganized TransTexas in the future, and provided
that no dividends may be paid on the New Common Stock so long as the New Senior
Preferred Stock is outstanding, the holders of New Common Stock are entitled to
receive ratably such dividends, if any, as and when declared from time to time
by the Board of Directors of Reorganized TransTexas out of funds legally
available therefor. See "--Dividend Policy." Upon liquidation, dissolution or
winding-up of the
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affairs of Reorganized TransTexas, the holders of New Common Stock will be
entitled to participate equally and ratably, in proportion to the number of
shares held, in the net assets of Reorganized TransTexas available for
distribution to holders of New Common Stock. The shares of New Common Stock
currently outstanding are, and the shares of New Common Stock issuable upon
exercise of the New Warrants when issued will be, validly issued, fully paid
and nonassessable.
Dividend Policy. Reorganized TransTexas' ability to pay cash
dividends in the future will be restricted by the Post-Confirmation Credit
Facility and the New Senior Secured Notes Indenture and (with respect to the
New Common Stock) the provisions of Reorganized TransTexas' Certificate of
Incorporation relating to the New Senior Preferred Stock, and will depend upon
Reorganized TransTexas' debt levels, earning levels, and book value and
discounted value of certain tangible assets. In determining whether to declare
and pay a cash dividend, the Board of Directors will consider various other
factors, including Reorganized TransTexas' capital requirements and financial
condition.
Limitations on Liability of Directors. Reorganized TransTexas'
Certificate of Incorporation will contain a provision that is designed to limit
the directors' liability to the extent permitted by the DGCL and any amendments
thereto. Under current law, directors will not be held liable to Reorganized
TransTexas or its stockholders for monetary damages for any breach of fiduciary
duty except for liability as a result of: (i) a breach of the duty of loyalty
to Reorganized TransTexas or its stockholders, (ii) actions or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) payment of an improper dividend or improper stock repurchases, or
improper stock redemptions, or (iv) actions or omissions pursuant to which the
director will receive an improper personal benefit.
The principal effect of the limitation of liability provision
is that a stockholder is unable to prosecute an action for monetary damages
against a director of Reorganized TransTexas unless the stockholder can
demonstrate one of the specified bases for liability. This provision, however,
may not eliminate or limit director liability arising in connection with causes
of action brought under Federal securities laws.
Reorganized TransTexas' Certificate of Incorporation will not
eliminate its directors' duty of care. The inclusion of this provision in
Reorganized TransTexas' Certificate of Incorporation may, however, discourage
or deter stockholders or management from bringing a lawsuit against directors
for a breach of their fiduciary duties, even though such an action, if
successful, might otherwise have benefitted Reorganized TransTexas and its
stockholders. This provision should not affect the availability of equitable
remedies such as injunction or rescission based upon a director's breach of the
duty of care.
Indemnification of Officers and Directors. Reorganized
TransTexas' Amended Certificate of Incorporation and Bylaws provide that
Reorganized TransTexas will indemnify its
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officers and directors to the fullest extent permitted by Delaware law. In
addition, TransTexas has customary directors' and officers' liability insurance
policies for its directors and officers.
(e) New Warrants.
The New Warrants will be issued pursuant to a warrant
agreement (the "Warrant Agreement") between Reorganized TransTexas and the
warrant agent named therein (the "Warrant Agent"). The following summary of
certain provisions of the Warrant Agreement and the New Warrants does not
purport to be complete and is qualified in its entirety by reference to the
Warrant Agreement and the New Warrants, including the definitions therein of
certain terms. The Warrant Agent may resign at any time, in which case a
successor warrant agent is to be appointed pursuant to the terms of the Warrant
Agreement.
General. Each Warrant will entitle the holder thereof to
receive one share of New Class A Common Stock of Reorganized TransTexas (each,
a "Warrant Share") at an exercise price of $120.00 per share. The exercise
price and the number of Warrant Shares issuable upon exercise of a Warrant are
both subject to adjustment in certain cases. See "Adjustments" below. The New
Warrants will be exercisable at any time on or after the date of issuance
thereof (the "Exercisability Date"). Unless exercised, the New Warrants will
automatically expire on June 30, 2002 (the "Expiration Date"). The New Warrants
will entitle the holders thereof to purchase in the aggregate approximately 33%
of the outstanding New Common Stock of Reorganized TransTexas on a fully
diluted basis (including the New Common Stock issuable upon exercise of the New
Warrants, but without giving effect to the exercise of any New Warrants issued
after the Effective Date or to the conversion of the New Senior Preferred Stock
or the New Junior Preferred Stock into shares of New Common Stock, which would
have a substantial dilutive effect upon the New Warrants) as of the date of
issuance of the New Warrants.
The New Warrants may be exercised at any time on or after the
Exercisability Date by surrendering to Reorganized TransTexas the Warrant
certificates evidencing such New Warrants, if any, with the accompanying form
of election to purchase, properly completed and executed, together with payment
of the exercise price. Payment of the exercise price may be made in the form of
cash or a certified or official bank check payable to the order of Reorganized
TransTexas. Upon surrender of the New Warrant certificate and payment of the
exercise price, the Warrant Agent will deliver or cause to be delivered, to or
upon the written order of such holder, stock certificates representing the
number of whole Warrant Shares or other securities or property to which such
holder is entitled under the New Warrants and Warrant Agreement, including,
without limitation, any cash payable to adjust for fractional interests in
Warrant Shares issuable upon such exercise. If fewer than all of the New
Warrants evidenced by a Warrant certificate are to be exercised, a new Warrant
certificate will be issued for the remaining number of New Warrants.
No fractional Warrant Shares will be issued upon exercise of
the New Warrants. If any fraction of a Warrant Share would, except for the
foregoing provision, be issuable upon the
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exercise of any New Warrants (or specified portion thereof), Reorganized
TransTexas will, in lieu of issuing a fraction of a Warrant Share, pay to the
holder of the New Warrant at the time of exercise an amount in cash equal to
the same fraction of the Current Market Value (as defined) of a share of New
Class A Common Stock less the portion of the Exercise Price attributable
thereto.
Certificates for New Warrants will be issued in global form or
registered form as definitive warrant certificates and no service charge will
be made for registration of transfer or exchange upon surrender of any Warrant
certificate at the office of the Warrant Agent maintained for that purpose.
Reorganized TransTexas may require payment of a sum sufficient to cover any tax
or other governmental charges that may be imposed in connection with any
registration of transfer or exchange of New Warrant certificates.
The holders of the New Warrants will have no right to vote on
matters submitted to the stockholders of Reorganized TransTexas and will have
no right to receive cash dividends. The holders of the New Warrants will not be
entitled to share in the assets of Reorganized TransTexas in the event of the
liquidation, dissolution or winding up of Reorganized TransTexas' affairs.
Adjustments. Each of the number of Warrant Shares purchasable
upon the exercise of the New Warrants and the Exercise Price will be subject to
adjustment in certain events, including: (i) the payment by Reorganized
TransTexas of dividends (or other distributions) on the New Class A Common
Stock of Reorganized TransTexas payable in shares of such New Class A Common
Stock or other shares of Reorganized TransTexas' capital stock, (ii)
subdivisions, combinations and reclassification of the New Class A Common
Stock, (iii) the distribution to all holders of the New Class A Common Stock of
any of Reorganized TransTexas' assets, debt securities or any rights or New
Warrants to purchase securities (excluding cash dividends or other cash
distributions from current or retained earnings); and (iv) if Reorganized
TransTexas issues (x) shares of New Class A Common Stock for a consideration
per share less than the Current Market Value per share net of commissions and
fees (other than shares of New Class A Common Stock issued upon conversion of
New Senior Preferred Stock or New Junior Preferred Stock or upon exercise of
New Warrants) or (y) any securities convertible into or exchangeable for New
Class A Common Stock (other than shares of New Senior Preferred Stock and New
Junior Preferred Stock issued in payment of dividends on such stock) for a
consideration per share of New Class A Common Stock initially deliverable upon
conversion or exchange of such securities that is less than the Current Market
Value per share net of commissions and fees on the date of issuance of such
securities.
Notwithstanding the foregoing, no adjustment or action need be
made for (i) a change solely in the par value or no par value of the New Class
A Common Stock, provided that Reorganized TransTexas shall not increase the par
value to exceed the Exercise Price, (ii) the conversion or exchange (other than
pursuant to a reclassification), in any case on a share-for-share basis, of New
Common Stock for non-voting New Class A Common Stock that has rights (other
than voting rights) identical to the New Class A Common Stock, or of such
non-voting stock for New Class A Common Stock, (iii) the issuance to employees
of Reorganized TransTexas or any of its
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Subsidiaries of stock or stock options in an amount which, upon purchase or
exercise, as the case may be, would represent in the aggregate, less than 10%
of Reorganized TransTexas' New Common Stock on a fully diluted basis or (iv)
any exercise of the New Warrants.
As used herein, the term "Current Market Value" per share of
New Class A Common Stock or any other security at any date means, on any date
of determination (a) the average of the daily closing sale prices for each of
15 trading days immediately preceding such date (or such shorter number of days
during which such security has been listed or traded), if the security has been
listed on the New York Stock Exchange, the American Stock Exchange or other
national securities' exchange or the NASDAQ National Market for at least 10
trading days prior to such date, (b) if such security is not so listed or
traded, the average of the daily closing bid prices for each of the 15 trading
days immediately preceding such date (or such shorter number of days during
which such security had been quoted), if the security has been quoted on a
national over-the-counter market for at least 10 trading days, and (c)
otherwise, the value of the security most recently determined as of a date
within the six months preceding such day by Reorganized TransTexas' Board of
Directors.
In case of certain reclassifications, redesignations,
reorganizations or changes in the number of outstanding shares of New Class A
Common Stock or consolidations or mergers of Reorganized TransTexas or the sale
of all or substantially all of the assets of Reorganized TransTexas, each New
Warrant shall thereafter be exercisable for the right to receive the kind and
amount of shares of stock or other securities or property to which such holder
would have been entitled as a result of such consolidation, merger or sale had
the New Warrants been exercised immediately prior thereto.
The holders of unexercised New Warrants will not be entitled,
as such, to receive dividends or other distributions with respect to the New
Class A Common Stock, receive notice of' any meeting of the stockholders of
Reorganized TransTexas, consent to any action of the stockholders of
Reorganized TransTexas, receive notice of any other stockholder proceedings, or
to any other rights as stockholders of Reorganized TransTexas.
Reservation of Shares. Reorganized TransTexas will authorize
and reserve for issuance such number of shares of New Class A Common Stock as
shall be issuable upon the exercise of outstanding New Warrants. Such shares of
New Class A Common Stock, when paid for and issued, will be duly and validly
issued, fully paid and non-assessable, free of preemptive rights and free from
all taxes, liens, charges and security interests with respect to the issue
thereof.
Amendment. From time to time, Reorganized TransTexas and the
New Warrant Agent, without the consent of the holders of the New Warrants, may
amend or supplement the New Warrant Agreement for certain purposes, including,
without limitation, curing defects or inconsistencies or making any change that
does not materially adversely affect the rights of any holder. Any amendment or
supplement to the Warrant Agreement that has a material adverse effect on the
interests of the holders of the New Warrants shall require the written consent
of the holders of a
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majority of the then outstanding New Warrants. The consent of each holder of
the New Warrants affected shall be required for any amendment pursuant to which
the exercise price would be increased or the number of shares purchasable upon
exercise of New Warrants would be decreased (other than pursuant to adjustments
provided in the Warrant Agreement).
7. Cancellation and Surrender of Existing Securities;
Cancellation of Indentures.
(a) Cancellation of Existing Securities and Agreements. On the
Effective Date, the TransTexas Senior Secured Notes, the TransTexas Senior
Secured Loan Agreement, the TransTexas Subordinated Notes, the TransTexas
Subordinated Notes Indenture, the Old Common Stock, and any options, warrants,
calls, subscriptions, or other similar rights or other agreements or
commitments, contractual or otherwise, obligating TransTexas to issue,
transfer, or sell any shares of Old Common Stock, or any other capital stock of
TransTexas shall be canceled and the holders thereof shall have no rights, and
such instruments shall evidence no rights, except the right to receive the
Distributions to be made to holders of such instruments under this Plan. After
the Indenture Trustees or their agents perform their obligations under the
Plan, the Plan Documents and their respective Indentures, the Indenture
Trustees and their agents, successors and assigns shall be discharged of all of
their obligations associated with the respective Indentures and related
agreements and released from all Claims arising in this Chapter 11 Case, and as
of the Effective Date, such Indentures shall be deemed canceled, except that
such cancellation shall not impair the rights of the holders of the TransTexas
Senior Secured Note Claims and the TransTexas Subordinated Note Claims to
receive Distributions under the Plan or the rights of the Indenture Trustee
under their charging liens, if any, pursuant to the Indentures to the extent
that the Indenture Trustee has not received payment.
(b) Surrender of Existing Securities. As a condition to
receiving any Distribution under the Plan, each holder of a promissory note,
share certificate, or other instrument evidencing a Claim or Interest must
surrender such promissory note, share certificate, or other instrument to the
Reorganized Debtor or its designee. Any holder of a Claim or Interest that
fails to (i) surrender such instrument or (ii) execute and deliver an affidavit
of loss and/or indemnity reasonably satisfactory to the Reorganized Debtor and
furnish a bond in the form, substance, and amount reasonably satisfactory to
the Reorganized Debtor before the later to occur of (1) the second anniversary
of the Effective Date and (2) six (6) months following the date such holder's
Claim becomes an Allowed Claim, shall be deemed to have forfeited all rights,
Claims, and/or Interests and may not participate in any Distribution under the
Plan.
(c) Payment of Firstar's Fees and Expenses As Indenture
Trustee. Unless otherwise agreed by Firstar and TransTexas, on the Effective
Date, TEC, pursuant to the terms of the TEC Plan shall pay or cause to be paid
to Firstar an amount in Cash equal to the Indenture Trustee Claim of Firstar
for its reasonable fees and expenses (including attorneys' fees and expenses)
incurred as Indenture Trustee prior to the Effective Date.
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8. Employee Benefit Plans. Except as otherwise provided in the
Plans, subject to the occurrence of the Effective Date, all employee benefit
plans, policies and programs of TransTexas, and TransTexas' obligations
thereunder, will survive confirmation of the TransTexas Plan, remain unaltered
thereby, and not be discharged. Except as otherwise provided in the TransTexas
Plan, employee benefit plans, policies and programs will include, without
limitation, all savings plans, retirement pension plans (to the extent not
otherwise affected by health care plans), disability plans, severance benefit
plans, life, accidental death and dismemberment insurance plans (to the extent
not executory contracts assumed under the TransTexas Plan) and Workers'
Compensation Programs, but will exclude all employees' equity or equity-based
incentive plans.
C. Securities Law Matters.
1. Exemption from Securities Act Registration. The
Reorganization Securities to be issued on the Effective Date will be issued
pursuant to the exemption from the registration requirements of the Securities
Act of 1933, as amended (the "Securities Act") (and of equivalent state
securities or "blue sky" laws), provided by section 1145(a)(1) of the
Bankruptcy Code. Generally, section 1145(a)(1) of the Bankruptcy Code exempts
from the registration requirements of the Securities Act and equivalent state
securities and "blue sky" laws the issuance of securities directly or through a
warrant to purchase such securities if the following conditions are satisfied:
(a) the securities are issued by a debtor (or its successor) under a chapter 11
plan; (b) the recipients of the securities hold a claim against, an interest
in, or a claim for an administrative expense against, the debtor and (c) the
securities are issued entirely in exchange for the recipient's claim against or
interest in the debtor or are issued "principally" in such exchange and
"partly" for cash or property. Section 1145(a)(2) of the Bankruptcy Code also
exempts from such registration requirements offers of securities through
warrants and similar rights such as the New Warrants distributed pursuant to
the exemption set forth in section 1145(a)(1). TransTexas believes that the
issuance of the Reorganization Securities will satisfy the aforementioned
requirements.
The Reorganization Securities may be resold by the holders
thereof without registration unless, as more fully described below, any such
holder is deemed to be an "underwriter" with respect to such securities, as
defined in section 1145(b)(1) of the Bankruptcy Code. Generally, section
1145(b)(1) of the Bankruptcy Code defines an "underwriter" as any person who
(a) purchases a claim against, or interest in, a bankruptcy case, with a view
towards the distribution of any security to be received in exchange for such
claim or interest, (b) offers to sell securities issued under a bankruptcy plan
on behalf of the holders of such securities, (c) offers to buy securities
issued under a bankruptcy plan from persons receiving such securities, if the
offer to buy is made with a view towards distribution of such securities and
under an agreement made in connection with the plan, with the consummation of
the plan or with the offer of sale of securities under the plan, or (d) is an
issuer within the meaning of section 2(11) of the Securities Act. Although the
definition of the term "issuer" appears in section 2(4) of the Securities Act,
the reference (contained in section 1145(b)(1)(D) of the Bankruptcy Code) to
section 2(11) of the Securities Act purports to include as "underwriters" all
persons who, directly or indirectly, through one or more intermediaries,
control,
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are controlled by, or are under common control with, an issuer of securities.
"Control" (as such term is defined in Rule 405 of Regulation C under the
Securities Act) means the possession, direct or indirect, of the power to
direct or cause the direction of the policies of a person, whether through the
ownership of voting securities by contract, or otherwise.
THE FOREGOING SUMMARY DISCUSSION IS GENERAL IN NATURE AND HAS
BEEN INCLUDED IN THIS DISCLOSURE STATEMENT SOLELY FOR INFORMATIONAL PURPOSES.
THE DEBTORS MAKE NO REPRESENTATIONS CONCERNING, AND DO NOT HEREBY PROVIDE ANY
OPINION OR ADVICE WITH RESPECT TO, THE SECURITIES LAW AND BANKRUPTCY LAW
MATTERS DESCRIBED ABOVE. IN LIGHT OF THE COMPLEX AND SUBJECTIVE INTERPRETIVE
NATURE OF WHETHER A PARTICULAR RECIPIENT OF NEW SENIOR SECURED NOTES, NEW
SENIOR PREFERRED STOCK, NEW JUNIOR PREFERRED STOCK, NEW COMMON STOCK, OR NEW
WARRANTS MAY BE DEEMED TO BE AN "UNDERWRITER" WITHIN THE MEANING OF SECTION
1145(B)(1) OF THE BANKRUPTCY CODE UNDER APPLICABLE FEDERAL AND STATE SECURITIES
LAWS AND, CONSEQUENTLY, THE UNCERTAINTY CONCERNING THE AVAILABILITY OF
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
EQUIVALENT STATE SECURITIES AND "BLUE SKY" LAWS, THE DEBTORS ENCOURAGE EACH
HOLDER OF A CLAIM OR INTEREST POTENTIALLY ENTITLED TO RECEIVE A REORGANIZATION
SECURITY UNDER THE PLANS TO CONSIDER CAREFULLY AND CONSULT WITH ITS OWN LEGAL
ADVISOR(S) WITH RESPECT TO SUCH (AND ANY RELATED) MATTERS.
2. Registration Rights. The final drafts of such Registration
Rights Agreement will be filed by TransTexas with the Bankruptcy Court no later
than a date which is five (5) days prior to the first date set by the
Bankruptcy Court as the Voting Deadline. Such Registration Rights Agreement
will be in form and substance satisfactory to the Bondholder Committee.
3. Registration of Reorganization Securities; Listing of
Reorganization Securities. Reorganized TransTexas shall use its best efforts to
(i) maintain its status as a reporting company under the Exchange Act and
cause, on the Effective Date, the shares of New Common Stock issued hereunder
to be listed on a national securities exchange or on the National Market System
of the National Association of Securities Dealers Inc. Automated Quotation
System ("NASDAQ"), (ii) in accordance with the terms of the Registration Rights
Agreement, file within 10 days after the Effective Date, and have declared
effective as soon as practicable thereafter, a registration statement or
registration statements under the Securities Act for the offering on a
continuous or delayed basis in the future of the Reorganization Securities (the
"Shelf Registration"), (iii) cause to be filed with the Commission on or prior
to the Effective Date, and have declared effective as soon as practicable
thereafter, a registration statement under the Exchange Act with respect to the
Reorganization Securities, (iv) keep the Shelf Registration effective for a
three-year period and (v) supplement or make amendments to the Shelf
Registration, if required under the
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Securities Act or by the rules and regulations promulgated thereunder, or in
accordance with the terms of the Registration Rights Agreement, and have such
supplements and amendments declared effective as soon as practicable after
filing. Registration of the Reorganization Securities under the Exchange Act
will facilitate the trading of the Reorganization Securities on a national
securities exchange or on the National Market System of the NASDAQ as
applicable. There can be no assurance, however, that the Reorganization
Securities will be listed on any stock exchange or quoted on the National
Market System. Moreover, no assurance can be given that a trading market for
such securities will develop following the effectiveness of the Plans or, if a
trading market for the Reorganization Securities develops, no assurance can be
given as to the liquidity of such a trading market.
D. Executory Contracts and Unexpired Leases.
Subject to the approval of the Bankruptcy Court, the Bankruptcy Code
empowers a debtor in possession to assume or reject executory contracts and
unexpired leases. Generally, an "executory contract" is a contract under which
material performance is due from both parties as of the Petition Date. If an
executory contract or unexpired lease is rejected by a debtor in possession,
such rejection will constitute a prepetition breach under sections 365(g) and
502(g) of the Bankruptcy Code and the other parties to the agreement may File a
claim for damages incurred by reason of such rejection, which claim is treated
as a prepetition claim. If an executory contract or unexpired lease is assumed
by a debtor in possession, the debtor in possession has the obligation to cure
all prepetition defaults and perform its obligations thereunder in accordance
with the terms of such agreement and failure to perform such obligations could
result in a claim for damages which may be entitled to administrative expense
status.
On the Effective Date, all executory contracts and unexpired leases of
TEC and TARC will be rejected by TEC and TARC.
On the Effective Date, all executory contracts and unexpired leases of
TransTexas shall be assumed by TransTexas (subject to the same rights that
Reorganized TransTexas held or holds at, on, or after the Petition Date to
modify or terminate such agreements under applicable nonbankruptcy law)
pursuant to the provisions of sections 365 and 1123 of the Bankruptcy Code,
except: (a) any executory contract or unexpired lease that is the subject of a
separate motion to reject Filed pursuant to section 365 of the Bankruptcy Code
by TransTexas before the entry of the Confirmation Order; (b) executory
contracts and unexpired leases listed in the "Schedule of Rejected Executory
Contracts and Unexpired Leases" (the "Schedule of Rejected Contracts") annexed
to the TransTexas Plan which shall be served and Filed by TransTexas at least
five (5) Business Days before the Confirmation Hearing. Each executory contract
and unexpired lease assumed pursuant to the TransTexas Plan by TransTexas shall
revest in and be fully enforceable by Reorganized TransTexas in accordance with
its terms, except as modified by the provisions of the TransTexas Plan, any
Final Order authorizing and providing for its assumption, or applicable federal
law.
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TransTexas estimates that rejection of the executory contracts and
unexpired leases set forth on the Schedule of Rejected Contracts will give rise
to General Unsecured Claims aggregating no more than $33 million. TransTexas
estimates that the assumption of executory contracts and unexpired leases will
require TransTexas to spend in the aggregate no more than $2.3 million to cure
prepetition defaults under certain of those contracts and leases.
E. Conditions to Occurrence of the Effective Date of the Plans.
Prior to the occurrence of the Effective Date, the following
conditions must occur and be satisfied:
(a) The Bankruptcy Court shall have entered an order confirming the
Plans, and the Plans and the order confirming the Plans shall each be in form
and substance satisfactory to the Bondholder Committee and the respective
Debtor.
(b) The orders confirming the TEC Plan, the TARC Plan and the
TransTexas Plan shall have become Final Orders in form and substance
satisfactory to the Bondholder Committee and the respective Debtor.
(c) TransTexas shall have sufficient Cash under the Post-Confirmation
Credit Facility and otherwise to satisfy all Cash obligations under the Plan
due on or as of the Effective Date.
(d) The Amended Certificate of Incorporation shall have been filed
with the Secretary of State of Delaware in accordance with the DGCL and the
Amended By-Laws shall have been adopted by Reorganized TransTexas and in form
and substance satisfactory to the Bondholder Committee.
(e) All authorizations, consents and regulatory approvals required, if
any, in connection with each of the Plans' effectiveness shall have been
obtained.
(f) No order of a court shall have been entered and shall remain in
effect restraining any Debtor from consummating its Plan.
(g) TransTexas and the Bondholder Committee shall each have approved
each of the Plan Documents and such Plan Documents shall have been executed in
accordance with their terms.
(h) All amounts required to be paid pursuant to Section 3.02 of the
TransTexas Plan shall have been paid in full in Cash to the Bondholder Lenders.
Each Debtor may waive, with the prior consent of the Bondholder
Committee, by a writing signed by an authorized representative and subsequently
Filed with the Bankruptcy Court, one or more of the conditions to the
occurrence of the Effective Dates.
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A hearing to consider confirmation of the Plans has been scheduled for
November 9, 1999, at 9:00 a.m., as a result of which, if all conditions to
confirmation of the Plans have occurred or been waived by that time, the
respective Confirmation Orders may be entered by the Bankruptcy Court.
The Debtors believe that all conditions to the Effective Date of the
Plans will likely be satisfied within 45 days of the Confirmation Date, and
that the Effective Date of the Plans could occur by December 31, 1999.
F. Exemption From Certain Transfer Taxes.
The Plans provide that, pursuant to Bankruptcy Code section 1146(c),
the issuance, transfer, or exchange of a security, or the making or delivery of
an instrument of transfer, shall not be subject to any stamp tax, real estate
transfer tax or similar tax. Transfers under the Plans that are exempt from
taxation pursuant to section 1146(c) of the Bankruptcy Code include, but are
not limited to, the issuance, transfer, assignment or exchange of the New
Senior Secured Notes, New Common Stock, New Senior Preferred Stock, New Junior
Preferred Stock and New Warrants; the creation of any mortgage, deed of trust,
lien or other security interest; the making, reinvestment, or delivery of any
deed or instrument or transfer under, in furtherance of, or in connection with,
the Plans, including any deeds, bills of sale, pledges, mortgages, deeds of
trust or assignments executed in connection with the Plans, agreements entered
into in connection with the Plans or the Confirmation Order.
G. Section 1125 of the Bankruptcy Code.
The Plans provide that the Debtors upon confirmation of the Plans
shall be deemed to have solicited acceptances of the Plans in good faith and in
compliance with the applicable provisions of the Bankruptcy Code and that the
Debtors (and their respective affiliates, agents, directors, officers,
employees, members, advisors and attorneys) have participated in good faith and
in compliance with the applicable provisions of the Bankruptcy Code in the
offer, issuance, sale and purchase of the securities offered and sold under the
Plans, and therefore are not, and on account of such offer, issuance, sale,
solicitation and/or purchase will not be, liable at any time for the violation
of any applicable law, rule or regulation governing the solicitation of
acceptances or rejections of the Plans or the offer, issuance, sale or purchase
of the securities offered and sold under the Plans.
H. Effects of Confirmation of the Plans.
1. TransTexas.
(a) Discharge. Except as otherwise specifically provided by
the TransTexas Plan, the confirmation of the TransTexas Plan (subject to the
occurrence of the Effective Date) will discharge Reorganized TransTexas from
any debt that arose before the Confirmation Date, and any debt of the kind
specified in sections 502(g), 502(h) and 502(i) of the Bankruptcy Code, whether
or
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not a proof of claim for such debt is Filed or is deemed Filed, whether or not
such Claim is Allowed, and whether or not the holder of such Claim has voted on
the TransTexas Plan. The effect of discharging a Claim is to release
Reorganized TransTexas from any obligations to make payments with respect to
such debt, other than those specifically provided by the Plan, and to prohibit
any collection efforts by the holder of the Claim.
(b) Binding Effect. The provisions of the Plan will be binding
upon and inure to the benefit of Reorganized TransTexas, any holder of a Claim
or Interest, their respective predecessors, successors, assigns, agents,
officers and directors and any other Entity affected by the Plan.
(c) Releases. Except as otherwise specifically provided by the
Plan, the distributions and rights that are provided in the Plan will be in
complete satisfaction, discharge and release, effective as of the Confirmation
Date (but subject to the occurrence of the Effective Date) of (i) all Claims
and Causes of Action against, liabilities of, liens on, obligations of and
Interests in Reorganized TransTexas on the assets and properties of Reorganized
TransTexas, whether known or unknown, and (ii) all Causes of Action (whether
known or unknown, either directly or derivatively through Reorganized
TransTexas) against, claims (as defined in section 101 of the Bankruptcy Code)
against, liabilities (as guarantor of a Claim or otherwise) of, liens on the
assets and properties of, and obligations of successors and assigns of,
Reorganized TransTexas and their successors and assigns, or based on any act or
omission, transaction or other activity or security, instrument or other
agreement of any kind or nature occurring, arising or existing prior to the
Effective Date that was or could have been the subject of any Claim or
Interest, in each case regardless of whether a proof of Claim or Interest was
Filed, whether or not Allowed and whether or not the holder of the Claim or
Interest has voted on the Plan.
Further, except as otherwise specifically provided by the
Plan, any Entity accepting any distribution pursuant to the Plan will be
presumed conclusively to have released the Reorganized TransTexas, and
successors and assigns of Reorganized TransTexas from any Cause of Action based
on the same subject matter as the Claim or Interest on which a distribution is
received. The release described in the preceding sentence will be enforceable
as a matter of contract against any Entity that accepts any distribution
pursuant to the Plan.
On the Effective Date, TransTexas will release the officers
and directors of TransTexas from any and all Claims or liability based upon any
act or omission related to service prior to the Effective Date with, for or on
behalf of TransTexas as Debtor or Debtor-In-Possession, except that the
Releasees shall not be released with respect to:
(i) any indebtedness of any such Releasee to TransTexas or
Debtors-In-Possession for money borrowed by such Releasee;
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(ii) any setoff or counterclaim TransTexas or
Debtors-In-Possession may have or assert against any such Releasee, provided
that the aggregate amount thereof shall not exceed the aggregate amount of any
Claims held or asserted by such Releasee against TransTexas or Debtors-In-
Possession, as the case may be; and
(iii) claims arising from the fraud, willful misconduct or
gross negligence of such Releasee.
The releases provided above will not extend, and not be deemed
to extend, to any person or entity other than the Releasees (including without
limitation, any affiliate of any Releasees).
The releases embodied in the Plans are in addition to, and not
in lieu of, any other release separately given, conditionally or
unconditionally, by TransTexas or Debtors-In-Possession to any other person or
entity.
IN CONSIDERATION OF THE DISTRIBUTIONS UNDER THE TRANSTEXAS
PLAN, UPON THE EFFECTIVE DATE, EACH HOLDER OF A CLAIM OR INTEREST WILL BE
DEEMED TO HAVE RELEASED TRANSTEXAS, REORGANIZED TRANSTEXAS, THE GMAC RELEASEES,
THE RELEASEES, THE CREDITORS' COMMITTEE, THE BONDHOLDER COMMITTEE AND THEIR
RESPECTIVE PROFESSIONALS FROM ANY AND ALL CAUSES OF ACTION (OTHER THAN THE
RIGHT TO ENFORCE TRANSTEXAS' OBLIGATIONS UNDER THE TRANSTEXAS PLAN AND THE
RIGHT TO PURSUE A CLAIM BASED ON ANY WILLFUL MISCONDUCT) ARISING OUT OF ACTIONS
OR OMISSIONS DURING THE ADMINISTRATION OF TRANSTEXAS' ESTATE. THE SUBDEBT
COMMITTEE IS NOT RECEIVING SUCH RELEASE.
2. TEC and TARC. Upon Confirmation of the TEC Plan and the
TARC Plan, and pursuant to Section 1141(a) of the Bankruptcy Code, the
provisions of the respective Plans will bind the respective Debtors, the
Bondholder Committee, the Creditors' Committee, all Creditors and Interests,
including their successors and assigns, whether or not they accept the
respective Plan.
The holders of the "Senior Debt" (as defined in the TARC
Subordinated Notes Indenture) and the holders of the TARC Subordinated Notes
Claims have agreed to a compromise and settlement embodied in the TARC Plan
pursuant to which the holders of the TARC Subordinated Notes Claims will
receive their Ratable Proportion of 17 1/2% of the funds held in the Interest
Reserve Accounts, less reasonable fees and expenses payable to First Union and
its attorneys, plus their Ratable Proportion of the net proceeds of the
Litigation Trust, in satisfaction of their TARC Subordinated Notes Claims, and
the holders of the Senior Debt will receive the balance of the funds held in
the Interest Reserve Accounts, less reasonable fees and expenses (including
attorneys' fees and expenses) of Firstar and the Bondholder Committee.
3. Indemnification. Subject to the occurrence of the Effective
Date, the obligations of the Debtors to indemnify officers and directors,
holding such offices from and
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including the Petition Date through and including the Confirmation Date,
against any obligation pursuant to each Debtor's certificate of incorporation,
bylaws, or applicable state law shall not survive confirmation of the Plan,
provided, however, Reorganized TransTexas shall take all action necessary to
maintain in full force and effect the existing insurance policies until they
expire by their terms.
4. Injunction. Except as otherwise provided in the TransTexas
Plan, the Confirmation Order shall provide, among other things, that all
Entities who have held, hold or may hold Claims against or Interests in
TransTexas are, with respect to any such Claims or interests, permanently
enjoined from and after the Confirmation Date from: (a) commencing, conducting
or continuing in any manner, directly or indirectly, any suit, action or other
proceeding of any kind (including, without limitation, any proceeding in a
judicial, arbitral, administrative or other forum) against or affecting
TransTexas, Reorganized TransTexas, Firstar or any member of the Bondholder
Committee, any of their property, or any direct or indirect transferee of any
property of, or direct or indirect successor in interest to, any of the
foregoing Entities, or any property of any such transferee or successor; (b)
enforcing, levying, attaching (including, without limitation, any pre-judgment
attachment), collecting or otherwise recovering by any manner or means, whether
directly or indirectly, of any judgment, award, decree or order against
TransTexas, Reorganized TransTexas, Firstar or any member of the Bondholder
Committee, any of its property, or any direct or indirect transferee of any
property of, or direct or indirect successor in interest to, any of the
foregoing Entities, or any property of any such transferee or successor; (c)
creating, perfecting or otherwise enforcing in any manner, directly or
indirectly, any encumbrance of any kind against TransTexas. Reorganized
TransTexas, Firstar or any member of the Bondholder Committee, any of its
property, or any direct or indirect transferee of any property of, or successor
in interest to, any of the foregoing Entities; (d) asserting any right of
setoff, subrogation, or recoupment of any kind, directly or indirectly, against
any obligation due TransTexas, Reorganized TransTexas, Firstar or any member of
the Bondholder Committee, any of its property, or any direct or indirect
transferee of any property of, or successor in interest to, any of the
foregoing Entities; and (e) acting or proceeding in any manner, in any place
whatsoever, that does not conform to or comply with the provisions of the
Plans.
5. Revesting. On the Effective Date, pursuant to sections
1123(a) (5) and 1141 of the Bankruptcy Code, title to all property of the
TransTexas estate will pass to Reorganized TransTexas, free and clear of all
Claims, liens, charges, encumbrances and Interests (except as otherwise
provided in the Plans). As of the Effective Date, TransTexas may operate its
businesses and use, acquire and dispose of property and settle and compromise
claims or interests without supervision of the Bankruptcy Court free of any
restrictions of the Bankruptcy Code or Bankruptcy Rules, other than those
restrictions expressly imposed by the Plans and Confirmation Order. Without
limiting the foregoing, Reorganized TransTexas may pay any expenses, including
any fees and expenses of professionals, accruing from and after the
Confirmation Date without any application to the Bankruptcy Court. Confirmation
of the TransTexas Plan (subject to occurrence
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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of the Effective Date) will be binding and TransTexas' debts will be discharged
as provided in section 1141 of the Bankruptcy Code.
6. Retention and Enforcement of Causes of Action. Except as
otherwise provided in the Plans, pursuant to section 1123(b)(3) of the
Bankruptcy Code, Reorganized TransTexas will retain and have the exclusive
right to enforce against any entity, any and all Causes of Action (including
all Causes of Action which may exist under sections 510, 544 through 550 and
553 of the Bankruptcy Code or otherwise arising under the Bankruptcy Code
and/or those arising under other applicable law) that arise before the
Effective Date including all Causes of Action of a trustee and Debtor in
Possession under the Bankruptcy Code other than those released or compromised
as part of or pursuant to the Plans.
In this connection, TransTexas and the Creditors' Committee
continue to review payments made by and transactions involving TransTexas prior
to the Petition Date to determine whether preference and other actions to avoid
such payments and transactions should be brought. Failure to specifically
identify potential actions in this Disclosure Statement shall not be deemed a
waiver of any such action by TransTexas, the Creditors' Committee or any other
party.
TransTexas or Reorganized TransTexas, as the case may be, and
the Creditors' Committee will be reviewing all expenditures made in the 90 days
prior to the Petition Date to determine whether any of these payments
constitute recoverable preferences and whether any preference actions would
result in significant recoveries in view of any defenses that may exist.
TransTexas does not expect that preference recoveries will be material. When
voting on the Plans, holders of Claims and/or Interests that received payments
from TransTexas, directly or indirectly, within 90 days prior to the Petition
Date (one year for insiders of TransTexas) should take into account that they
may be named by TransTexas or Reorganized TransTexas as defendants in
preference actions.
I. Distributions Under the Plans.
1. Time of Distributions Under the Plans. Except as otherwise
provided in the Plans, payments and distributions in respect of Allowed Claims
and Allowed Interests will be made by Reorganized TransTexas (or its designee)
on or as promptly as practicable after the Effective Date. Cash or
Reorganization Securities otherwise distributable with respect to Disputed
Claims and Disputed Interests will be held by Reorganized TransTexas pending
resolution of all objections to each such Claim. When such objections have been
resolved and the Claim or Interest has become an Allowed Claim or Allowed
Interest, Reorganized TransTexas will make an appropriate Distribution with
respect to such Allowed Claim or Allowed Interest.
2. Rounding. Only whole numbers of shares of Reorganization
Securities will be distributed. All Allowed Claims or Allowed Interests of a
holder in a particular Class will be aggregated and treated as an Allowed Claim
or Allowed Interest for purposes of distribution. If
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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any calculated distribution on account of such Allowed Claim or Allowed
Interest would otherwise result in the distribution of a number of New Common
Stock or New Warrants that is not a whole number, then the actual distribution
of shares of such stock or such warrants will be rounded to the nearest whole
number unless such rounding results in a class of Allowed Interests receiving
more than the aggregate number of New Warrants allotted for distribution to
that Class. In such a case, the actual distribution of New Warrants shall be
rounded so that the total amount of New Warrants distributed to the Class will
be no more than the amount allotted for distribution in that Class. Holders of
Allowed Claims or Allowed Interests that would be entitled to fractional shares
of New Common Stock or to fractional New Warrants but for this provision shall
receive no consideration therefor because such amount would be de minimis.
3. Compliance with Tax Requirements. TransTexas will comply
with all withholding and reporting requirements imposed by federal, state or
local taxing authorities in connection with making distributions pursuant to
the Plans.
4. Distribution of Undeliverable or Unclaimed Property. Any
Entity that is entitled to receive a Cash Distribution under the Plans but that
fails to cash a check within 120 days of its issuance shall be entitled to
receive a reissued check from Reorganized TransTexas for the amount of the
original check, with any interest, if such Entity requests Reorganized
TransTexas or their designee to reissue such check and provides Reorganized
TransTexas or their designee, as the case may be, with such documentation as
Reorganized TransTexas or their designee requests to verify that such Entity is
entitled to such check, prior to the later of (a) the second anniversary of the
Effective Date or (b) six (6) months after such Claim becomes an Allowed Claim.
If an Entity fails to cash a check within 120 days of its issuance and fails to
request reissuance of such check prior to the later to occur of (a) the second
anniversary of the Effective Date or (b) six months following the date such
Entity's Claim becomes an Allowed Claim, such Entity shall not be entitled to
receive any distribution under the Plans with respect to the amount of such
check. If the distribution to any holder of an Allowed Claim or Interest is
returned to Reorganized TransTexas or their designee as undeliverable, no
further distributions will be made to such holder unless and until either
Reorganized TransTexas or its designee, as applicable, is notified in writing
of such holder's then current address.
All claims for undeliverable distributions must be made on or
before the later to occur of (i) the second anniversary of the Effective Date
and (ii) six months following the date such Entity's Claim becomes an Allowed
Claim or Allowed Interest. After such date, all unclaimed property shall revert
to Reorganized TransTexas and the claim of any holder or successor to such
holder with respect to such property shall be discharged and forever barred
notwithstanding any federal or state escheatment laws.
5. Set-Offs. Except as otherwise expressly provided in the
Plans, agreements entered into in connection with the Plans, the Confirmation
Order or in agreements previously approved by Final Order of the Bankruptcy
Court, TransTexas or Reorganized TransTexas, as the
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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<PAGE> 96
case may be, may, but will not be required to, setoff against any Claim and the
Distributions to be made pursuant to the Plans in respect of such Claim, any
claims of any nature whatsoever which TransTexas or Debtors-In-Possession may
have against the holder of such Claim, but neither the failure to do so nor the
allowance of any Claim under the Plans will constitute a waiver or release of
any such claim TransTexas or Debtors-In-Possession may have against such holder
except for distributions to holders of Allowed TransTexas Senior Secured Note
Claims (as to which TransTexas and Reorganized TransTexas shall have no right
of setoff of recoupment'). To the extent Reorganized TransTexas fails to set
off against a creditor and seek to collect a claim from such creditor after a
distribution to such creditor pursuant to the Plans, Reorganized TransTexas
shall be entitled to full recovery on their claim against such creditor.
6. Allocation of Consideration. The aggregate consideration to
be distributed to the holders of Allowed Claims in each Class under the Plans
shall be treated as first satisfying an amount equal to the stated principal
amount of the Allowed Claim for such holders and any remaining consideration as
satisfying accrued, but unpaid, interest if any.
7. Manner of Payment. Payments provided under the Plans may be
made, at the option of Reorganized TransTexas, in Cash, by wire transfer or by
check drawn on any money center bank.
8. Disbursing Agent. Reorganized TransTexas shall be the
initial Disbursing Agent for making Distributions under the TransTexas Plan.
J. Procedures for Resolving Disputed Claims.
1. Objections to Claims. An objection to the allowance of a
Claim or Interest shall be in writing and may be Filed with the Court by
TransTexas or Reorganized TransTexas, as the case may be, or any other party in
interest, at any time on or before the Objection Deadline. The "Objection
Deadline" is the later of (a) the 120th day following the Effective Date unless
such period is extended by order of the Bankruptcy Court, (b) sixty (60) days
after the filing of the proof of such Claim or Interest or (c) such other date
set by order of the Bankruptcy Court (the application for which may be made on
an ex parte basis). The objecting party shall serve a copy of each such
objection upon the holder of the Claim or Interest to which it pertains and
upon TransTexas or Reorganized TransTexas, as the case may be. TransTexas or
Reorganized TransTexas will prosecute each objection to a Claim or Interest
until determined by a Final Order unless TransTexas or Reorganized TransTexas
(i) compromises and settles an objection to a Claim or Interest by written
stipulation, subject to Bankruptcy Court approval, if necessary or (ii)
withdraws an objection to a Claim or Interest.
2. Payments and Distributions With Respect to Disputed Claims
or Interests. No payments or distributions will be made in respect of a
Disputed Claim or Disputed Interest unless and until such Disputed Claim or
Disputed Interest becomes an Allowed Claim or Allowed Interest.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 86
<PAGE> 97
Notwithstanding the foregoing, on or as soon as practicable after the Objection
Deadline, Reorganized TransTexas will make Distributions to the holders of
Disputed Claims or Disputed Interests to the extent, and only to the extent,
the portion of such Claim or Interest is not the subject of a pending
objection. Subject to the provisions of the Plans, Cash payments and
Distributions with respect to each Disputed Claim or Disputed Interest that
becomes an Allowed Claim or Allowed Interest shall be made within thirty (30)
days after the date that such Disputed Claim or Disputed Interest becomes an
Allowed Claim or Allowed Interest.
K. Dissolution of Creditors' Committee and SubDebt Committee.
Except with respect to any appeal of an order in the Chapter 11 Cases,
and any matters related to any proposed modification of the Plans, on the
Effective Date, the Creditors' Committee and the SubDebt Committee shall be
dissolved and the members, employees, agents, advisors and representatives
(including without limitation, attorneys, financial advisors, and other
Professionals) of each thereof shall thereupon be released from and discharged
of and from all further authority, duties, responsibilities and obligations
related to, arising from and in connection with the Chapter 11 Cases and shall
be indemnified (including reasonable attorneys' fees and costs) by Reorganized
TransTexas for any and all acts performed, or omissions, in connection with the
Chapter 11 Cases, except for acts or omissions as shall constitute fraud,
willful misconduct, or gross negligence. Notwithstanding the foregoing, for a
period not to exceed 2 years from Effective Date, the Executive Committee (and
its counsel) shall continue for the sole purpose of monitoring and, if
necessary, participating in the claim objection process
L. Other Provisions of the Plans.
1. Retention of Jurisdiction. Notwithstanding entry of the
Confirmation Order, the Bankruptcy Court shall retain jurisdiction as is
legally permissible, including, without limitation, for the following purposes:
(a) to determine (i) any Disputed Claims, Disputed Interests
and all related Claims accruing after the Confirmation Date including rights
and liabilities under contracts giving rise to such Claims, (ii) the validity,
extent, priority and nonavoidability of consensual and nonconsensual liens and
other encumbrances, (iii) preconfirmation tax liability pursuant to section 505
of the Bankruptcy Code and (iv) controversies and disputes regarding the
interpretation of the Plans and documents executed in connection therewith;
(b) to allow, disallow, estimate, liquidate or determine any
Claim or Interest against a Debtor and to enter or enforce any order requiring
the filing of any such Claim or Interest before a particular date;
(c) to approve all matters related to the assumption,
assumption and assignment, or rejection of any executory contract or unexpired
lease of TransTexas pursuant to section 365 of
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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the Bankruptcy Code and Article VIII of the TransTexas Plan and the TARC Plan
and Article VII of the TEC Plan;
(d) to determine requests for payment of administrative
expenses entitled to priority under section 507(a)(1) of the Bankruptcy Code,
including compensation of parties entitled thereto;
(e) to resolve controversies and disputes regarding the
interpretation and implementation of the Plans, any disputes relating to
whether or not a timely and proper proof of claim was Filed or whether a
Disallowed Claim or Disallowed Interest should be reinstated;
(f) to implement the provisions of the Plans and to enter
orders in aid of confirmation and consummation of the Plans;
(g) to modify the Plans pursuant to section 1127 of the
Bankruptcy Code;
(h) to adjudicate any and all Causes of Action that arose in
the Chapter 11 Cases pre-confirmation or in connection with the implementation
of the Plans, whether or not pending on the Confirmation Date, including
without limitation, any remands of appeals;
(i) to resolve disputes concerning any reserves with respect to
Disputed Claims, Disputed Interests or the administration thereof;
(j) to resolve any disputes concerning whether a person or
entity had sufficient notice of the Chapter 11 Cases, the applicable claims bar
date, the hearing on the approval of the Disclosure Statement as containing
adequate information, the hearing on the confirmation of the Plans for the
purpose of determining whether a Claim or Interest is discharged thereby or for
any other purpose;
(k) to determine any and all applications, Claims, Interests,
pending adversary proceedings and contested matters (including, without
limitation, any adversary proceeding or other proceeding to recharacterize
agreements or reclassify Claims or Interests) in the Chapter 11 Cases;
(1) to enter and implement such orders as may be appropriate
in the event any one of the Confirmation Orders is for any reason stayed,
revoked, modified, or vacated;
(m) to issue orders in aid of execution of the Plans, to the
extent authorized by section 1142 of the Bankruptcy Code;
(n) to consider any modifications of the Plans, to cure any
defect or omission, or reconcile any inconsistency in any order of the Court,
including, without limitation, the Confirmation Order;
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 88
<PAGE> 99
(o) to recover all assets of the Debtors and property of their
estates, wherever located, including any Causes of Action under sections 544
through 550 of the Bankruptcy Code.
(p) to hear and resolve matters concerning state, local, and
federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy
Code;
(q) to hear any other matter not inconsistent with the
Bankruptcy Code;
(r) to resolve any and all disputes or controversies relating
to Distributions to be made, and/or reserves to be established, under the
Plans, including, without limitation, Distributions to be made by the Indenture
Trustee; and
(s) to enter a final decree closing the Chapter 11 Cases.
2. Amendment and Modification to the Plans. In accordance with
the provisions of the Plans, the Debtors reserve the right, in accordance with
the Bankruptcy Code, to alter, amend or modify the Plans prior to the entry of
the Confirmation Order. After the entry of the Confirmation Order, the
respective Debtor may, upon order of the Bankruptcy Court, alter, amend or
modify the Plans in accordance with section 1127(b) of the Bankruptcy Code, or
remedy any defect or omission or reconcile any inconsistency in the Plans in
such manner as may be necessary to carry out the purpose and intent of the
Plans.
3. Withdrawal and Revocation of the Plans. In accordance with
the provisions of the Plans, the Debtors reserve the right to revoke or
withdraw their respective Plan prior to the Confirmation Date. If a Debtor
revokes or withdraws its Plan or if the Confirmation Date does not occur, the
respective Plan shall have no force and effect.
V. PROJECTIONS
The Bankruptcy Code requires that confirmation of a plan is not likely
to be followed by liquidation or the need for further financial reorganization.
For purposes of determining whether the Plan meets this requirement, TransTexas
has prepared projections of Reorganized TransTexas' expected financial
performance (the "Proforma Financial Projections") for each of the fiscal years
beginning January 31, 2000, through January 31, 2006 (the "Projected Period").
These projections, and the assumptions on which they are based, are annexed
hereto as Appendix 2.
The Proforma Financial Projections make numerous assumptions (the
material assumptions are outlined in Appendix 2) with respect to industry
performance, general business and economic conditions, commodity prices,
competition, taxes and other regulatory matters, many of which are beyond
Reorganized TransTexas' control. Accordingly, such forecasts and assumptions
are not necessarily indicative of future performance. Although the Proforma
Financial Projections represent TransTexas' best estimates of the prospective
financial performance of Reorganized TransTexas,
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 89
<PAGE> 100
actual performance may vary significantly from the Proforma Financial
Projections. Consequently, the Proforma Financial Projections should not be
regarded as a representation by TransTexas, TransTexas' management, Reorganized
TransTexas, or any other person, that the forecasted results will be achieved.
The Proforma Financial Projections were not prepared with a view towards
compliance with published guidelines of the Securities and Exchange Commission,
or the American Institute of Certified Public Accountants. The Proforma
Financial Projections have not been examined, compiled or audited by
TransTexas' independent accountants or its financial advisors.
The Proforma Financial Projections have been prepared in accordance
with accounting and reporting principles for entities in reorganization under
the Bankruptcy Code ("SOP 90-7").
A. Conclusion
Based on the Proforma Financial Forecast, TransTexas believes
that Reorganized TransTexas will be able to make all payments required pursuant
to the TransTexas Plan and, therefore, that confirmation of the TransTexas Plan
is not likely to be followed by liquidation or the need for further
reorganization. TransTexas believes that Reorganized TransTexas will be able to
repay or refinance any and all of the then outstanding indebtedness under the
TransTexas Plan at or prior to the maturity of such indebtedness.
B. Oil and Gas Exploration and Development
Reorganized TransTexas, consistent with historical objectives,
intends to focus on converting unproven acreage to proved reserves through
drilling in under-exploited areas. The Proforma Financial Projections assume
Reorganized TransTexas incurs approximately $251 million for capital
expenditures (excluding capitalized interest) and the drilling of 129 wells
(gross, unrisked) over the Projection Period. The results of the drilling and
related capital expenditures have been risked by TransTexas in an attempt
estimate future results. Production generated by the assets of Reorganized
TransTexas increases over the Projection Period from 112.3 Mmcfed in October
1999, to 171.8 Mmcfed in January 2006.
C. Prospective Indebtedness
A priority of Reorganized TransTexas is to repay the
indebtedness included in the TransTexas Plan. The Proforma Financial
Projections assume that Reorganized TransTexas is able to repay the $42.5
million of exit financing, and the $10 million of remaining
debtor-in-possession financing obligations by July 31, 2003. Additionally,
based on the Proforma Financial Projections, Reorganized TransTexas is able to
reduce the amount of the outstanding Senior Secured Notes by $38 million to a
remaining balance of $162 million as of January 31, 2006.
D. Selected Information from the Proforma Financial Projections
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 90
<PAGE> 101
The following table sets forth certain information contained
in the Proforma Financial Projections attached hereto as Appendix 2.
Year Ended January 31,
<TABLE>
<CAPTION>
Forecast
<S> <C> <C> <C> <C> <C> <C> <C>
Pro Forma Summary Financial Data 2000 2001 2002 2003 2004 2005 2006
Revenues 106.0 178.2 194.9 198.9 190.1 176.4 164.9
Operating Costs and Expenses 30.1 40.3 39.1 38.7 38.6 37.9 38.2
General and Administrative 28.8 21.4 22.1 22.7 25.4 24.1 24.8
Depreciation, Depletion and 70.2 93.2 68.2 61.8 54.3 51.0 48.4
Amortization
Operating Income (23.1) 23.2 65.6 75.7 71.8 63.3 53.5
Net Cash Interest and Dividends 16.0 47.5 41.2 61.8 56.9 52.2 50.0
Sales Volumes:
Gas (Bcf) 29.9 50.5 53.9 54.6 54.5 53.0 51.8
Condensate and Oil (Mbbls) 1,911 2,908 3,354 3,485 3,036 2,528 2,078
Total Sales (Bcfc) 41.4 68.0 74.0 75.5 72.8 68.2 64.3
</TABLE>
VI. RISK FACTORS
HOLDERS OF CLAIMS AND INTERESTS SHOULD READ AND CONSIDER CAREFULLY THE
FACTORS SET FORTH BELOW, AS WELL AS THE OTHER INFORMATION SET FORTH IN THIS
DISCLOSURE STATEMENT (AND THE DOCUMENTS DELIVERED TOGETHER HEREWITH AND/OR
INCORPORATED BY REFERENCE HEREIN), PRIOR TO VOTING TO ACCEPT OR REJECT THE
PLANS.
A. TransTexas' Business Risks.
1. Tax Issues. TransTexas expects that a significant portion
of its net operating loss carryovers ("NOLs") will be eliminated and the use of
those NOLs that are not eliminated will be severely restricted as a consequence
of the TransTexas Plan. In addition, certain other tax attributes of
Reorganized TransTexas may under certain circumstances be eliminated or reduced
as a consequence of the TransTexas Plan. The elimination or reduction of NOLs
and such other tax attributes may substantially increase the amount of tax
payable by Reorganized TransTexas following the consummation of the TransTexas
Plan as compared with the amount of tax payable
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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<PAGE> 102
had no such attribute reduction or restriction been required. The projected
financial information contained in this Disclosure Statement assumes that the
NOLs are not preserved. Nevertheless, TransTexas has endeavored to take such
steps as are reasonable to maximize its use of the NOLs.
2. Financial Condition of TransTexas; Payment at Maturity.
TransTexas is currently, and after the Effective Date Reorganized TransTexas
will continue to be, highly leveraged. There can be no assurance that the
operating cash flow of Reorganized TransTexas, after giving effect to operating
requirements, will be adequate to fully fund the payment of interest under its
post-confirmation indebtedness and cash dividends on its New Senior Preferred
Stock when due as well as all capital expenditures contemplated in TransTexas'
cash-flow projections.
Reorganized TransTexas' high degree of leverage could have
important consequences for creditors and equity holders in Reorganized
TransTexas, including the following:
(a) Reorganized TransTexas' ability to obtain additional
financing for working capital, capital expenditures or general corporate or
other purposes may be impaired in the future;
(b) a substantial portion of Reorganized TransTexas' cash flow
from operations must be dedicated to the payment of principal and interest on
its indebtedness, thereby reducing the funds available to Reorganized
TransTexas for other purposes;
(c) Reorganized TransTexas may be substantially more leveraged
than certain of its competitors, which may place Reorganized TransTexas at a
competitive disadvantage;
(d) Reorganized TransTexas' cash flow will be more sensitive
to fluctuations in natural gas prices than less highly leveraged companies; and
(e) Reorganized TransTexas' ability to adjust rapidly to
changing market conditions may be hindered and could make TransTexas more
vulnerable in the event of a downturn in general economic conditions or their
businesses.
Reorganized TransTexas' ability to make scheduled payments of
principal and interest with respect to its indebtedness and to make scheduled
payments of cash dividends and redemption payments with respect to its
preferred stock or to refinance such obligations will depend on its financial
and operating performance, which, in turn, will be subject to prevailing
economic conditions and to certain financial, business and other factors beyond
its control. For fiscal year 1999, TransTexas had a net loss of $447.7 million.
If Reorganized TransTexas' cash flow and capital resources are insufficient to
fund its debt service and preferred stock obligations, TransTexas may be forced
to reduce or delay planned capital expenditures, sell assets, obtain additional
equity capital or restructure its indebtedness or preferred stock obligations.
Covenants in the New Senior Secured Notes Indenture and the provisions of the
New Senior Preferred Stock will limit Reorganized TransTexas' ability to sell
assets. There can be no assurance that Reorganized
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 92
<PAGE> 103
TransTexas' operating results, cash flow and capital resources will be
sufficient for payment of its indebtedness and preferred stock obligations in
the future.
TransTexas does not currently intend to pay dividends on the
New Common Stock at any time in the foreseeable future.
3. Contractual Restrictions in Post-Confirmation Environment.
The agreement relating to the Post-Confirmation Credit Facility, the New Senior
Secured Notes Indenture and the provisions of the New Senior Preferred Stock
will contain restrictive financial and operating covenants and prohibitions,
including provisions that will limit Reorganized TransTexas' ability to incur
secured indebtedness, dispose of assets, engage in sale/leaseback transactions,
make capital expenditures and pay cash dividends and make other distributions
to holders of New Common Stock, New Senior Preferred Stock and New Junior
Preferred Stock. As noted above, failure to make necessary capital expenditures
could have an adverse effect on Reorganized TransTexas' ability to achieve its
projected financial results.
There can be no assurance that Reorganized TransTexas'
performance and its ability to satisfy its debt service obligations will not be
adversely affected by one or a combination of the above or other factors.
4. Mandatory Conversion of Preferred Stock. If either (i) more
than 75 million shares of the New Senior Preferred Stock are outstanding after
the sixth anniversary of the Effective Date or (ii) two successive dividend
payments are in arrears on the New Senior Preferred Stock at any time, one-half
of the shares of the New Senior Preferred Stock will be automatically converted
into shares of the New Class A Common Stock on the basis of .4175 shares of New
Class A Common Stock for each $1.00 of liquidation preference of the shares of
New Senior Preferred Stock converted and all of the outstanding shares of the
New Junior Preferred Stock will be automatically converted into shares of New
Class A Common Stock on the basis of .04175 share of New Class A Common Stock
for each $1.00 of liquidation preference of the New Junior Preferred Stock. If
these automatic conversions occur, they will result in substantial dilution of
the interests in Reorganized TransTexas theretofore held by the holders of New
Junior Preferred Stock and New Common Stock and the elimination of the
liquidation preference and dividend rights of the New Senior Preferred Stock
that is converted and all of the New Junior Preferred Stock.
5. Environmental Regulation and Litigation. TransTexas'
operations and properties are subject to extensive federal, state, and local
laws and regulations relating to the generation, storage, handling, emission,
transportation, and discharge of materials into the environment. See
"Background-Business of the Debtors-TransTexas-Environmental Matters."
6. Adequacy of Collateral; Risks of Foreclosure. Reorganized
TransTexas will grant and pledge to the New Senior Secured Notes Indenture
Trustee, for the ratable benefit of the holders of the New Senior Secured
Notes, a security interest in substantially all of the assets of
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 93
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Reorganized TransTexas, excluding Equipment, Inventory and Receivables (the
"Collateral"). There can be no assurance that the New Senior Secured Notes
Indenture Trustee will be able to foreclose on or dispose of any of the
Collateral without substantial delays and other risks or that the proceeds
obtained therefrom will be sufficient to pay all amounts owing to holders of
the New Senior Secured Notes.
In addition, if Reorganized TransTexas becomes a debtor in a
new case under the Bankruptcy Code, the automatic stay imposed by the
Bankruptcy Code would prevent the New Senior Secured Notes Indenture Trustee
from selling or otherwise disposing of the Collateral without the Bankruptcy
Code authorization. In that case, the foreclosure might be delayed
indefinitely.
7. Lien Priority. The mortgage securing the New Senior Secured
Notes will create a lien on substantially all of TransTexas' assets, excluding
Inventory, Receivables and Equipment, subject to exceptions permitted under the
security documents relating thereto. Certain types of subsequent encumbrances
(such as tax liens, mechanics' and materialmen's liens, and environmental
liens) will be entitled to priority over the liens of the mortgages as a matter
of law.
The New Senior Secured Notes Indenture and the New Secured
Notes Security Documents will provide that the security interest of the New
Senior Secured Notes Indenture Trustee in the Collateral securing the New
Senior Secured Notes will be subordinated to the security interests securing
the Extended Bondholder DIP Facility and the Post Confirmation Credit Facility.
In addition, the security interest of the New Senior Secured Notes Indenture
Trustee may be subordinated to certain Permitted Liens (as defined) that
constitute First Lien Debt (as defined) under the New Senior Secured Notes
Indenture.
8. Potential Tax Liabilities. Based upon independent legal
advice, including an opinion from a nationally recognized law firm, TransTexas
did not report any significant federal income tax liability as a result of the
Lobo Sale. However, no assurance can be given that TransTexas' position will be
sustained if challenged by the Internal Revenue Service (the "IRS"). TransTexas
is part of an affiliated group for tax purposes (the "TNGC Consolidated
Group"), which includes TNGC Holdings Corporation, the sole stockholder of
TransAmerican ("TNGC"), TransAmerican, TEC, TransTexas, and TARC. If the IRS
were to successfully challenge TransTexas' position, each member of the TNGC
Consolidated Group would be severally liable under the consolidated tax return
regulations for the resulting taxes, in the estimated amount of up to $270
million (assuming the use of none of the available tax attributes of the TNGC
Consolidated Group), possible penalties equal to 20% of the amount of the tax,
and interest at the statutory rate (currently 8%) on the tax and penalties (if
any). Assuming the use of available tax attributes of the TNGC Consolidated
Group, primarily the carryback of NOLs, this estimated tax would be reduced to
approximately up to $25 million (with the NOL carrybacks reducing interest as
of the end of the tax year in which the carryback arose and not reducing
penalties. In this event, a substantial portion of TransTexas' NOLs would be
utilized and thus not available to Reorganized TransTexas after the Effective
Date. Pursuant to the tax allocation agreement among the members of the TNGC
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
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Consolidated Group, TransAmerican is obligated to fund the entire tax
deficiency (if any) resulting from the Lobo Sale. There can be no assurance
that TransAmerican would be able to make any such payment and the other members
of the TNGC Consolidated Group including TransTexas, thus, may be required to
pay the tax, penalties and interest. There can be no assurance that TransTexas
could pay this contingency.
Part of the refinancing of TransAmerican's debt in 1993 involved
the cancellation of approximately $65.9 million of accrued interest and of a
contingent liability for interest of $102 million owed by TransAmerican.
TransAmerican has taken the federal tax position that the entire amount of this
debt cancellation is excluded from its income under the cancellation of
indebtedness provision (the "COD Exclusion") of the Internal Revenue Code of
1986, as amended (the "Tax Code"), and has reduced its tax attributes (including
its net operating loss and credit carryforwards) as a consequence of the COD
Exclusion. No federal tax opinion was rendered with respect to this transaction,
however, and TransAmerican has not obtained a ruling from the IRS regarding this
transaction. TransTexas believes that there is substantial legal authority to
support the position that the COD Exclusion applies to the cancellation of
TransAmerican's indebtedness. However, due to factual and legal uncertainties,
there can be no assurance that the IRS will not challenge this position, or that
any such challenge would not be upheld. Under the Tax Allocation Agreement,
TransTexas has agreed to pay an amount equal to any federal tax liability (which
would be approximately $25.4 million) attributable to the inapplicability of the
COD Exclusion. Any such tax would be offset in future years by alternative
minimum tax credits and retained loss and credit carryforwards to the extent
recoverable from TransAmerican.
As a member of the TNGC Consolidated Group,
each of TEC, TransTexas and TARC will be severally liable for any tax liability
resulting from the above-described transactions. The IRS has commenced an audit
of the consolidated federal income tax returns of the TNGC Consolidated Group
for its taxable years ended July 31, 1994 and July 31, 1995. Because the audit
is in its initial stages, it is not possible to predict the scope of the IRS'
review or whether any tax deficiencies will be proposed by the IRS as a result
of its review.
9. Risks Related to Projections and Estimates. This
Disclosure Statement and the material incorporated by reference herein (the
"Incorporated Materials") include "forward-looking statements" as defined in
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical facts included in this
Disclosure Statement and the Incorporated Materials regarding the Debtors'
financial positions, business strategies, plans and objectives of management
for future operations and indebtedness covenant compliance, including but not
limited to words such as "anticipates," "expects," "estimates," "believes" and
"likely," are forward-looking statements. Management of the Debtors believe
that their current views and expectations are based on reasonable assumptions;
however, there are significant risks and uncertainties that could significantly
affect expected results. Important factors that could cause actual results to
differ materially from those in the forward-looking statements ("Cautionary
Statements") are disclosed throughout this Disclosure Statement and include,
without limitation,
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fluctuations in the commodity prices for natural gas, crude oil, condensate and
natural gas liquids, the success of Reorganized TransTexas' exploration and
production activities, conditions in the equity and capital markets,
competition and the ultimate resolution of litigation. All subsequent written
and oral forward-looking statements attributable to the Debtors, or persons
acting on their behalf, are expressly qualified in their entirety by the
Cautionary Statements. The Debtors do not intend to update or otherwise revise
the forward-looking statements contained herein to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
There are numerous uncertainties inherent in estimating
quantities of proved reserves, including many factors beyond the control of
Reorganized TransTexas. The reserve data included and incorporated by reference
in this Disclosure Statement represent only estimates prepared by Netherland,
Sewell & Associates, Inc. ("Netherland Sewell"). Gas reserve assessment is a
subjective process of estimating the recovery from underground accumulations of
gas that cannot be measured in an exact way, and estimates by other persons
might differ materially from those of Netherland Sewell. Certain events,
including production, acquisitions and future drilling and development could
result in increases or decreases in estimated quantities of proved reserves. In
addition, estimates of Reorganized TransTexas' future net revenues from proved
reserves and the present value thereof are based on certain assumptions
regarding future natural gas prices, production levels, production and ad
valorem taxes and operating and development costs that may not prove to be
correct over time.
10. Absence of Public Market for the Reorganization
Securities. The Reorganization Securities will constitute new issues of
securities with no established trading market. Although Reorganized TransTexas
intends to apply for a listing of the New Class A Common Stock on a national
securities exchange or to seek the admission thereof to trading in the NASDAQ
National Market System if and when the requirements for such listing or
admission can be satisfied, there can be no assurance that such listing will be
accomplished. The other Reorganization Securities will not be so listed or
admitted. Accordingly, no assurance can be given that an active public or other
market will develop for any of the Reorganization Securities. If a market for
the Reorganization Securities does not develop, holders may not be able to
resell any of the Reorganization Securities for an extended period of time, if
at all. If a market for the Reorganization Securities does develop, the New
Senior Secured Notes, the New Senior Preferred Stock and the New Junior
Preferred Stock may trade at discounts from their principal amount and
liquidation preferences, respectively, depending upon prevailing interest
rates, results of operations of Reorganized TransTexas, the market for similar
securities and other factors. There can be no assurance that a holder of
Reorganization Securities will be able to sell such securities in the future or
of any price of which any such sale might be made.
11. Substantial Capital Requirements. TransTexas believes
that a substantial capital expenditure program will be crucial to Reorganized
TransTexas' future profitability as well as its ability to generate the cash
flow necessary for its operating requirements, to pay interest on its debt and
cash dividends on its preferred stock and for payment of the principal amounts
of its debt at maturity and the redemption price of the New Senior Preferred
Stock on the scheduled redemption
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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date thereof. Historically, TransTexas has financed capital expenditures and
serviced its debt with cash from operations, public and private offerings of
debt and equity securities, the sale of production payments, asset sales and
other financings. TransTexas intends to use cash flow from operations to fund
Reorganized TransTexas' cash requirements following the Effective Date. If
capital expenditures are higher than anticipated or cash flow from operations
is lower than anticipated, Reorganized TransTexas may not have sufficient funds
for capital expenditures necessary to replace its reserves, to maintain
production at current levels or to attain increased production levels, and, as
a result, production from operations may decrease over time. No assurance can
be given that Reorganized TransTexas' cash flow from operating activities will
be sufficient to meet actual capital expenditures, debt service and preferred
stock obligations in the future.
12. Ability to Replace Short-Lived Reserves. TransTexas'
principal producing properties are characterized by high initial production
followed by a steep decline in production rates. As a result, Reorganized
TransTexas will be required to find and develop or acquire new natural gas
reserves to replace those being depleted by production. Without successful
drilling and exploration or acquisition activities, Reorganized TransTexas'
reserves and production will decline rapidly. TransTexas' business strategy has
been to add reserves by pursuing an active drilling program on its existing
undeveloped properties and on properties that it may acquire in the future.
There can be no assurance that Reorganized TransTexas will have funds available
to pursue an active drilling program or that production from new wells will be
sufficient to replace production from existing wells.
13. Natural Gas Price Fluctuations and Markets. TransTexas'
results of operations and the value of its gas and oil properties are highly
dependent upon the prices TransTexas receives for its natural gas.
Substantially all of TransTexas' sales of natural gas are made in the spot
market, or pursuant to contracts based on spot market prices, and not pursuant
to long-term, fixed-price contracts. Accordingly, the prices received by
Reorganized TransTexas for its natural gas production will be dependent upon
numerous factors beyond the control of Reorganized TransTexas, including the
level of consumer product demand, the North American supply of natural gas,
government regulations and taxes, the price and availability of alternative
fuels, the level of foreign imports of oil and natural gas, and the overall
economic environment. Demand for natural gas is seasonal, with demand typically
higher during the summer and winter, and lower during the spring and fall, with
concomitant changes in price.
Any significant decline in current prices for natural gas
could have a material adverse effect on Reorganized TransTexas' financial
condition, results of operations and quantities of reserves recoverable on an
economic basis. In order to mitigate its vulnerability to natural gas price
volatility, Reorganized TransTexas may enter into commodity price swap
agreements to reduce its exposure to price risk in the spot market for natural
gas. However, a substantial majority of Reorganized TransTexas' production
likely will remain subject to natural gas price fluctuations.
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PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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14. Competition. TransTexas competes in the highly
competitive areas of natural gas exploration, development and production. Many
of Reorganized TransTexas' competitors will have substantially larger financial
resources, staffs and facilities than Reorganized TransTexas.
15. Drilling Risks. Drilling activities are subject to
numerous risks, including mechanical risk and the risk that no commercially
productive reservoirs will be encountered. There can be no assurance that new
wells drilled by Reorganized TransTexas will be productive or that Reorganized
TransTexas will recover all or any portion of its investment. The cost of
drilling, completing and operating wells is often uncertain. Reorganized
TransTexas' drilling operations may be curtailed, delayed or canceled as a
result of numerous factors, many of which will be beyond Reorganized
TransTexas' control, including title problems, weather conditions, compliance
with governmental requirements and shortages or delays in the delivery of
equipment and services.
16. Operating Hazards and Uninsured Risks. TransTexas'
operations are subject to hazards and risks inherent in drilling for, and the
production, processing and transportation of, natural gas, such as fires,
explosions, encountering formations with abnormal pressures, blowouts,
cratering, pipeline ruptures and spills, any of which can result in loss of
hydrocarbons, environmental pollution, personal injury claims and other damage
to properties of TransTexas and others. TransTexas' insurance coverage
includes, among other things, operator's extra expense, physical damage on
certain assets, employer's liability, comprehensive general liability,
automobile and workers' compensation insurance. TransTexas believes that its
insurance is adequate and customary for companies of a similar size engaged in
operations similar to those of TransTexas, but losses can occur for uninsurable
or uninsured risks or in amounts in excess of existing insurance coverage.
17. Government Regulations. TransTexas' business is subject
to certain federal, state and local laws and regulations relating to the
exploration for and the development, production and transportation of natural
gas, as well as environmental and safety matters. Many of these laws and
regulations have become more stringent in recent years, often imposing greater
liability on a larger number of potentially responsible parties. Because the
requirements imposed by such laws and regulations are frequently changed,
TransTexas is unable to predict the ultimate cost of compliance with these
requirements or their effect on its operations.
18. Lack of Complete Year 2000 Compliance. The widespread use
of computer programs that rely on two-digit date programs to perform
computations and decision-making functions may cause information technology
("IT") systems to malfunction in and around the Year 2000. Such malfunctions
may lead to significant business delays in the U.S. and internationally. The
Year 2000 problem will potentially impact Reorganized TransTexas' normal
business activities because information necessary to monitor and control
various operations is controlled by computers. In addition to potential
problems from computer systems, potential problems could arise from equipment
with embedded chips.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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TransTexas has defined a Year 2000-compliant system as one
capable of correct identification, manipulation and calculation when processing
data in connection with the year change from December 31, 1999 to January 1,
2000. A Year 2000-compliant system is also capable of correct identification,
manipulation and calculation using leap years both alone and in conjunction
with other dates.
Not all of TransTexas' systems are compliant under the above
definition. However, TransTexas is addressing the issues associated with this
problem in the following manner.
o In the first stage, TransTexas commenced
preparation of an inventory of all IT and non-IT
systems, as well as equipment that could have
embedded chips, whether or not critical to the
operation of the business. TransTexas also compiled
a listing of material relationships with third
parties with which it conducts business. These
relationships include contractors, suppliers and
financial institutions. This stage of the Year 2000
compliance process is substantially complete.
o In stage two, TransTexas is assessing the results of
the completed portions of inventory done in the
first stage to determine the Year 2000 impact and
what actions need to be taken to obtain Year 2000
compliance. For TransTexas' internal systems,
actions needed include obtaining vendor
certification of Year 2000 compliance, remediating
internal systems or replacing systems and equipment
that cannot be remediated. This stage is
approximately 95% complete with respect to internal
systems. Major outstanding items include receipt of
vendor certifications and installation of Year 2000
upgrades for certain non-critical systems.
TransTexas has determined a course of action for
remediation or replacement of all identified
critical internal systems. TransTexas is surveying
and obtaining information about Year 2000 readiness
of its material third-party relationships.
Contingency plans will be developed for those third
parties that cannot satisfactorily demonstrate Year
2000 compliance.
o The third stage includes the repair, replacement or
retirement of systems. This stage of the Year 2000
process is ongoing and is dependent upon the
availability of upgrades from TransTexas' IT
vendors, technician time to implement the upgrades
and notification from other third parties of Year
2000 compliance. TransTexas has been upgrading
packaged software throughout the organization.
TransTexas has implemented a new financial reporting
system. Several operational systems are in various
stages of implementation, which should be completed
prior to November 1999. Some vendors of these new
systems have provided certification that their
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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respective software packages are Year 2000 compliant
according to TransTexas' definition.
o The last stage of the implementation process, which
is approximately 80% complete, includes testing all
of the changes implemented individually and
integrating those changes with all of the systems of
TransTexas and its suppliers and customers. Various
forms of testing are used depending on the type of
change implemented. Each upgrade, to the extent
economically feasible, will be run through a test
environment before it is implemented. It is then
tested to see how well it integrates into
TransTexas' overall IT environment. Currently,
TransTexas is not employing any independent
verification processes of its systems' tests.
As of July 31, 1999, TransTexas had incurred approximately $2
million in direct costs with respect to its Year 2000 compliance program.
TransTexas anticipates spending an additional $0.2 million in direct costs to
complete its Year 2000 compliance program.
Despite TransTexas' best efforts to ready its systems and
infrastructure for the Year 2000, there are many factors outside of TransTexas'
control that could affect readiness for the Year 2000. Although TransTexas
believes that Year 2000 compliance will be accomplished by the implementation
of the program described above, there could be operational issues with the new
systems implemented that prevent TransTexas from solving the Year 2000
compliance issue in a timely manner. In such event, Reorganized TransTexas
could be required to implement a contingency plan for Year 2000 compliance.
Although TransTexas has not completely finalized its contingency plans,
TransTexas will select from several alternative plans including remediation of
its software, installation of other third party vendor software, or some
combination of alternatives. Substantial completion of these plans is expected
by November 1999 with continual refinement until all of TransTexas' critical
systems and all critical third-party relationships have demonstrated Year 2000
compliance.
The potential impact of the Year 2000 problem on Reorganized
TransTexas could be material, as virtually every aspect of its business will be
affected. Reorganized TransTexas may be adversely affected by this problem,
depending on whether it and the entities with which it does business address
this issue successfully.
19. No Control of Operations of TCR Holding Corporation;
Potential Elimination of Value of TCR Holding Preferred Stock. Pursuant to the
TARC Plan and the TEC Plan, holders of the TEC Senior Secured Notes will
receive the preferred stock owned by TARC in TCR Holding Corporation (the "TCR
Holding Preferred Stock"). The TCR Holding Preferred Stock does not entitle the
holders thereof to control TCR Holding Corporation or its subsidiary Orion
Refining Corporation ("Orion") which owns the refinery formerly owned by TARC.
In addition, Orion has significant debt obligations that rank senior to the
interest of the holders of the TCR
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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Holding Preferred Stock (certain of which are secured by a pledge of
substantially all of Orion's assets), and TCR Holding may incur additional debt
obligations without any approval of the holders of the TCR Holding Preferred
Stock. A default by Orion in its debt payment obligations could result in a
foreclosure on Orion's assets and the elimination of the indirect interest
therein currently held by the holders of the TCR Holding Preferred Stock and,
consequently, a total loss on the TCR Holding Preferred Stock.
B. Bankruptcy Risks.
1. Objection to Classifications. Section 1122 of the
Bankruptcy Code provides that a Plan may place a claim or an interest in a
particular class only if such claim or interest is substantially similar to the
other claims or interests of such class. TransTexas believes that the
classification of Claims and Interests under the Plan complies with the
requirements set forth in the Bankruptcy Code. However, there can be no
assurance that the Bankruptcy Court will reach the same conclusion.
2. Risk of Nonconfirmation of the Plans. Even if all Classes
of Claims or Interests that are entitled to vote accept the Plans, the Plans
might not be confirmed by the Bankruptcy Court. Section 1129 of the Bankruptcy
Code sets forth the requirements for confirmation and requires, among other
things, that the confirmation of a plan of reorganization is not likely to be
followed by the liquidation or the need for further financial reorganization of
TransTexas, and that the value of distributions to dissenting creditors and
equity security holders not be less than the value of distributions such
creditors and equity security holders would receive if TransTexas were
liquidated under Chapter 7 of the Bankruptcy Code. TransTexas believes that its
Plan satisfies all the requirements for confirmation of a plan of
reorganization under the Bankruptcy Code. There can be no assurance, however,
that the Bankruptcy Court will also conclude that the requirements for
confirmation of the Plan has been satisfied.
3. Nonoccurrence of Effective Date of the Plans. Even if all
Classes of Claims and Interests that are entitled to vote accept the Plans, the
Plans may not go effective on the Effective Date. The Plans set forth
conditions to the occurrence of the Effective Date of the Plans which may not
be satisfied by the Effective Date. The Debtors believe that they will satisfy
all requirements for consummation required under the Plans. There can be no
assurance, however, that the Bankruptcy Court will also conclude that the
requirements for consummation of the Plans have been satisfied.
4. Potential Effect of Bankruptcy on Certain Relationships.
The effect, if any, which the commencement of the Chapter 11 Cases may have
upon the operations of Reorganized TransTexas cannot be accurately predicted or
quantified. If, however, confirmation and consummation of the Plans do not
occur expeditiously, the Chapter 11 Cases could adversely affect TransTexas'
relationship with its purchasers, suppliers and employees, resulting in a
material adverse impact on the operations of TransTexas. Moreover, even
expedited Chapter 11 Cases could have
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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a detrimental impact on such operations due to the possibility that the Chapter
11 Cases may create a negative image of TransTexas.
The pendency of the Chapter 11 Cases has negatively affected
the operations of TransTexas and its results of operations, and adverse effects
of the Chapter 11 Cases may affect future periods as well.
C. Liquidity Risks.
1. Restrictions on Transfer. Holders of New Senior Secured
Notes, New Common Stock, New Senior Preferred Stock, New Junior Preferred Stock
or New Warrants who are deemed to be "underwriters" as defined in subsection
1145(b) of the Bankruptcy Code, or who are otherwise deemed to be "affiliates
or "control persons" of Reorganized TransTexas within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), will be unable to
offer or sell its New Senior Secured Notes, New Senior Preferred Stock, New
Junior Preferred Stock, New Common Stock or New Warrants after the Effective
Date, except pursuant to an available exemption from registration under the
Securities Act and under equivalent state securities or "blue sky" laws.
Holders who believe they may be statutory underwriters as defined in Section
1145 of the Bankruptcy Code are advised to consult with their own legal
advisors as to the availability of the exemption provided by Rule 144 of the
Securities Act.
2. Potential Illiquidity of Reorganization Securities. No
established trading market exists for the Reorganization Securities, and no
assurance can be given that such a trading market will develop following the
effectiveness of the Plans or, if a trading market for the Reorganization
Securities develops, no assurance can be given as to the liquidity of such a
trading market.
As provided in the TransTexas Plan, Reorganized TransTexas
will use its reasonable best efforts to cause the New Class A Common Stock to
be listed on a stock exchange or quoted on the NASDAQ National Market System.
There can be no assurance, however, that the New Class A Common Stock will be
listed on any stock exchange or quoted on the NASDAQ National Market System.
None of the other Reorganization Securities will be listed on an exchange or
quoted on NASDAQ.
VII. CONFIRMATION OF THE PLANS
A. Voting Procedures and Requirements.
The Debtors are providing copies of this Disclosure Statement, Ballots
and, where appropriate, summary Ballots, to all known holders of Impaired
Claims and Interests who are entitled to vote on the Plans, including
registered holders of TransTexas' securities. Registered holders may include
brokerage firms, commercial banks, trust companies or other nominees. Any such
nominee
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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who requires additional copies of the Disclosure Statement and Ballots for
distribution to beneficial holders may obtain them from D.F. King & Co., Inc.,
by calling 1-212-425-1685. If a registered holder does not hold for its own
account, then it is required to provide promptly copies of this Disclosure
Statement and appropriate Ballots to its customers and to beneficial owners. Any
beneficial owner who has not received a Ballot should contact his or its
brokerage firm, nominee, or D.F. King & Co., Inc.
Pursuant to the provisions of the Bankruptcy Code, only classes of
Claims and Interests in a Debtor that are "Impaired" under the terms and
provisions of a Plans and entitled to receive a Distribution thereunder are
entitled to vote to accept or reject a Plan. Accordingly, Classes of Claims or
Interests that are not Impaired are not entitled to vote on the Plans. In
addition, Classes of Claims or Interests that are not entitled to a
Distribution are deemed to have rejected the Plans and are not entitled to vote
to accept or reject the Plans.
Under the TEC Plan, the Claims in Classes 1 and 2 and the Interest in
Class 3 are Impaired. Classes 2 and 3 do not vote and are deemed not to have
accepted the TEC Plan by virtue of not receiving any Distribution under the TEC
Plan.
Under the TARC Plan, the Claims in Classes 1, 2 and 3 and the
Interests in Class 4 are Impaired. Classes 1, 2, and 3 are entitled to vote to
accept or reject the TARC Plan. Class 4 does not vote and is deemed not to have
accepted the TARC Plan because their Interests are canceled.
Under the TransTexas Plan, the Claims in Classes 1 and 11 are
Unimpaired and are deemed to have accepted the Plan. The Claims in Classes 2,
3, 4, 5, 6A, 6B, 7, 8, 9, 10, and 12 are Impaired. Classes 2, 3, 4, 5, 6A, 6B
and 10 are entitled to vote to accept or reject the TransTexas Plan. Classes 7,
8, and 9 do not vote and are deemed not to have accepted the TransTexas Plan by
virtue of not receiving any Distributions on account of their Claims under the
TransTexas Plan. The Interests of the holders of Class 12 Interests are deemed
not to have accepted the TransTexas Plan because their Interests are canceled.
Some holders of Claims and Interests may hold Claims and/or Interests
in more than one Impaired Class and must vote separately for each Class. Such
holders will receive a separate Ballot for all their Claims in each Class and
should complete and sign each Ballot separately. The voting procedures are set
forth in a voting procedures order, dated October 1, 1999 (the "Voting
Procedures Order"). The Voting Procedures Order establishes the following
procedures with respect to the amount and classification of a Claim or Interest
for voting purposes:
1. With respect to a Claim or Interest as to which a proof of
Claim or proof of Interest, as the case may be, has not been timely Filed
(i.e., was not Filed or was Filed after the deadline set by the Bankruptcy
Court for the filing of a Claim of that type), the voting amount of such Claim
or Interest (subject to any applicable limitations set forth below) shall be
equal to the amount listed, if any, in respect of such Claim or Interest in the
appropriate Debtor's Schedules to
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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the extent such Claim or Interest is not listed as contingent, unliquidated,
undetermined or disputed. Such Claim or Interest shall be placed in the
appropriate Class based upon the appropriate Debtor's records and the
classification scheme set forth in the Plans.
2. With respect to a proof of Claim or proof of Interest, as
the case may be, which, according to the Clerk of the Bankruptcy Court's
records, was not timely Filed (i.e., was Filed after the deadline set by the
Bankruptcy Court for the filing of a proof of a Claim or a proof of Interest of
that type) and is not subject to the provisions of the immediately preceding
paragraph, such Claim or Interest shall be provisionally disallowed for voting
purposes.
3. With respect to a liquidated, non-contingent, undisputed
Claim as to which a proof of Claim has been timely Filed and as to which an
objection has not been Filed at least five days prior to the end of the voting
period fixed by the Bankruptcy Court with respect to a Plan (as may be extended
by the appropriate Debtor, the "Voting Period"), the amount and classification
of such Claim shall be that specified in such proof of Claim as reflected in
the records of the appropriate Debtor, the agent for the Clerk of the
Bankruptcy Court, subject to any applicable limitations set forth below.
4. With respect to a proof of Claim or proof of Interest, as
the case may be, which is the subject of an objection Filed at least five days
prior to the end of the Voting Period, the Claim or Interest represented by
such proof of Claim or proof of Interest shall be provisionally disallowed for
voting purposes, except to the extent and in the manner that: (i) the
appropriate Debtor indicates in its objection the extent to which such Claim or
Interest should be allowed; or (ii) the Bankruptcy Court otherwise orders.
5. A timely Filed proof of Claim that is designated as wholly
unliquidated and/or contingent shall be accorded one vote valued at one dollar
for purposes of section 1126(c) of the Bankruptcy Code, unless the Claim is
disputed as set forth in the immediately preceding paragraph.
6. With respect to a Claim that has been estimated or
otherwise allowed for voting purposes by order of the Bankruptcy Court, the
amount and classification of such Claim shall be that set by the Bankruptcy
Court.
7. With respect to a Claim that is unliquidated, contingent
and/or disputed in part, the holder of the Claim shall be entitled to vote that
portion of the Claim that is liquidated, non- contingent and undisputed in the
liquidated, non-contingent and undisputed amount, subject to any limitations
set forth herein and unless otherwise ordered by the Bankruptcy Court.
8. Holders shall not be entitled to vote Claims or Interests
to the extent such Claims or Interests duplicate or have been superseded by
other Claims or Interests of such holders of Claims or Interests.
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In addition, the following rules have also been established
under the Voting Procedures Order:
1. Whenever a holder of a Claim or Interest submits more than
one Ballot voting the same Claim or Interest prior to the deadline for
submission of Ballots, the first of such multiple Ballots Filed (and only such
Ballot) shall be counted in accordance with the rules otherwise established
pursuant to the Voting Procedures Order, unless either (i) the Debtors consent
to the filing and counting of a superseding Ballot, or (ii) the Bankruptcy
Court, after notice and a hearing, orders otherwise.
2. The authority of the signatory of each Ballot to complete
and execute the Ballot shall be presumed.
3. Except with respect to "summary" Ballots (as described
below), a holder of a Claim or Interest must vote all of its Claim or Interest
within a particular Class under the Plans either to accept or reject the Plans
and may not split its vote. Accordingly, a Ballot (or multiple Ballots with
respect to separate Claims or Interests within a single Class) that partially
rejects and partially accepts the Plans or that indicates both a vote for and
against the Plans will not be counted.
4. Any Ballot that does not indicate whether the holder of
the relevant Claim or Interest is voting for or against the Plans will not be
counted.
5. Any Ballot that is not signed will not be counted.
6. For the purpose of voting on the Plans, the Debtors will
be deemed to be in constructive receipt of any Ballot timely delivered to any
address designated for the receipt of Ballots cast in connection with the
Plans.
7. Any Ballot postmarked prior to the end of the Voting
Period but received by the appropriate Debtor after the end of the Voting
Period shall not be counted unless such Debtor, in its discretion, consent to
the counting of such Ballot or the Bankruptcy Court orders such Ballot to be
counted.
8. All Ballots must be cast using the Ballots distributed to
the holders of Claims and Interests. Votes cast in any manner other than by
using such Ballots will not be counted.
In accordance with Bankruptcy Rule 3017(d), the Debtors
expect to send Ballots to holders of Claims and Interests as of October 1, 1999
(the "Voting Record Date"). In the event that the record holders are Indenture
Trustees, transfer agents, registrars, servicing agents or other intermediaries
(collectively, the "Intermediaries") holding Claims or Interests for or acting
on behalf of beneficial owners, they will be entitled to receive, upon request
made of the appropriate Debtor by no later than October 15, 1999, sufficient
copies of Ballots to distribute to the beneficial holders
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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(as of the Voting Record Date) of the Claims or Interests for which it is an
Intermediary. The Intermediary must collect those Ballots and complete and
submit a "summary" Ballot within the voting period. IN ORDER TO BE COUNTED,
EXCEPT TO THE EXTENT THE DEBTORS SO DETERMINE OR AS PERMITTED BY THE BANKRUPTCY
COURT PURSUANT TO BANKRUPTCY RULE 3018, BALLOTS MUST BE MAILED, SIGNED AND
RETURNED SO THAT THEY ARE RECEIVED NO LATER THAN 4:00 P.M. CENTRAL TIME, ON
NOVEMBER 4, 1999 AT THE FOLLOWING ADDRESS:
D.F. King & Co., Inc.
77 Water Street, 20th Floor
New York, NY 10005
"Summary" Ballots must be returned to the above address so
that they are received no later than 4:00 p.m. Central Time on November 4,
1999. As mentioned above, if your Ballot is not signed and returned as
described, it will not be counted. If your Ballot is damaged or lost, or if you
do not receive a Ballot, you may request a replacement by addressing a written
request to Kevin Schwicardi at the foregoing address, or calling
1-212-425-1685. Please follow the directions contained on the enclosed Ballot
carefully.
The process of soliciting consents to confirmation of the
Plans must be fair and open without outside influence in the form of
representations, inducements or duress of any kind. To the extent that you
believe solicitation of your vote from any party is being sought outside of the
judicially-approved and statutorily-defined disclosures requirements and voting
procedures, please contact co-counsel for the Debtors.
B. Acceptance.
Acceptance of a Plan requires that each Impaired Class of
Claims or Interests (as classified therein) accepts that Plan, with certain
exceptions hereinafter discussed below. Thus, acceptance of a Plan requires
acceptance by each of the Impaired Classes.
Classes of Claims and Interests that are not Impaired under a
Plan are deemed to have accepted the Plan. Acceptances of the Plans are being
solicited only from those persons who hold Claims or Interests of Impaired
Classes.
The Bankruptcy Code defines acceptance of a Plan by a Class
of Claims as acceptance by the holders of at least two-thirds (2/3) in dollar
amount and a majority in number of Claims of that class, but for that purpose,
only those Claims, the holders of which actually vote to accept or reject a
Plan, are counted. The Bankruptcy Code defines acceptance of a Plans by a class
of Interests as acceptance by the holders of at least two-thirds (2/3) of the
allowed interests in such class, but for that purpose, only those Interests,
the holders of which actually vote to accept or reject the Plans, are counted.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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<PAGE> 117
C. Confirmation of the Plans.
In order to confirm a Plan, section 1129 of the Bankruptcy
Code requires that the Bankruptcy Court make a series of determinations
concerning the Plan, including, without limitation: (a) that a Plan has
classified claims and interests in a permissible manner; (b) that the contents
of a Plan complies with the technical requirements of the Bankruptcy Code; (c)
that the Debtor has proposed the Plan in good faith; and (d) that the Debtor has
made disclosures concerning the Plan which are adequate and include information
concerning all payments made or promised in connection with the Plan and the
Chapter 11 Case. The Debtors believe that all of these conditions have been or
will be met.
The Bankruptcy Code requires unless the "cramdown" provisions
of the Bankruptcy Code (as discussed below) are utilized, as a condition
precedent to confirmation, that the Plans be accepted by the requisite votes of
each Class of Claims and Interests voting as separate Classes. Therefore, the
Bankruptcy Court must find, in order to confirm a Plan, that the Plan has been
duly accepted. In addition, the Bankruptcy Court must find that the Plan is
feasible and that the TransTexas Plan is in the "best interests" of all holders
of Claims and Interests. Thus, even if holders of Claims or Interests of the
Debtors were to accept the TransTexas Plan by the requisite number of votes, the
Bankruptcy Court would be required to make independent findings respecting the
TransTexas Plan's feasibility and whether the TransTexas Plan is in the best
interests of holders of Claims and Interests before it can confirm the
TransTexas Plan.
1. The Best Interests Test. Whether or not the TransTexas Plan
is accepted by each Impaired Class of Claims and each Impaired Class of
Interests entitled to vote on the TransTexas Plan, in order to confirm the
TransTexas Plan the Bankruptcy Court must, pursuant to section 1129(a)(7) of the
Bankruptcy Code, independently determine that the TransTexas Plan is in the best
interests of each holder of an Impaired Claim or Interest that has not accepted
the TransTexas Plan. This requirement is satisfied if the TransTexas Plan
provides each non-accepting holder of a Claim or Interest in such Impaired Class
a recovery on account of such holder's Claim or Interest that has a value, as of
the Effective Date, at least equal to the value of the Distribution each such
holder would receive in a liquidation of the Debtors under Chapter 7 of the
Bankruptcy Code.
To determine the value that holders of Impaired Claims and
Interests would receive if TransTexas was liquidated under Chapter 7, the
Bankruptcy Court must determine the aggregate dollar amount that would be
generated from the liquidation of TransTexas' assets if TransTexas' Chapter 11
Case was converted to a Chapter 7 liquidation case and TransTexas' assets were
liquidated by a Chapter 7 trustee (the "Liquidation Value"). The Liquidation
Value would consist of the net proceeds from the disposition of TransTexas'
assets, augmented by cash held by TransTexas and reduced by certain increased
costs and Claims that arise in a Chapter 7 liquidation case that do not arise in
a Chapter 11 reorganization case. Liquidation Value was arrived at assuming that
cash and accounts receivable were liquidated at full book value of the July 31,
1999
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 107
<PAGE> 118
balance sheet. The receivable from affiliate was assumed to have no liquidation
value. Inventories were assumed to be liquidated at 50% of book value. Oil and
gas properties were valued at the Liquidation Value calculated by The Scotia
Group, less 1% sales commission to the liquidating broker. Other Plant, Property
& Equipment was valued in liquidation at book value, less associated liabilities
and less 1% sales commission to the liquidating broker. Chapter 7 liquidation
expenses were assumed to be approximately $1 million, or 0.3% of the assets
being liquidated.
The Liquidation Value available for satisfaction of general
creditors of, and Interests in, TransTexas would be reduced by: (a) the Claims
of Secured Creditors to the extent of the value of their collateral and (b) the
costs, fees and expenses of the liquidation under Chapter 7, which would
include: (i) the compensation of a trustee and its counsel and other
professionals retained, (ii) disposition expenses, (iii) all unpaid expenses
incurred by TransTexas during the Chapter 11 Cases (such as compensation for
attorneys, financial advisors, investment bankers, brokers, auctioneers and
accountants and the costs and expenses of members of any statutory committee of
unsecured creditors appointed by the United States Trustee pursuant to section
1102 of the Bankruptcy Code and any other such appointed committee) which are
allowed in a Chapter 7 case, (iv) litigation costs, and (v) Claims arising from
the operation of TransTexas during the pendency of the Chapter 11 Cases and the
Chapter 7 liquidation case. The liquidation itself would trigger certain Claims,
such as Claims for severance pay and environmental claims, and would accelerate
other priority payments which would otherwise be paid in the ordinary course.
These Claims would be paid in full out of the liquidation proceeds before the
balance would be made available to pay most other Claims or to make any
Distribution in respect of Interests. Liquidation would also involve the
rejection of additional executory contracts and unexpired leases of TransTexas
and substantial additional rejection damage Claims.
To determine if the TransTexas Plan is in the best interests
of each Impaired Class, the present value of the Distributions from the proceeds
of the liquidation of TransTexas' assets and properties, after subtracting the
amounts attributable to the foregoing Claims, costs, fees and expenses, are
compared with the value of the property offered to such Classes of Claims and
Interests under the TransTexas Plan on the Effective Date.
(a) TransTexas' Estimate of Liquidation Value. The
liquidation analysis annexed to the Disclosure Statement as Appendix 6 is based
on the projected assets and liabilities of TransTexas as of July 31, 1999.
Underlying the liquidation analysis are a number of estimates and assumptions
that are inherently subject to significant uncertainties and contingencies, many
of which are beyond the control of TransTexas. Accordingly, there can be no
assurances that the values assumed in the analysis would be realized if
TransTexas was in fact liquidated.
(b) Comparison of Liquidation Values with Recoveries
under the TransTexas Plan. If TransTexas were liquidated in a Chapter 7
proceeding only administrative expenses and approximately 51% of the unpaid
balance of the TransTexas Senior Secured Note
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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would be paid. (See Appendix 6). Payments would be made to the Holders of
Production Payments as those assets are not property of the Estate of TransTexas
pursuant to 11 U.S.C. Section 541(b)(4).
Under the TransTexas Plan the holder of the Allowed
TransTexas Senior Secured Note Claim has agreed to reallocate and to direct
Reorganized TransTexas to distribute certain of the Distributions it receives as
a Class 3 Claimant. Because of these redirected allocations the Holders of
Allowed TransTexas Subordinate Note Claims, the Holders of Allowed General
Unsecured Claims and certain Holders of the TransTexas Old Common Stock receive
distributions that they otherwise would not receive in a liquidation of
TransTexas.
(c) Conclusion. Due to the numerous uncertainties and
time delays associated with liquidation under Chapter 7, it is not possible to
predict with certainty the outcome of liquidation of TransTexas or the timing of
any Distribution to Creditors. As the Liquidation Analysis and Comparison of
Recoveries under the TransTexas Plan versus Liquidation demonstrate, however,
liquidation under Chapter 7 of the Bankruptcy Code would result in much lower
Distributions for most holders of Claims and Interests than that provided for in
the TransTexas Plan, and no holder of a Claim or Interest would obtain a greater
recovery on its Claim or Interest in a Chapter 7 liquidation case than it would
obtain under the TransTexas Plan.
2. Feasibility. Even if the TransTexas Plan is accepted by
each Class of Claims and Interests voting on the Plan, and even if the
Bankruptcy Court determines that the TransTexas Plan satisfies the best
interests test, the Bankruptcy Code requires that, in order for the TransTexas
Plan to be confirmed by the Bankruptcy Court, it must be demonstrated that
consummation of the TransTexas Plan is not likely to be followed by the
liquidation or the need for further financial reorganization of TransTexas. For
purposes of determining whether the TransTexas Plan meets this requirement,
TransTexas has analyzed its ability to meet its obligations under the TransTexas
Plan. As part of such analyses, TransTexas has prepared forecasts of Reorganized
TransTexas' cash flow (assuming the transactions contemplated by the TransTexas
Plan is consummated) for the 6 fiscal years through January 31, 2006. These
forecasts, and the significant assumptions on which they are based, are set
forth above. Based on such forecasts, TransTexas believes that Reorganized
TransTexas will be able to make all payments required to be made pursuant to the
TransTexas Plan.
D. Non-Acceptance and Cramdown.
Pursuant to section 1129(b) of the Bankruptcy Code, the
Bankruptcy Court may confirm a Plan despite the non-acceptance of the Plan by an
impaired class. This procedure is commonly referred to as a "cramdown". Section
1129(b) of the Bankruptcy Code provides that upon request of the proponent of a
Plan, the Bankruptcy Court shall confirm a Plan despite the lack of acceptance
by an Impaired Class or Classes if the Bankruptcy Court finds that (a) the Plan
does not discriminate unfairly with respect to each non-accepting Impaired
Class, (b) the Plan is "fair and equitable" with respect to each non-accepting
Impaired Class, (c) at least one Impaired Class has accepted the Plan (without
counting acceptances by insiders) and (d) the Plan satisfies the
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 109
<PAGE> 120
requirements set forth in Bankruptcy Code section 1129(a) other than section
1129(a)(8). In general, section 1129(b) of the Bankruptcy Code permits
confirmation notwithstanding non-acceptance by an impaired class if that class
and all more junior class are treated in accordance with the "absolute priority"
rule, which requires that the dissenting class be paid in full before a junior
class may receive anything under a Plan.
1. The Plans are Fair and Equitable. The Bankruptcy Code
establishes different "fair and equitable" tests for holders of secured claims,
unsecured claims and equity interests. As to the dissenting class, the test sets
different standards, depending on the type of claims or interests in such class.
(a) Secured Claims: With respect to a Class
of Secured Claims that does not accept a Plan, the appropriate Debtor must
demonstrate to the Bankruptcy Court that either (i) the holders of such Claims
are retaining the liens securing such Claims and that each holder of a Claim of
such Class will receive on account of such Claim deferred cash payments totaling
at least the Allowed amount of such Claim, of a value, as of the Effective Date,
of at least the value of such holder's interest in such property, or (ii) the
holders of such Claims will realize the indubitable equivalent of such Claims
under the Plans.
(b) Unsecured Claims: With respect to a
Class of unsecured Claims that does not accept a Plan, the appropriate Debtor
must demonstrate to the Bankruptcy Court that either (i) each holder of an
unsecured Claim of the dissenting class receives or retains under the Plans
property of a value equal to the Allowed amount of its unsecured Claim or (ii)
the holders of Claims or Interests that are junior to the Claims of the holders
of such unsecured Claims will not receive or retain any property under the Plan.
(c) Interests: With respect to a class of
Interests that does not accept the Plans, the appropriate Debtor must
demonstrate to the Bankruptcy Court that (i) each holder of an Interest of the
dissenting Class receives or retains on account of such Interest property of a
value equal to the greatest of the Allowed amount of any fixed liquidation
preference to which such holder is entitled, any fixed redemption price to which
such holder is entitled or the value of such Interest or (ii) the holders of any
Interest that is junior to the Interests of the holders of such Class of
Interest will not receive or retain any property under the Plan. The Debtors
believe their respective Plans are fair and equitable with respect to each
Class.
2. No Unfair Discrimination. A Chapter 11 plan "does not
discriminate unfairly" with respect to a nonaccepting class if the value of the
cash and/or securities to be distributed to the nonaccepting class is equal or
otherwise fair when compared to the value of distributions to other classes
whose legal rights are the same as those of the nonaccepting class. Since all
similarly situated holders of Claims or Interests are classified together, each
of the Plans does not unfairly discriminate against any Class.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 110
<PAGE> 121
E. Confirmation Hearing.
Section 1128(a) of the Bankruptcy Code requires the Bankruptcy
Court, after notice, to hold a confirmation hearing (the "Confirmation
Hearing"). Section 1128(b) of the Bankruptcy Code provides that any party in
interest may object to confirmation of a Plan. Notice of the Confirmation
Hearing will be provided to all holders of Claims and Interests and other
parties in interest (the "Confirmation Notice"). The Confirmation Hearing may be
adjourned from time to time by the Bankruptcy Court without further notice
except for an announcement of the adjourned date made at the Confirmation
Hearing or any adjournment thereof. Objections to confirmation of a Plan must be
made in writing, specifying in detail the name and address of the person or
Entity objecting, the grounds for the objection, and the nature and amount of
the Claim or Interest held by the objector. Objections must be Filed with the
Bankruptcy Court, together with proof of service, and served upon the parties so
designated in the Confirmation Notice, on or before the time and date designated
in the Confirmation Notice as being the last date for serving and filing
objections to confirmation of a Plan. Objections to confirmation of a Plan are
governed by Bankruptcy Rule 9014 and the local rules of the Bankruptcy Court.
VIII. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF PLANS
If the Plans are not confirmed by the Bankruptcy Court and
consummated, the alternatives to the Plans include (a) liquidation of the
Debtors under Chapter 7 of the Bankruptcy Code and (b) alternative plans under
Chapter 11 of the Bankruptcy Code.
A. Liquidation Under Chapter 7.
If a Plan cannot be confirmed, the Debtors' Chapter 11 Cases
may be converted to cases under Chapter 7 of the Bankruptcy Code, pursuant to
which a trustee would be appointed to liquidate the assets of the Debtors for
distribution to holders of Claims and Interests in accordance with the
priorities established by the Bankruptcy Code. For the reasons discussed above,
the Debtors believe that confirmation of the Plans will provide each holder of
a Claim entitled to receive a distribution under its Plans with a recovery that
is not less (and is expected to be substantially more) than it would receive
pursuant to liquidation of the Debtors under Chapter 7 of the Bankruptcy Code.
B. Alternative Plans.
If a Plan is not confirmed, the appropriate Debtor (or if the
Debtor's exclusive period in which to File a Plan or Plan of reorganization has
expired, any other party in interest) may be entitled to File a different Plan.
Such a Plan might involve either a reorganization and continuation of the
Debtor's businesses or an orderly liquidation of its assets under Chapter 11 of
the Bankruptcy Code. The Debtors believe that their respective Plans enable
holders of Claims or Interests to realize the most value under the
circumstances. In a liquidation under Chapter 11, a Debtor's assets would be
sold in an orderly fashion over a more extended period of time than in a
liquidation under
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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Chapter 7, probably resulting in somewhat greater (but indeterminate) recoveries
than would be obtained in a Chapter 7 liquidation. Further, if a trustee were
not appointed (such appointment is not required in a Chapter 11 case), the
expenses for professional fees would most likely be lower than those incurred in
a Chapter 7 case. Although preferable to a Chapter 7 liquidation, TransTexas
believes that liquidation of TransTexas under Chapter 11 would result in
substantially lower recoveries than provided for by the Plans. Further, the
Proponents believe that any alternative Plans would likely be less favorable to
holders of Claims or Interests because, inter alia, distributions would be
delayed.
IX. MANAGEMENT OF REORGANIZED TRANSTEXAS
A. New Board of Directors.
Composition
The Board of Directors of TransTexas currently consists of
John R. Stanley, Thomas B. McDade, Robert L. May and James V. Langston. On the
Effective Date, each of the existing members of the Board of Directors, other
than Mr. Stanley, will be deemed to have resigned and a new Board of Directors
will be created. The new Board of Directors will consist of five members whose
appointment will be subject to the approval of the Bankruptcy Court. After the
Effective Date, the selection of directors of Reorganized TransTexas will be
governed by the Amended Bylaws or the Amended Certificate of Incorporation, as
the case may be.
Director Compensation
The amount and nature of compensation to be paid to the
non-employee directors of Reorganized TransTexas will be determined by the new
Board of Directors. It is expected that such compensation will be consistent
with compensation paid to non-employee directors of companies of a similar size
and nature. It is expected that Reorganized TransTexas will maintain officer
and director liability insurance coverage comparable to that currently
maintained by TransTexas.
B. Senior Management of Reorganized TransTexas
The following individuals are expected to serve as executive
officers of Reorganized TransTexas. There can be no assurance that the new
Board of Directors will not make one or more changes in senior management after
the Effective Date. Any changes that are made prior to the Confirmation Hearing
will be disclosed at such hearing.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 112
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Name Office
John R. Stanley Chief Executive Officer
Arnold H. Brackenridge President and Chief Operating Officer
Edwin B. Donahue Vice President, Chief Financial Officer
and Secretary
Simon Ward Vice President and Treasurer
George Wright Vice President of Accounting
Set forth below is a description of the business experience of each of
the executive officers.
John R. Stanley, age 60, has been a director and Chief Executive
Officer of TransTexas since May 1993. He is also a director and the Chief
Executive Officer of TEC and TARC. Mr. Stanley is also the founder, Chairman of
the Board, Chief Executive Officer and sole stockholder of TNGC Holdings
Corporation ("TNGC Holdings"), which is the sole stockholder of TransAmerican.
He is also a director of TCR Holding and Orion. He has operated TransAmerican
since 1958.
Arnold H. Brackenridge, age 66, has been President and Chief Operating
Officer of TransTexas since May 1993. Mr. Brackenridge is also the Executive
Vice President of TransAmerican. From 1984 until June 1992, Mr. Brackenridge
was the President and Chief Executive Officer of Wintershall Energy, a business
group of BASF Corporation. Mr. Brackenridge has worked in the domestic and
international oil and gas industry for over 40 years.
Edwin B. Donahue, age 48, has been Vice President, Chief Financial
Officer and Secretary of TransTexas since May 1993. He also serves as Vice
President, Chief Financial Officer and Secretary of TEC and as Vice President
and Secretary of TransAmerican and TARC. Mr. Donahue also serves as a director
of TARC, TCR Holding and Orion. Mr. Donahue has been employed in various
positions with TransAmerican for over 20 years.
Simon Ward, age 43, has been Vice President and Treasurer of
TransTexas since June 1999. He served as Manager of Investor Relations of
TransTexas from 1994 until June 1999. From 1976 until 1994, he held various
positions with ICO, Inc., Baker Hughes Vetco Services, Inc. and Vetco Services,
Inc.
George Wright, age 57, has been Vice President of Accounting of
TransTexas since March 1999. He has been employed by TransTexas and its
affiliates since June 1982.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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C. Management Agreement
On the Effective Date, Reorganized TransTexas and John R. Stanley will
enter into a three-year management agreement. Any securities that Mr. Stanley
receives pursuant to 5.03(b) of the TransTexas Plan is not on account of his
Claims, if any, against the Estate of TransTexas. The management agreement may
be renewed for two additional one-year terms if certain performance tests are
met. Pursuant to the management agreement, Mr. Stanley will receive an annual
salary of $300,000. He will also receive warrants to purchase 300,000 shares of
New Common Stock annually at an exercise price of $120 per share. If the
management agreement is terminated for cause, Mr. Stanley will be entitled to
received a severance payment of $1.5 million. If the management agreement is
terminated other than for cause, the severance payment will be $3 million.
"Cause" includes, among other things, the failure of Reorganized TransTexas to
meet its principal or interest payment obligations on the New Senior Secured
Notes or its dividend or redemption payment obligations on the New Senior
Preferred Stock and a bankruptcy filing by Reorganized TransTexas. The terms of
the Management Agreement have not been approved or disapproved by TransTexas or
its board of directors.
D. Employee Benefits
Savings Plan
TransAmerican maintains a long-term savings plan (the
"Savings Plan") in which eligible employees of Reorganized TransTexas and
certain of its affiliates may elect to participate. Each employee becomes
eligible to participate in the Savings Plan on January 1 or July 1 following
the completion of one year of service with TransTexas or its participating
affiliates and attainment of age 21. The Savings Plan is intended to constitute
a qualified plan under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code") and contains a salary reduction arrangement described in
Section 401(k) of the Code.
Each participant may elect to reduce his compensation by a
percentage equal to 2% to 15% and TransTexas will contribute that amount to the
Savings Plan on a pre-tax basis on behalf of the participant. The Code limits
the annual amount that a participant may elect to have contributed on his
behalf on a pre-tax basis to the Savings Plan. For 1999, this limit is $10,000.
TransTexas presently makes a matching contribution in an amount equal to 10%,
20% or 50% of the amount elected to be contributed by each participant on a
pre-tax basis, up to a maximum of 3% of each participant's compensation,
depending on whether the employee has been a participant in the Savings Plan
for one year, two years, or three years. Each participant also may elect to
contribute up to 10% of his compensation to the Savings Plan on an after-tax
basis. The Code imposes nondiscrimination tests on contributions made to the
Savings Plan pursuant to participant elections and on TransTexas' matching
contributions, and limits amounts which may be allocated to a
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Page 114
<PAGE> 125
participant's Savings Plan account each year. In order to satisfy the
nondiscrimination tests, contributions made on behalf of certain highly
compensated employees (as defined in the Code) may be limited. Contributions
made to the Savings Plan pursuant to participant elections and matching
contributions are at all times 100% vested. Contributions to the Savings Plan
are invested, according to specified investment options selected by the
participants, in investment funds maintained by the trustee of the Savings Plan.
Generally, a participant's vested benefits will be distributed from the Savings
Plan as soon as administratively practicable following a participant's
retirement, death, disability, or other termination of employment. In addition,
a participant may elect to withdraw his after-tax contributions from the Savings
Plan prior to his termination of employment, and subject to strict limitations
and exceptions, the Savings Plan provides for withdrawals of a participant's
pre-tax contributions prior to a participant's termination of employment, in the
event of the participant's severe financial hardship or attainment of age
59 1/2. The Savings Plan may be amended or terminated by the Board of Directors
of TransAmerican. As of January 31, 1999, approximately 200 employees of
TransTexas were eligible to participate in the Savings Plan, including the
executive officers.
Executive Reimbursement Plan
TransAmerican also maintains an executive reimbursement plan
in which certain officers of TransTexas are entitled to participate. Pursuant
to this plan, participants are entitled to reimbursement for medical expenses
not otherwise covered by TransTexas' medical insurance. As of January 31, 1999,
no amounts had been reimbursed under this plan.
X. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain federal income tax
consequences of the Plans to TransTexas and holders of Claims and Interests that
are individual citizens or residents of the United States or corporations that
are created or organized in or under the laws of the United States or any
political subdivision thereof. The analysis contained herein is based upon the
Internal Revenue Code of 1986, as amended (the "Tax Code"), the Treasury
Regulations promulgated and proposed thereunder, judicial decisions and
published administrative rulings and pronouncements of the Internal Revenue
Service ("IRS") as in effect on the date hereof. Legislative, judicial or
administrative changes or interpretations enacted or promulgated hereafter could
alter or modify the analysis and conclusions set forth below. Any such changes
or interpretations may be retroactive and could affect significantly the federal
income tax consequences discussed below. This summary does not address the
federal income tax consequences to any holders of Claims or Interests that will
either be satisfied in full under the Plans or will receive no recovery under
the Plans. Finally, this summary does not address foreign, state or local tax
law, or any estate or gift tax consequences of the Plans, nor does it purport to
address the federal income tax consequences of the Plans to special classes of
taxpayers (such as taxpayers who are not United States domestic corporations or
citizens or residents of the United States, S corporations, banks, mutual funds,
insurance companies, financial institutions, regulated investment companies,
broker-dealers, small business investment companies,
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
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persons that hold Claims or Interests as part of a straddle or conversion
transaction and tax-exempt organizations).
Due to the complexity of the transactions described herein and
in the Plans, the lack of applicable legal precedent and the possibility of
changes in law, differences in the nature of the Claims, differences in the
Claimants' methods of accounting (including Claimants within the same class) and
the potential for disputes as to legal and factual matters, the tax consequences
described herein are subject to significant uncertainties. No rulings or
determinations by the IRS have been obtained or sought by the Debtors with
respect to the Plans and no opinion of counsel has been obtained with respect to
the tax aspects of the Plans.
THE TAX CONSEQUENCES TO HOLDERS OF CLAIMS AND INTERESTS MAY
VARY BASED UPON THE INDIVIDUAL CIRCUMSTANCES OF EACH HOLDER. MOREOVER, THE TAX
CONSEQUENCES OF CERTAIN ASPECTS OF THE PLANS ARE UNCERTAIN DUE TO THE LACK OF
APPLICABLE LEGAL PRECEDENT AND THE POSSIBILITY OF CHANGES IN THE APPLICABLE TAX
LAW. THERE CAN BE NO ASSURANCE THAT THE IRS WILL NOT CHALLENGE ANY OF THE TAX
CONSEQUENCES DESCRIBED HEREIN, OR THAT SUCH A CHALLENGE, IF ASSERTED, WOULD NOT
BE SUSTAINED. ACCORDINGLY, EACH HOLDER OF A CLAIM OR INTEREST IS STRONGLY URGED
TO CONSULT WITH ITS OWN TAX ADVISOR REGARDING THE FOREIGN, FEDERAL, STATE OR
LOCAL TAX CONSEQUENCES OF THE PLANS.
A. Federal Income Tax Consequences to the Debtors.
1. Utilization by the Debtors of Existing Tax Attributes. As
of the Effective Date and before reductions for income or gain, including
discharge of indebtedness income ("COI income"), realized as a result of the
Plans, it is estimated that TransTexas and TARC each will have net operating
loss carryovers ("NOLs") of approximately $466 million and $402 million,
respectively. The Debtors do not believe that any of these tax attributes are
subject to current limitation under section 382 of the Tax Code or subject to
the separate return limitation year ("SRLY") restrictions of the Treasury
Regulations. After properly offsetting any income or gains of the Debtors,
including income or gain resulting from the Plans, the remaining tax attributes
of TARC and TEC, including TARC's NOLs, will be eliminated immediately after the
Effective Date as a result of the Plans. TransTexas' NOLs expire during the
taxable years ranging from 2011 to 2020. As discussed below, TransTexas' tax
attributes that will be available to Reorganized TransTexas after the Effective
Date will be reduced by any gain or income recognized as a result of the
transactions contemplated by the Plans, and by certain COI income that is
excluded from income pursuant to section 108 of the Tax Code. Further,
TransTexas' NOLs and other tax attributes are subject to review and to possible
disallowance by the IRS on audit of any year to which they are carried forward.
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The Debtors will realize COI income in respect of each Claim
generally in an amount equal to the difference, if any, between (i) the portion
of the Claim (including accrued and previously deducted but unpaid interest)
from which the Debtors are (or are deemed to be) discharged and (ii) the sum of
any cash, the issue price of the New Senior Secured Notes, the fair market value
of the new stock and warrants of TransTexas and the fair market value of any
other property distributed under the Plan in discharge of such Claims. The exact
amount of COI income realized but not recognized upon consummation of the Plans
has not been finally determined, and will depend in part upon the cash, fair
market value of the stock and other property and the issue price of the New
Senior Secured Notes distributed under the Plans. In addition, because the
TransTexas Plan will result in an "ownership change" (as defined in section 382
of the Tax Code) of TransTexas, the availability of TransTexas' NOLs remaining
after reduction for COI income and other income to offset income of Reorganized
TransTexas after the Effective Date will likely be severely limited, unless the
exception provided in section 382(l)(5) of the Tax Code (the "Bankruptcy
Exception") applies. In general, an ownership change occurs if the stock
ownership of a company changes by more than 50 percentage points during a
three-year testing period.
(a) Discharge of Indebtedness Income and Other Income
and Gain Recognized by the Debtors. Under the Tax Code, a taxpayer is generally
required to include COI income in gross income. COI income is not includable in
gross income, however, if it occurs in a case under the Bankruptcy Code,
provided the taxpayer is under the jurisdiction of a court in such case and the
cancellation of indebtedness is granted by the court or is pursuant to a plan
approved by the court. The Debtors' COI income resulting from the Plans should
satisfy these requirements. COI income otherwise includable in gross income is
generally applied to reduce certain tax attributes in the following order: NOLs,
general business credit carryovers, minimum tax credit carryovers, capital loss
carryovers, the taxpayer's basis in property and foreign tax credit carryovers.
Discharge under the Plans of certain of the Claims will result in the
realization of COI income, which will reduce the tax attributes of the Debtors
by the difference between the fair market value of the consideration received
and the amount of the discharged indebtedness.
The proper application of these attribute reduction rules to
debtors that constitute members of a single "affiliated group" for federal
income tax purposes is unclear. Under a "separate entity" approach, COI income
would reduce only the portion of the consolidated NOL attributable to the
member that realizes COI income in the Plans. Accordingly, the consolidated NOL
that remains after application of the attribute reduction rules may be
substantial, even if the total COI income realized upon consummation of the
Plans equals or exceeds the pre-reduction consolidated NOL. Although the IRS
may take a contrary position, the Debtors intend to apply section 108(b) of the
Tax Code on a "separate entity" basis.
This summary does not address the treatment of intercompany
indebtedness owed by one Debtor to another Debtor, which will be treated under
the Plan either as settled and paid or as discharged. Under special rules
applicable to corporations filing consolidated United States federal income tax
returns, such as the consolidated group of which the Debtors are members, the
discharge
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of intercompany indebtedness in bankruptcy will result in COI income for the
borrower member. However, because the creditor member will not be repaid in full
for such discharged indebtedness, the creditor member should recognize a bad
debt deduction, which should exactly offset the COI income. The foregoing
discussion also does not reflect the effect of the proposed bankruptcy
liquidation of TARC and TEC. Special consolidated return rules are expected to
prevent TEC from taking a full worthless stock deduction to reflect its
unreturned investment, as a stockholder, in TARC. On the Effective Date, TEC and
TransAmerican will recognize income or gain from the excess loss account balance
in their TransTexas Common Stock in the approximate amount of $372 million.
Based upon the Debtors' present belief concerning the value of TARC's equity
interest in TCR Holding and the value of the Reorganization Securities and the
Debtors' calculation of their available tax attributes, it is anticipated that
this income or gain will be offset in total by NOLs and other tax attributes of
the Debtors.
(b) Effect of Section 382 of the Tax Code. Section 382 of the
Tax Code contains very complex rules that may limit the ability of a corporation
that undergoes an "ownership change" to use pre-change NOLs to shelter its
post-change income. Section 382 of the Tax Code imposes certain limitations upon
the carryforward of NOLs and other tax attributes after an "ownership change."
Given the anticipated amount of COI income and other income realized as a result
of implementing the Plans, the significance of these limitations will depend
largely upon whether any substantial portion of TransTexas' NOLs will remain
after utilizing such NOLs against the non-COI income realized by the Debtors and
reducing these tax attributes under section 108(b) of the Tax Code, as described
above.
The TransTexas Plan will cause an "ownership change" of
TransTexas within the meaning of Section 382 of the Tax Code on the Effective
Date. In general, unless the Bankruptcy Exception applies, the general
restrictions on the use of NOL carryovers of a corporation that has an ownership
change are as follows: A corporation that experiences an ownership change may
utilize its prechange NOLs (and possibly certain built-in losses) only up to an
annual amount equal to the "Section 382 limitation," which is calculated as the
product of (i) the federal long-term tax-exempt rate at the time of such
ownership change (5.45% for changes occurring in October 1999) and (ii) the fair
market value of the equity of the corporation immediately before the ownership
change. In a bankruptcy proceeding, however, the fair market value of the equity
of the corporation will also include the increase in value resulting from any
surrender or cancellation of claims. Finally, if Section 382 of the Tax Code
applies with respect to an ownership change, and the continuity of business
enterprise requirement of Section 382 of the Tax Code is not satisfied during
the two-year period following the date of such ownership change, then the
Section 382 limitation is limited to recognized built-in gains. TransTexas
expects, however, to satisfy this continuity of business enterprise requirement.
If the corporation's taxable income which would otherwise be offset by NOLs in a
given year exceeds the Section 382 limitation, the excess is generally subject
to federal income tax (except to the extent attributable to certain "built-in
gains" of the corporation). NOLs not utilized in a given year by virtue of this
limitation remain available for use in future years until their normal
expiration dates. To the extent that a corporation's Section 382 limitation in a
given
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year exceeds its taxable income for such year, the excess amount will increase
the Section 382 limitation for the following taxable year.
In addition to restricting the use of NOLs after an "ownership
change," section 382 of the Tax Code also restricts the use of certain
recognized losses from the sale or other disposition of each asset, and
deduction of depreciation, depletion and amortization of each asset, that has a
built-in losses (tax basis in excess of fair market value as of the Effective
Date) if as of the ownership change, the loss corporation owns the asset and has
a "net unrealized built-in loss". In general, a corporation has a "net
unrealized built-in loss" if the fair market value of its assets immediately
before an ownership change is less than the aggregate adjusted basis of such
assets at that time by more than a specified de minimis amount. If a corporation
that undergoes an ownership change has a net unrealized built-in loss, then to
the extent of such net unrealized built-in loss and subject to certain other
limitations, any built-in loss recognized (including certain depreciation,
depletion and amortization) during the five-year period beginning with the date
of the ownership change is treated as a pre-change loss and is subject to the
general Section 382 limitation described above.
(c) The Bankruptcy Exception. Pursuant to the
Bankruptcy Exception under section 382(l)(5) of the Tax Code, the general
Section 382 limitation will not apply if the stockholders and certain "qualified
creditors" of such corporation determined immediately before the ownership
change own at least 50 percent of the stock of the corporation, by vote and
value, immediately after such change, by virtue of their status as stockholders
or "qualified creditors" immediately before such change. For this purpose, stock
transferred to a creditor is taken into account only to the extent that such
stock is transferred in satisfaction of debt and only if such debt either (i)
was held by the creditor at least 18 months before the filing of the Chapter 11
case, or (ii) arose in the ordinary course of the trade or business of the old
loss corporation and is held by the person who at all times held the beneficial
interest in such debt. Even if the Bankruptcy Exception applies, however,
TransTexas must reduce its NOLs and certain other tax attributes by the amount
of interest claimed as a deduction on any indebtedness converted into stock
during the three-year period preceding the taxable year of the ownership change,
in addition to the portion of the current year that precedes the Effective Date.
In addition, a second ownership change during the two-year period following
consummation of the Plans will effectively eliminate the NOLs and other tax
attributes of TransTexas carried forward from pre-Effective Date taxable years
with respect to any taxable year ending after the date of the second ownership
change. The Bankruptcy Exception automatically applies to Plans of
reorganization that satisfy its requirements. A debtor has the option, however,
to "elect out" of the Bankruptcy Exception. In such a case, the normal Section
382 limitation will apply, and the NOLs will be subject to the annual limitation
as described above.
At this time, it is unclear if "qualified creditors" of
TransTexas will receive the requisite 50 percent or more of the new stock of
TransTexas. Further, TransTexas will not impose any transfer restrictions upon
the sale of its new stock issued in connection with the TransTexas Plan.
Accordingly, there is a significant risk that a second ownership change would
occur during
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the two year period following consummation of the TransTexas Plan. As described
above, assuming that the TransTexas Plan qualifies under the Bankruptcy
Exception, the second ownership change would eliminate TransTexas' NOLs and
certain other tax attributes. TransTexas, therefore, presently intends to "elect
out" of the Bankruptcy Exception even if the TransTexas Plan otherwise satisfies
its conditions.
2. Alternative Minimum Tax. The Tax Code provides that, for
any taxable year, a corporation's federal income tax liability equals the
greater of (i) the regular tax computed at the maximum regular 35% corporate tax
rate on taxable income and (ii) the alternative minimum tax ("AMT") computed at
a lower tax rate (20%) but on a broader income base (alternative minimum taxable
income ("AMTI")). For purposes of computing a corporation's regular federal
income tax liability, all of the income recognized in a taxable year may be
offset by available NOLs and other tax carryovers (to the extent permitted
under, inter alia, sections 382 and 383 of the Tax Code). In contrast, for
purposes of computing AMTI, NOLs (as determined for AMT purposes) and other tax
carryovers generally are taken into account, but may not offset more than 90% of
the pre-NOL AMTI. Thus, a corporation that is currently profitable for AMT
purposes generally will be required to pay federal income tax at an effective
rate of at least 2% of its pre-NOL AMTI (10% of the 20% AMT tax rate),
regardless of the amount of its NOLs. As a result, even if TransTexas is
otherwise able to fully shelter its income with NOLs, it will be subject to
current taxation in any year in which it has positive net pre-NOL AMTI
(including as a result of gain and income recognition, other than COI income, in
connection with the transactions contemplated by the TransTexas Plan). To the
extent that a corporation's AMT liability for any taxable year exceeds its
regular federal income tax liability, the excess may be carried forward as a
credit against regular tax liability in subsequent years.
B. Federal Income Tax Consequences to Creditors.
1. Generally. The federal income tax consequences of the Plans
to a Creditor will depend upon several factors, including but not limited to:
(i) whether the Creditor's Claim (or portion thereof) constitutes a Claim for
principal or interest; (ii) the type of consideration received by the Creditor
in exchange for the Claim; (iii) whether the Creditor is a resident of the
United States for tax purposes (or falls into any of the special classes of
taxpayers excluded from this discussion as noted above); (iv) whether the
Creditor has taken a bad debt deduction or worthless security deduction with
respect to his Claim; and (v) whether the Creditor receives distributions under
the TransTexas Plan in more than one taxable year. CREDITORS ARE STRONGLY
ADVISED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX TREATMENT UNDER
THE PLANS OF THEIR PARTICULAR CLAIMS.
2. Creditors Who Receive Solely Cash or Solely an Interest of
the Litigation Trust. Creditors receiving solely cash in exchange for their
Claims will generally recognize taxable gain or loss in an amount equal to the
difference between the amount realized and each such Creditor's adjusted tax
basis in the Claim. The amount realized will equal the amount of cash to the
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extent that such consideration is not allocable to any portion of the Claim
representing accrued and unpaid interest. See "Federal Income Tax Consequences
to Creditors-Receipt of Interest" below. A holder of an Allowed General
Unsecured Claim of TARC that receives an interest in the Litigation Trust may be
subject to special tax rules concerning the timing of income or loss with
respect to the receipt of such interest.
The character of any recognized gain or loss (i.e., ordinary
income, or short-term or long-term capital gain or loss) will depend upon the
status of the Creditor, the nature of the Claim in the Creditor's hands, the
purpose and circumstances of its acquisition, the Creditor's holding period of
the Claim, and the extent to which the Creditor previously claimed a deduction
for the worthlessness of all or a portion of the Claim. A loss generally is
treated as sustained in the taxable year for which there has been a closed and
completed transaction, and no portion of a loss with respect to which there is a
reasonable prospect of reimbursement may be deducted until it can be ascertained
with reasonable certainty whether or not such reimbursement will be recovered.
Creditors should consult with their own tax advisors as to the
matters discussed in this section concerning character and timing of recognition
of gain or loss. Because a loss will be allowed as a deduction only for the
taxable year in which the loss was sustained, a Creditor that claims a loss in
the wrong taxable year risks denial of such loss altogether. In the case of
certain categories of Claims, consideration should be given to the possible
availability of a bad debt deduction under section 166 of the Tax Code for a
period prior to the Effective Date. In addition, a portion of any distributions
received after the Effective Date may be taxed as ordinary income under the
imputed interest rules.
3. Creditors Who Receive Reorganization Securities.
(a) Generally. The federal income tax consequences
of the Plans to Creditors who receive Reorganization Securities will depend in
large part on whether the exchange of their Claims for such consideration will
be treated as a "recapitalization" within the meaning of section 368(a)(1)(E) of
the Tax Code. This discussion assumes that each such Creditor holds its Claim,
and will hold any Reorganization Security received under the TransTexas Plan, as
"capital assets" within the meaning of section 1221 of the Tax Code. Claims
arising out of extension of trade credit or performance of personal services
generally are not held as capital assets by their original holders.
If an exchange of a Claim for cash and Reorganization
Securities is properly treated as a recapitalization within the meaning of
section 368(a)(1)(E) of the Tax Code, then subject to the discussion below with
respect to accrued but unpaid interest, a Creditor generally would not recognize
loss on the exchange, but would recognize gain to the extent of the lesser of
(a) the amount of gain realized in the exchange and (b) the sum of the fair
market value of the cash, the New Preferred Stock (to the extent that shares of
the New Preferred Stock constitute "disqualified" preferred stock under section
351(g) of the Tax Code) and the issue price of the Senior Secured
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Notes (assuming such notes do not constitute a "security" for tax purposes)
(collectively, "boot"). The Creditor's tax basis in the boot received would
equal the fair market value of such property as of the Effective Date and the
holding period of the property would begin on the day immediately following the
Effective Date. The Creditor's tax basis in the property, other than boot, on
which the Creditor did not recognize gain or loss because of the
"recapitalization" provisions of the Tax Code, will equal the Creditor's basis
in the Claim exchanged in the TransTexas Plan, less the amount of cash and the
fair market value of other boot received, plus any gain recognized by the
Creditor on such exchange. This aggregate basis would be allocated among the
non-boot properties on a relative fair market basis. The amount of gain
realized, if any, would be equal to the excess of the sum of the fair market
value of the cash and the Reorganization Securities received over such
Creditor's adjusted tax basis in its Claim. Any such gain would constitute
capital gain that would qualify as long-term capital gain if as of the Effective
Date the Claim constituted a capital asset and such Creditor held the Claim for
more than one year.
Alternatively, if the exchange does not constitute a
"recapitalization," then subject to the discussion below as to accrued but
unpaid interest, a Creditor would recognize gain or loss on the exchange in an
amount equal to the difference between the sum of the fair market value of the
cash and the Reorganization Securities as determined as of the Effective Date
and such Creditor's adjusted tax basis in its Claim. Such gain or loss should
constitute capital gain or loss that qualifies as long-term capital gain or loss
if as of the Effective Date the Claim constituted a capital asset and such
Creditor held its Claim for more than one year. The Creditor's tax basis in the
property received would be equal to the fair market value of such property as of
the Effective Date and the holding period of the property would begin on the day
immediately following the Effective Date. The maximum regular individual United
States federal income tax rate on capital gains is 20% for capital assets held
for more than one year. Capital gains on the sale of capital assets held for one
year or less are subject to United States federal income tax at ordinary income
rates.
(b) Tax Treatment to TEC Senior Secured Noteholders.
Because the holders of TEC Senior Secured Notes will receive stock and notes of
TransTexas rather than of TEC, the Debtors intend to take the position that
receipt by the TEC Creditors of Reorganization Securities should not constitute
a "recapitalization" within the meaning of section 368(a)(1)(E) of the Tax Code.
Under the Plans, the holders of the TEC Senior Secured Notes will be entitled to
receive all of the Reorganization Securities, including (i) 80 million shares of
New Junior Preferred Stock that will be reallocated and distributed to holders
of the TransTexas Subordinated Notes, (ii) cash and shares of New Senior
Preferred Stock that will be reallocated and distributed to holders of the
Allowed General Unsecured Claims and (iii) New Common Stock and New Warrants
that will be and reallocated and distributed to holders of the TransTexas Old
Common Stock, who are not affiliated with the Debtors, and to John R. Stanley
(or his designee). Although not clear, it appears that a risk exists that the
holders of TEC Senior Secured Notes will be deemed to have received such cash,
stock and warrants and, in turn, treated as constructively transferring such
property to the ultimate recipients. Viewed in this manner, the holders of TEC
Senior Secured Notes would be taxed on the deemed receipt as if they actually
received such property and cash in accordance with the tax
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rules set forth above. Under this analysis. it is unclear whether the holders of
TEC Senior Secured Notes would be entitled to a deduction for the constructive
transfer of such property to the ultimate recipients and it is possible that all
or a portion of any such deduction might be available only to Reorganized
TransTexas. EACH HOLDER OF TEC SENIOR SECURED NOTES IS URGED TO CONSULT WITH
SUCH HOLDER'S OWN TAX ADVISORS CONCERNING THE TAX TREATMENT TO THEM RESULTING
FROM THE PLANS.
(c) Tax Treatment to TransTexas Subordinated Noteholders. A
holder of TransTexas Subordinated Notes will receive a New Junior Preferred
Stock pursuant to a tax-free recapitalization if such stock was exchanged for a
Claim that constitutes a "security" is not defined in the Tax Code or the
regulations issued thereunder, and has not been clearly defined by court
decisions. In general, a debt instrument constitutes a "security" if it
represents a participating, continuing interest in the issuer, rather than
merely the right to a cash payment. The length of the term of the debt
instrument is usually regarded as a significant factor in determining whether it
is a security. The IRS has ruled that a debt instrument with a maturity of ten
years or more is treated as a security, while under the case law, debt
instruments with maturities ranging between five and ten years are often held to
be securities. Instruments with a five-year term or less, however, often do not
qualify as tax securities. Claims arising out of the extension of trade credit
or litigation generally will not constitute tax securities. When issued, the
TransTexas Subordinated Notes had a term of approximately 4.5 years. It is
unclear whether the TransTexas Subordinated Notes constitute securities for
federal income tax purposes.
Even if the TransTexas Subordinated Notes qualify as
securities for tax purposes, the holders of the TransTexas Subordinated Notes
will receive no distribution under the TransTexas Plan in respect of their
TransTexas Subordinated Note Claims. Rather, holders the Allowed TransTexas
Senior Secured Note Claims, who are entitled to receive all of the New Junior
Preferred Stock under the Plans, have agreed to reallocate and direct
Reorganized TransTexas to distribute to each holder of TransTexas Subordinated
Notes its Ratable Proportion of the shares of New Junior Preferred Stock.
Accordingly, although not clear, based on the foregoing facts, a risk exists
that the holders of the TransTexas Subordinated Notes will not be treated as
receiving the New Junior Preferred Stock in exchange for their TransTexas
Subordinated Notes and, thus, will not receive such stock in a recapitalization
transaction under section 368(a)(1)(E) of the Tax Code. Under this analysis, it
appears that holders of the TransTexas Subordinated Notes might recognize income
or gain equal to the fair market value of the New Junior Preferred Stock
received and, presumably would be entitled to a worthless debt deduction for any
basis they have in their TransTexas Subordinated Note Claims. Alternatively, it
is possible that the IRS might argue successfully that the cancellation of the
TransTexas Subordinated Note Claims for no consideration and the receipt of the
New Junior Preferred Stock might be collapsed and treated as one interdependent
transaction whereby holders of the TransTexas Subordinated Notes might (i)
recognize gain or loss (other than that portion, if any, attributable to accrued
but unpaid interest) in an amount equal to the difference between the sum of the
fair market value of the New Junior Preferred Stock received and such
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holder's tax basis in their TransTexas Subordinated Note Claims, if the
TransTexas Subordinated Notes are not tax securities or (ii) recognize no gain
or loss on such deemed exchange (other than that portion, if any, attributable
to accrued but unpaid interest) if the TransTexas Subordinated Notes are tax
securities. EACH HOLDER OF TRANSTEXAS SUBORDINATED NOTE CLAIMS IS URGED TO
CONSULT WITH THEIR OWN TAX ADVISORS CONCERNING THE TAX TREATMENT TO THEM
RESULTING FROM THE TRANSTEXAS PLAN.
(d) Tax Treatment to Holders of TransTexas
General Unsecured Claims. For purposes of this discussion, it is assumed that
each TransTexas Allowed General Unsecured Claim does not constitute a "security"
for tax purposes. Under the TransTexas Plan, the holders of Allowed General
Unsecured Claims of TransTexas will receive no distribution on account of their
Claims. Instead, the holders of the Allowed TransTexas Senior Secured Note
Claims, who are entitled to receive all of the New Senior Preferred Stock and
the Maximum GUC Cash Amount under the Plans, have agreed to reallocate and
direct Reorganized TransTexas to distribute to each holder of an Allowed General
Unsecured Claim a specified amount of cash and shares of New Senior Preferred
Stock. Accordingly, although not clear, based on the foregoing facts, a risk
exists that the holders of the Allowed General Unsecured Claims will not be
viewed as receiving such cash or the value of New Senior Preferred Stock in
exchange for their Claims. Under this analysis, it appears that holders of the
General Unsecured Claims might recognize income or gain equal to the amount of
cash received and the fair market value of the New Senior Preferred Stock
received and, presumably would be entitled to a worthless deduction for any
basis they have in their Claims. Alternatively, it is possible that the
cancellation of the General Unsecured Claims for no consideration and the
receipt of cash and the value of New Senior Preferred Stock might be collapsed
and treated as one interdependent transaction whereby holders of the TransTexas
Allowed General Unsecured Claims might recognize gain or loss (other than that
portion, if any, attributable to accrued but unpaid interest) in an amount equal
to the difference between (i) the cash and the fair market value of the New
Senior Preferred Stock received and (ii) such holder's tax basis in their
TransTexas Allowed General Unsecured Claims. EACH HOLDER OF TRANSTEXAS ALLOWED
GENERAL UNSECURED CLAIMS IS URGED TO CONSULT WITH SUCH HOLDER'S OWN TAX ADVISORS
CONCERNING THE TAX TREATMENT TO THEM RESULTING FROM THE TRANSTEXAS PLAN.
(e) Market Discount. Generally, a debt instrument
will have a "market discount" for federal income tax purposes if the debt
instrument is acquired after its original issuance for less than the issue price
of such instrument plus the aggregate amount, if any, of original issue discount
includable in the income of all holders of such instrument prior to such
acquisition. A Claimant with market discount must treat as ordinary income any
gain recognized on the satisfaction of such Claim pursuant to the Plan, to the
extent that such gain does not exceed the accrued but previously unrecognized
market discount on such Claim in the hands of the Claimant. To the extent that a
Claim, that has been acquired by the holder with market discount and constitutes
a tax security, is exchanged under the Plan in a tax-free transaction for
another tax security, any market discount that accrued but was not recognized
with respect to the Claim should be carried over to the security
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received therefor and any gain recognized on the subsequent sale, exchange,
redemption or other disposition of such security should be treated as ordinary
income to the extent of the accrued but unrecognized market discount with
respect to the exchanged Claim.
4. Receipt of Interest. The Plans provide that the aggregate
consideration to be distributed to Creditors shall first satisfy an amount equal
to the stated principal amount of the Claim and any remaining consideration
shall be allocated to accrued but unpaid interest. Based upon certain
legislative history to the Bankruptcy Tax Act of 1980, the IRS should respect
this allocation of consideration under the Plans. Nevertheless, a portion of the
consideration received by a Creditor in satisfaction of a Claim may be allocated
to accrued but unpaid interest. If any portion of the distribution were required
to be allocated to accrued but unpaid interest, such portion would be taxable to
the Creditor as interest income, except to the extent the Creditor has
previously reported such interest as income. In the event that a Creditor has
previously reported the interest income, only the balance of the distribution
after the allocation of proceeds to accrued interest would be considered
received by the Creditor in respect of the principal amount of the Claim. Such
an allocation would reduce the amount of the gain, or increase the amount of
loss, realized by the Creditor with respect to the Claim. If such loss were a
capital loss, it would not offset any amount of the distribution that was
treated as ordinary interest income (except, in the case of individuals, to the
limited extent that capital losses may be deducted against ordinary income).
C. Federal Income Tax Consequences to Holders of TransTexas Old
Common Stock.
1. Tax Treatment to Holders of TransTexas Old Common Stock.
Under the TransTexas Plan, holders of TransTexas Old Common Stock other than
affiliates of the Debtors (the "TransTexas Nonaffiliate Old Shareholders") will
receive shares of New Class A Common Stock and New Warrants that are
exercisable into shares of New Class A Common Stock. If these holders are
properly viewed as exchanging their TransTexas Old Common Stock for New Class A
Common Stock and New Warrants, the exchange should constitute a
recapitalization under section 368(a)(1)(E) of the Tax Code and the holders
would not recognize gain or loss on such exchange, although the recipients
might be taxed on the fair market value of the New Warrants to the extent of
the recipient's gain realized from the exchange.
Under the TransTexas Plan, however, the TransTexas
Nonaffiliate Old Shareholders will receive no distributions with respect to
their TransTexas Old Common Stock. Instead, the holders of the Allowed
TransTexas Senior Secured Note Claims, who are entitled to receive all of the
New Common Stock and New Warrants issued under the Plans, have agreed to
reallocate and direct Reorganized TransTexas to distribute a specified amount
of New Class A Common Stock and New Warrants to the TransTexas Nonaffiliate Old
Shareholders. Although not entirely clear, a risk exists that the receipt of
the New Class A Common Stock and New Warrants should not be viewed as issued in
exchange for TransTexas Old Common Stock and, thus, the receipt of the New
Class A Common Stock and New Warrants should not constitute a tax-free
recapitalization under section 368(a)(1)(E) of the Tax Code. Under this
analysis, it appears that the TransTexas Nonaffiliate Old
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Shareholders might recognize income or gain equal to the fair market value of
the New Class A Common Stock and New Warrants received and, presumably would be
entitled to a worthless stock deduction characterized as a capital loss for any
basis they have in their TransTexas Old Common Stock. Under this analysis, a
TransTexas Non-Affiliate Old Shareholder's capital loss generally would be
available only to offset capital gain (plus, in the case of individuals, a small
amount of annual ordinary income). Alternatively, it is possible that the
cancellation of the TransTexas Old Common Stock and the receipt of the New Class
A Common Stock and New Warrants might be collapsed and treated as one
interdependent transaction under section 368(a)(1)(E) of the Tax Code whereby
the TransTexas Nonaffiliate Old Shareholders would recognize no loss and
apparently would recognize no gain. It is possible, however, that the IRS might
argue that in this event a TransTexas Nonaffiliate Old Shareholder might
recognize gain equal to the lesser of the holder's realized gain on the deemed
exchange (i.e., the excess of the sum of the fair market value of the New Class
A Common Stock and New Warrants over such holder's tax basis in the Old Common
Stock) or the fair market value of the New Warrants received. EACH TRANSTEXAS
NONAFFILIATE OLD SHAREHOLDER IS URGED TO CONSULT WITH THEIR OWN TAX ADVISORS
CONCERNING THE TAX TREATMENT TO THEM RESULTING FROM THE TRANSTEXAS PLAN.
D. Federal Income Tax Consequences of Holding Reorganization
Securities.
1. New Senior Secured Notes.
(a) Issue Price. The "issue price" of the New Senior
Secured Notes is relevant in determining (i) the amount of COI income realized
by the Debtors, and the gain or loss realized by the creditors who receive these
notes in connection with the Plan, and (ii) whether the New Senior Secured Notes
are issued with original issue discount ("OID"). If neither the New Senior
Secured Notes nor the existing Claims exchanged therefor are treated as traded
on an established market within the 60-day period ending 30 days after the issue
date of the New Senior Secured Notes (such 60-day period, the "Issue Period"),
then, under section 1274 of the Tax Code, the issue price of the New Senior
Secured Notes should be equal to their stated principal amount. In general, a
new debt instrument (or the property exchanged therefor) will be treated as
traded on an established market if, at any time during the Issue Period, the
debt instrument (or property) (i) is listed on the New York Stock Exchange,
certain other qualifying national or foreign securities exchanges, or certain
qualifying interdealer quotation systems, (ii) appears on a system of general
circulation that provides a reasonable basis to determine fair market value by
disseminating either recent price quotations of identified brokers, dealers or
traders or actual prices of recent sales transactions or (iii) has price
quotations that are readily available from dealers, brokers or traders.
The Debtors believe that neither the New Senior Secured Notes
nor the debt underlying the Claims exchanged therefor appear or will appear on
an interdealer quotation system or a system of general circulation that
provides a reasonable basis to determine fair market value, and that no price
quotations on such New Senior Secured Notes or debt otherwise are or will be
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readily available during the Issue Period. Thus, the Debtors believe that
neither the New Senior Secured Notes nor the debt underlying the Claims
exchanged therefor should be treated as traded on an established market.
However, because the New Senior Secured Notes will be freely tradable upon
issuance, there can be no assurance that such Notes will not be traded on an
established market during the Issue Period. If the New Senior Secured Notes or
the debt underlying the Claims exchanged therefore under the Plans were
properly treated as traded on an established securities market during the Issue
Period, then the issue price of the New Secured Senior Notes would generally
equal the trading price on the Effective Date. If such issue price was less
than the stated principal amount of the New Senior Secured Notes by more than a
de minimis amount, such difference would constitute original issue discount
("OID") for federal income tax purposes. If the New Senior Secured Notes are
issued with OID, holders of the notes wold be required to include OID in gross
income in advance of the receipt of cash attributable to such income during the
period in which the holder holds New Senior Secured Notes. The remainder of
this summary assumes that the New Senior Secured Notes and the debt underlying
the Claims exchanged therefor under the Plans will be treated as not traded on
an established market and that the New Senior Secured Notes will have an issue
price equal to their stated principal amount and, thus, will not be issued with
OID. EACH CLAIMANT IS URGED TO CONSULT ITS OWN TAX ADVISOR REGARDING THE
NONPUBLICLY-TRADED STATUS OF THE NEW SENIOR SECURED NOTES AND THE CLAIMS
EXCHANGED THEREFOR UNDER THE PLANS.
(b) Sale, Exchange or Retirement. Generally, any sale,
redemption or other disposition of New Senior Secured Notes will result in
taxable gain or loss equal to the difference between (i) the amount of cash and
the fair market value of other property received and (ii) the holder's adjusted
tax basis in the note disposed of. Any gain or loss upon a sale or other
disposition of a note will generally be capital gain or loss, which will be
long-term if the New Senior Secured Note has been held by the holder for more
than twelve months.
(c) Subsequent Purchasers. The foregoing summary does not
discuss special rules which may affect the treatment of holders of a New Senior
Secured Note that acquires such note other than in connection with the Plans,
including those provisions of the Tax Code relating to the treatment of "market
discount," "acquisition premium" and "amortization bond premium." For example,
the market discount provisions of the Tax Code may require a taxpayer who
purchases a New Senior Secured Note subsequent to its distribution under the
Plans at a market discount to treat all or a portion of any gain recognized upon
sale or other disposition of the note as ordinary income and to defer a portion
of any interest expense that would otherwise be deducible on any indebtedness
incurred or maintained to purchase or carry such New Senior Secured Note until
the holder disposes of the note in a taxable transaction.
2. New Preferred Stock.
(a) Distributions on the Stock. If a distribution is made with
respect to the New Preferred Stock, including a distribution on the New
Preferred Stock that is paid in kind, the
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amount of the distribution generally will be subject to tax to the holder as a
dividend under section 301 of the Tax Code to the extent of Reorganized
TransTexas' current and accumulated earnings and profits, as calculated for tax
purposes. Such distributions received by corporate holders may be eligible for
the dividends-received deduction. In the case of a distribution of New Preferred
Stock that is paid in kind, a holder would recognize current ordinary income to
the extent that the distribution is characterized as a dividend, even though no
cash is received with respect to such distribution. The amount of the
distribution, and the recipient's tax basis, with respect to a distribution in
kind on the New Preferred Stock will equal the fair market value of the shares
distributed as determined on the distribution date. The amount of any
distribution on the New Preferred Stock in excess of current and accumulated
earnings and profits will first be a tax-free recovery of basis to the extent of
(and reduce) such holder's adjusted basis in the stock, and any remaining amount
of the distribution will generally be subject to tax to the holder of the stock
as capital gain. Corporate holders may be subject to limitations on their
ability to claim the dividends-received deduction.
(b) Redemption Premium. Reorganized TransTexas has an optional
right to redeem the New Preferred Stock and also has a mandatory redemption
right with respect to the New Senior Preferred Stock. Under section 305 of the
Tax Code, if the redemption price of the New Senior Preferred Stock or New
Junior Preferred Stock exceeds their respective issue price by more than a de
minimis amount, such excess (the "redemption premium") is includible in ordinary
income as a dividend and taxable as a constructive distribution of additional
New Preferred Stock over the period that the stock cannot be called for
redemption to the extent that the distribution is paid from Reorganized
TransTexas' current or accumulated earnings and profits. The issue price
generally will equal the fair market value of the New Preferred Stock as of the
Effective Date. To the extent a constructive distribution is treated as
dividend, it will increase the holder's adjusted basis in the New Preferred
Stock. A holder should not recognize taxable income or gain from a constructive
distribution (and the holder's basis in his New Preferred Stock should not be
adjusted) to the extent it is not paid from the Reorganized TransTexas' current
or accumulated earnings and profits.
It is expected that the New Junior Preferred Stock will have a fair
market value as of the Effective Date substantially below its par value.
Accordingly, if a holder was required to calculate the redemption premium of
the New Junior Preferred Stock based on the optional redemption price of $1.00
per share, a holder might have a substantial constructive distribution on such
stock to the extent such constructive distribution is treated as paid out of
current or accumulated earnings and profits. An optional redemption price will
not result in a constructive distribution under section 305 of the Tax Code,
however, if either (i) based on all the facts and circumstances as of the issue
date, the optional redemption is not more likely than not to occur or (ii) the
optional redemption premium is solely in the nature of a penalty for premature
redemption. Under a "safe harbor" provisions in the Treasury Regulations, an
optional redemption right will not be treated as more likely than not to occur
if (i) the issuer of the stock and the holder are not related, (ii) there are
no plans, arrangements, or agreements that effectively require or are intended
to compel the issuer to exercise the optional
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redemption right (disregarding, a separate mandatory redemption) and (iii)
exercise of the right to redeem will not reduce the yield of the preferred
stock. Based on these Treasury Regulations, Reorganized TransTexas intends to
take the position that it satisfies the regulatory safe harbor with respect to
the New Junior Preferred Stock and that the existence of the optional redemption
right in the New Junior Preferred Stock does not result in a constructive
distribution to the holders of such stock.
It is possible that the New Senior Preferred Stock will have a fair
market value as of the Effective Date that is less than its par value by more
than a de minimis amount. For purposes of determining the amount of the
redemption premium, redemption of the New Senior Preferred Stock will be deemed
to occur at the mandatory redemption price unless, based on all of the facts
and circumstances when the New Senior Preferred Stock is issued, the optional
redemption is more likely than not to occur. Reorganized TransTexas believes
that it is not more likely than not that it will exercise its right to
optionally redeem the New Senior Preferred Stock. To the extent that the
mandatory redemption price of the New Senior Preferred Stock exceeds its issue
price (assuming such excess is more than a de minimis amount), a holder will be
required to include such redemption premium in ordinary income to the extent of
Reorganized TransTexas' current or accumulated earnings or profits over the
six-year period during which the New Senior Preferred Stock can not be redeemed.
CREDITORS WHO RECEIVE NEW SENIOR PREFERRED STOCK UNDER THE PLANS ARE URGED TO
CONSULT WITH THEIR TAX ADVISORS CONCERNING THE APPLICATION OF SECTION 305 OF THE
TAX CODE WITH RESPECT TO THE NEW SENIOR PREFERRED STOCK.
If additional shares of New Senior Preferred Stock are distributed on
the New Senior Preferred Stock having a fair market value at the time of
distribution that is less than its redemption price, the additional New Senior
Preferred Stock will have a redemption premium that may be taxable as a
constructive distribution of additional stock to a holder that is taxed as a
dividend to the extent of Reorganized TransTexas' current and accumulated
earnings and profits. Such redemption premium on the additional shares of New
Senior Preferred Stock may differ from that attributable to the New Senior
Preferred Stock issued in connection with the TransTexas Plan, resulting in the
additional shares of New Senior Preferred Stock not being fungible with the
shares issued under the TransTexas Plan.
CREDITORS WHO RECEIVE NEW PREFERRED STOCK IN CONNECTION WITH THE
TRANSTEXAS PLAN ARE URGED TO CONSULT WITH THEIR TAX ADVISORS CONCERNING THE
CONSTRUCTIVE DISTRIBUTION TAX RULES WITH RESPECT TO THE NEW PREFERRED STOCK.
(c) Conversion of Stock. The terms of the New Preferred Stock
provide that one-half of the shares of the New Senior Preferred Stock and all of
the shares of New Junior Preferred Stock will automatically be converted to
shares of New Class A Common Stock based on
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the conversion ratios set forth under their terms if either (i) more than 75
million shares of New Senior Preferred Stock are outstanding after the sixth
anniversary of the Effective Date or (ii) two successive dividend payments are
in arrears on the New Senior Preferred Stock. Except to the extent attributable
to unpaid accrued dividends, a holder of the New Preferred Stock will generally
not recognize gain or loss upon conversion of such stock into New Class A Common
Stock. A holder's initial tax basis in the New Preferred Stock that is acquired
pursuant to the Plans will generally be equal to the fair market value of such
stock as of the Effective Date (or as determined under section 358 of the Tax
Code if such stock was received in a tax-free recapitalization transaction under
section 368(a)(1)(E) of the Tax Code). The tax basis of shares of the New Class
A Common Stock acquired upon conversion of the New Preferred Stock (exclusive of
any shares the receipt of which is taxable because of dividend arrearages) will
be equal to the holder's adjusted tax basis in such New Preferred Stock
immediately before the conversion and the holding period of the common stock
received will include the period during which the New Preferred Stock was held
by the holder. If dividends are in arrears on the New Preferred Stock at the
time of the conversion into New Class A Common Stock, a portion of the New Class
A Common Stock so received the value of which is less than or equal to the
amount of such arrearage may be includible in income as a dividend (to the
extent of Reorganized TransTexas' current or accumulated earnings and profits).
(d) Sale or Other Disposition of New Preferred Stock of
Reorganized TransTexas. Upon a sale, exchange or other taxable disposition of
New Preferred Stock, excluding a mandatory conversion into New Class A Common
Stock, a holder will generally recognize gain or loss for federal income tax
purposes in an amount equal to the difference between (i) the sum of any amount
of cash and the fair market value of any property received upon such sale,
exchange or other disposition and (ii) the holders' adjusted tax basis in the
New Preferred Stock disposed of. Any gain or loss recognized upon a sale,
exchange or disposition of such stock generally would be long-term capital gain
or loss if the holder's holding period for the New Preferred Stock exceeds
twelve months at the time of the sale or exchange. If the New Preferred Stock is
redeemed by the issuer, the redeemed shareholder will generally recognize
capital gain or loss if the holder has no other interest in the issuer, directly
or constructively through the attribution rules of section 318 of the Tax Code.
If the holder of the redeemed New Preferred Stock has such an interest, the
redemption could be treated as a dividend under section 302 of the Tax Code.
(e) Adjustment. The conversion ratio of the New Preferred
Stock is subject to adjustments under certain circumstances. Under section 305
of the Tax Code, holders of the New Preferred Stock will be treated as having
received a constructive distribution, resulting in ordinary income (subject to a
possible dividends-received deduction in the case of corporate holders) to the
extent of Reorganized TransTexas' current or accumulated earnings and profits,
if and to the extent that certain adjustments in the conversion ratio that may
occur in limited circumstances (particularly an adjustment to reflect a taxable
dividend to holders of New Class A Common Stock) increase the proportionate
interest of a holder of New Preferred Stock in the fully diluted New Common
Stock. This consequence results whether or not the New Preferred Stock is ever
converted.
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3. New Common Stock and New Warrants.
(a) Exercise of New Warrants. No gain or loss will be
recognized by a holder upon the exercise of New Warrants for shares of New Class
A Common Stock. A holder's tax basis in the shares of New Class A Common Stock
received upon such exchange will equal the sum of the adjusted tax basis in the
New Warrants plus the price paid on the exercise thereof. The holding period of
the New Class A Common Stock received on the exercise of the New Warrants will
not include the period during which the New Warrants were held by such holder.
(b) Lapse of New Warrants. If the New Warrants lapse without
exercise, the holder will recognize a capital loss (assuming the sale or
exchange of the New Warrants by the holder would have given rise to capital gain
or loss) equal to the holder's tax basis in the New Warrants. Any such capital
loss should be long-term if such holder held its New Warrants for more than one
year.
(c) Dividends. Distributions, if any, paid on the New Common
Stock, to the extent made from the current or accumulated earnings and profits
of Reorganized TransTexas, as determined for federal income tax purposes, will
be included in income as ordinary dividend income by a holder when paid. The
amount of any distribution on the New Common Stock in excess of current and
accumulated earnings and profits will first be a tax-free recovery of basis to
the extent of (and reduce) such holder's adjusted basis in the stock, and any
remaining amount of the distribution will generally be subject to tax to the
holder of the stock as capital gain. Corporate holders may be subject to
limitations on their ability to claim the dividends-received deduction.
(d) Sale or Other Disposition of New Common Stock or New
Warrants. The sale of New Warrants ordinarily will result in the recognition of
gain or loss to the holder for federal income tax purposes in an amount equal to
the difference between (i) the amount of cash and the fair market value of the
property received and (ii) the holder's tax basis in the New Warrants. Such gain
or loss should constitute capital gain or loss, assuming that the New Class A
Common Stock would have been a capital asset in the hands of the holder had the
New Warrants been exercised, and such capital gain or loss should qualify as
long-term capital gain or loss if such holder held its New Warrants for more
than one year. Similarly, upon the sale or exchange of New Common Stock (whether
received in connection with the Plans or upon exercise of a New Warrant), a
holder will recognize gain or loss in an amount equal to the difference between
(i) the amount of cash and the fair market value of the property received and
(ii) the adjusted tax basis of the New Common Stock in the hands of the holder.
Such gain or loss generally will be treated as capital gain or loss if the New
Common Stock is a capital asset in the hands of the holder, except that such
gain will be treated as ordinary income to the extent of the aggregate amount of
(i) any bad debt deductions claimed by the holder with respect to the Claim
exchanged for such New Common Stock (less any gain recognized upon such
exchange) and any loss deduction claimed upon such exchange and (ii) any accrued
market discount carried over to the New Common Stock. Receipt of cash by
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a holder of a New Warrant in lieu of fractional shares of New Common Stock on
the exercise of a New Warrant should be treated as a redemption of such
fractional shares for cash.
The maximum regular individual United States federal income tax rate on
capital gains is 20% for capital assets held for more than one year. Capital
gains on the sale of capital assets held for one year or less are subject to
United States federal income tax at ordinary income rates.
(e) Adjustment. The conversion ratio and exercise price of the
New Warrants are subject to adjustments under certain circumstances. Under
section 305 of the Tax Code, holders of the New Warrants will be treated as
having received a constructive distribution, resulting in ordinary income
(subject to a possible dividends-received deduction in the case of corporate
holders) to the extent of Reorganized TransTexas' current or accumulated
earnings and profits, if and to the extent that certain adjustments in the
conversion ratio or exercise price that may occur in limited circumstances
(particularly an adjustment to reflect a taxable dividend to holders of New
Class A Common Stock) increase the proportionate interest of a holder of a New
Warrant in the fully diluted New Class A Common Stock. This consequence results
whether or not the holder ever exercises the New Warrant.
E. Withholding and Reporting. The Debtors will withhold all
amounts required by law to be withheld from payments to Claimants and holders of
Interests and with respect to payments on the Reorganization Securities. In
addition, such holders may be required to provide certain tax information to the
Debtors as a condition of receiving Distributions under the Plan.
F. Importance of Obtaining Professional Tax Assistance.
The foregoing is intended to be a summary only and not a
substitute for consultation with a tax professional. The federal, state, local
and foreign tax consequences of the Plans are complex and, in some respects,
uncertain. Such consequences may also vary based upon the individual
circumstances of each holder of a Claim or Interest. Accordingly, each holder of
a Claim or Interest is strongly urged to consult with its own tax advisor
regarding the federal, state, local and foreign tax consequences of the Plans.
THE FOREGOING IS INTENDED TO BE ONLY A SUMMARY OF CERTAIN OF
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PLANS, AND IS NOT A
SUBSTITUTE FOR CAREFUL TAX PLANNING WITH A TAX PROFESSIONAL. ACCORDINGLY, EACH
HOLDER OF A CLAIM OR INTEREST IS STRONGLY URGED TO CONSULT WITH ITS OWN TAX
ADVISOR REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
PLANS.
THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
PLANS ARE COMPLEX AND, IN MANY RESPECTS, UNCERTAIN. THE FOREGOING IS INTENDED TO
BE A SUMMARY ONLY AND, AS SUCH, DOES NOT DISCUSS ALL
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ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR CREDITOR
OR HOLDER OF INTERESTS IN TRANSTEXAS. ALL CREDITORS AND HOLDERS OF INTERESTS IN
THE DEBTORS ARE STRONGLY URGED TO CONSULT WITH THEIR OWN TAX ADVISORS REGARDING
THE TAX CONSEQUENCES OF THE PLANS THAT ARE RELEVANT TO THEIR PARTICULAR
CIRCUMSTANCES.
XI. CONCLUSION AND RECOMMENDATION
The Debtors believe that confirmation of their respective Plans is
desirable and in the best interests of all holders of Claims and Interests. The
Debtors therefore urge you to vote to accept the Plans.
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Respectfully submitted,
TransTexas Gas Corporation
By: /s/ Ed Donahue
-------------------------------
Name: Ed Donahue
-------------------------------
Title: Vice President
-------------------------------
TransAmerican Energy Corporation
By: /s/ Ed Donahue
-------------------------------
Name: Ed Donahue
-------------------------------
Title: Vice President
-------------------------------
TransAmerican Refining Corporation
By: /s/ Ed Donahue
-------------------------------
Name: Ed Donahue
-------------------------------
Title: Vice President
-------------------------------
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APPENDIX 1
DISCLOSURE STATEMENT
GLOSSARY
The following terms used herein shall have the respective meanings
defined below:
Administrative Expense means (a) any cost or expense of administration
of the Chapter 11 Case of TARC, the Chapter 11 Case of TEC or the Chapter 11
Case of TransTexas, as applicable (including, without limitation, the fees and
expenses of Professionals) asserted or arising under Sections 503(b), or 507(b)
of the Bankruptcy Code, (b) a Claim determined to be an Administrative Expense
pursuant to a Final Order, and (c) any fees or charges assessed against the
Estate under Section 1930, title 28, United States Code.
Affiliate of the Debtor means John R. Stanley, or any corporation,
limited liability company or other business entity directly or indirectly
controlled by John R. Stanley.
Allowed means with respect to Claims and Interests, (a) any Claim
against, or Interest in, TransTexas, TEC or TARC, as applicable, proof of which
is timely Filed or by order of the Bankruptcy Court is not or will not be
required to be Filed, (b) any Claim or Interest that has been or is hereafter
listed in the Schedules as neither disputed, contingent or unliquidated, and for
which no timely Filed proof of Claim has been Filed, (c) any Interest registered
in the stock register maintained by or on behalf of the applicable Debtor as of
the Distribution Record Date or (d) any Claim allowed pursuant to the applicable
Plan and, in each such case in (a), (b) and (c) above, as to which either (i) no
objection to the allowance thereof has been Filed within the applicable period
of time fixed by the applicable Plan, the Bankruptcy Code, the Bankruptcy Rules
or the Bankruptcy Court or (ii) such an objection is so Filed and the Claim and
Interest shall have been allowed pursuant to a Final Order (but only to the
extent so allowed).
Allowed Claim or Allowed Interest means an Allowed Claim or an Allowed
Interest in a specified class with respect to TransTexas, TEC or TARC, as
applicable. For example, an Allowed General Unsecured Claim is an Allowed Claim
in the General Unsecured Claims Class and an Allowed Old Common Stock Interest
is an Allowed Interest in the Old Common Stock Interest Class.
Amended Bylaws means the amended and restated bylaws of TransTexas to
become effective on the Effective Date.
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PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Appendix 1 - Page 1
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Amended Certificate of Incorporation means the amended and restated
certificate of incorporation of TransTexas to become effective on the Effective
Date, substantially in the form as Filed on or prior to the Confirmation Date.
Ballot/Election Deadline means the date set by the Bankruptcy Court as
the last date on which Ballots/Elections may be submitted.
Ballots means the ballots that accompany the Plan and Disclosure
Statement of TransTexas, TEC or TARC, as applicable, upon which holders of
Impaired Claims and Impaired Interests entitled to vote on the Plan of such
Debtor shall indicate their acceptance or rejection of the Plan of such Debtor.
Ballots/Elections means the ballots and election forms that accompany
the Plan and the Disclosure Statement of TransTexas, TEC or TARC, as applicable,
upon which holders of Impaired Claims entitled to vote on the Plan of such
Debtor and/or make elections hereunder shall indicate their acceptance or
rejection, of or elections respecting, the Plan of such Debtor.
Bank One means Bank One, N.A., as Indenture Trustee under the
TransTexas Subordinated Notes Indenture.
Bankruptcy Code means Title 11, United States Code, as amended from
time to time, as applicable to the Chapter 11 Case.
Bankruptcy Court means the United States Bankruptcy Court for the
Southern District of Texas, Corpus Christi Division, having jurisdiction over
the Chapter 11 Case or such other court of competent jurisdiction as may obtain
such jurisdiction in the future.
Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure as
promulgated by the United States Supreme Court under Section 2075, title 28,
United States Code, as amended from time to time, applicable to the Chapter 11
Case, and any local rules of the Bankruptcy Court.
Bar Date means as to Creditors other than Governmental Units, September
27, 1999, as the final date for Filing proofs of Claim or proofs of Interest in
the Chapter 11 Case of TransTexas, the Chapter 11 Case of TEC or the Chapter 11
Case of TARC, as applicable; and as to Governmental Units, October 18, 1999, as
the date for Filing Proofs of Claim or Proofs of Interest in the Chapter 11 Case
of TransTexas, the Chapter 11 Case of TEC or the Chapter 11 Case of TARC, as
applicable.
Bondholder Committee means an unofficial committee composed of the
following TEC Bondholders: Credit Suisse First Boston Corporation, Oaktree
Capital Management, L.L.C., Angelo Gordon & Co., L.P. and Merrill Lynch Asset
Management, L.P.; provided, however, each of the
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foregoing Entities shall cease to be a member of such committee from any date
on which it ceases to hold or manage at least $50,000,000 in principal amount
of the TEC Senior Secured Notes.
Bondholder DIP Facility means the Debtor-In-Possession loans and other
financial accommodations provided pursuant to the Credit Agreement among
TransTexas, as borrower, and TEC and TARC, as guarantors, and the Bondholder
Lenders dated as of April 27, 1999, as amended, and all ancillary agreements and
instruments thereto.
Bondholder DIP Secured Claims means the Secured Claims of the lenders
arising under the Bondholder DIP Facility.
Bondholder Lenders means Credit Suisse First Boston Management
Corporation, Angelo Gordon & Co., L.P., and Oaktree Capital Management, L.L.C.
and their respective successors and assigns.
Business Day means any day other than a Saturday, Sunday or legal
holiday.
Cash means currency, a certified check, a cashier's check or a wire
transfer of immediately available funds from any source or a check drawn on a
domestic bank.
Causes of Action means any and all actions, causes of action, suits,
accounts, controversies, agreements, promises, rights to legal remedies, rights
to equitable remedies, rights to payment, and Claims, whether known or unknown,
reduced to judgment, not reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, secured, unsecured and
whether asserted or assertable directly or indirectly or derivatively, in law,
equity or otherwise.
Chapter 11 Case means the Chapter 11 Case of TransTexas, the Chapter 11
Case of TEC or the Chapter 11 Case of TARC, as applicable.
Chapter 11 Case of TARC means TARC's voluntary case pending in the
Bankruptcy Court under Chapter 11 of the Bankruptcy Code as case number
99-21552.
Chapter 11 Case of TEC means TEC's voluntary case pending in the
Bankruptcy Court under Chapter 11 of the Bankruptcy Code as case number
99-21551.
Chapter 11 Case of TransTexas means TransTexas' voluntary case pending
in the Bankruptcy Court under Chapter 11 of the Bankruptcy Code as case number
99-21550.
Claim means any right to (a) payment from TransTexas, TEC or TARC, as
applicable, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured, known or
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unknown, or (b) an equitable remedy for breach of performance if such breach
gives rise to a right of payment from such Debtor, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured, or unsecured, known or unknown.
Class means any group of substantially similar Claims or Interests
classified by the TransTexas Plan, the TEC Plan or the TARC Plan, as applicable,
pursuant to Section 1129(a)(1) of the Bankruptcy Code.
Collateral means any property or interest in property of the TransTexas
Estate, the TEC Estate or the TARC Estate, as applicable, subject to a Lien to
secure the payment or performance of a Claim, which Lien is not subject to
avoidance under the Bankruptcy Code.
Confirmation means the entry of the Confirmation Order relating to
TransTexas, TEC or TARC, as applicable, on the docket maintained by the Clerk of
the Bankruptcy Court with respect to the applicable Chapter 11 Case.
Confirmation Date means the date on which the Confirmation Order
relating to TransTexas, TEC or TARC, as applicable, is entered on the docket
maintained by the Clerk of the Bankruptcy Court with respect to the applicable
Chapter 11 Case.
Confirmation Hearing means the hearing held by the Bankruptcy Court
regarding confirmation of the TransTexas Plan, the TEC Plan or the TARC Plan, as
applicable, pursuant to Section 1129 of the Bankruptcy Code, as such hearing may
be adjourned or continued from time to time.
Confirmation Order means the order of the Bankruptcy Court confirming
the TransTexas Plan, the TEC Plan or the TARC Plan, as applicable, pursuant to
Section 1129 of the Bankruptcy Code.
Convenience Claim means any Claim, which would otherwise be a General
Unsecured Claim that (a) is Allowed in an amount of $500 or less, or (b) is
Allowed in an amount greater than $500, but which is reduced pursuant to Section
6.16 of TransTexas Plan, the TEC Plan or the TARC Plan, as applicable, to an
amount of $500 or less.
Creditor means any Entity that is the holder of a Claim that arose on
or before the Petition Date or a Claim of the kind specified in Section 502(g),
502(h) or 502(i) of the Bankruptcy Code.
Creditors' Committee means the Official Committee of Unsecured
Creditors in the Chapter 11 Cases of TransTexas, TEC and TARC, as appointed by
the Office of the United States Trustee and reconstituted from time to time,
which members are identified in the Disclosure Statement.
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Cure Amount Schedule means the schedule setting forth the proposed
amounts to cure all executory contracts to be assumed under Article VIII of the
TransTexas Plan, the TEC Plan or the TARC Plan, as applicable.
Debtor means TransTexas, TEC or TARC, as applicable, as the debtor in
the applicable Chapter 11 Case.
Debtor-in-Possession means TransTexas, TEC or TARC, as applicable, in
its capacity as a debtor in possession in its Chapter 11 Case under Sections
1101, 1107 and 1108 of the Bankruptcy Code.
Deductible Claim means with respect to any Insured Claim, an amount
equal to the applicable deductible, self-insured retention or retrospective
rating under the relevant insurance policy and any reimbursement obligation of
the applicable Debtor to the insurance carrier for sums expended by the
insurance carrier on account of such Claim (including, without limitation, any
costs and expenses relating to the defense of such Claim). For purposes hereof,
the term "Deductible Claim" shall include any Secured Deductible Claim.
Defendants means Bill Elder, WWL-TV, A.H. Belo, the defendants in the
Lawsuit.
Deficiency Claim means with respect to a Claim that is partially
secured, the amount by which the Allowed amount of such Claim exceeds the value
of the Collateral which secures such Claim.
Delaware Court means the United States Bankruptcy Court for the
District of Delaware.
DGCL means the General Corporation Law of the State of Delaware, as
amended from time to time.
DIP Facilities means, collectively, the Bondholder DIP Facility and the
GMAC DIP Facility.
DIP Orders means the Final Orders approving the GMAC DIP Facility and
the Bondholder DIP Facility.
Disallowed means, when used with respect to a Claim or an Interest, a
Claim or an Interest that has been disallowed pursuant to a Final Order.
Disbursing Agent means (i) with respect to TARC, the Estate
Representative and (ii) with respect to TransTexas, the Entity or Entities
designated in the Confirmation Order relating to TransTexas to disburse property
pursuant to the TransTexas Plan and may include TransTexas when acting in that
capacity.
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Disclosure Statement means the Disclosure Statement relating to the
TransTexas Plan, the TEC Plan and the TARC Plan, including, without limitation,
all exhibits and schedules thereto as approved by the Bankruptcy Court pursuant
to Section 1125 of the Bankruptcy Code, as such Disclosure Statement may be
amended, modified, or supplemented.
Disputed Claim means the portion (including, when appropriate, the
whole) of a Claim that is not an Allowed Claim as to which: (a) a proof of Claim
has been Filed, or deemed Filed under applicable law or order of the Bankruptcy
Court; (b) an objection has been or may be timely Filed; and (c) such objection
has not been: (i) withdrawn, (ii) overruled or denied in whole or in part
pursuant to a Final Order, or (iii) granted in whole or part pursuant to a Final
Order. Before the time that an objection has been or may be Filed, a Claim shall
be considered a Disputed Claim (A) if the amount or classification of the Claim
specified in the proof of Claim exceeds the amount or classification of any
corresponding Claim scheduled by the applicable Debtor in its Schedules, to the
extent of such excess; (B) in its entirety, if any corresponding Claim scheduled
by the applicable Debtor has been scheduled as disputed, contingent or
unliquidated in its Schedules; or (C) in its entirety, if no corresponding Claim
has been scheduled by the applicable Debtor in its Schedules.
Disputed Interest means an Interest, or portion thereof, that has not
become an Allowed Interest.
Distribution Record Date means 5:00 p.m. on the Business Day
immediately preceding the applicable Confirmation Date or other such time and
date designated in the applicable Confirmation Order.
Distributions means the distributions to be made pursuant to the
TransTexas Plan, the TEC Plan or the TARC Plan, as applicable.
Effective Date means a Business Day selected by TransTexas, TEC or
TARC, as applicable, with the prior consent of the Bondholder Committee that is
the later of (a) a day that is not less than eleven (11) days after the
applicable Confirmation Date and (b) the first Business Day on which all
conditions to the occurrence of the Effective Date have been satisfied or duly
waived.
Entity means any individual, corporation, limited or general
partnership, joint venture, association, joint stock company, limited liability
company, estate, entity, trust, trustee, United States Trustee, unincorporated
organization, government, governmental unit (as defined in the Bankruptcy Code),
agency or political subdivision thereof.
Estate Representative means the Person appointed by TARC, with the
prior consent of the Creditors' Committee and the Bondholder Committee, who
shall be an attorney experienced in commercial litigation to serve as the
Litigation Trustee and the Disbursing Agent.
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Exchange Act means the Securities Exchange Act of 1934, as amended.
Extended Bondholder DIP Facility means the Bondholder DIP Facility as
amended on the Effective Date to provide for, among other things, the extension
of the maturity date thereunder with respect to $10,000,000 in principal amount
owing thereunder and all interest, fees and other charges accruing thereon and
associated therewith to the maturity date specified in the Post Confirmation
Credit Facility, substantially in the form as Filed on or prior to the
Confirmation Date.
Face Amount means: (a) with respect to a particular Claim (i) if the
Claim is listed in the Schedules and the holder of such Claim has not Filed a
proof of Claim within the applicable period of limitation fixed by the
Bankruptcy Court pursuant to the Bankruptcy Code, the Bankruptcy Rules or other
applicable law, the amount of such Claim that is listed in the Schedules as not
disputed, contingent or unliquidated; or (ii) if the holder of such Claim has
Filed a proof of Claim with the Bankruptcy Court within the applicable period of
limitation fixed by the Bankruptcy Court pursuant to the Bankruptcy Code, the
Bankruptcy Rules or other applicable law, the liquidated amount stated in such
proof of Claim, or such amount as is determined by the Final Order of the
Bankruptcy Court; (b) in the case of an Administrative Expense, the liquidated
amount set forth in any application Filed with respect thereto, or the amount
set forth in the Debtor's books and records or such amount as is determined
pursuant to a Final Order; or (c) in all other cases, zero or such amount as
shall be fixed or estimated pursuant to a Final Order.
File, Filed or Filing means file, filed or filing with the Bankruptcy
Court in the Chapter 11 Case of TransTexas, the Chapter 11 Case of TEC or the
Chapter 11 Case of TARC, as applicable.
Final Order means an order or judgment of the Bankruptcy Court entered
by the Clerk of the Bankruptcy Court on the docket in the Chapter 11 Case of
TransTexas, the Chapter 11 Case of TEC or the Chapter 11 Case of TARC, as
applicable, which has not been reversed, vacated or stayed and as to which (a)
the time to appeal, petition for certiorari or move for a new trial, reargument
or rehearing has expired and as to which no appeal, petition for certiorari or
other proceedings for a new trial, reargument or rehearing shall then be pending
or (b) if an appeal, writ of certiorari, new trial, reargument or rehearing
thereof has been sought, such order or judgment of the Bankruptcy Court shall
have been affirmed by the highest court to which such order was appealed, or
certiorari shall have been denied or a new trial, reargument or rehearing shall
have been denied or resulted in no modification of such order, and the time to
take any further appeal, petition for certiorari or move for a new trial,
reargument or rehearing shall have expired; provided, however, that the
possibility that a motion under Rule 60 of the Federal Rules of Civil Procedure,
or any analogous rule under the Bankruptcy Rules, may be Filed relating to such
order, shall not cause such order not to be a Final Order.
First Union means First Union National Bank, as Indenture Trustee for
the TARC Subordinated Notes.
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Firstar means Firstar Bank, N.A., formerly known as Firstar Bank of
Minnesota, N.A., as Indenture Trustee for the TEC Bondholders.
Galveston Bay Processing Corporation means Galveston Bay Processing
Corporation, a Delaware corporation.
General Unsecured Claim means (i) with respect to TEC, any Claim
relating to TEC, including, without limitation, the TEC Senior Secured Note
Deficiency Claim, that is not an Administrative Expense of TEC, a Priority Claim
relating to TEC or a Secured Claim relating to TEC, (ii) with respect to
TransTexas, any Claim relating to TransTexas including, without limitation, any
Deductible Claim, that is not an Administrative Expense of TransTexas, a
Priority Tax Claim relating to TransTexas, a Priority Claim relating to
TransTexas, a Secured Claim relating to TransTexas, a Convenience Claim or a
Production Payment Claim relating to TransTexas, and (iii) with respect to TARC,
any Claim relating to TARC that is not an Administrative Expense of TARC, a
Priority Claim relating to TARC, a Secured Claim relating to TARC, a TARC Senior
Secured Note Claim, or a TARC Subordinated Note Claim.
GMAC means GMAC Commercial Credit LLC, formerly known as BNY Factoring
LLC, successor by merger to BNY Financial Corporation.
GMAC DIP Facility means the Debtor-in-Possession loans and other
financial accommodations provided pursuant to the Post-Petition Amendment No. 1
to Financing Agreement between TransTexas and GMAC dated as of April 19, 1999
and all ancillary agreements and instruments thereto.
GMAC Secured Claim means the Secured Claim of GMAC.
Governmental Unit means a governmental unit as such term is defined in
Section 101(27) of the Bankruptcy Code.
Impaired means with respect to any Claim or Interest, impaired within
the meaning of Section 1124 of the Bankruptcy Code.
Indemnity Claim means a Claim relating to TransTexas, TEC or TARC, as
applicable, of a director or officer of such Debtor that is not assumed by such
Debtor pursuant to Article VIII of the Plan of such Debtor for any obligations
of such Debtor to indemnify directors or officers against any obligations
pursuant to such Debtor's certificate of incorporation, bylaws, contract,
applicable state law, any combination of the foregoing, or otherwise.
Indenture Trustee means any entity identified as the trustee, paying
agent or other similar fiduciary under a bond, note or other debt instrument
(including, but not limited to (i) with respect
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to TARC, the TEC Senior Secured Notes and the TARC Subordinated Notes, (ii)
with respect to TEC, the TEC Senior Secured Notes Indenture, and (iii) with
respect to TransTexas, the TEC Senior Secured Notes and the TransTexas
Subordinated Notes).
Indenture Trustee Claim means: (i) with respect to TransTexas, the fees
and expenses of Bank One or Firstar, as Indenture Trustee under their respective
Indentures, or any other successor Indenture Trustee, incurred in their capacity
as such, including the fees and expenses of its counsel, (ii) with respect to
TARC, the fees and expenses of First Union or Firstar, as Indenture Trustee
under their respective Indentures, or any other successor Indenture Trustee,
incurred in their capacity as such, including the fees and expenses of its
counsel and (iii) with respect to TEC, the fees and expenses of Firstar, as
Indenture Trustee under the TEC Senior Secured Notes Indenture, or any other
successor Indenture Trustee, incurred in their capacity as such, including the
fees and expenses of its counsel.
Indentures means, collectively, (i) with respect to TEC, the TEC Senior
Secured Notes Indenture, (ii) with respect to TransTexas, the TransTexas Senior
Secured Loan Agreement, the TEC Senior Secured Notes Indenture and the
TransTexas Subordinated Notes Indenture and (iii) with respect to TARC, the TARC
Senior Secured Loan Agreement, the TEC Senior Secured Notes Indenture and the
TARC Subordinated Notes Indenture.
Insured Claim means any Claim relating to TransTexas, TEC or TARC, as
applicable, arising from an incident or occurrence that is covered under such
Debtor's general liability insurance policies but shall not include Workers'
Compensation Claims arising out of Workers' Compensation Programs and employee
benefit plans.
Insured Portion means the portion of any Insured Claim that is covered
under an applicable Debtor's general liability insurance policy and would not
constitute a Deductible Claim.
Interest Reserve Accounts means the custodial accounts at First Union
in the name of First Union, as Trustee, which were established pursuant to the
TARC Subordinated Notes Indenture.
Interests means, as of the Petition Date, the equity Interests in
TransTexas, TEC or TARC, as applicable, including, without limitation, shares of
common stock and shares of preferred stock of such Debtor and any rights,
options, warrants, calls, subscriptions or other similar rights or agreements,
commitments or outstanding securities obligating such Debtor to issue, transfer
or sell any shares of capital stock of such Debtor.
IT means information technology.
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PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Appendix 1 - Page 9
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Lawsuit means TARC's Causes of Action in that case styled TARC and John
Stanley v. Bill Elder, WWL-TV, A.H. Belo, currently pending in the 19th District
Court, East Baton Rough Parish, LA.
Lien means any charge against, encumbrance upon or other interest in
property, the purpose of which is to secure payment of a debt or performance of
an obligation.
Litigation Trust means the trust created by the Litigation Trust
Agreement and set up for the benefit of the Class 2 Creditors of TARC.
Litigation Trust Agreement means the Creditor Litigation Trust
Agreement in the form acceptable to the Creditors Committee, TARC and the
Bondholders Committee.
M&M Lien Claimant means any Entity that has a valid mineral contractor
or mineral subcontractor Claim pursuant to Chapter 56 of the Texas Property Code
or similar statute of a state other than Texas or any Entity with rights which
constitute a perfected lien under the Texas Constitution, Article 16, Section
37, to the extent enforceable in a case under Title 11 of the United States
Code.
M&M Lien Secured Claim means a Secured Claim held by a M&M Lien
Claimant which has been determined by the Reviewer to be senior in priority as
of the Petition Date under the applicable state law to the Secured Claim of TEC
and/or Firstar with respect to the Collateral securing such Secured Claim.
Management Agreement means the new employment agreement between John R.
Stanley and Reorganized TransTexas dated as of the Effective Date.
Maximum GUC Cash Amount means $20 million.
Mineral Interest means any estate or interest in oil, gas and/or
minerals, leases, in which TransTexas claims (either in severalty or in common
with other Mineral Interest owners) rights to a share of oil and gas production
as defined in Section 9.319(q) of the Texas Business and Commerce Code.
Mineral Interest Claimant means any Entity other than TransTexas and
M&M Lien Claimant that owns an interest in a Mineral Interest, including without
limitation, the owners of royalty Interests, overriding royalty Interests,
working Interests, and mineral Interests, whether such interest are perpetual or
terminable (excluding any person or entity that claims an interest pursuant to a
production payment).
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PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Appendix 1 - Page 10
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Mineral Interest Secured Claim means a Secured Claim held by a Mineral
Interest Claimant which has been determined by the Reviewer to be senior in
priority as of the Petition Date under the applicable state law to the Secured
Claim of TEC and/or Firstar with respect to the Collateral securing such Secured
Claim.
Miscellaneous Secured Claims means a Secured Claim relating to
TransTexas, TEC or TARC, as applicable, other than Secured Tax Claims relating
to such Debtor, Bondholder DIP Secured Claims relating to such Debtor,
TransTexas Senior Secured Note Claims, GMAC Secured Claims, Mineral Interest
Secured Claims and M&M Lien Secured Claims.
New Board of Directors means the board of directors of Reorganized
TransTexas, as of the Effective Date.
New Class A Common Stock means, collectively, the 100 million shares of
authorized new Class A Common Stock of Reorganized TransTexas, par value $.01
per share, of which 1,002,500 shares are to be issued on the Effective Date
pursuant to the TransTexas Plan.
New Class B Common Stock means, collectively, the 247,500 shares of
authorized New Class B Common Stock of Reorganized TransTexas, par value $0.01
per share, all of which shares are to be issued on the Effective Date pursuant
to the TransTexas Plan.
New Common Stock means, collectively, the New Class A Common Stock and
the New Class B Common Stock.
New Junior Preferred Stock means the Junior Preferred Stock to be
authorized and issued on the Effective Date by Reorganized TransTexas pursuant
to the TransTexas Plan. The principal economic terms of the New Junior Preferred
Stock are set forth on Annex A to the TransTexas Plan.
New Lenders means certain institutional lenders holding notes secured
by a security interest and a lien against the Refinery Assets.
New Preferred Stock means, collectively, the New Senior Preferred Stock
and the New Junior Preferred Stock.
New Secured Notes Security Documents means the security and pledge
agreement and mortgages pursuant to which certain Collateral shall be pledged to
secure Reorganized TransTexas' obligations under the New Senior Secured Notes,
substantially in the form as Filed on or prior to the Confirmation Date.
New Senior Preferred Stock means the 10% Senior Preferred Stock to be
authorized and issued on the Effective Date by Reorganized TransTexas pursuant
to the TransTexas Plan. The
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principal economic terms of the New Senior Preferred Stock are set forth on
Annex B to the TransTexas Plan.
New Senior Secured Notes means the Senior Secured Notes to be issued by
Reorganized TransTexas pursuant to the TransTexas Plan under the New Senior
Secured Notes Indenture. The principal economic terms of the New Senior Secured
Notes are set forth on Annex C to the TransTexas Plan.
New Senior Secured Notes Indenture means the Indenture between
Reorganized TransTexas, as issuer, and the New Senior Secured Notes Indenture
Trustee, as indenture trustee, which indenture relates to the New Senior Secured
Notes, substantially in the form as Filed on or prior to the Confirmation Date.
New Senior Secured Notes Indenture Trustee shall be as designated at
the Confirmation Hearing and have the meaning set forth in the Confirmation
Order.
New Warrant Agent shall be as designated by TransTexas, with the
consent of the Bondholder Committee, at the Confirmation Hearing and shall have
the meaning set forth in the Confirmation Order.
New Warrant Agreement means the Warrant Agreement between Reorganized
TransTexas, as issuer, and the New Warrant Agent, as agent, which agreement
relates to the New Warrants, substantially in the form as Filed on or prior to
the Confirmation Date.
New Warrants means the freely transferable rights issued pursuant to
the New Warrant Agreement to purchase shares of the New Common Stock. The
principal economic terms of the New Warrants are set forth on Annex D to the
TransTexas Plan.
Old Common Stock means all authorized, issued and outstanding shares of
the common stock of TransTexas, $.01 par value, as of the Petition Date.
Orion means Orion Refining Corporation, a Delaware corporation.
Paying Agent means the Disbursing Agent, any Indenture Trustee, or any
other entity contractually authorized and/or obligated to make Distributions to
certain holders of Claims and Interests and similar intermediaries an agents
participating in making or conveying Distributions as required by the Plan.
Petition Date means April 19, 1999, with respect to TransTexas, and
April 20, 1999, with respect to TEC and TARC.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Appendix 1 - Page 12
<PAGE> 157
Plan means the TransTexas Plan, the TEC Plan or the TARC Plan, as
applicable.
Plan Documents means: (i) with respect to TEC, the agreements,
documents and instruments entered into on or as of the Effective Date as
contemplated by, and in furtherance of, the TEC Plan, (ii) with respect to
TransTexas, the agreements, documents and instruments entered into on or as of
the Effective Date as contemplated by, and in furtherance of, the TransTexas
Plan and (iii) with respect to TARC, the Litigation Trust Agreement and the
other agreements, documents and instruments entered into on or as of the
Effective Date as contemplated by, and in furtherance of, the TARC Plan.
Plan Rate means the "underpayment rate" (as defined in Section
6621(a)(2) of the Internal Revenue Code of 1986, as amended) on the Business Day
immediately preceding the applicable Confirmation Date, which rate is the rate
of interest charged by the Internal Revenue Service on delinquent federal income
taxes.
Post-Confirmation Credit Facility means the $40,000,000 credit facility
between Reorganized TransTexas and certain lender(s), and all ancillary
agreements and instruments thereto, in the form as Filed on or prior to the
Confirmation Date.
Priority Tax Claim means any Claim of a Governmental Unit of the kind
entitled to priority in payment as specified in Sections 502(i) and 507(a)(8) of
the Bankruptcy Code.
Production Payment Holder Claims means Claims of TCW Portfolio No. 1555
DRV Sub-Custody Partnership, L.P., TCW DR VI Investment Partnership, L.P. and
TCW Asset Management Company which relate to that certain agreement entitled the
Production Payment Drilling Program dated February 23, 1998; and Claims of TCW
DR VI Investment Partnership, L.P. and TCW Asset Management Company which relate
to that certain agreement entitled the Production Payment Transactions dated
September 30, 1998.
Professionals means those Entities: (a) employed pursuant to an order
of the Bankruptcy Court in accordance with Sections 327 or 1103 of the
Bankruptcy Code providing for compensation for services rendered prior to the
Effective Date pursuant to Sections 327, 328, 329, 330 and 331 of the Bankruptcy
Code, or (b) seeking compensation and reimbursement pursuant to Sections
503(b)(2) or (4) of the Bankruptcy Code.
Quarterly Distribution Date means the first Business Day following the
end of each quarterly period (i.e., March 31, June 30, September 30, and
December 31) following the Effective Date, or as soon thereafter as practicable.
Ratable Proportion means, with reference to any Distribution on account
of any Claim or Interest in any Class or subclass, a Distribution equal in
amount to the ratio (expressed as a
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Appendix 1 - Page 13
<PAGE> 158
percentage) that the amount of such Claim or number of shares evidencing such
Interests, as applicable, bears to the aggregate amount of Claims or aggregate
number of outstanding shares of Interest in the same Class or subclass, as
applicable.
Registration Rights Agreement means the registration rights agreement
relating to the Reorganization Securities, in substantially the form as Filed on
or prior to the Confirmation Date.
Registration Statement means a registration statement pursuant to
Section 12 of the Exchange Act.
Rejection Claim means any Claim against the Debtor arising from the
rejection of any executory contract or unexpired lease, including any Claim of
(a) a lessor for damages resulting from the rejection of a lease of real
property as any such Claim shall be calculated in accordance with Section
502(b)(6) of the Bankruptcy Code or (b) an employee for damages resulting from
the rejection of an employment agreement as any such Claim shall be calculated
in accordance with Section 502(b)(7) of the Bankruptcy Code. A Rejection Claim
shall constitute a General Unsecured Claim.
Reorganization Securities means the New Senior Secured Notes, the New
Senior Preferred Stock, the New Junior Preferred Stock, the New Common Stock and
the New Warrants.
Reorganized TransTexas or Reorganized Debtor means TransTexas from and
after the Effective Date.
Reviewer means the person appointed by the Bankruptcy Court pursuant to
the procedures set forth in the Motion of TransTexas Gas Corporation for Order
Establishing Procedures For Determination of Amount and Priority of Mechanic's
Lien Claims Filed on September 17, 1999, to review the Claims of M&M Lien
Claimants and prepare a written report of his proposed factual findings and
recommendations for disposition of such Claims.
Schedules means the schedules of assets and liabilities and the
statement of financial affairs Filed by TransTexas, TEC or TARC, as applicable,
under Section 521 of the Bankruptcy Code, Bankruptcy Rule 1007 on June 14, 1999,
as amended from time to time.
Secured Claim means a Claim secured by a Lien on Collateral to the
extent of the value of such Collateral (a) as set forth in the TransTexas Plan,
the TEC Plan or the TARC Plan, as applicable, (b) as agreed to by the holder of
such Claim and the Debtor or (c) as determined pursuant to a Final Order in
accordance with Section 506(a) of the Bankruptcy Code or, in the event that such
Claim is subject to setoff under Section 553 of the Bankruptcy Code, to the
extent of such setoff.
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PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Appendix 1 - Page 14
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Secured Tax Claim means a Secured Claim of a Governmental Unit for
taxes assessed before the commencement of the Case.
Securities Act means the Securities Act of 1933, as amended.
SubDebt Committee means the Official Committee of holders of the
TransTexas Subordinated Notes in the Chapter 11 case of TransTexas, as appointed
by the Office of the United States Trustee and reconstituted from time-to-time,
which members are identified in the Disclosure Statement.
TARC means TransAmerican Refining Corporation, a Texas corporation, and
a debtor-in-possession, in case number 99-21552, pending in the Bankruptcy
Court and which is jointly administered with the Debtor and TEC.
TARC Common Stock means all authorized, issued and outstanding shares
of common stock of TARC, $0.1 par value, as of the Petition Date and all other
Interests.
TARC Estate means the estate of TARC created by Section 541 of the
Bankruptcy Code upon the commencement of the Chapter 11 Case.
TARC Plan means the Plan of Liquidation under Chapter 11 of the
Bankruptcy Code proposed by TARC dated as of July 16, 1999, including, without
limitation the annexes, exhibits and schedules thereto, as amended by the First
Amended Plan of Liquidation under Chapter 11 of the Bankruptcy Code proposed by
TARC dated as of July 22, 1999, and as further amended from time to time.
TARC Senior Secured Loan Agreement means the Loan Agreement between
TARC and TEC, dated as of June 13, 1997, as amended from time to time.
TARC Senior Secured Note means the fully accreted $920 million senior
secured note dated June 13, 1997, originally made by TARC payable to TEC and
which was pledged as collateral for the TEC Senior Secured Notes.
TARC Senior Secured Note Claims means the Claims of the holder of the
TARC Senior Secured Note.
TARC Senior Secured Note Deficiency Claim means the Deficiency Claim of
the holder of the $920 million senior secured note dated June 13, 1997,
originally made by TARC payable to TEC.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Appendix 1 - Page 15
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TARC Subordinated Note Claims means the Claims of the holder of the
TARC Subordinated Notes.
TARC Subordinated Notes means the $200 million aggregate principal
amount of TARC 16% Senior Subordinated Notes due 2001 issued by TARC pursuant to
the TARC Subordinated Notes Indenture.
TARC Subordinated Notes Indenture means the Indenture between TARC, as
issuer, and First Union, as Indenture Trustee, dated as of December 30, 1997, as
amended from time to time, which relates to the TARC Subordinated Notes.
TARC/TEC Note means the promissory note made by TARC to TEC in the
original face amount of $50 million with interest thereon as therein provided,
dated October 1, 1998, payable to TEC, and which was pledged as Collateral for
the TEC Senior Secured Notes.
TARC Transaction means the transaction completed by TARC in December
1998, which is described under "Background--Prior Transactions--the TARC
Transaction."
TCR and TCR Holding means TCR Holding Corporation, a Delaware
corporation.
TCR Holding Preferred Stock means all stock held by TARC in TCR Holding
pledged to TEC as collateral for the TARC Senior Secured Note.
TCR Preferred Stock means all stock held by TCR in Orion Refining
Corporation, pledged to TEC under that certain Pledge Agreement between TCR and
TEC dated December 15, 1998, as amended.
TCR Secured Note means the Secured Note assumed by TCR , dated October
1, 1998, in the original face amount of $50,000,000 with interest thereon as
therein provided payable to TEC and pledged to Firstar by TEC as Collateral for
the TEC Senior Secured Notes.
TEC means TransAmerican Energy Corporation, a Delaware corporation, and
a debtor-in-possession, in case number 99-21551, pending in the Bankruptcy
Court and which is jointly administered with the Debtor and TransTexas.
TEC Bondholders means the holders of the TEC Senior Secured Notes as of
the Distribution Record Date.
TEC Common Stock means all authorized, issued and outstanding shares of
the common stock of TEC, $0.1 par value, as of the Petition Date and all other
Interests.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Appendix 1 - Page 16
<PAGE> 161
TEC Estate means the estate of TEC created by Section 541 of the
Bankruptcy Code upon the commencement of the Chapter 11 Case.
TEC Plan means the Plan of Liquidation under Chapter 11 of the
Bankruptcy Code proposed by TEC dated as of July 16, 1999, including, without
limitation, the annexes, exhibits and schedules thereto, as amended by the First
Amended Plan of Liquidation under Chapter 11 of the Bankruptcy Code proposed by
TEC dated as of July 22, 1999, and as further amended from time to time.
TEC Senior Secured Note Claims means the Secured Claims of the holders
of the TEC Senior Secured Notes.
TEC Senior Secured Note Deficiency Claims means the Deficiency Claims
of the holder of the TEC Senior Secured Notes.
TEC Senior Secured Notes means, collectively, the $475 million
aggregate principal amount of the 11 1/2% Senior Secured Notes due 2002 and the
$1.13 billion aggregate principal amount of the 13% Senior Secured Discount
Notes due 2002 issued by TEC pursuant to the TEC Senior Secured Notes Indenture.
TEC Senior Secured Notes Indenture means the Indenture between TEC, as
issuer, and Firstar, as Indenture Trustee, dated as of June 13, 1997, as amended
from time to time, which relates to the TEC Senior Secured Notes.
TEC Transaction means, collectively, the transactions completed by TEC,
TransTexas and TARC in June 1997 that are described under "Background--Prior
Transactions--the TEC Transaction."
Tort Claim means any Claim relating to TransTexas, TEC or TARC, as
applicable, related to personal injury, property damage, products liability or
other similar Claims against such Debtor. A Tort Claim shall constitute an
Unsecured Claim.
TransAmerican means TransAmerican Natural Gas Corporation, a Texas
corporation.
TransTexas means TransTexas Gas Corporation, a Delaware corporation and
Debtor-in-Possession, in Case No. 99-21550, pending in the Bankruptcy Court and
which is jointly administered with the Chapter 11 cases of the Debtor and TEC.
TransTexas Common Stock means all authorized, issued and outstanding
shares of the Common Stock of TransTexas $.01 par value, as of the Petition
Date.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Appendix 1 - Page 17
<PAGE> 162
TransTexas Estate means the estate of TransTexas created by Section 541
of the Bankruptcy Code upon the commencement of the Chapter 11 Case.
TransTexas Plan means the Plan of Reorganization under Chapter 11 of
the Bankruptcy Code proposed by TransTexas, dated as of July 16, 1999,
including, without limitation, the annexes, exhibits and schedules thereto, as
amended by the First Amended Plan of Reorganization under Chapter 11 of the
Bankruptcy Code proposed by TransTexas dated as of July 22, 1999, and as further
amended from time to time.
TransTexas Senior Secured Loan Agreement means the Loan Agreement
between TransTexas and TEC, dated as of June 13, 1997, as amended from time to
time.
TransTexas Senior Secured Note means the $450 million Senior Secured
Note dated June 13, 1997, originally made by TransTexas payable to TEC and which
was pledged as Collateral for the TEC Senior Secured Notes.
TransTexas Senior Secured Note Claims means the Secured Claims of the
holder of the TransTexas Senior Secured Note.
TransTexas Senior Secured Note Deficiency Claim means the Deficiency
Claim of the holder of the $450 million senior secured note dated June 13, 1997,
originally made by TransTexas payable to TEC and the Claim of the holder of the
$50 million unsecured note dated January 23, 1998, originally made by TransTexas
payable to TEC.
TransTexas Subordinated Note Claims means the Claims of the holders of
the TransTexas Subordinated Notes due 2001.
TransTexas Subordinated Notes means the $115.8 million aggregate
principal amount of TransTexas 13 3/4% Series D Senior Subordinated Notes due
2001 issued by TransTexas pursuant to the TransTexas Subordinated Notes
Indenture.
TransTexas Subordinated Notes Indenture means the Indenture between
TransTexas, as issuer, and Bank One, as Indenture Trustee, dated as of June 13,
1997, as amended from time to time, which relates to the TransTexas Subordinated
Notes.
TransTexas/TEC Note means the note made by TransTexas to TEC in the
original face amount of $50,000,000 with interest thereon as therein provided,
dated January 23, 1998, payable to TEC and which was pledged as Collateral for
the TEC Senior Secured Notes.
Unclaimed Property means any Cash and Reorganization Securities
unclaimed on or after the applicable distribution date made in respect of the
relevant Allowed Claim or Allowed Interest.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Appendix 1 - Page 18
<PAGE> 163
Unclaimed Property shall include: (a) checks (and the funds represented thereby)
and Reorganization Securities, mailed to an address of a holder of an Allowed
Claim or Interest and returned as undeliverable without a proper forwarding
address; (b) funds for uncashed checks; and (c) checks (and the funds
represented thereby) and Reorganization Securities not mailed or delivered
because no address to mail or deliver such property was available.
Unimpaired means a Claim that is not Impaired.
Workers' Compensation Claims means, with respect to TransTexas, TEC or
TARC, as applicable, any Claims held by (a) current and former employees of such
Debtor, (b) beneficiaries of current and former employees of the Debtor and (c)
Governmental Units, for payment or reimbursement under and according to the
terms of the Workers' Compensation Programs.
Workers' Compensation Programs means those statutorily mandated
programs in effect on the Petition Date providing compensation, paid for by
third parties, to employees of the applicable Debtor for job-related injuries or
job related illnesses, which were required to be maintained under provisions of
non-bankruptcy law.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Appendix 1 - Page 19
<PAGE> 164
APPENDIX 2
TransTexas Gas Corporation
Proforma Financial Projections
1998-2006
Introduction
TransTexas Gas Corporation is an independent oil and gas producer engaged in the
exploration for and development and production of natural gas and condensate,
primarily in South Texas and along the upper Texas Gulf Coast. The business
strategy of TransTexas is to use its experience to continue to find, develop,
and produce reserves at a low cost. TransTexas's long term goal is to convert
unproven acreage to proved reserves through drilling in underexploited areas.
Pursuant to its strategy, TransTexas has made and will be required to make,
substantial capital expenditures to fully develop its oil and gas reserves.
In accordance with the TransTexas Plan, Reorganized TransTexas will emerge from
Chapter 11 and will continue to operate its properties, and intends to continue
its strategy of exploration on both existing acreage and acreage not currently
held.
Historical and Projected Financial Statements
The attached schedules set forth TransTexas's (i) audited balance sheet and
related statement of operations as of and for each of the years in the two-year
period ended January 31, 1999; and (ii) projected balance sheets and statements
of projected operations as of and for each of the years in the six-year period
ending January 31, 2006, hereinafter referred to as the "Proforma Financial
Projections."
The Proforma Financial Projections present, to the best of TransTexas's belief,
the expected results of operations for the projected periods, using the
assumptions referred to below. Accordingly, the Proforma Financial Projections
reflect TransTexas's judgment, based on current facts and circumstances, of the
expected conditions and TransTexas's anticipated course of action upon the
Effective Date. Although TransTexas believes the assumptions set forth below are
reasonable, their validity may be affected by the occurrence of events and the
existence of conditions not now contemplated, many of which are beyond the
control of TransTexas. In addition estimates become less precise in later years
in the projection period. The Proforma Financial Projections are, therefore, not
intended to represent Reorganized TransTexas's actual future performance. Actual
operating results during the projected periods will vary from the Proforma
Financial Projections and such variations may be material.
The Proforma Financial Projections were developed using a detailed model of
wells to be drilled during the projection period on properties currently in
possession of TransTexas and properties to be acquired by TransTexas during the
projection period. The model considered each individual well to be drilled in
the various development, delineation and exploration areas, using
industry-accepted methodology including extrapolation of drilling profiles from
similar wells, contingent success rates and historical capital costs to drill
wells of similar depth and prospective formation objectives.
Appendix 2
Page 1
<PAGE> 165
Aggregate production was estimated from base wells in production as of the time
of preparation of the projections, declined in accordance with the rates
utilized in the Netherland, Sewell & Associates reserve report, plus incremental
production from wells to be drilled. Production profiles and resultant cashflows
of each incremental well were estimated from the anticipated initial production,
adjusted for contingent success rates, using historical decline rates and
general commodity pricing assumptions.
In conformance with the unescalated commodity pricing assumptions of the model,
capital expenditures were unescalated.
The historical information for the years ended January 31, 1998 and 1999 has
been extracted from TransTexas's consolidated financial statements for such
years, as included in TransTexas's 1999 Securities and Exchange Commission Form
10-K, including the related footnotes, which should be read for additional
information.
The Proforma Financial Projections have not been prepared with a view towards
compliance with published guidelines of the Securities and Exchange Commission
and the American Institute of Certified Accountants, regarding projections or
forecasts. The Proforma financial Projections have not been examined, reviewed
or compiled by TransTexas's independent accountants in accordance with AICPA
Guidelines.
Capitalized terms not otherwise defined herein are used as defined in the
TransTexas Plan, Disclosure Statement and attached Appendices. The Proforma
Financial Projections should be read in conjunction with the TransTexas Plan,
Disclosure Statement and related Appendices Effective Date. The Proforma
Financial Projections assume that TransTexas will emerge from Chapter 11 on an
Effective Date of December 31, 1999.
Financial Reporting by Entities in Reorganization under the Bankruptcy Code
("SOP 90-7"). The Proforma Financial Projections conform to SOP 90-7.
Under SOP 90-7, the reorganization value, or enterprise value, of the entity is
allocated to the entity's assets in conformance with the purchase method
described in APB Opinion 16, "Business Combinations." The effects of fresh-start
adjustments on assets and liabilities and the effects of the discharge of
liabilities gives rise to extraordinary gain.
Upon the Effective Date, Reorganized TransTexas will allocate the actual
reorganization value to the entity's assets, and that allocation may be
significantly different from the balance sheet presented herein. Because SOP
90-7 requires a different basis of accounting, financial statements for entities
emerging from Chapter 11 are not comparable to financial statements of
predecessor operations.
Appendix 2
Page 2
<PAGE> 166
SIGNIFICANT ASSUMPTIONS
OPERATING ASSUMPTIONS
Pricing. The markets for oil and gas have historically been, and will continue
to be, volatile. Prices for oil and gas may fluctuate in response to relatively
minor changes in supply and demand, market uncertainty and a variety of factors
beyond the control of TransTexas. Set forth in the table below are the average
prices historically obtained by and assumed future prices to be received by
Reorganized TransTexas during the period indicated.
<TABLE>
<CAPTION>
Year Ended Jan 31 Year Ended Jan 31
Historical Projected
----------------- ----------------------------------------------------------
1998 1999 2000(1) 2001 2002 2003 2004 2005 2006
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Price:
Gas (per Mcf) $2.09 $2.10 $2.45 $2.45 $2.46 $2.46 $2.46 $2.46 $2.46
Condensate and Oil (per Bbl) $19.20 $11.91 $17.62 $17.62 $17.62 $17.62 $17.62 $17.62 $17.62
</TABLE>
(1) For the period November 1, 1999 through January 30, 2000 only.
TransTexas assumes natural gas prices using the historical three-year average of
the NYMEX strip price, adjusted for Btu content and transportation. The basis
for TransTexas's condensate and oil price assumption is the historical
three-year average of Koch's WTI posting adjusted for bonus and transportation.
The higher price per Mcf beginning in fiscal 2000 is primarily due to
TransTexas's new production in the Eagle Bay area. The gas produced in this area
has a Btu content approximately 10% higher than production from areas that
TransTexas has operated in the past. In addition, the transportation costs in
prior years were higher due to the location of the reserves.
TransTexas's revenue and cash flows will be affected by changes in oil and gas
prices. Oil and gas prices are subject to substantial seasonal, political and
other fluctuations that TransTexas is unable to control or accurately predict.
From time to time, prior to the bankruptcy petition, TransTexas has entered into
commodity price swap agreements to reduce its exposure to price risk in the spot
market for natural gas. The Proforma Financial Projections do not assume that
Reorganized TransTexas will enter into any transactions to hedge against changes
in oil and gas prices or interest rates.
Production Volumes. Set forth in the following table are the actual production
volumes and projected production volumes.
Appendix 2
Page 3
<PAGE> 167
<TABLE>
<CAPTION>
Year Ended Jan 31 Year Ended Jan 31
Historical Projected
------------------- ---------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004 2005 2006
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Price:
Gas (per Bcf) 72.4 85.6 29.9 50.5 53.9 54.6 54.5 53.0 51.8
Condensate and Oil (MBbls) 619 1,120 1911 2908 3354 3485 3036 2528 2078
</TABLE>
Overall production declined between fiscal years 1998 and 1999 due to the sale
of the Lobo area oil and gas properties. The increase in condensate and oil
production for future periods results from TransTexas' existing and planned
production from Eagle Bay and other upper gulf coast areas.
Operating Costs. The following chart identifies historical and forecasted
operating costs:
<TABLE>
<CAPTION>
Year Ended Jan 31 Year Ended Jan 31
Historical Projected
------------------ ----------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004 2005 2006
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average Operating
Costs (per Mcfe) (1) $0.58 $0.49 $0.67 $0.57 $0.51 $0.50 $0.52 $0.55 $0.57
</TABLE>
(1) Operating costs include lease operating expenses and all taxes other than
income taxes.
The Proforma Financial Projections separately identify estimated lease operating
expenses from transportation costs. Taxes, including severance and ad valorem
taxes, are disclosed separately and have been estimated by TransTexas based on
anticipated production and commodity prices, and applicable laws.
Depreciation, Depletion and Amortization. The following table summarizes
depletion rates per Mcfe for the periods indicated.
<TABLE>
<CAPTION>
Year Ended Jan 31 Year Ended Jan 31
Historical Projected
----------------- ----------------------------------------------------------
1998 1999 2000(1) 2001 2002 2003 2004 2005 2006
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Depletion Expense
(per Mcfe) $1.11 $1.96 $1.15 $1.32 $.88 $.77 $.70 $.70 $.70
</TABLE>
(1) As of January 31, 2000.
Appendix 2
Page 4
<PAGE> 168
General and Administrative Expenses. The following table identifies historical
and estimated future general and administrative expenses:
<TABLE>
<CAPTION>
Year Ended Jan 31 Year Ended Jan 31
Historical Projected
------------------ ---------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004 2005 2006
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
G&A Expense $48,156 $21,938 $33,202 $21,416 $22,058 $22,720 $25,402 $24,104 $24,827
</TABLE>
The decrease in general and administrative expenses from 1998 to 1999
represents TransTexas's change in operations from the Lobo area in south Texas
to the Texas gulf coast area.
Reorganization Expenses. TransTexas estimates that reorganization costs,
including administrative claims and financing costs of the exit facility, will
approximate $5.0 million. TransTexas has planned to pay such expenditures and
claims between the months of July 1999 and March 2000.
Interest Expense. The Proforma Financial Projections include interest expense in
accordance with the terms of Reorganized TransTexas's capital structure as
discussed below and consistent with the terms outlined in the TransTexas Plan.
Income Taxes. TransTexas estimates no material tax liabilities during the
Proforma Financial Projections period.
BALANCE SHEET ASSUMPTIONS
Accounts Receivable. The Proforma Financial Projections assume accounts
receivable based on Days Sales Outstanding of 35 days (see Credit Agreement
below). The Proforma Financial Projections do not include any amounts relating
to joint interest billings, as the analysis assumes all costs and revenues net
to TransTexas's working interest.
Capital Expenditures. Historical and projected exploration and development costs
are as follows:
<TABLE>
<CAPTION>
Year Ended Jan 31 Year Ended Jan 31
Historical Projected
------------------- ------------------------------------------------------------------
1998 1999 2000(1) 2001 2002 2003 2004 2005 2006
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lease Acquisition
Costs $56,205 $13,084 $6,000 $6,000 $6,000 $6,000 $6,000 $6,000
Exploration and
Development
Costs 320,001 175,616 48,805 49,361 26,562 41,787 33,370 31,964 31,964
</TABLE>
Appendix 2
Page 5
<PAGE> 169
(1) Lease acquisition costs are included in Exploration and Development costs
for fiscal 2000.
TransTexas has historically, including during the pendency of this Chapter 11
case, explored for oil and gas. Capital expenditures used in the Proforma
Financial Projections are based upon TransTexas's drilling program. TransTexas's
drilling program includes the development drilling locations included in the
NSAI report dated May 14, 1999, certain probable and possible reserves not
included in the NSAI report and future unidentified drilling opportunities.
TransTexas has applied risk factors to the various wells included in the
TransTexas drilling program. These risk factors have been internally developed
by TransTexas's management, and represent management's best estimate of the
likelihood of hydrocarbon discovery, production rates and required capital
expenditures.
Plugging and Abandonment Liabilities. The Proforma Financial Projections do not
include cash outlays associated with plugging or abandonment liabilities as no
such net cash outlays are expected during the projection period.
Credit Agreement. TransTexas and GMAC Financial Corporation ("GMAC") are parties
to an accounts receivable management and security agreement dated October
14,1997 ("the GMAC Facility"). Interest accrues on advances at the rate of (i)
the higher of (a) the prime rate of the Bank of New York or (b) the Federal
Funds Rate plus 1/2 of 1%; plus (ii) 1/2 of 1%. Obligations under the GMAC
Facility are secured by liens on TransTexas receivables and inventory, and are
guaranteed by Mr. John Stanley. The amounts that may be advanced under the GMAC
Facility are based on a percentage of certain of TransTexas' receivables and
inventory.
(The Proforma Financial Projections assume TransTexas continues to utilize a
facility similar to the GMAC Facility subsequent to the Effective Date. The
effective interest rate assumed in the Proforma Financial Projections is 8.75%).
Exit Financing. The Proforma Financial Projections assume that TransTexas
reduces its Debtor in Possession financial from $30 million to $10 million on
the effective date, and that it obtains a new $42.5 million exit financing
credit agreement. The Proforma Financial Projections assume that the terms of
these facilities are consistent with the existing Debtor in Possession credit
facility including an interest rate of 15%, paid monthly.
Production Payments. The Proforma Financial Projections assume Reorganized
TransTexas combines the existing production payment into a new drilling program
production payment. The new program will provide up to $50 million in additional
funding and have terms similar to the existing facilities. Pursuant to the new
program, the third party will reimburse at a minimum all or a portion of the
costs of a currently drilling or recently drilled well. The new arrangement will
consist of a dollar-denominated production payment equal to the primary sum of
the existing production payments plus future funding plus an amount equivalent
to 15% annual interest on the unpaid portion of such primary sum.
Appendix 2
Page 6
<PAGE> 170
Repayment of the new production payment will be made from 80-90% of qualified
revenues from those wells included in the existing production payments and 65%
of qualified revenues from new wells added to the program. A similar program in
the amount of approximately $15 million is anticipated beginning in the last
fiscal quarter of 2001.
New Senior Secured Notes. The Proforma Financial Projections assume the issuance
of $200 million of New Senior Secured Notes. The New Senior Secured Notes have
an interest rate of 15% per annum, payable semi-annually in arrears, in cash,
beginning six months after the Effective Date.
The New Senior Secured Notes are due five years from the Effective Date. The
Proforma Financial Projections assume that the reduced principal balance of the
New Senior Secured Notes if refinanced with debt having similar terms.
Refinancing costs of $2.0 million associated with this refinancing are assumed
in the Proforma Financial Projections.
New Senior Preferred Stock. Pursuant to the TransTexas Plan, the Proforma
Financial Projections assume the issuance of $220 million face amount of $1.00
par value New Senior Preferred Stock. The Proforma Financial Projections assume
that dividends on the New Senior Preferred Stock are paid quarterly in kind, at
a rate of 20% per annum, for the first two years subsequent to December 31,
1999. Beginning in January 2002, the Proforma Financial Projections assume 7.75%
cash dividends on the New Senior Preferred Stock paid on a quarterly basis
beginning February 2002.
The Proforma Financial Projections do not assume any redemption or conversion of
the New Senior Preferred Stock. According to the TransTexas Plan, Reorganized
TransTexas may redeem the New Senior Preferred Stock subsequent to the
retirement of the New Senior Notes. The new Senior Preferred Stock has a
mandatory redemption date of the sixth anniversary of the Effective Date
(December 31, 2005).
New Junior Preferred Stock. The Proforma Financial Projections assume the
issuance of $80 million face amount of $1.00 par value per share New Junior
Preferred Stock. The New Junior Preferred Stock pays quarterly dividends, in
kind at 8% of par value per annum. The Proforma Financial Projections do not
assume the redemption of the New Junior Preferred Stock.
New Common Stock. The Proforma Financial Projections assume Reorganized
TransTexas will issue 1,002,500 million shares of the 100 million authorized
shares of Reorganized TransTexas' $.01 par value common stock to the holders of
the TransTexas Senior Secured Note Claimants pursuant to the TransTexas Plan.
The Proforma Financial Projections represent Management's understanding of the
Company's revenues, development history, operating structure, and prospects,
and anticipated commodity prices. Management utilized the industry knowledge
and expertise of their financial advisors, PricewaterhouseCoopers, and
valuation experts, the Scotia Energy Group, to finalize the projections.
Appendix 2
Page 7
<PAGE> 171
($000'S) TRANSTEXAS GAS CORPORATION
STATEMENT OF OPERATIONS
FOR PERIODS ENDING IN 1998 THROUGH 2006
<TABLE>
<CAPTION>
ACTUAL JANUARY 31,
----------------------
STATEMENTS OF
INCOME 1998 1999
- -------------------------------------------- --------- ---------
<S> <C> <C>
REVENUES:
Gas, condensate and natural gas liquids $ 164,538 $ 91,319
Transportation 12,055 0
Gain on the sale of assets 543,365 61,247
Other 3,313 4,200
--------- ---------
TOTAL REVENUES 723,271 156,766
COSTS AND EXPENSES:
Operating 50,957 22,352
General and Administrative 48,156 21,938
Taxes Other Than Income Taxes 11,399 7,130
--------- ---------
TOTAL COSTS AND EXPENSES 110,512 51,420
--------- ---------
EBITDA 612,759 105,346
DEPLETION EXPENSE 82,659 86,137
IMPAIRMENT LOSS 0 425,966
--------- ---------
TOTAL D D & A 82,659 512,103
--------- ---------
EBIT 530,100 (406,757)
OTHER EXPENSE (INCOME):
Interest Expense, net (80,580) (79,921)
Interest Income 12,393 1,205
--------- ---------
TOTAL OTHER EXPENSE (INCOME) (68,187) (78,716)
--------- ---------
PRETAX INCOME (LOSS) 461,913 (485,473)
INCOME TAX EXPENSE 161,669 (38,882)
--------- ---------
INCOME (LOSS) BEFORE EX. ITEM 300,244 (446,591)
========= =========
EXTRAORDINARY ITEM (72,043) (1,142)
NET INCOME (LOSS) 228,201 (447,733)
========= =========
PREFERRED DIVIDENDS 0 0
PREFERRED ACCRETION 0 0
========= =========
NET INCOME TO COMMON $ 228,201 ($447,733)
========= =========
<CAPTION>
FORECAST JANUARY 31,
------------------------------------------------------------------------------------
STATEMENTS OF
INCOME 2000 2001 2002 2003 2004 2005 2006
- -------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Gas, condensate and natural gas liquids $ 104,824 $ 178,241 $ 194,936 $ 198,932 $ 190,068 $ 176,362 $ 164,942
Transportation 0 0 0 0 0 0 0
Gain on the sale of assets (531) 0 0 0 0 0 0
Other 1,680 0 0 0 0 0 0
--------- --------- --------- --------- --------- --------- ---------
TOTAL REVENUES 105,973 178,241 194,936 198,932 190,068 176,362 164,942
COSTS AND EXPENSES:
Operating 21,391 27,013 25,543 26,012 25,387 24,053 22,906
General and Administrative 28,801 21,416 22,058 22,720 25,402 24,104 24,827
Taxes Other Than Income Taxes 8,729 13,327 13,565 12,706 13,191 13,836 15,316
--------- --------- --------- --------- --------- --------- ---------
TOTAL COSTS AND EXPENSES 58,921 61,756 61,167 61,439 63,979 61,992 63,049
--------- --------- --------- --------- --------- --------- ---------
EBITDA 47,052 116,485 133,769 137,493 126,089 114,370 101,894
DEPLETION EXPENSE 70,157 93,250 68,194 61,797 54,265 51,049 48,354
IMPAIRMENT LOSS 0 0 0 0 0 0 0
--------- --------- --------- --------- --------- --------- ---------
TOTAL D D & A 70,157 93,250 68,194 61,797 54,265 51,049 48,354
--------- --------- --------- --------- --------- --------- ---------
EBIT (23,105) 23,235 65,575 75,696 71,824 63,321 53,540
OTHER EXPENSE (INCOME):
Interest Expense, net (32,048) (45,427) (39,428) (35,274) (30,352) (25,726) (23,441)
Interest Income 182 375 211 628 621 672 646
--------- --------- --------- --------- --------- --------- ---------
TOTAL OTHER EXPENSE (INCOME) (31,866) (45,052) (39,216) (34,646) (29,732) (25,054) (22,795)
--------- --------- --------- --------- --------- --------- ---------
PRETAX INCOME (LOSS) (54,971) (21,817) 26,359 41,050 42,093 38,267 30,745
INCOME TAX EXPENSE 0 0 0 0 0 0 0
--------- --------- --------- --------- --------- --------- ---------
INCOME (LOSS) BEFORE EX. ITEM (54,971) (21,817) 26,359 41,050 42,093 38,267 30,745
========= ========= ========= ========= ========= ========= =========
EXTRAORDINARY ITEM 452,211 0 (90) (250) (545) (600) 0
NET INCOME (LOSS) 397,240 (21,817) 26,269 40,800 41,548 37,667 30,745
========= ========= ========= ========= ========= ========= =========
PREFERRED DIVIDENDS 0 47,411 57,629 25,191 25,191 25,191 25,191
PREFERRED ACCRETION 0 36,667 36,667 36,667 36,667 36,667 36,667
========= ========= ========= ========= ========= ========= =========
NET INCOME TO COMMON $ 397,240 $(105,895) $ (68,026) $ (21,057) $ (20,310) $ (24,190) $ (31,112)
========= ========= ========= ========= ========= ========= =========
</TABLE>
Appendix 2
<PAGE> 172
($000'S) TRANSTEXAS GAS CORPORATION
STATEMENT OF CASH FLOWS
FOR PERIODS ENDING IN 1998 THROUGH 2006
<TABLE>
<CAPTION>
ACTUAL JANUARY 31,
--------------------------
STATEMENTS OF
CASH FLOWS 1998 1999
- ------------------------------------------------ ----------- -----------
CASH FLOW FROM OPER. ACTIVITIES:
<S> <C> <C>
Net income to Common $ 228,201 $ (447,733)
Extraordinary Item 72,043 1,142
Depletion, depreciation and amortization/Imp 82,659 86,137
Amortization of debt issue costs 2,030 5,730
Accretion of interest on senior notes 4,941 0
Gains on the sale of assets (543,365) (61,247)
Deferred income taxes 161,670 (38,882)
Repayment of volumetric production payments (45,134) 0
Impairment of Oil & Gas Properties 0 425,966
Amortization of deferred revenue (9,420) 0
Capitalized Interest 0 0
Changes in assets and liabilities:
Accounts receivable 61,604 965
Receivable from affiliates 3,248 (1,286)
Inventories (3,953) 13,227
Other current assets 10,265 7,026
Accounts payable 18,451 7,981
Accrued liabilities (50,966) 9,177
Transactions with affiliates, net 31,223 (6,166)
Accrued Interest payable to affiliate 6,762 1,851
Other assets 65 126
Other liabilities (8,371) (5,384)
----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 21,953 (1,370)
=========== ===========
CASH FLOWS FROM INVEST. ACTIVITIES:
Capital expenditures (423,915) (190,601)
Proceeds from sale of assets 1,062,490 156,212
Withdrawals from cash restricted for interest 46,000 0
Payment of advances by affiliate 24,750 0
Contribution to affiliate (13,304) 0
Advances to affiliate 0 (1,648)
----------- -----------
Net Cash Used in (Provided by)
Investing Activities 696,021 (36,037)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of production payments 20,977 69,824
Principal payments on production payments (29,504) (17,355)
(Paydown)/issuance of N/P to TEC/senior notes 0 0
DIP financing/super senior 0 0
Principal payments on long-term debt (10,128) (62,235)
Revolving credit agreement, net (18,351) (7,572)
(Paydown)/Issuance of sub notes 0 0
Preferred Equity Accretion (892,000) 0
Issuance of note payable to affiliate 486,991 1,395
Debt issue costs (13,559) (1,027)
Increase in cash restricted for share repurchases (399,284) 0
Withdrawals from cash restricted for share repurchase 399,284 0
Purchase of treasury stock (262,405) 0
Issuance of long-term debt 14,946 19,650
Issuance of senior preferred equity 0 0
Issuance of junior preferred equity 0 0
----------- -----------
Net Cash Provided By (Used in)
Financing Activities (703,033) 2,680
----------- -----------
NET CHANGE IN CASH 14,941 (34,727)
=========== ===========
BEGINNING CASH BALANCE 23,561 38,502
----------- -----------
ENDING CASH BALANCE $ 38,502 $ 3,775
=========== ===========
<CAPTION>
FORECAST JANUARY 31,
----------------------------------------------------------------
STATEMENTS OF
CASH FLOWS 2000 2001 2002 2003 2004 2005 2006
- ------------------------------------------------ --------- -------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
CASH FLOW FROM OPER. ACTIVITIES:
Net income to Common $ 397,240 $(21,817) $26,268 $40,800 $41,548 $37,667 $30,745
Extraordinary Item (453,130) 0 0 0 0 0 0
Depletion, depreciation and amortization/Imp 70,157 83,250 68,194 61,797 54,265 51,049 48,354
Amortization of debt issue costs 1,556 0 0 0 0 0 0
Accretion of interest on senior notes 0 0 0 0 0 0 0
Gains on the sale of assets 531 0 0 0 0 0 0
Deferred income taxes 0 0 0 0 0 0 0
Repayment of volumetric production payments 0 0 0 0 0 0 0
Impairment of Oil & Gas Properties 0 0 0 0 0 0 0
Amortization of deferred revenue 0 0 0 0 0 0 0
Capitalized Interest 0 0 0 0 0 0 0
Changes in assets and liabilities:
Accounts receivable (747) (4,503) (296) (1,605) 1,871 1,199 956
Receivable from affiliates 1,286 0 0 0 0 0 0
Inventories 618 0 0 0 0 0 0
Other current assets (1,320) 0 0 0 0 0 0
Accounts payable 1,346 7,089 (6,072) (4,179) 0 0 0
Accrued liabilities 7,411 (1,636) (1,723) (1,798) (1,798) (1,798) (1,817)
Transactions with affiliates, net 0 0 0 0 0 0 0
Accrued Interest payable to affiliate 700 0 0 0 0 0 0
Other assets (1,246) 0 0 0 0 0 0
Other liabilities (11,770) (3,100) (3,000) (3,000) (3,000) (3,000) 0
--------- -------- ------- ------- ------- ------- -------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 12,732 69,284 83,371 92,015 92,885 85,117 78,239
========= ======== ======= ======= ======= ======= =======
CASH FLOWS FROM INVEST. ACTIVITIES:
Capital expenditures (50,604) (57,761) (34,562) (49,787) (41,370) (39,964) (38,964)
Proceeds from sale of assets 556 0 0 0 0 0 0
Withdrawals from cash restricted for interest 0 0 0 0 0 0 0
Payment of advances by affiliate 0 0 0 0 0 0 0
Contribution to affiliate 0 0 0 0 0 0 0
Advances to affiliate 0 0 0 0 0 0 0
--------- -------- ------- ------- ------- ------- -------
Net Cash Used in (Provided by)
Investing Activities (50,048) (57,761) (34,562) (49,787) (41,370) (39,964) (38,964)
--------- -------- ------- ------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of production payments 21,384 43,964 5,000 0 0 0 0
Principal payments on production payments (24,762) (88,466) (34,022) 0 0 0 0
(Paydown)/issuance of N/P to TEC/senior notes 0 0 0 0 (6,000) (20,000) (12,000)
DIP financing/super senior 52,500 0 (9,000) (25,000) (18,500) 0 0
Principal payments on long-term debt (187) 0 0 0 0 0 0
Revolving credit agreement, net 2,170 (390) 354 7,791 (1,109) (709) (599)
(Paydown)/Issuance of sub notes 0 0 0 0 0 0 0
Preferred Equity Accretion 0 0 0 0 0 0 0
Issuance of note payable to affiliate 0 0 0 0 0 0 0
Debt issue costs (2,991) 0 0 0 0 0 0
Increase in cash restricted for share repurchases 0 0 0 0 0 0 0
Withdrawals from cash restricted for share repurchase 0 0 0 0 0 0 0
Purchase of treasury stock 0 0 0 0 0 0 0
Issuance of long-term debt 0 0 0 0 0 0 0
Issuance of senior preferred equity 0 0 0 (25,191) (25,191) (25,191) (25,191)
Issuance of junior preferred equity 0 0 0 0 0 0 0
--------- -------- ------- ------- ------- ------- -------
Net Cash Provided by (Used in)
Financing Activities 48,114 (22,892) (37,669) (42,400) (50,799) (45,899) (37,789)
--------- -------- ------- ------- ------- ------- -------
NET CHANGE IN CASH 10,798 (11,369) 11,141 (172) 716 (745) 486
========= ======== ======= ======= ======= ======= =======
BEGINNING CASH BALANCE 3,775 14,573 3,204 14,345 14,173 14,889 14,143
--------- -------- ------- ------- ------- ------- -------
ENDING CASH BALANCE $ 14,573 $ 3,204 $14,345 $14,173 $14,889 $14,143 $14,529
========= ======== ======= ======= ======= ======= =======
</TABLE>
Appendix 2
Page 9
<PAGE> 173
($000'S) TRANSTEXAS GAS CORPORATION
BALANCE SHEETS
FOR PERIODS ENDING IN 1998 THROUGH 2006
<TABLE>
<CAPTION>
ACTUAL JANUARY 31,
--------------------------
BALANCE SHEET 1998 1999
- ------------------------------------------- ----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 38,502 $ 3,775
Accounts receivable 17,056 16,091
Receivable from affiliates 0 1,286
Inventories 16,437 3,210
Other current assets 10,719 3,693
----------- -----------
Total current assets 82,714 28,055
----------- -----------
PROPERTY, PLANT & EQUIPMENT 1,418,293 1,459,630
Less Accumulated Depreciation 716,695 1,167,487
----------- -----------
Property, Plant & Equipment, Net 701,598 292,143
OTHER ASSETS 32,323 25,169
----------- -----------
816,635 345,367
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Installments of long-term debt 10,181 0
Accounts Payable 52,075 0
Accrued Interest payable to affiliate 6,762 0
Accrued liabilities 35,818 983
----------- -----------
Total current liabilities 104,836 983
----------- -----------
LONG-TERM DEBT, LESS CUR. MAT 9,199 0
N/PTO AFFILIATE / SENIOR NOTES 486,991 0
PRODUCTION PAYMENTS, LESS CUR 4,121 56,260
DIP FINANCING / SUPER SENIOR 0 0
REVOLVING CREDIT AGREEMENT 7,917 0
SUB NOTES 115,815 0
DEFERRED INCOME TAXES 39,497 0
PAYABLE TO AFFILIATES 3,002 0
OTHER LIABILITIES 20,620 0
SENIOR PREFERRED STOCK 0 0
LIABILITIES SUBJECT TO COMPROMISE 0 718,139
STOCKHOLDERS' DEFICIT
Common stock 740 740
Additional paid-in-capital 26,834 19,915
Retained earnings 259,468 (188,265)
----------- -----------
Common Equity 287,042 (167,610)
Treasury stock, at cost, 16,484 shares (262,405) (262,405)
PIK Junior Preferred Stock 0 0
----------- -----------
Total stockholders' deficit 24,637 (430,015)
----------- -----------
$ 816,635 $ 345,367
=========== ===========
<CAPTION>
FORECAST JANUARY 31,
--------------------------------------------------------------------------------
BALANCE SHEET 2000 2001 2002 2003 2004 2005 2006
- ------------------------------------------ --------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 14,573 $ 3,204 $ 14,345 $ 14,173 $ 14,889 $ 14,143 $ 14,629
Accounts receivable 16,838 21,341 21,637 23,242 21,371 20,172 19,216
Receivable from affiliates 0 0 0 0 0 0 0
Inventories 2,592 2,592 2,592 2,592 2,592 2,592 2,592
Other current assets 5,010 5,010 5,010 5,010 5,010 5,010 5,010
--------- -------- -------- -------- -------- -------- ---------
Total current assets 39,013 32,146 43,584 45,017 43,862 41,917 41,447
--------- -------- -------- -------- -------- -------- ---------
PROPERTY, PLANT & EQUIPMENT 315,807 373,568 408,130 457,917 499,287 539,251 579,214
Less Accumulated Depreciation 4,942 98,192 166,386 228,183 282,448 333,497 381,851
--------- -------- -------- -------- -------- -------- ---------
Property, Plant & Equipment, Net 310,865 275,376 241,744 229,734 216,839 205,754 197,363
--------- -------- -------- -------- -------- -------- ---------
OTHER ASSETS 2,819 2,819 2,818 2,818 2,819 2,819 2,818
--------- -------- -------- -------- -------- -------- ---------
352,696 310,341 288,146 277,569 263,520 250,490 241,628
========= ======== ======== ======== ======== ======== =========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current Installments of long-term debt 0 0 0 0 0 0 0
Accounts Payable 11,969 19,058 12,986 8,807 8,807 8,807 8,807
Accrued Interest payable to affiliate 0 0 0 0 0 0 0
Accrued liabilities 21,992 20,356 18,633 16,835 15,037 13,239 11,422
--------- -------- -------- -------- -------- -------- ---------
Total current liabilities 33,961 39,414 31,619 25,642 23,844 22,046 20,229
--------- -------- -------- -------- -------- -------- ---------
LONG-TERM DEBT, LESS CUR. MAT 0 0 0 0 0 0 0
N/PTO AFFILIATE / SENIOR NOTES 200,000 200,000 200,000 200,000 194,000 174,000 162,000
PRODUCTION PAYMENTS, LESS CUR 51,525 29,022 0 0 0 0 0
DIP FINANCING / SUPER SENIOR 52,500 52,500 43,500 18,500 0 0 0
REVOLVING CREDIT AGREEMENT 2,327 1,937 2,291 10,082 8,973 8,264 7,666
SUB NOTES 0 0 0 0 0 0 0
DEFERRED INCOME TAXES 0 0 0 0 0 0 0
PAYABLE TO AFFILIATES 0 0 0 0 0 0 0
OTHER LIABILITIES 15,100 12,000 9,000 6,000 3,000 0 0
SENIOR PREFERRED STOCK 0 84,078 178,374 215,040 251,707 288,374 325,040
LIABILITIES SUBJECT TO COMPROMISE 0 0 0 0 0 0 0
STOCKHOLDERS' DEFICIT
Common stock 13 13 13 13 13 13 13
Additional paid-in-capital 0 0 0 0 0 0 0
Retained earnings (2,730) (108,625) (176,651) (197,708) (218,018) (242,208) (273,320)
--------- -------- -------- -------- -------- -------- ---------
Common Equity (2,717) (108,612) (176,638) (197,695) (218,005) (242,195) (273,307)
Treasury stock, at cost, 16,484 shares 0 0 0 0 0 0 0
PIK Junior Preferred Stock 0 0 0 0 0 0 0
--------- -------- -------- -------- -------- -------- ---------
Total stockholders' deficit (2,717) (108,612) (176,638) (197,695) (218,005) (242,195) (273,307)
--------- -------- -------- -------- -------- -------- ---------
$352,696 $310,341 $288,146 $277,569 $263,520 $250,490 $241,628
========= ======== ======== ======== ======== ======== =========
</TABLE>
Appendix 2
<PAGE> 174
TRANSAMERICAN ENERGY CORPORATION
(DEBTOR-IN-POSSESSION)
BALANCE SHEET
AUGUST 31, 1999
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 13
Receivable from affiliates 26,760
----------
Total current assets 26,773
----------
Notes receivable from affiliates 1,420,000
Investment in subsidiaries 467,113
Other 4,921
----------
$1,918,807
==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 5
----------
Total current liabilities 5
----------
Liabilities subject to compromise 1,629,067
Stockholder's equity:
Common stock --
Additional paid-in capital 289,334
Retained earnings 401
----------
Total Stockholder's equity 289,735
----------
$1,918,807
==========
</TABLE>
Appendix 2
<PAGE> 175
TRANSAMERICAN REFINING CORPORATION
(DEBTOR-IN-POSSESSION)
BALANCE SHEET
AUGUST 31, 1999
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,276
Accounts receivable 168
-----------
Total current assets 16,444
-----------
Due from affiliates 2,953
Investment in subsidiary 1,112,872
Other 25,151
-----------
$ 1,157,420
===========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable $ 5
-----------
Total current liabilities 5
-----------
Liabilities subject to compromise 1,130,371
Stockholders equity:
Common stock 300
Additional paid-in capital 597,024
Retained earnings (570,280)
-----------
Total stockholder's equity 27,044
-----------
$ 1,157,420
===========
</TABLE>
Appendix 2
<PAGE> 176
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
IN RE: )
)
TRANSAMERICAN ENERGY )
CORPORATION, ) CASE NO. 99-21551-C-11
)
DEBTOR. )
SECOND AMENDED PLAN OF LIQUIDATION UNDER
CHAPTER 11 OF THE BANKRUPTCY CODE
PROPOSED BY DEBTOR
Dated: September 29, 1999
JORDAN, HYDEN, WOMBLE GARDERE & WYNNE, L.L.P.
& CULBRETH, P.C. John Nabors
Shelby Jordan Deirdre B. Ruckman
Bank America Towers 3000 Thanksgiving Tower
500 N. Shoreline, Suite 900 1601 Elm Street
Corpus Christi, TX 78471 Dallas, TX 75201
COUNSEL FOR DEBTOR SPECIAL COUNSEL FOR
DEBTOR
APPENDIX 3
<PAGE> 177
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
INTRODUCTION
Section 1.01 Introduction..................................................1
ARTICLE II
DEFINITIONS
Section 2.01 Administrative Expense........................................1
Section 2.02 Affiliate of the Debtor.......................................1
Section 2.03 Allowed.......................................................1
Section 2.04 Allowed Claim or Allowed Interest.............................1
Section 2.05 Ballots.......................................................2
Section 2.06 Ballot Deadline...............................................2
Section 2.07 Bankruptcy Code...............................................2
Section 2.08 Bankruptcy Court..............................................2
Section 2.09 Bankruptcy Rules..............................................2
Section 2.10 Bar Date......................................................2
Section 2.11 Bondholder Committee..........................................2
Section 2.12 Bondholder DIP Facility.......................................2
Section 2.13 Bondholder DIP Secured Claims.................................2
Section 2.14 Business Day..................................................2
Section 2.15 Cash..........................................................2
Section 2.16 Causes of Action..............................................3
Section 2.17 Chapter 11 Case...............................................3
Section 2.18 Claim.........................................................3
Section 2.19 Class.........................................................3
Section 2.20 Collateral ...................................................3
Section 2.21 Confirmation..................................................3
Section 2.22 Confirmation Date.............................................3
Section 2.23 Confirmation Hearing..........................................3
Section 2.24 Confirmation Order............................................3
Section 2.25 Creditor......................................................3
Section 2.26 Creditors' Committee..........................................3
Section 2.27 Debtor........................................................4
Section 2.28 Debtor-in-Possession..........................................4
Section 2.29 Deficiency Claim..............................................4
Section 2.30 DGCL..........................................................4
Section 2.31 Disallowed....................................................4
Section 2.32 Disclosure Statement..........................................4
Section 2.33 Distribution Record Date......................................4
Section 2.34 Distributions.................................................4
Section 2.35 Effective Date................................................4
Section 2.36 Entity........................................................4
Section 2.37 Estate........................................................4
Section 2.38 Face Amount...................................................4
</TABLE>
i
<PAGE> 178
<TABLE>
<S> <C> <C>
Section 2.39 File, Filed or Filing.........................................5
Section 2.40 Final Order...................................................5
Section 2.41 Firstar.......................................................5
Section 2.42 General Unsecured Claim.......................................5
Section 2.43 Governmental Unit.............................................5
Section 2.44 Impaired......................................................5
Section 2.45 Indenture Trustee.............................................5
Section 2.46 Indenture Trustee Claim.......................................6
Section 2.47 Interest Reserve Accounts.....................................6
Section 2.48 Interests.....................................................6
Section 2.49 Lien..........................................................6
Section 2.50 Petition Date.................................................6
Section 2.51 Plan..........................................................6
Section 2.52 Plan Documents................................................6
Section 2.53 Priority Claim................................................6
Section 2.54 Professionals ................................................6
Section 2.55 Ratable Proportion............................................6
Section 2.56 Rejection Claim...............................................7
Section 2.57 Schedules.....................................................7
Section 2.58 Secured Claim.................................................7
Section 2.59 SubDebt Committee.............................................7
Section 2.60 TARC..........................................................7
Section 2.61 TARC Common Stock.............................................7
Section 2.62 TARC Plan.....................................................7
Section 2.63 TARC Senior Secured Note......................................7
Section 2.64 TCR...........................................................7
Section 2.65 TCR Secured Note.............................................7
Section 2.66 TEC...........................................................8
Section 2.67 TEC Bondholders...............................................8
Section 2.69 TEC Senior Secured Note Claims................................8
Section 2.70 TEC Senior Secured Note Deficiency Claims.....................8
Section 2.71 TEC Senior Secured Notes......................................8
Section 2.72 TEC Senior Secured Notes Indenture............................8
Section 2.73 Tort Claim....................................................8
Section 2.74 TransTexas....................................................8
Section 2.75 TransTexas Common Stock.......................................8
Section 2.76 TransTexas Plan...............................................8
Section 2.77 TransTexas Senior Secured Loan Agreement......................8
Section 2.78 TransTexas Senior Secured Note................................9
Section 2.79 TransTexas/TEC Note...........................................9
Section 2.80 Unimpaired....................................................9
ARTICLE III
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSE
CLAIMS AND PRIORITY CLAIMS
Section 3.01 Treatment of Allowed Administrative Expenses..................9
Section 3.02 Bondholder DIP Secured Claims.................................9
Section 3.03 Treatment of Allowed Priority Claims..........................9
</TABLE>
ii
<PAGE> 179
<TABLE>
ARTICLE IV
CLASSIFICATION OF CLAIMS AND INTERESTS
<S> <C> <C>
Section 4.01 Class 1......................................................10
Section 4.02 Class 2......................................................10
Section 4.03 Class 3......................................................10
ARTICLE V
TREATMENT OF CLAIMS AND INTERESTS
Section 5.01 Treatment of Allowed Class 1 Claims (TEC Senior Secured
Note Claims).................................................10
Section 5.02 Treatment of Allowed Class 2 Claims (General Unsecured
Claims)......................................................11
Section 5.03 Treatment of Allowed Class 3 Interests (TEC Common Stock
Interests)...................................................11
ARTICLE VI
MEANS FOR IMPLEMENTATION OF THE PLAN
Section 6.01 General Corporate Matters....................................11
Section 6.02 Distributions to Holders of Allowed Claims; Further
Agreements...................................................11
Section 6.03 Cancellation of Existing Securities..........................11
Section 6.04 Payment of Firstar's Fees and Expenses as Indenture Trustee..12
ARTICLE VII
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Section 7.01 Rejection Generally..........................................12
ARTICLE VIII
DISCHARGE, RELEASES AND INDEMNIFICATION
Section 8.01 No Discharge of Debtor.......................................12
Section 8.02 Releases.....................................................13
Section 8.03 Indemnification..............................................14
Section 8.04 Conclusion of Chapter 11 Cases, and Dissolution of
Creditors' Committee and the SubDebt Committee...............14
ARTICLE IX
CONDITIONS TO OCCURRENCE OF THE EFFECTIVE DATE
Section 9.01 Conditions to Occurrence of the Effective Date...............14
Section 9.02 Waiver of Conditions.........................................15
</TABLE>
iii
<PAGE> 180
<TABLE>
<S> <C> <C>
ARTICLE X
LEGAL BINDING EFFECT
Section 10.01 Effects of Confirmation......................................15
ARTICLE XI
ADMINISTRATIVE PROVISIONS
Section 11.01 Retention of Jurisdiction....................................15
Section 11.02 Cram Down....................................................17
Section 11.03 Modification of the Plan.....................................17
Section 11.04 Exemption from Certain Transfer Taxes........................17
Section 11.05 Withdrawal or Revocation of the Plan.........................17
Section 11.06 Successors and Assigns.......................................18
Section 11.07 Governing Law................................................18
Section 11.08 Notices......................................................18
Section 11.09 Severability.................................................18
Section 11.10 Interpretation, Rules of Construction, Computation of Time,
and Choice of Law............................................19
Section 11.11 No Admissions................................................20
Section 11.12 Limitation of Liability......................................20
</TABLE>
iv
<PAGE> 181
ARTICLE I
INTRODUCTION
Section 1.01 Introduction. This Plan is proposed by
TransAmerican Energy Corporation. Reference is made to the Disclosure Statement
accompanying the Plan for a discussion of each of TransTexas Gas Corporation's,
TransAmerican Energy Corporation's, and TransAmerican Refining Corporation's
history, results of operations, historical financial information and properties,
and for a summary and analysis of this Plan. All holders of Claims against and
Interests in TransAmerican Energy Corporation are encouraged to read this Plan
and the Disclosure Statement in their entirety before voting to accept or reject
the Plan.
ARTICLE II
DEFINITIONS
The following terms used herein shall have the respective
meanings defined below:
Section 2.01 Administrative Expense means (a) any cost or
expense of administration of the Chapter 11 Case (including, without limitation,
the fees and expenses of Professionals) asserted or arising under Sections
503(b), or 507(b) of the Bankruptcy Code, (b) a Claim determined to be an
Administrative Expense pursuant to a Final Order, and (c) any fees or charges
assessed against the Estate under Section 1930, title 28, United States Code.
Section 2.02 Affiliate of the Debtor means John R. Stanley, or
any corporation, limited liability company or other business entity directly or
indirectly controlled by John R. Stanley.
Section 2.03 Allowed means with respect to Claims and
Interests, (a) any Claim against, or Interest in, the Debtor, proof of which is
timely Filed or by order of the Bankruptcy Court is not or will not be required
to be Filed, (b) any Claim or Interest that has been or is hereafter listed in
the Schedules as neither disputed, contingent or unliquidated, and for which no
timely Filed proof of Claim has been Filed, (c) any Interest registered in the
stock register maintained by or on behalf of the Debtor as of the Distribution
Record Date or (d) any Claim allowed pursuant to this Plan and, in each such
case in (a), (b) and (c) above, as to which either (i) no objection to the
allowance thereof has been Filed within the applicable period of time fixed by
this Plan, the Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy Court or
(ii) such an objection is so Filed and the Claim and Interest shall have been
allowed pursuant to a Final Order (but only to the extent so allowed).
Section 2.04 Allowed Claim or Allowed Interest means an
Allowed Claim or an Allowed Interest in a specified class. For example, an
Allowed General Unsecured Claim is an Allowed Claim in the General Unsecured
Claims Class and an Allowed Old Common Stock Interest is an Allowed Interest in
the Old Common Stock Interest Class.
Second Amended Plan of Liquidation proposed by TransAmerican Energy
Corporation Page 1
<PAGE> 182
Section 2.05 Ballots means the ballots that accompany the Plan
and Disclosure Statement upon which holders of Impaired Claims and Impaired
Interests entitled to vote on the Plan shall indicate their acceptance or
rejection of the Plan.
Section 2.06 Ballot Deadline means the date set by the Court
as the last date on which Ballots may be cast to vote on the Plan.
Section 2.07 Bankruptcy Code means Title 11, United States
Code, as amended from time to time, as applicable to the Chapter 11 Case.
Section 2.08 Bankruptcy Court means the United States
Bankruptcy Court for the Southern District of Texas, Corpus Christi Division,
having jurisdiction over the Chapter 11 Case or such other court of competent
jurisdiction as may obtain such jurisdiction in the future.
Section 2.09 Bankruptcy Rules means the Federal Rules of
Bankruptcy Procedure as promulgated by the United States Supreme Court under
Section 2075, title 28, United States Code, as amended from time to time,
applicable to the Chapter 11 Case, and any local rules of the Bankruptcy Court.
Section 2.10 Bar Date means as to Creditors other than
Governmental Units, September 27, 1999, as the final date for Filing Proofs of
Claims or Proofs of Interest herein; and as to Governmental Units, October 18,
1999, as the final date for Filing Proofs of Claim or Proofs of Interest herein.
Section 2.11 Bondholder Committee means an unofficial
committee composed of the following TEC Bondholders: Credit Suisse First Boston
Management Corporation, Oaktree Capital Management, L.L.C., Angelo Gordon & Co.,
L.P. and Merrill Lynch Asset Management, L.P.; provided, however, each of the
foregoing Entities shall cease to be a member of such committee from the date on
which it ceases to hold or manage at least $50,000,000 in principal amount of
the TEC Senior Secured Notes.
Section 2.12 Bondholder DIP Facility means the
Debtor-In-Possession loans and other financial accommodations provided pursuant
to the Credit Agreement among TransTexas, as borrower, the Debtor and TARC, as
guarantors, and Credit Suisse First Boston Corporation, Angelo Gordon & Co.,
L.P. and Oaktree Capital Management, L.L.C. and their respective successors and
assigns dated as of April 27, 1999, as amended, and all ancillary agreements and
instruments thereto.
Section 2.13 Bondholder DIP Secured Claims means the Secured
Claims of the lenders arising under the Bondholder DIP Facility.
Section 2.14 Business Day means any day other than a Saturday,
Sunday or legal holiday.
Section 2.15 Cash means currency, a certified check, a
cashier's check or a wire transfer of immediately available funds from any
source or a check drawn on a domestic bank.
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Section 2.16 Causes of Action means any and all actions,
causes of action, suits, accounts, controversies, agreements, promises, rights
to legal remedies, rights to equitable remedies, rights to payment, and Claims,
whether known or unknown, reduced to judgment, not reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, unsecured and whether asserted or assertable directly or
indirectly or derivatively, in law, equity or otherwise.
Section 2.17 Chapter 11 Case means the Debtor's voluntary case
pending in the Bankruptcy Court under Chapter 11 of the Bankruptcy Code as case
number 99-21551.
Section 2.18 Claim means any right to (a) payment from the
Debtor, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured, known or unknown, or (b) an equitable
remedy for breach of performance if such breach gives rise to a right of payment
from the Debtor, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured,
or unsecured, known or unknown.
Section 2.19 Class means any group of substantially similar
Claims or Interests classified by the Plan pursuant to Section 1129(a)(1) of the
Bankruptcy Code.
Section 2.20 Collateral means any property or interest in
property of the Estate subject to a Lien to secure the payment or performance of
a Claim, which Lien is not subject to avoidance under the Bankruptcy Code.
Section 2.21 Confirmation means the entry of the Confirmation
Order on the docket maintained by the Clerk of the Bankruptcy Court with respect
to the Chapter 11 Case.
Section 2.22 Confirmation Date means the date on which the
Confirmation Order is entered on the docket maintained by the Clerk of the
Bankruptcy Court with respect to the Chapter 11 Case.
Section 2.23 Confirmation Hearing means the hearing held by
the Bankruptcy Court regarding confirmation of the Plan pursuant to Section 1129
of the Bankruptcy Code, as such hearing may be adjourned or continued from time
to time.
Section 2.24 Confirmation Order means the order of the
Bankruptcy Court confirming the Plan pursuant to Section 1129 of the Bankruptcy
Code.
Section 2.25 Creditor means any Entity that is the holder of a
Claim that arose on or before the Petition Date or a Claim of the kind specified
in Section 502(g), 502(h) or 502(i) of the Bankruptcy Code.
Section 2.26 Creditors' Committee means the Official Committee
of Unsecured Creditors in the Chapter 11 cases of the Debtor, TransTexas and
TARC, as appointed by the Office
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of the United States Trustee and reconstituted from time to time, which members
are identified in the Disclosure Statement.
Section 2.27 Debtor means TransAmerican Energy Corporation, a
Delaware corporation, the debtor in the Chapter 11 Case.
Section 2.28 Debtor-in-Possession means the Debtor in its
capacity as a debtor in possession in the Chapter 11 Case under Sections 1101,
1107 and 1108 of the Bankruptcy Code.
Section 2.29 Deficiency Claim means with respect to a Claim
that is partially secured, the amount by which the Allowed amount of such Claim
exceeds the value of the Collateral which secures such Claim.
Section 2.30 DGCL means the General Corporation Law of the
State of Delaware, as amended from time to time.
Section 2.31 Disallowed means, when used with respect to a
Claim or an Interest, a Claim or an Interest that has been disallowed pursuant
to a Final Order.
Section 2.32 Disclosure Statement means the Disclosure
Statement relating to the Plan, including, without limitation, all exhibits and
schedules thereto as approved by the Bankruptcy Court pursuant to Section 1125
of the Bankruptcy Code, as such Disclosure Statement may be amended, modified,
or supplemented.
Section 2.33 Distribution Record Date means 5:00 p.m. on the
Business Day immediately preceding the Confirmation Date or other such time and
date designated in the Confirmation Order.
Section 2.34 Distributions means the distributions to be made
pursuant to the Plan.
Section 2.35 Effective Date means a Business Day selected by
the Debtor, with the prior consent of the Bondholder Committee that is the later
of (a) a day that is not less than eleven (11) days after the Confirmation Date
and (b) the first Business Day on which all conditions to the occurrence of the
Effective Date have been satisfied or duly waived.
Section 2.36 Entity means any individual, corporation, limited
or general partnership, joint venture, association, joint stock company, limited
liability company, estate, entity, trust, trustee, United States Trustee,
unincorporated organization, government, governmental unit (as defined in the
Bankruptcy Code), agency or political subdivision thereof.
Section 2.37 Estate means the estate of TEC created by Section
541 of the Bankruptcy Code upon the commencement of the Chapter 11 Case.
Section 2.38 Face Amount means: (a) with respect to a
particular Claim (i) if the Claim is listed in the Schedules and the holder of
such Claim has not Filed a proof of Claim within the applicable period of
limitation fixed by the Bankruptcy Court pursuant to the Bankruptcy Code,
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the Bankruptcy Rules or other applicable law, the amount of such Claim that is
listed in the Schedules as not disputed, contingent or unliquidated; or (ii) if
the holder of such Claim has Filed a proof of Claim with the Bankruptcy Court
within the applicable period of limitation fixed by the Bankruptcy Court
pursuant to the Bankruptcy Code, the Bankruptcy Rules or other applicable law,
the liquidated amount stated in such proof of Claim, or such amount as is
determined by the Final Order of the Bankruptcy Court; (b) in the case of an
Administrative Expense, the liquidated amount set forth in any application Filed
with respect thereto, or the amount set forth in the Debtor's books and records
or such amount as is determined pursuant to a Final Order; or (c) in all other
cases, zero or such amount as shall be fixed or estimated pursuant to a Final
Order.
Section 2.39 File, Filed or Filing means file, filed or filing
with the Bankruptcy Court in the Chapter 11 Case.
Section 2.40 Final Order means an order or judgment of the
Bankruptcy Court entered by the Clerk of the Bankruptcy Court on the docket in
the Chapter 11 Case, which has not been reversed, vacated or stayed and as to
which (a) the time to appeal, petition for certiorari or move for a new trial,
reargument or rehearing has expired and as to which no appeal, petition for
certiorari or other proceedings for a new trial, reargument or rehearing shall
then be pending or (b) if an appeal, writ of certiorari, new trial, reargument
or rehearing thereof has been sought, such order or judgment of the Bankruptcy
Court shall have been affirmed by the highest court to which such order was
appealed, or certiorari shall have been denied or a new trial, reargument or
rehearing shall have been denied or resulted in no modification of such order,
and the time to take any further appeal, petition for certiorari or move for a
new trial, reargument or rehearing shall have expired; provided, however, that
the possibility that a motion under Rule 60 of the Federal Rules of Civil
Procedure, or any analogous rule under the Bankruptcy Rules, may be Filed
relating to such order, shall not cause such order not to be a Final Order.
Section 2.41 Firstar means Firstar Bank, N.A., formerly known
as Firstar Bank of Minnesota, N.A., as Indenture Trustee for the TEC
Bondholders.
Section 2.42 General Unsecured Claim means any Claim,
including, without limitation, the TEC Senior Secured Note Deficiency Claim,
that is not an Administrative Expense, a Priority Claim or a Secured Claim.
Section 2.43 Governmental Unit means a governmental unit as
such term is defined in Section 101(27) of the Bankruptcy Code.
Section 2.44 Impaired means with respect to any Claim or
Interest impaired within the meaning of Section 11 U.S.C. Section 1124 of the
Bankruptcy Code.
Section 2.45 Indenture Trustee means any Entity identified as
the trustee, paying agent or other similar fiduciary under a bond, note or other
debt instrument (including, but not limited to, Firstar under the TEC Senior
Secured Notes Indenture), whether or not the agreement evidencing the debt or
delineating its terms is denominated as an indenture.
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Section 2.46 Indenture Trustee Claim means the fees and
expenses of Firstar, as Indenture Trustee under the TEC Senior Secured Notes
Indenture, or any other successor Indenture Trustee, incurred in their capacity
as such, including the fees and expenses of its counsel.
Section 2.47 Interest Reserve Accounts means the custodial
accounts at First Union in the name of First Union, as Trustee, which were
established pursuant to the TARC Subordinated Notes Indenture.
Section 2.48 Interests means, as of the Petition Date, the
equity interests in the Debtor, including, without limitation, shares of common
stock and shares of preferred stock of the Debtor and any rights, options,
warrants, calls, subscriptions or other similar rights or agreements,
commitments or outstanding securities obligating the Debtor to issue, transfer
or sell any shares of capital stock of the Debtor.
Section 2.49 Lien means any charge against, encumbrance upon
or other interest in property, the purpose of which is to secure payment of a
debt or performance of an obligation.
Section 2.50 Petition Date means April 20, 1999, the date on
which the Debtor commenced the Chapter 11 Case.
Section 2.51 Plan means this Second Amended Plan of
Liquidation Under Chapter 11 of the Bankruptcy Code Proposed by the Debtor dated
as of September 29, 1999, including, without limitation, the annexes, exhibits
and schedules hereto, as the same may be amended or modified from time to time
in accordance with the Confirmation Order, the provisions of the Bankruptcy Code
and the terms hereof.
Section 2.52 Plan Documents means the agreements, documents
and instruments entered into on or as of the Effective Date as contemplated by,
and in furtherance of, the Plan.
Section 2.53 Priority Claim means any Claim other than an
Administrative Expense Claim, entitled to priority in payment under Section
507(a) and 507(a)(8) of the Bankruptcy Code.
Section 2.54 Professionals means those Entities: (a) employed
pursuant to an order of the Bankruptcy Court in accordance with Sections 327 or
1103 of the Bankruptcy Code providing for compensation for services rendered
prior to the Effective Date pursuant to Sections 327, 328, 329, 330 and 331 of
the Bankruptcy Code, or (b) seeking compensation and reimbursement pursuant to
Sections 503(b)(2) or (4) of the Bankruptcy Code.
Section 2.55 Ratable Proportion means, with reference to any
Distribution on account of any Claim or Interest in any Class or subclass, a
Distribution equal in amount to the ratio (expressed as a percentage) that the
amount of such Claim or number of shares evidencing such Interest, as
applicable, bears to the aggregate amount of Claims or aggregate number of
outstanding shares of Interests in the same Class or subclass, as applicable.
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Section 2.56 Rejection Claim means any Claim against the
Debtor arising from the rejection of any executory contract or unexpired lease,
including any Claim of (a) a lessor for damages resulting from the rejection of
a lease of real property as any such Claim shall be calculated in accordance
with Section 502(b)(6) of the Bankruptcy Code or (b) an employee for damages
resulting from the rejection of an employment agreement as any such Claim shall
be calculated in accordance with Section 502(b)(7) of the Bankruptcy Code. A
Rejection Claim shall constitute a General Unsecured Claim.
Section 2.57 Schedules means the schedules of assets and
liabilities and the statement of financial affairs Filed by the Debtor under
Section 521 of the Bankruptcy Code, Bankruptcy Rule 1007 on June 14, 1999, as
amended from time to time.
Section 2.58 Secured Claim means a Claim secured by a Lien on
Collateral to the extent of the value of such Collateral (a) as set forth in the
Plan, (b) as agreed to by the holder of such Claim and the Debtor or (c) as
determined pursuant to a Final Order in accordance with Section 506(a) of the
Bankruptcy Code or, in the event that such Claim is subject to setoff under
Section 553 of the Bankruptcy Code, to the extent of such setoff.
Section 2.59 SubDebt Committee means the Official Committee of
holders of the TransTexas Subordinated Notes in the Chapter 11 case of
TransTexas, as appointed by the Office of the United States Trustee and
reconstituted from time-to-time, which members are identified in the Disclosure
Statement.
Section 2.60 TARC means TransAmerican Refining Corporation, a
Texas corporation, and a debtor-in-possession, in case number 99-21552, pending
in the Bankruptcy Court and which is jointly administered with the Debtor and
TransTexas.
Section 2.61 TARC Common Stock means all authorized, issued
and outstanding shares of the Common Stock of TARC $.01 par value, as of the
Petition Date.
Section 2.62 TARC Plan means the Second Amended Plan of
Liquidation under Chapter 11 of the Bankruptcy Code proposed by TARC dated as of
September 29, 1999, including without limitation, the annexes, exhibits and
schedules thereto, amended from time to time.
Section 2.63 TARC Senior Secured Note means the fully accreted
$920 million senior secured note dated June 13, 1997, originally executed by
TARC payable to TEC and which was pledged as collateral for the TEC Senior
Secured Notes.
Section 2.64 TCR mean TCR Holding Corporation, a Delaware
corporation.
Section 2.65 TCR Secured Note means the Secured Note assumed
by TCR , dated October 1, 1998, in the original face amount of $50,000,000 with
interest thereon as therein provided payable to TEC and pledged to Firstar by
TEC as Collateral for the TEC Senior Secured Notes.
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Section 2.66 TEC means TransAmerican Energy Corporation, a
Delaware corporation, and the Debtor and the Debtor-in-Possession.
Section 2.67 TEC Bondholders means the holders of the TEC
Senior Secured Notes as of the Distribution Record Date.
Section 2.68 TEC Common Stock means all authorized, issued and
outstanding shares of the common stock of TEC, $0.1 par value, as of the
Petition Date and all other Interests.
Section 2.69 TEC Senior Secured Note Claims means the Secured
Claims of the holders of the TEC Senior Secured Notes.
Section 2.70 TEC Senior Secured Note Deficiency Claims means
the Deficiency Claims of the holder of the TEC Senior Secured Notes.
Section 2.71 TEC Senior Secured Notes means, collectively, the
$475 million aggregate principal amount of the 11 1/2 % Senior Secured Notes due
2002 and the $1.13 billion aggregate principal amount of the 13% Senior Secured
Discount Notes due 2002 issued by TEC pursuant to the TEC Senior Secured Notes
Indenture.
Section 2.72 TEC Senior Secured Notes Indenture means the
Indenture between TEC, as issuer, and Firstar, as Indenture Trustee, dated as of
June 13, 1997, as amended from time to time, which relates to the TEC Senior
Secured Notes.
Section 2.73 Tort Claim means any Claim related to personal
injury, property damage, products liability or other similar Claims against the
Debtor. A Tort Claim shall constitute an Unsecured Claim.
Section 2.74 TransTexas means TransTexas Gas Corporation, a
Delaware corporation and a debtor-in-possession, in Case No. 99-21550, pending
in the Bankruptcy Court and which is jointly administered with the Chapter 11
cases of the Debtor and TARC.
Section 2.75 TransTexas Common Stock means all authorized,
issued and outstanding shares of the Common Stock of TransTexas $.01 par value,
as of the Petition Date.
Section 2.76 TransTexas Plan means the Second Amended Plan of
Reorganization under Chapter 11 of the Bankruptcy Code proposed by TransTexas
dated as of September 29, 1999, including without limitation, the annexes,
exhibits and schedules thereto, as the same may be amended or modified from time
to time in accordance with the confirmation order entered in the TransTexas
bankruptcy proceeding and pursuant to, the provisions of the Bankruptcy Code and
the terms thereof.
Section 2.77 TransTexas Senior Secured Loan Agreement means
the Loan Agreement between TransTexas and TEC, dated as of June 13, 1997, as
amended from time to time.
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Section 2.78 TransTexas Senior Secured Note means the $450
million senior secured note dated June 13, 1997, originally made by TransTexas
payable to TEC and which was pledged as Collateral for the TEC Senior Secured
Notes.
Section 2.79 TransTexas/TEC Note means the Note made by
TransTexas to TEC in the original face amount of $50,000,000 with interest
thereon as therein provided, dated January 23, 1998, payable to TEC and which
was pledged as Collateral for the TEC Senior Secured Notes.
Section 2.80 Unimpaired means a Claim or Interest that is not
Impaired.
ARTICLE III
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSE CLAIMS AND
PRIORITY CLAIMS
Section 3.01 Treatment of Allowed Administrative Expenses.
Unless otherwise provided for herein, each holder of an Allowed Administrative
Expense (including, without limitation, all compensation and reimbursement of
expenses of Professionals pursuant to Sections 327, 328, 330, 331, 503(b) or
1103 of the Bankruptcy Code) shall receive 100% of the unpaid Allowed amount of
such Administrative Expense in Cash on or as soon as reasonably practicable
after the later of: (a) the Effective Date; and (b) the date on which such
Administrative Expense becomes Allowed, provided, that an Allowed Administrative
Expense may be paid on such other terms and conditions as are agreed to between
the Debtor and the holder of such Allowed Administrative Expense. All
Professionals requesting compensation or reimbursement of expenses pursuant to
Sections 327, 328, 330, 331, or 503(b) of the Bankruptcy Code for services
rendered before the Effective Date shall File and serve on the Debtor, the
Creditors' Committee, the Bondholder Committee, GMAC and the United States
Trustee an application for final allowance of compensation and reimbursement of
expenses no later than forty-five (45) days after the Confirmation Date.
Objections to applications of Professionals for compensation or reimbursement of
expenses must be Filed and served on the Debtor, the United States Trustee, the
Bondholder Committee, the Creditors' Committee and the Professionals to whose
fee application the objections are addressed.
Section 3.02 Bondholder DIP Secured Claims. The Bondholder DIP
Secured Claims are Allowed in full and the Allowed Bondholder DIP Secured Claims
shall receive no Distributions.
Section 3.03 Treatment of Allowed Priority Claims. Each holder
of an Allowed Priority Claim shall receive an amount of Cash equal to 100% of
the unpaid Allowed Amount of such Claim on as soon as practicable after the
later of: (a) the Effective Date, or (b) the date on which such Priority Claim
became an Allowed Priority Claim.
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ARTICLE IV
CLASSIFICATION OF CLAIMS AND INTERESTS
Pursuant to Section 1122 of the Bankruptcy Code, set forth
below is a designation of classes of Claims and Interests. Administrative
Expenses and Priority Claims of the kinds specified in Sections 507(a)(1),
502(i) and 507(a)(8) of the Bankruptcy Code have not been classified and are
excluded from the following classes in accordance with Section 1123(a)(1) of the
Bankruptcy Code.
Section 4.01 Class 1 consists of the TEC Senior Secured Note
Claims.
Section 4.02 Class 2 consists of all General Unsecured Claims.
Section 4.03 Class 3 consists of all Interests.
ARTICLE V
TREATMENT OF CLAIMS AND INTERESTS
Section 5.01 Treatment of Allowed Class 1 Claims (TEC Senior
Secured Note Claims).
(a) The TEC Senior Secured Note Claims are Allowed in full. On
the Effective Date, each holder of an Allowed TEC Senior Secured Note Claim as
of the Distribution Record Date shall receive on account of its Allowed TEC
Senior Secured Note Claim its Ratable Proportion of all of the Debtor's right,
title and interest in (i) each item of Collateral securing any of the Debtor's
obligations arising under, in respect of, or relating to, the TEC Senior Secured
Notes, the TEC Senior Secured Notes Indenture and/or any other agreement or
instrument entered into in connection therewith, including, without limitation,
all of the Debtor's right, title and interest in (A) the TransTexas Senior
Secured Note and all related rights, (B) the TARC Senior Secured Note and all
related rights, including 82 1/2% of the funds held in the Interest Reserve
Accounts, less reasonable fees and expenses (including attorneys' fees and
expenses) of Firstar and the Bondholder Committee, (C) the TransTexas/TEC Note
and all related rights, (D) the TCR Secured Note and all related rights, (E) the
TARC Common Stock and (F) the TransTexas Common Stock, and (iii) all
distributions the Debtor would have, but for this Section 5.01(a), been entitled
to receive pursuant to the terms of the TransTexas Plan and the TARC Plan.
(b) As more specifically set forth in, and without in any way
limiting, Section 8.01 of this Plan, the Distributions provided in this Section
5.01 are in full settlement, release and discharge of each of the TEC Senior
Secured Note Claims.
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(c) Class 1 is Impaired. Holders of Allowed TEC Senior Secured
Note Claims shall be entitled to vote to accept or reject the Plan.
Section 5.02 Treatment of Allowed Class 2 Claims (General
Unsecured Claims).
(a) Each holder of a General Unsecured Claim (other than
Affiliates of the Debtor) shall receive its Ratable Proportion of $5,000.
(b) Class 2 is Impaired under this Plan. Holders of Class 2
Claims will be entitled to vote to accept or reject the Plan.
Section 5.03 Treatment of Allowed Class 3 Interests (TEC
Common Stock Interests).
(a) On the Effective Date, the Interests shall be canceled.
(b) Class 3 is Impaired under this Plan. Holders of such
Interests are deemed to have rejected the Plan
ARTICLE VI
MEANS FOR IMPLEMENTATION OF THE PLAN
In addition to the provisions set forth elsewhere in this
Plan, the following shall constitute the means for implementation of this Plan.
Section 6.01 General Corporate Matters. The Debtor shall take
such action as is necessary under the laws of the States of Delaware and Texas,
federal law and other applicable law to effect the terms and provisions of the
Plan and the Plan Documents.
Section 6.02 Distributions to Holders of Allowed Claims;
Further Agreements. On the Effective Date, the Debtor shall execute and deliver
to the Holders of Allowed TEC Senior Secured Note Claims all documents,
agreements and instruments reasonably requested by Firstar or the Bondholder
Committee to effectuate the treatment of the Class 1 Claims under the Plan and
such further documents, instruments and agreements as are necessary to
effectuate and further evidence the terms and conditions of the Plan.
For the purposes of such Distributions, Firstar shall be
deemed to be the sole holder of all such Claims. All Distributions on account of
Allowed TEC Senior Secured Note Claims shall be distributed to Firstar, for
further distribution to the TEC Bondholders pursuant to the terms of the TEC
Senior Secured Notes Indenture. Neither Firstar nor the TEC Bondholders shall
have assumed or be deemed to have assumed any liabilities, or obligations of the
Debtor by virtue of the treatment of the TEC Senior Secured Note Claims
hereunder and this Section 6.02.
Section 6.03 Cancellation of Existing Securities. On the
Effective Date, the TEC Common Stock, and any options, warrants, calls,
subscriptions, or other similar rights or other
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agreements or commitments, contractual or otherwise, obligating the Debtor to
issue, transfer, or sell any shares of TEC Common Stock, or any other capital
stock of the Debtor shall be canceled and the holders thereof shall have no
rights, and such instruments shall evidence no rights. After Firstar or its
agents perform their obligations under the Plan and the TEC Senior Secured Notes
Indenture, Firstar and its agents, successors and assigns shall be discharged of
all of their obligations associated with the TEC Senior Secured Notes Indenture
and related agreements and released from all Claims arising in this Chapter 11
Case, and as of the Effective Date, such Indenture and related agreements shall
be deemed canceled, except that such cancellation shall not impair the rights of
the holders of the TEC Senior Secured Note Claims to receive Distributions under
the Plan or the rights of the Indenture Trustee under its charging liens, if
any, pursuant to the TEC Senior Secured Notes Indenture to the extent that the
Indenture Trustee has not received payment and, to the extent applicable, a
reserve has been established on account of the Indenture Trustee Claim.
Section 6.04 Payment of Firstar's Fees and Expenses as
Indenture Trustee. Unless otherwise agreed by Firstar and the Debtor, on the
Effective Date, the Debtor shall pay or cause to be paid to Firstar an amount in
Cash equal to the Indenture Trustee Claim of Firstar for its reasonable fees and
expenses incurred as Indenture Trustee prior to the Effective Date. In the event
that the Debtor is unable to perform the foregoing obligation, Firstar shall
have the right to impose its charging lien to obtain payment of the Indenture
Trustee Claim of Firstar upon all Distributions that it receives pursuant to
this Plan, the TransTexas Plan and the TARC Plan on behalf of the TEC
Bondholders. Nothing in this Plan shall limit Firstar's rights to payment of its
Indenture Trustee Claim arising after the Effective Date.
ARTICLE VII
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Section 7.01 Rejection Generally. On the Effective Date,
pursuant to Section 365 of the Bankruptcy Code, all executory contracts and
unexpired leases of the Debtor are rejected. The Confirmation Order shall
constitute an order of the Bankruptcy Court approving such rejections on the
Confirmation Date, pursuant to Section 365 of the Bankruptcy Code, effective as
of the Effective Date.
ARTICLE VIII
DISCHARGE, RELEASES AND INDEMNIFICATION
Section 8.01 No Discharge of Debtor. The Plan provides for
liquidation of all of the Debtor's assets and the discontinuance of its
business. Accordingly, and pursuant to Section 1141(d)(3) of the Bankruptcy
Code, the Debtor shall not receive a discharge.
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Section 8.02 Releases.
(a) On the Effective Date, the Debtor shall be deemed to
release unconditionally, and hereby is deemed to release unconditionally on such
date (i) each present or former officer, director, shareholder, employee,
consultant, attorney, accountant and other representatives of the Debtor, (ii)
the Creditors' Committee and, solely in their capacity as members or
representatives of the Creditors' Committee, each consultant, attorney,
accountant or other representative or member of the Creditors' Committee, (iii)
Entities serving on the Bondholder Committee at any time during the Chapter 11
Case and, solely in their capacity as representatives of such holders, each of
such Entity's respective officers, directors, shareholders, partners, agents,
employees, consultants, attorneys, accountants and other representatives, (iv)
Firstar and Indenture Trustee, and, solely in their capacity as representatives
of Firstar, as Indenture Trustee, each of such Entity's officers, directors,
shareholders, employees, consultants, attorneys, accountants, advisors,
affiliates and other representatives (v) the holders of Bondholder DIP Claims
and, solely in their capacity as representatives of such holders, (vi) the
holders of the Bondholder DIP Secured Claims and, solely in their capacity as
representatives of such holders, each of such holder's respective officers,
directors, shareholders, partners, agents, employees, consultants, accountants,
advisors, affiliates and other representatives (the Entities specified in
clauses (iv) and (v) are referred to collectively as the "Releasees"), from any
and all Claims, obligations, suits, judgments, damages, rights, causes of action
and liabilities whatsoever, whether known or unknown, foreseen or unforeseen,
existing or hereafter arising, in law, equity or otherwise, based in whole or in
part upon or related to any act or omission, transaction, event or other
occurrence taking place on or prior to the Effective Date in any way relating to
the Debtor, the Chapter 11 Case, or the Plan, except that no Releasees shall be
released from acts or omissions which are the result of willful misconduct, and
except that no officers or directors of the Debtor shall be released with
respect to (x) any indebtedness of such Releasee to Debtor or
Debtor-in-Possession for money borrowed by such Releasee, (y) any setoff or
counterclaim Debtor or Debtor-in-Possession may have or assert against any such
Releasee, provided that the aggregate amount thereof shall not exceed the
aggregate amount of any Claims held or asserted by such Releasee against Debtor
or Debtor-in-Possession, as the case may be and (z) Claims arising from the
fraud, willful misconduct or gross negligence of such Releasee.
(b) On the Effective Date, each holder of a Claim and/or an
Interest shall be deemed to have released unconditionally, and hereby is deemed
to release unconditionally on such date, the Releasees, from any and all rights,
Claims, causes of action, obligations, suits, judgments, damages and liabilities
whatsoever which any such holder may be entitled to assert, whether known or
unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity
or otherwise, based in whole or in part upon any act or omission, transaction,
event or other occurrence taking place on or before the Effective Date in any
way relating to the Debtor, the Chapter 11 Case or the Plan, except that no
Releasees shall be released from acts or omissions which are the result of
willful misconduct.
(c) If and to the extent that the Bankruptcy Court concludes
that the Plan cannot be confirmed with any portion of the foregoing releases,
then the Debtor, with the prior consent of the Bondholder Committee, reserves
the right to amend the Plan so as to give effect as much as possible to the
foregoing releases, or to delete them.
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Section 8.03 Indemnification. Notwithstanding any other
provisions of the Plan, the obligations of the Debtor to indemnify its present
and former directors, officers and employees against any obligations,
liabilities, costs or expenses pursuant to the articles of incorporation or
by-laws of the Debtor, applicable state law, specific agreement or any
combination of the foregoing shall not survive the Effective Date and shall be
discharged, regardless of whether indemnification is owed in connection with an
event occurring prior to, upon or subsequent to the Petition Date.
Section 8.04 Conclusion of Chapter 11 Cases, and Dissolution
of Creditors' Committee and the SubDebt Committee.
Except with respect to any appeal of an order in the Chapter
11 Case, and any matters related to any proposed modification of the Plan, on
the Effective Date, the Creditors' Committee and the SubDebt Committee shall be
dissolved and the members, employees, agents, advisors and representatives
(including, without limitation, attorneys, financial advisors, and other
Professionals) of each thereof shall thereupon be released from and discharged
of and from all further authority, duties, responsibilities and obligations
related to, arising from and in connection with the Chapter 11 Case.
ARTICLE IX
CONDITIONS TO OCCURRENCE OF THE EFFECTIVE DATE
Section 9.01 Conditions to Occurrence of the Effective Date.
The following are conditions precedent to the occurrence of the Effective Date:
(a) The Bankruptcy Court shall have entered an order
confirming the TARC Plan, and the TARC Plan and the order confirming the TARC
plan shall each be in form and substance satisfactory to the Bondholder
Committee and the Debtor.
(b) The Bankruptcy Court shall have entered an order
confirming the TransTexas Plan, and the TransTexas Plan and the order confirming
the TransTexas Plan shall each be in form and substance satisfactory to the
Bondholder Committee and the Debtor.
(c) The order confirming the TARC Plan shall have become a
Final Order (as such term is defined in the TARC Plan).
(d) The order confirming the TransTexas Plan shall have become
a Final Order (as such term is defined in the TransTexas Plan).
(e) The Confirmation Order shall have been entered and become
a Final Order in form and substance satisfactory to the Debtor and the
Bondholder Committee.
(f) The Debtor shall have sufficient Cash to satisfy all Cash
obligations under the Plan due on or as of the Effective Date.
Second Amended Plan of Liquidation proposed by TransAmerican Energy
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(g) All authorizations, consents and regulatory approvals
required, if any, in connection with the Plan's effectiveness shall have been
obtained.
(h) No order of a court shall have been entered and shall
remain in effect restraining the Debtor from consummating the Plan.
(i) The Debtor and the Bondholder Committee shall each have
approved each of the Plan Documents and such Plan Documents shall have been
executed in accordance with their terms.
Section 9.02 Waiver of Conditions. The Debtor may waive, upon
the prior consent of the Bondholder Committee, one or more of the conditions to
the occurrence of the Effective Date.
ARTICLE X
LEGAL BINDING EFFECT
Section 10.01 Effects of Confirmation. Upon Confirmation, and
pursuant to Section 1141(a) of the Bankruptcy Code, the provisions of the Plan
will bind the Debtor, the Bondholder Committee, the Creditors' Committee, the
SubDebt Committee, all Creditors and Interest holders, including their
successors and assigns, whether or not they accept the Plan. The Claims and
distributions under the Plan to Creditors are in full and complete settlement of
all Claims and Interests.
ARTICLE XI
ADMINISTRATIVE PROVISIONS
Section 11.01 Retention of Jurisdiction. Notwithstanding entry
of the Confirmation Order, the Bankruptcy Court shall retain jurisdiction as is
legally permissible, including, without limitation, for the following purposes:
(a) to determine (i) any Disputed Claims, Disputed Interests
and all related Claims accruing after the Confirmation Date including rights and
liabilities under contracts giving rise to such Claims, (ii) the validity,
extent, priority and nonavoidability of consensual and nonconsensual liens and
other encumbrances and (iii) preconfirmation tax liability pursuant to Section
505 of the Bankruptcy Code;
(b) to allow, disallow, estimate, liquidate or determine any
Claim or Interest against the Debtor and to enter or enforce any order requiring
the Filing of any such Claim or Interest before a particular date;
(c) to approve all matters related to the assumption,
assumption and assignment, or rejection of any executory contract or unexpired
lease of any of the Debtor pursuant to Section 365 of the Bankruptcy Code and
Article VII herein;
Second Amended Plan of Liquidation proposed by TransAmerican Energy
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(d) to determine requests for payment of administrative
expenses entitled to priority under Section 507(a)(1) of the Bankruptcy Code,
including compensation of parties entitled thereto;
(e) to resolve controversies and disputes regarding the
interpretation and implementation of this Plan, any disputes relating to whether
or not a timely and proper proof of Claim was Filed or whether a Disallowed
Claim or Disallowed Interest should be reinstated;
(f) to implement the provisions of this Plan and entry of
orders in aid of confirmation and consummation of this Plan;
(g) to modify the Plan pursuant to Section 1127 of the
Bankruptcy Code;
(h) to adjudicate any and all Causes of Action that arose in
this Chapter 11 Case preconfirmation or in connection with the implementation of
this Plan, whether or not pending on the Confirmation Date, including without
limitation, any remands of appeals;
(i) to resolve disputes concerning any reserves with respect
to Disputed Claims, Disputed Interests or the administration thereof;
(j) to resolve any disputes concerning whether a person or
entity had sufficient notice of the Chapter 11 Case, the applicable Claims bar
date, the hearing on the approval of the Disclosure Statement as containing
adequate information, the hearing on the confirmation of this Plan for the
purpose of determining whether a Claim or Interest is discharged hereunder or
for any other purpose;
(k) to determine any and all applications, Claims, Interests,
pending adversary proceedings and contested matters (including, without
limitation, any adversary proceeding or other proceeding to recharacterize
agreements or reclassify Claims or Interests) in this Chapter 11 Case;
(l) to enter and implement such orders as may be appropriate
in the event the Confirmation Order is for any reason stayed, revoked, modified,
or vacated;
(m) to seek the issuance of such orders in aid of execution of
the Plan, to the extent authorized by Section 1142 of the Bankruptcy Code;
(n) to consider any modifications of the Plan, to cure any
defect or omission, or reconcile any inconsistency in any order of the Court,
including, without limitation, the Confirmation Order;
(o) to recover all assets of the Debtor and property of the
Estate, wherever located, including any Causes of Action under Sections 544
through 550 of the Bankruptcy Code;
(p) to hear and resolve matters concerning state, local, and
federal taxes in accordance with Sections 346, 505, and 1146 of the Bankruptcy
Code;
(q) to hear any other matter not inconsistent with the
Bankruptcy Code;
Second Amended Plan of Liquidation proposed by TransAmerican Energy
Corporation Page 16
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(r) to resolve any and all disputes or controversies relating
to Distributions to be made, and/or reserves to be established, under this Plan;
including, without limitation, the Distributions to be made by the Indenture
Trustee and the rights of such Indenture Trustee; and
(s) to enter a final decree closing the Chapter 11 Case.
Section 11.02 Cram Down. If all of the applicable requirements
for confirmation of the Plan are met as set forth in Section 1129(a) of the
Bankruptcy Code except subsection (8) thereof, the Debtor, with the prior
consent of the Bondholder Committee, may request the Court to confirm the Plan
pursuant to Section 1129(b) of the Bankruptcy Code, notwithstanding the
requirements of such subsection (8), on the basis that the Plan is fair and
equitable and does not discriminate unfairly with respect to any Impaired Class
that does not vote to accept this Plan as described in the Disclosure Statement.
Section 11.03 Modification of the Plan. The Debtor reserves
the right, with the consent of the Bondholder Committee, to alter, amend or
modify the Plan prior to the entry of the Confirmation Order. After the entry of
the Confirmation Order, the Debtor, with the prior consent of the Bondholder
Committee, may, upon order of the Bankruptcy Court and with the prior consent of
the Bondholder Committee, alter, amend or modify the Plan in accordance with
Section 1127(b) of the Bankruptcy Code, or remedy any defect or omission or
reconcile any inconsistency in the Plan in such manner as may be necessary to
carry out the purpose and intent of the Plan.
Section 11.04 Exemption from Certain Transfer Taxes. Pursuant
to Section 1146(c) of the Bankruptcy Code: (a) the issuance, transfer or
exchange of any securities, instruments or documents; (b) the creation of any
other lien, mortgage, deed of trust or other security interest; (c) the making
or assignment of any lease or sublease or the making or delivery of any deed or
other instrument of transfer under, pursuant to, in furtherance of, or in
connection with, the Plan, including, without limitation, any deeds, bills of
sale or assignments executed in connection with any of the transactions
contemplated under the Plan or the revesting, transfer or sale of any real or
personal property of the Debtor pursuant to, in implementation of, or as
contemplated in the Plan, and (d) the issuance, renewal, modification or
securing of indebtedness by such means, and the making, delivery or recording of
any deed or other instrument of transfer under, in furtherance of, or in
connection with, the Plan, including, without limitation, the Confirmation
Order, shall not be subject to any document recording tax, stamp tax, conveyance
fee or other simple tax, mortgage tax, real estate transfer tax, mortgage
recording tax or other similar tax or governmental assessment. Consistent with
the foregoing, each recorder of deeds or similar official for any county, city
or governmental unit in which any instrument hereunder is to be recorded shall,
pursuant to the Confirmation Order, be ordered and directed to accept such
instrument, without requiring the payment of any filing fees, documentary stamp
tax, deed stamps, stamp tax, transfer tax, intangible tax or similar tax.
Section 11.05 Withdrawal or Revocation of the Plan. The
Debtor, with the prior consent of the Bondholder Committee, reserves the right
to revoke or withdraw the Plan prior to the
Second Amended Plan of Liquidation proposed by TransAmerican Energy
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Confirmation Date. If the Plan is revoked or withdrawn, or if the Confirmation
Date does not occur, the Plan shall have no force and effect.
Section 11.06 Successors and Assigns. The rights, benefits and
obligations of any Entity named or referred to in the Plan shall be binding on,
and shall inure to the benefit of, the heirs, executors, administrators,
successors and/or assigns of such Entity.
Section 11.07 Governing Law. Except to the extent that the
Bankruptcy Code or Bankruptcy Rules are applicable, the rights and obligations
arising under this Plan shall be governed by and construed and enforced in
accordance with the laws of the State of Texas.
Section 11.08 Notices. All notices, requests or demands for
payments provided for in this Plan shall be in writing and shall be deemed to
have been received, by mail, addressed to:
TransAmerican Energy Corporation
1300 North Sam Houston Parkway East
Houston, Texas 77032-2949
Attn: Simon Ward
with copies to:
Gardere & Wynne, L.L.P.
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Attn: Deirdre B. Ruckman, Esq.
and:
Bondholder Committee
c/o Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attn: Michael J. Sage, Esq.
Any of the above may, from time to time, change its address for future notices
and other communications hereunder by Filing a notice of the change of address
with the Bankruptcy Court. Any and all notices given under this Plan shall be
effective when received.
Section 11.09 Severability. Except as to terms which would
frustrate the overall purposes of this Plan, should any provision in this Plan
be determined to be unenforceable, such determination shall in no way limit or
affect the enforceability and operative effect of any or all other provisions of
this Plan.
Second Amended Plan of Liquidation proposed by TransAmerican Energy
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Section 11.10 Interpretation, Rules of Construction,
Computation of Time, and Choice of Law.
(a) The provisions of the Plan shall control over any
descriptions thereof contained in the Disclosure Statement.
(b) Any term used in the Plan that is not defined in the Plan,
either in Article II (Definitions) or elsewhere, but that is used in the
Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to that
term in (and shall be construed in accordance with the rules of construction
under) the Bankruptcy Code or the Bankruptcy Rules. Without limiting the
foregoing, the rules of construction set forth in Section 102 of the Bankruptcy
Code shall apply to the Plan, unless superseded herein.
(c) Unless specified otherwise in a particular reference, all
references in the Plan to Articles, Sections and Exhibits are references to
Articles, Sections and Exhibits of or to the Plan.
(d) Any reference in the Plan to a contract, document,
instrument, release, bylaw, certificate, indenture or other agreement being in a
particular form or on particular terms and conditions means that such document
shall be substantially in such form or substantially on such terms and
conditions.
(e) Any reference in the Plan to an existing document or
Exhibit means such document or Exhibit as it may have been amended, restated,
modified or supplemented as of the Effective Date without limitation to the
provisions set forth in Article VI of this Plan.
(f) Captions and headings to Articles and Sections in the Plan
are inserted for convenience of reference only and shall neither constitute a
part of the Plan nor in any way affect the interpretation of any provisions
hereof.
(g) In computing any period of time prescribed or allowed by
the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.
(h) All exhibits, annexes and schedules to the Plan are
incorporated into the Plan, and shall be deemed to be included in the Plan,
regardless of when Filed.
(i) Subject to the provisions of any contract, certificate,
bylaws, instrument, release, indenture or other agreement or document entered
into in connection with the Plan, the rights and obligations arising under the
Plan shall be governed by, and construed and enforced in accordance with,
federal law, including the Bankruptcy Code and Bankruptcy Rules.
(j) Where applicable, references to the singular shall include
the plural, and vice-versa.
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Section 11.11 No Admissions. Notwithstanding anything herein
to the contrary, nothing contained in the Plan shall be deemed as an admission
by any Entity with respect to any matter set forth herein.
Section 11.12 Limitation of Liability. None of the Debtor, the
Creditors' Committee, the Entities serving on the Bondholder Committee at any
time during the Chapter 11 Case, the Bondholder Lenders, the Indenture Trustee,
nor any of their respective officers, directors, employees, members, agents,
underwriters or investment bankers, nor any other professional persons employed
by any of them (collectively, the "Exculpated Persons"), shall have or incur any
liability to any Entity for any act taken or omission made in good faith in
connection with or related to formulating, negotiating, implementing, confirming
or consummating the Plan, the Disclosure Statement or any Plan Document. The
Exculpated Persons shall have no liability to the Debtor, the Reorganized
Debtor, any holder of a Claim, any holder of an Interest, any other party in
interest in the Chapter 11 Case or any other Entity for actions taken or not
taken under the Plan, in connection herewith or with respect hereto, or arising
out of their administration of the Plan, or the property to be distributed under
the Plan, in good faith, including, without limitation, failure to obtain
Confirmation or to satisfy any condition or conditions, or refusal to waive any
condition or conditions, to the occurrence of the Effective Date, and in all
respects such Exculpated Persons shall be entitled to rely upon the advice of
counsel with respect to their duties and responsibilities under the Plan.
Second Amended Plan of Liquidation proposed by TransAmerican Energy
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Respectfully submitted,
TransAmerican Energy Corporation
By: /s/ Ed Donahue
------------------------------
Name: Ed Donahue
------------------------
Title: Vice President
------------------------
Second Amended Plan of Liquidation proposed by TransAmerican Energy
Corporation Page 21
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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
IN RE: )
)
TRANSTEXAS GAS CORPORATION, ) CASE NO. 99-21550-C-11
)
DEBTOR. )
SECOND AMENDED PLAN OF REORGANIZATION UNDER
CHAPTER 11 OF THE BANKRUPTCY CODE
PROPOSED BY DEBTOR
Dated: September 29, 1999
<TABLE>
<S> <C>
JORDAN, HYDEN, WOMBLE GARDERE & WYNNE, L.L.P.
& CULBRETH, P.C. John Nabors
Shelby Jordan Deirdre B. Ruckman
Bank America Towers 3000 Thanksgiving Tower
500 N. Shoreline, Suite 900 1601 Elm Street
Corpus Christi, TX 78471 Dallas, TX 75201
COUNSEL FOR DEBTOR SPECIAL COUNSEL FOR
DEBTOR
</TABLE>
Appendix 4
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TABLE OF CONTENTS
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ARTICLE I
INTRODUCTION
Section 1.01 Introduction...........................................................................1
ARTICLE II
DEFINITIONS
Section 2.01 Administrative Expense.................................................................1
Section 2.02 Affiliate of the Debtor................................................................1
Section 2.03 Allowed................................................................................1
Section 2.04 Allowed Claim or Allowed Interest......................................................1
Section 2.05 Amended Bylaws.........................................................................2
Section 2.06 Amended Certificate of Incorporation...................................................2
Section 2.07 Ballot Deadline........................................................................2
Section 2.08 Ballots................................................................................2
Section 2.09 Bank One...............................................................................2
Section 2.10 Bankruptcy Code........................................................................2
Section 2.11 Bankruptcy Court.......................................................................2
Section 2.12 Bankruptcy Rules.......................................................................2
Section 2.13 Bar Date...............................................................................2
Section 2.14 Bondholder Committee...................................................................2
Section 2.15 Bondholder DIP Facility................................................................2
Section 2.16 Bondholder DIP Secured Claims .........................................................3
Section 2.17 Bondholder Lenders.....................................................................3
Section 2.18 Business Day...........................................................................3
Section 2.19 Cash...................................................................................3
Section 2.20 Causes of Action.......................................................................3
Section 2.21 Chapter 11 Case........................................................................3
Section 2.22 Claim..................................................................................3
Section 2.23 Class..................................................................................3
Section 2.24 Collateral ............................................................................3
Section 2.25 Confirmation...........................................................................3
Section 2.26 Confirmation Date......................................................................3
Section 2.27 Confirmation Hearing...................................................................4
Section 2.28 Confirmation Order.....................................................................4
Section 2.29 Convenience Claim......................................................................4
Section 2.30 Creditor...............................................................................4
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Section 2.31 Creditors' Committee...................................................................4
Section 2.32 Cure Amount Schedule...................................................................4
Section 2.33 Debtor.................................................................................4
Section 2.34 Debtor-in-Possession...................................................................4
Section 2.35 Deficiency Claim.......................................................................4
Section 2.36 DGCL...................................................................................4
Section 2.37 Disallowed.............................................................................4
Section 2.38 Disbursing Agent.......................................................................4
Section 2.39 Disclosure Statement...................................................................4
Section 2.40 Disputed Claim.........................................................................5
Section 2.41 Disputed Interest......................................................................5
Section 2.42 Distribution Record Date...............................................................5
Section 2.43 Distributions..........................................................................5
Section 2.44 Effective Date.........................................................................5
Section 2.45 Entity.................................................................................5
Section 2.46 Estate.................................................................................5
Section 2.47 Exchange Act...........................................................................5
Section 2.48 Executive Committee....................................................................5
Section 2.49 Extended Bondholder DIP Facility.......................................................5
Section 2.50 Face Amount............................................................................6
Section 2.51 File, Filed or Filing..................................................................6
Section 2.52 Final Order............................................................................6
Section 2.53 Firstar................................................................................6
Section 2.54 General Unsecured Claim................................................................6
Section 2.55 GMAC ..................................................................................6
Section 2.56 GMAC DIP Facility......................................................................7
Section 2.57 GMAC DIP Order.........................................................................7
Section 2.58 GMAC Post-Confirmation Agreement.......................................................7
Section 2.59 GMAC Post-Confirmation Collateral .....................................................7
Section 2.60 GMAC Secured Claim ....................................................................7
Section 2.61 GMAC Waiver and Injunction.............................................................7
Section 2.62 Governmental Unit......................................................................7
Section 2.63 Impaired...............................................................................7
Section 2.64 Indemnity Claim........................................................................7
Section 2.65 Indentures.............................................................................7
Section 2.66 Indenture Trustee......................................................................7
Section 2.67 Indenture Trustee Claim................................................................8
Section 2.68 Instructions Document..................................................................8
Section 2.69 Interests..............................................................................8
Section 2.70 Lien...................................................................................8
Section 2.71 M&M Lien Claimant......................................................................8
Section 2.72 M&M Lien Secured Claim ................................................................8
Section 2.73 Management Agreement...................................................................8
Section 2.74 Maximum GUC Cash Amount................................................................8
Section 2.75 Mineral Interest.......................................................................8
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Section 2.76 Mineral Interest Claimant..............................................................8
Section 2.77 Mineral Interest Secured Claim.........................................................8
Section 2.78 Miscellaneous Secured Claims...........................................................9
Section 2.79 New Board of Directors.................................................................9
Section 2.80 New Class A Common Stock...............................................................9
Section 2.81 New Class B Common Stock...............................................................9
Section 2.82 New Common Stock.......................................................................9
Section 2.83 New Junior Preferred Stock.............................................................9
Section 2.84 New Senior Preferred Stock.............................................................9
Section 2.85 New Secured Notes Security Documents ..................................................9
Section 2.86 New Senior Secured Notes...............................................................9
Section 2.87 New Senior Secured Notes Indenture.....................................................9
Section 2.88 New Senior Secured Notes Indenture Trustee............................................10
Section 2.89 New Warrant Agent ....................................................................10
Section 2.90 New Warrant Agreement.................................................................10
Section 2.91 New Warrants..........................................................................10
Section 2.92 Old Common Stock......................................................................10
Section 2.93 Paying Agent..........................................................................10
Section 2.94 Petition Date.........................................................................10
Section 2.95 Plan..................................................................................10
Section 2.96 Plan Documents........................................................................10
Section 2.97 Plan Rate.............................................................................10
Section 2.98 Post-Confirmation Credit Facility.....................................................10
Section 2.99 Priority Claim........................................................................11
Section 2.100 Priority Tax Claim....................................................................11
Section 2.101 Production Payment Holder Claims......................................................11
Section 2.102 Professionals ........................................................................11
Section 2.103 Quarterly Distribution Date...........................................................11
Section 2.104 Ratable Proportion....................................................................11
Section 2.105 Receivables...........................................................................11
Section 2.106 Registration Rights Agreement.........................................................11
Section 2.107 Registration Statement................................................................11
Section 2.108 Rejection Claim.......................................................................12
Section 2.109 Reorganization Securities.............................................................12
Section 2.110 Reorganized TransTexas or Reorganized Debtor .........................................12
Section 2.111 Reviewer..............................................................................12
Section 2.112 Schedules.............................................................................12
Section 2.113 Secured Claim.........................................................................12
Section 2.114 Secured Tax Claim.....................................................................12
Section 2.115 SubDebt Committee.....................................................................12
Section 2.116 TARC..................................................................................12
Section 2.117 TARC Plan.............................................................................12
Section 2.118 TEC...................................................................................13
Section 2.119 TEC Bondholders.......................................................................13
Section 2.120 TEC Plan .............................................................................13
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Section 2.121 TEC Senior Secured Notes..............................................................13
Section 2.122 TEC Senior Secured Notes Indenture....................................................13
Section 2.123 Tort Claim............................................................................13
Section 2.124 TransTexas............................................................................13
Section 2.125 TransTexas Senior Secured Loan Agreement..............................................13
Section 2.126 TransTexas Senior Secured Note Claims.................................................13
Section 2.127 TransTexas Senior Secured Note Deficiency Claim.......................................13
Section 2.128 TransTexas Subordinated Note Claims...................................................13
Section 2.129 TransTexas Subordinated Notes.........................................................13
Section 2.130 TransTexas Subordinated Notes Indenture...............................................14
Section 2.131 Unclaimed Property....................................................................14
Section 2.132 Unimpaired............................................................................14
Section 2.133 Workers' Compensation Claims..........................................................14
Section 2.134 Workers' Compensation Programs........................................................14
ARTICLE III
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSE CLAIMS
AND PRIORITY TAX CLAIMS AND BONDHOLDER DIP CLAIMS
Section 3.01 Treatment of Allowed Administrative Expenses..........................................14
Section 3.02 Treatment of Bondholder DIP Secured Claims............................................15
Section 3.03 Treatment of Allowed Priority Tax Claims..............................................15
ARTICLE IV
CLASSIFICATION OF CLAIMS AND INTERESTS
Section 4.01 Class 1...............................................................................15
Section 4.02 Class 2...............................................................................15
Section 4.03 Class 3...............................................................................16
Section 4.04 Class 4...............................................................................16
Section 4.05 Class 5...............................................................................16
Section 4.06 Class 6A..............................................................................16
Section 4.07 Class 6B .............................................................................16
Section 4.08 Class 7...............................................................................16
Section 4.09 Class 8...............................................................................16
Section 4.10 Class 9 ..............................................................................16
Section 4.11 Class 10..............................................................................16
Section 4.12 Class 11..............................................................................16
Section 4.13 Class 12 .............................................................................16
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ARTICLE V
TREATMENT OF CLAIMS AND INTERESTS
Section 5.01 Treatment of Allowed Class 1 Claims (Priority Claims).................................16
Section 5.02 Treatment of Allowed Class 2 Claims (Secured Tax Claims)..............................17
Section 5.03 Treatment of Allowed Class 3 Claim (TransTexas Senior Secured
Note Claims)..........................................................................17
Section 5.04 Treatment of Allowed Class 4 Claim (GMAC).............................................18
Section 5.05 Treatment of Allowed Class 5 Claims (Miscellaneous Secured
Claims)...............................................................................19
Section 5.06 Treatment of Allowed Class 6A Claims (Mineral Interest Secured
Claims). .............................................................................20
Section 5.07 Treatment of Allowed Class 6B Claims (M&M Lien Secured Claims)........................21
Section 5.08 Treatment of Allowed Class 7 Claims (TransTexas Senior Secured
Note Deficiency Claims)...............................................................21
Section 5.09 Treatment of Allowed Class 8 Claims (General Unsecured Claims)........................22
Section 5.10 Treatment of Allowed Class 9 Claims (TransTexas Subordinated
Note Claims)..........................................................................22
Section 5.11 Treatment of Allowed Class 10 Claims (Convenience Claims).............................22
Section 5.12 Treatment of Allowed Class 11 Claims (Production Payment Holder
Claims)...............................................................................22
Section 5.13 Treatment of Allowed Class 12 Interests (Old Common Stock
Interests)............................................................................23
ARTICLE VI
MEANS FOR IMPLEMENTATION OF THE PLAN
Section 6.01 General Corporate Matters. ...........................................................23
Section 6.02 Post-Confirmation Financing...........................................................23
Section 6.03 Effectiveness of Securities, Instruments and Agreements...............................23
Section 6.04 Corporate Action for Reorganized Debtor...............................................23
Section 6.05 Directors of the Reorganized Debtor. ................................................24
Section 6.06 Management Agreement. ................................................................24
Section 6.07 Approval of Agreements. ..............................................................24
Section 6.08 Employee Benefit Plans................................................................24
Section 6.09 Listing of New Common Stock; Registration of Reorganization
Securities............................................................................25
Section 6.10 Distributions to Holders of Allowed Claims and Interests; Source
of Cash and Reorganization Securities for Distributions...............................25
Section 6.11 Distribution to Holders of TransTexas Senior Secured Notes............................25
Section 6.12 Cancellation and Surrender of Existing Securities; Cancellation of
Indentures............................................................................25
Section 6.13 Release of Liens and Perfection of Liens..............................................26
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Section 6.14 Election of Treatment in Class 8......................................................26
Section 6.15 Liens Securing New Senior Secured Notes; Further Transactions.........................27
ARTICLE VII
DISPUTED CLAIMS, DISPUTED INTERESTS, RESERVES
AND MISCELLANEOUS DISTRIBUTION PROVISIONS
Section 7.01 Objections............................................................................27
Section 7.02 Amendments to Claims; Claims Filed After the Confirmation Date........................27
Section 7.03 Reserves for Disputed Claims and Disputed Interests...................................28
Section 7.04 Fluctuation in Value of Securities....................................................28
Section 7.05 Distributions on Account of Disputed Claims...........................................28
Section 7.06 Quarterly Distributions...............................................................29
Section 7.07 Excess Reserves.......................................................................29
Section 7.08 Undeliverable or Unclaimed Distributions..............................................29
Section 7.09 Allocation of Consideration...........................................................29
Section 7.10 Distributions to the Holders of General Unsecured Claims..............................30
Section 7.11 Transmittal of Distributions and Notices. ...........................................30
Section 7.12 Distribution Record Date..............................................................30
Section 7.13 Method of Cash Distributions..........................................................30
Section 7.14 Distributions on Non-Business Days....................................................30
Section 7.15 Rounding..............................................................................31
Section 7.16 Withholding Taxes.....................................................................31
Section 7.17 Disputed Distributions................................................................31
Section 7.18 Retention of Rights to Pursue Causes of Action........................................31
Section 7.19 Reviewer Proceedings. ................................................................32
Section 7.20 Instructions Regarding Sale of New Senior Preferred Stock.............................32
ARTICLE VIII
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Section 8.01 Assumption Generally..................................................................32
Section 8.02 Approval of Assumptions...............................................................32
Section 8.03 Objections to Assumption of Executory Contracts and Unexpired
Leases................................................................................33
Section 8.04 Objections to Proposed "Cure" Amounts.................................................33
Section 8.05 Payment Related to Assumption of Executory Contracts and
Unexpired Leases. ...................................................................34
Section 8.06 Executory Contracts and Unexpired Leases to be Rejected...............................34
Section 8.07 Bar Date for Rejection Damages........................................................35
Section 8.08 Contracts Entered Into on or After the Petition Date..................................35
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<S> <C> <C>
ARTICLE IX
DISCHARGE, RELEASES AND INDEMNIFICATION
Section 9.01 Discharge of All Claims and Interests and Releases....................................35
Section 9.02 Indemnification.......................................................................37
Section 9.03 Conclusion of Chapter 11 Case and Dissolution of Creditors'
Committee and SubDebt Committee.......................................................37
ARTICLE X
CONDITIONS TO OCCURRENCE OF THE EFFECTIVE DATE
Section 10.01 Conditions to Occurrence of the Effective Date........................................37
Section 10.02 Waiver of Conditions to Occurrence of the Effective Date..............................38
ARTICLE XI
EFFECTS OF PLAN CONFIRMATION
Section 11.01 Binding Effect........................................................................39
Section 11.02 Reorganized Debtor....................................................................39
Section 11.03 Revesting and Vesting.................................................................39
Section 11.04 Injunction............................................................................39
ARTICLE XII
ADMINISTRATIVE PROVISIONS
Section 12.01 Retention of Jurisdiction.............................................................40
Section 12.02 Jurisdiction Over the Reorganized Debtor..............................................41
Section 12.03 Cram Down. ..........................................................................42
Section 12.04 Modification of the Plan. ............................................................42
Section 12.05 Exemption from Certain Transfer Taxes.................................................42
Section 12.06 Setoffs. ............................................................................42
Section 12.07 Compromise of Controversies...........................................................43
Section 12.08 Withdrawal or Revocation of the Plan. ...............................................43
Section 12.09 Successors and Assigns................................................................43
Section 12.10 Governing Law. ......................................................................43
Section 12.11 Notices...............................................................................43
Section 12.12 Severability..........................................................................44
Section 12.13 Interpretation, Rules of Construction, Computation of Time, and
Choice of Law.........................................................................44
Section 12.14 No Admissions.........................................................................45
Section 12.15 Limitation of Liability...............................................................45
</TABLE>
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<TABLE>
<S> <C>
ANNEX A PRINCIPAL TERMS OF THE MANAGEMENT AGREEMENT........................47
ANNEX B PRINCIPAL TERMS OF NEW JUNIOR PREFERRED STOCK......................48
ANNEX C PRINCIPAL TERMS OF NEW SENIOR PREFERRED STOCK......................50
ANNEX D PRINCIPAL TERMS OF NEW SENIOR SECURED NOTES........................53
ANNEX E PRINCIPAL TERMS OF NEW WARRANTS....................................56
</TABLE>
viii
<PAGE> 211
ARTICLE I
INTRODUCTION
Section 1.01 Introduction. This Plan is proposed by TransTexas
Gas Corporation. Reference is made to the Disclosure Statement accompanying the
Plan for a discussion of each of TransTexas Gas Corporation's, TransAmerican
Energy Corporation's, and TransAmerican Refining Corporation's history, results
of operations, historical financial information and properties, and for a
summary and analysis of this Plan. All holders of Claims against and Interests
in TransTexas Gas Corporation are encouraged to read this Plan and the
Disclosure Statement in their entirety before voting to accept or reject the
Plan.
ARTICLE II
DEFINITIONS
The following terms used herein shall have the respective
meanings defined below:
Section 2.01 Administrative Expense means (a) any cost or
expense of administration of the Chapter 11 Case (including, without limitation,
the fees and expenses of Professionals) asserted or arising under Sections
503(b), or 507(b) of the Bankruptcy Code, (b) a Claim determined to be an
Administrative Expense pursuant to a Final Order, and (c) any fees or charges
assessed against the Estate under Section 1930, title 28, United States Code.
Section 2.02 Affiliate of the Debtor means John R. Stanley, or
any corporation, limited liability company or other business entity directly or
indirectly controlled by John R. Stanley.
Section 2.03 Allowed means with respect to Claims and
Interests, (a) any Claim against, or Interest in, the Debtor, proof of which is
timely Filed or by order of the Bankruptcy Court is not or will not be required
to be Filed, (b) any Claim or Interest that has been or is hereafter listed in
the Schedules as neither disputed, contingent or unliquidated, and for which no
timely Filed proof of Claim has been Filed, (c) any Interest registered in the
stock register maintained by or on behalf of the Debtor as of the Distribution
Record Date or (d) any Claim allowed pursuant to this Plan and, in each such
case in (a), (b) and (c) above, as to which either (i) no objection to the
allowance thereof has been Filed within the applicable period of time fixed by
this Plan, the Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy Court or
(ii) such an objection is so Filed and the Claim and Interest shall have been
allowed pursuant to a Final Order (but only to the extent so allowed).
Section 2.04 Allowed Claim or Allowed Interest means an
Allowed Claim or an Allowed Interest in a specified class. For example, an
Allowed General Unsecured Claim is an Allowed Claim in the General Unsecured
Claims Class and an Allowed Old Common Stock Interest is an Allowed Interest in
the Old Common Stock Interest Class.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 1
<PAGE> 212
Section 2.05 Amended Bylaws means the amended and restated
bylaws of TransTexas to become effective on the Effective Date.
Section 2.06 Amended Certificate of Incorporation means the
amended and restated certificate of incorporation of TransTexas to become
effective on the Effective Date, substantially in the form as Filed on or prior
to the Confirmation Date.
Section 2.07 Ballot Deadline means the date set by the
Bankruptcy Court as the last date on which Ballots/Elections may be submitted.
Section 2.08 Ballots means the ballot forms that accompany the
Plan and the Disclosure Statement upon which holders of Impaired Claims entitled
to vote on the Plan hereunder shall indicate their acceptance or rejection of
the Plan.
Section 2.09 Bank One means Bank One, N.A., as Indenture
Trustee under the TransTexas Subordinated Notes Indenture.
Section 2.10 Bankruptcy Code means Title 11, United States
Code, as amended from time to time, as applicable to the Chapter 11 Case.
Section 2.11 Bankruptcy Court means the United States
Bankruptcy Court for the Southern District of Texas, Corpus Christi Division,
having jurisdiction over the Chapter 11 Case or such other court of competent
jurisdiction as may obtain such jurisdiction in the future.
Section 2.12 Bankruptcy Rules means the Federal Rules of
Bankruptcy Procedure as promulgated by the United States Supreme Court under
Section 2075, title 28, United States Code, as amended from time to time,
applicable to the Chapter 11 Case, and any local rules of the Bankruptcy Court.
Section 2.13 Bar Date means as to Creditors other than
Governmental Units, September 27, 1999, as the final date for Filing proofs of
Claim or proofs of Interest herein; and as to Governmental Units, October 18,
1999, as the final date for Filing proofs of Claim or proofs of Interest herein.
Section 2.14 Bondholder Committee means an unofficial
committee composed of the following TEC Bondholders: Credit Suisse First Boston
Corporation, Oaktree Capital Management, L.L.C., Angelo Gordon & Co., L.P. and
Merrill Lynch Asset Management, L.P.; provided, however, each of the foregoing
Entities shall cease to be a member of such committee from any date on which it
ceases to hold or manage at least $50,000,000 in principal amount of the TEC
Senior Secured Notes
Section 2.15 Bondholder DIP Facility means the
Debtor-In-Possession loans and other financial accommodations provided pursuant
to the Credit Agreement among the Debtor, as borrower, and TEC and TARC, as
guarantors, and the Bondholder Lenders dated as of April 27, 1999, as amended or
otherwise modified, and all ancillary agreements and instruments thereto.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 2
<PAGE> 213
Section 2.16 Bondholder DIP Secured Claims means the Secured
Claims of the Bondholder Lenders arising under the Bondholder DIP Facility.
Section 2.17 Bondholder Lenders means Credit Suisse First
Boston Corporation, Angelo Gordon & Co., L.P., and Oaktree Capital Management,
L.L.C. and their respective successors and assigns.
Section 2.18 Business Day means any day other than a Saturday,
Sunday or legal holiday.
Section 2.19 Cash means currency, a certified check, a
cashier's check or a wire transfer of immediately available funds from any
source or a check drawn on a domestic bank.
Section 2.20 Causes of Action means any and all actions,
causes of action, suits, accounts, controversies, agreements, promises, rights
to legal remedies, rights to equitable remedies, rights to payment, and Claims,
whether known or unknown, reduced to judgment, not reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, unsecured and whether asserted or assertable directly or
indirectly or derivatively, in law, equity or otherwise.
Section 2.21 Chapter 11 Case means the Debtor's voluntary case
pending in the Bankruptcy Court under Chapter 11 of the Bankruptcy Code as case
number 99-21550.
Section 2.22 Claim means any right to (a) payment from the
Debtor, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured, known or unknown, or (b) an equitable
remedy for breach of performance if such breach gives rise to a right of payment
from the Debtor, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured,
or unsecured, known or unknown.
Section 2.23 Class means any group of substantially similar
Claims or Interests classified by the Plan pursuant to Section 1129(a)(1) of the
Bankruptcy Code.
Section 2.24 Collateral means any property or interest in
property of the Estate subject to a Lien to secure the payment or performance of
a Claim, which Lien is not subject to avoidance under the Bankruptcy Code.
Section 2.25 Confirmation means the entry of the Confirmation
Order on the docket maintained by the Clerk of the Bankruptcy Court with respect
to the Chapter 11 case.
Section 2.26 Confirmation Date means the date on which the
Confirmation Order is entered on the docket maintained by the Clerk of the
Bankruptcy Court with respect to the Chapter 11 Case.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 3
<PAGE> 214
Section 2.27 Confirmation Hearing means the hearing held by
the Bankruptcy Court regarding confirmation of the Plan pursuant to Section 1129
of the Bankruptcy Code, as such hearing may be adjourned or continued from time
to time.
Section 2.28 Confirmation Order means the order of the
Bankruptcy Court confirming the Plan pursuant to Section 1129 of the Bankruptcy
Code.
Section 2.29 Convenience Claim means any Claim, which would
otherwise be a General Unsecured Claim that (a) is Allowed in an amount of $500
or less, or (b) is Allowed in an amount greater than $500, but which is reduced
pursuant to Section 6.14 of the Plan to an amount of $500 or less.
Section 2.30 Creditor means any Entity that is the holder of a
Claim that arose on or before the Petition Date or a Claim of the kind specified
in Sections 502(g), 502(h) or 502(i) of the Bankruptcy Code.
Section 2.31 Creditors' Committee means the Official Committee
of Unsecured Creditors in the Chapter 11 cases of the Debtor, TEC and TARC, as
appointed by the Office of the United States Trustee and reconstituted from time
to time, which members are identified in the Disclosure Statement.
Section 2.32 Cure Amount Schedule means the schedule setting
forth the proposed amounts to cure all executory contracts to be assumed under
Article VIII of the Plan.
Section 2.33 Debtor means TransTexas Gas Corporation, a
Delaware corporation, the debtor in the Chapter 11 Case.
Section 2.34 Debtor-in-Possession means the Debtor in its
capacity as a debtor in possession in the Chapter 11 Case under Sections 1101,
1107 and 1108 of the Bankruptcy Code.
Section 2.35 Deficiency Claim means with respect to a Claim
that is partially secured, the amount by which the Allowed amount of such Claim
exceeds the value of the Collateral which secures such Claim.
Section 2.36 DGCL means the General Corporation Law of the
State of Delaware, as amended from time to time.
Section 2.37 Disallowed means, when used with respect to a
Claim or an Interest, a Claim or an Interest that has been disallowed pursuant
to a Final Order.
Section 2.38 Disbursing Agent means the Entity or Entities
designated in the Confirmation Order to disburse property pursuant to the Plan
and may include the Reorganized Debtor when acting in that capacity.
Section 2.39 Disclosure Statement means the Disclosure
Statement relating to the Plan, including, without limitation, all exhibits and
schedules thereto as approved by the Bankruptcy
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 4
<PAGE> 215
Court pursuant to Section 1125 of the Bankruptcy Code, as such Disclosure
Statement may be amended, modified, or supplemented.
Section 2.40 Disputed Claim means the portion (including, when
appropriate, the whole) of a Claim that is not an Allowed Claim as to which: (a)
a proof of Claim has been Filed, or deemed Filed under applicable law or order
of the Bankruptcy Court; (b) an objection has been or may be timely Filed; and
(c) such objection has not been: (i) withdrawn, (ii) overruled or denied in
whole or in part pursuant to a Final Order, or (iii) granted in whole or part
pursuant to a Final Order. Before the time that an objection has been or may be
Filed, a Claim shall be considered a Disputed Claim (A) if the amount or
classification of the Claim specified in the proof of Claim exceeds the amount
or classification of any corresponding Claim scheduled by the Debtor in its
Schedules, to the extent of such excess; (B) in its entirety, if any
corresponding Claim scheduled by the Debtor has been scheduled as disputed,
contingent or unliquidated in its Schedules; or (C) in its entirety, if no
corresponding Claim has been scheduled by the Debtor in its Schedules.
Section 2.41 Disputed Interest means an Interest, or portion
thereof, that has not become an Allowed Interest.
Section 2.42 Distribution Record Date means 5:00 p.m. on the
Business Day immediately preceding the Confirmation Date or other such time and
date designated in the Confirmation Order.
Section 2.43 Distributions means the distributions to be made
pursuant to the Plan.
Section 2.44 Effective Date means a Business Day selected by
the Debtor, with the prior consent of the Bondholder Committee, that is the
later of (a) a day that is not less than eleven (11) days after the Confirmation
Date and (b) the first Business Day on which all conditions to the occurrence of
the Effective Date have been satisfied or duly waived.
Section 2.45 Entity means any individual, corporation, limited
or general partnership, joint venture, association, joint stock company, limited
liability company, estate, entity, trust, trustee, United States Trustee,
unincorporated organization, government, governmental unit (as defined in the
Bankruptcy Code), agency or political subdivision thereof.
Section 2.46 Estate means the estate of TransTexas created by
Section 541 of the Bankruptcy Code upon the commencement of the Chapter 11 Case.
Section 2.47 Exchange Act means the Securities Exchange Act of
1934, as amended.
Section 2.48 Executive Committee means three members of the
Creditors' Committee to be designated by the Creditors' Committee on or before
the Confirmation Hearing.
Section 2.49 Extended Bondholder DIP Facility means the
Bondholder DIP Facility as amended on the Effective Date (and as otherwise
modified thereafter) to provide for, among other things: (i) the extension of
the maturity date thereunder with respect to one-third of the principal
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 5
<PAGE> 216
amount owing thereunder on the Effective Date and all interest, fees and other
charges accruing thereon and associated therewith to the date that is six months
after the Effective Date and (ii) securing the amounts due thereunder pari passu
with all amounts owing under the Post Confirmation Credit Facility,
substantially in the form as Filed on or prior to the Confirmation Date.
Section 2.50 Face Amount means: (a) with respect to a
particular Claim (i) if the Claim is listed in the Schedules and the holder of
such Claim has not Filed a proof of Claim within the applicable period of
limitation fixed by the Bankruptcy Court pursuant to the Bankruptcy Code, the
Bankruptcy Rules or other applicable law, the amount of such Claim that is
listed in the Schedules as not disputed, contingent or unliquidated; or (ii) if
the holder of such Claim has Filed a proof of Claim with the Bankruptcy Court
within the applicable period of limitation fixed by the Bankruptcy Court
pursuant to the Bankruptcy Code, the Bankruptcy Rules or other applicable law,
the liquidated amount stated in such proof of Claim, or such amount as is
determined by the Final Order of the Bankruptcy Court; (b) in the case of an
Administrative Expense, the liquidated amount set forth in any application Filed
with respect thereto, or the amount set forth in the Debtor's books and records
or such amount as is determined pursuant to a Final Order; or (c) in all other
cases, zero or such amount as shall be fixed or estimated pursuant to a Final
Order.
Section 2.51 File, Filed or Filing means file, filed or filing
with the Bankruptcy Court in the Chapter 11 Case.
Section 2.52 Final Order means an order or judgment of the
Bankruptcy Court entered by the Clerk of the Bankruptcy Court on the docket in
the Chapter 11 Case, which has not been reversed, vacated or stayed and as to
which (a) the time to appeal, petition for certiorari or move for a new trial,
reargument or rehearing has expired and as to which no appeal, petition for
certiorari or other proceedings for a new trial, reargument or rehearing shall
then be pending or (b) if an appeal, writ of certiorari, new trial, reargument
or rehearing thereof has been sought, such order or judgment of the Bankruptcy
Court shall have been affirmed by the highest court to which such order was
appealed, or certiorari shall have been denied or a new trial, reargument or
rehearing shall have been denied or resulted in no modification of such order,
and the time to take any further appeal, petition for certiorari or move for a
new trial, reargument or rehearing shall have expired; provided, however, that
the possibility that a motion under Rule 60 of the Federal Rules of Civil
Procedure, or any analogous rule under the Bankruptcy Rules, may be Filed
relating to such order, shall not cause such order not to be a Final Order.
Section 2.53 Firstar means Firstar Bank, N.A., formerly known
as Firstar Bank of Minnesota, N.A., as Indenture Trustee.
Section 2.54 General Unsecured Claim means any Claim
(including, without limitation, any Deductible Claim) that is not an
Administrative Expense, a Priority Tax Claim, a Priority Claim, a Secured Claim,
a Convenience Claim or a Production Payment Claim.
Section 2.55 GMAC means GMAC Commercial Credit LLC, formerly
known as BNY Factoring, LLC, successor by merger to BNY Financial Corporation.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 6
<PAGE> 217
Section 2.56 GMAC DIP Facility means the Debtor-In-Possession
loans, advances and other financial accommodations by GMAC to the Debtor
pursuant to the GMAC DIP Order and all agreements, documents and instruments
ancillary thereto and/or approved thereby.
Section 2.57 GMAC DIP Order means the Bankruptcy Court's
"Final Order Authorizing Debtor To Enter Into Accounts Receivable Management And
Security Agreement And Authorizing Post-Petition Financing Over Administrative
Expenses And Secured By Liens On Property Of The Estate Pursuant To Sections 363
and 364 Of The Bankruptcy Code."
Section 2.58 GMAC Post-Confirmation Agreement shall have the
meaning ascribed to such term pursuant to Section 5.04 of this Plan.
Section 2.59 GMAC Post-Confirmation Collateral shall have the
meaning ascribed to such term pursuant to Section 5.04 of this Plan.
Section 2.60 GMAC Secured Claim means the Secured Claim of
GMAC, whether arising prior or subsequent to the Petition Date, including
without limitation (a) those fees referred to in paragraph "18(c)" of the Second
Amended and Restated Accounts Receivable Management and Security Agreement by
and between GMAC and the Debtor made as of October 14, 1997, and (b) the claims
of GMAC under the GMAC DIP Facility and/or the GMAC DIP Order.
Section 2.61 GMAC Waiver and Injunction shall have the meaning
ascribed to such term pursuant to Section 5.04 of this Plan.
Section 2.62 Governmental Unit means a governmental unit as
such term is defined in Section 101(27) of the Bankruptcy Code.
Section 2.63 Impaired means with respect to any Claim or
Interest, impaired within the meaning of Section 1124 of the Bankruptcy Code.
Section 2.64 Indemnity Claim means a Claim of a director or
officer of the Debtor that is not assumed by the Debtor pursuant to Article VIII
of the Plan for any obligations of the Debtor to indemnify directors or officers
against any obligations pursuant to the Debtor's certificate of incorporation,
bylaws, contract, applicable state law, any combination of the foregoing, or
otherwise.
Section 2.65 Indentures means, collectively, the TransTexas
Senior Secured Loan Agreement, the TEC Senior Secured Notes Indenture and the
TransTexas Subordinated Notes Indenture.
Section 2.66 Indenture Trustee means any entity identified as
the trustee, paying agent or other similar fiduciary under a bond, note or other
debt instrument (including, but not limited to, the TEC Senior Secured Notes and
the TransTexas Subordinated Notes), whether or not the agreement evidencing the
debt or delineating its terms is denominated as an indenture.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 7
<PAGE> 218
Section 2.67 Indenture Trustee Claim means the fees and
expenses of Bank One or Firstar, as Indenture Trustee under their respective
Indentures, or any other successor Indenture Trustee, incurred in their capacity
as such, including the fees and expenses of its counsel.
Section 2.68 Instructions Document means a document governing
the sale of the New Senior Preferred Stock distributed to the Disbursing Agent
pursuant to Sections 6.10 and 7.20.
Section 2.69 Interests means, as of the Petition Date, the
equity Interests in the Debtor, including, without limitation, shares of common
stock and shares of preferred stock of the Debtor and any rights, options,
warrants, calls, subscriptions or other similar rights or agreements,
commitments or outstanding securities obligating the Debtor to issue, transfer
or sell any shares of capital stock of the Debtor.
Section 2.70 Lien means any charge against, encumbrance upon
or other interest in property, the purpose of which is to secure payment of a
debt or performance of an obligation.
Section 2.71 M&M Lien Claimant means any Entity that has a
valid mineral contractor or mineral subcontractor Claim pursuant to Chapter 56
of the Texas Property Code or similar statute of a state other than Texas or any
Entity with rights which constitute a perfected lien under the Texas
Constitution, Article 16, Section 37, to the extent enforceable in a case under
Title 11 of the United States Code.
Section 2.72 M&M Lien Secured Claim means a Secured Claim held
by a M&M Lien Claimant which has been determined by the Reviewer to be senior in
priority as of the Petition Date under the applicable state law to the Secured
Claim of TEC and/or Firstar with respect to the Collateral securing such Secured
Claim.
Section 2.73 Management Agreement means the new employment
agreement between John R. Stanley and the Reorganized Debtor dated as of the
Effective Date. The principal terms of the Management Agreement are set forth on
Annex A to the Plan.
Section 2.74 Maximum GUC Cash Amount means $20 million.
Section 2.75 Mineral Interest means any estate or interest in
oil, gas and/or minerals, leases, in which the Debtor claims (either in
severalty or in common with other Mineral Interest owners) rights to a share of
oil and gas production as defined in Section 9.319(q) of the Texas Business and
Commerce Code.
Section 2.76 Mineral Interest Claimant means any Entity other
than the Debtor and a M&M Lien Claimant that owns an interest in a Mineral
Interest, including without limitation, the owners of royalty interests,
overriding royalty interests, working interests, and mineral interests, whether
such interest are perpetual or terminable (excluding any person or entity that
claims an interest pursuant to a production payment).
Section 2.77 Mineral Interest Secured Claim means a Secured
Claim held by a Mineral Interest Claimant which has been determined by the
Reviewer to be senior in priority as of
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 8
<PAGE> 219
the Petition Date under the applicable state law to the Secured Claim of GMAC
with respect to the Collateral securing such Secured Claim.
Section 2.78 Miscellaneous Secured Claims means a Secured
Claim other than Secured Tax Claims, Bondholder DIP Secured Claims, TransTexas
Senior Secured Note Claims, GMAC Secured Claims, Mineral Interest Secured Claims
and M&M Lien Secured Claims.
Section 2.79 New Board of Directors means the board of
directors of Reorganized TransTexas, as of the Effective Date.
Section 2.80 New Class A Common Stock means, collectively, the
100 million shares of authorized new Class A Common Stock of Reorganized
TransTexas, par value $.01 per share, of which 1,002,500 shares are to be issued
on the Effective Date pursuant to the Plan.
Section 2.81 New Class B Common Stock means, collectively, the
247,500 shares of authorized New Class B Common Stock of Reorganized TransTexas,
par value $0.01 per share, all of which shares are to be issued on the Effective
Date pursuant to the TransTexas Plan.
Section 2.82 New Common Stock means, collectively, the New
Class A Common Stock and the New Class B Common Stock.
Section 2.83 New Junior Preferred Stock means the Junior
Preferred Stock to be authorized and issued on the Effective Date by Reorganized
TransTexas pursuant to the Plan. The principal economic terms of the New Junior
Preferred Stock are set forth on Annex B to the Plan.
Section 2.84 New Senior Preferred Stock means the 10% Senior
Preferred Stock to be authorized and issued on the Effective Date by Reorganized
TransTexas pursuant to the Plan. The principal economic terms of the New Senior
Preferred Stock are set forth on Annex C to the Plan.
Section 2.85 New Secured Notes Security Documents means the
security and pledge agreement and mortgages pursuant to which certain Collateral
shall be pledged to secure Reorganized TransTexas' obligations under the New
Senior Secured Notes, substantially in the form as Filed on or prior to the
Confirmation Date.
Section 2.86 New Senior Secured Notes means the Senior Secured
Notes to be issued by Reorganized TransTexas pursuant to the Plan under the New
Senior Secured Notes Indenture. The principal economic terms of the New Senior
Secured Notes are set forth on Annex D hereto.
Section 2.87 New Senior Secured Notes Indenture means the
Indenture between Reorganized TransTexas, as issuer, and the New Senior Secured
Notes Indenture Trustee, as indenture trustee, which indenture relates to the
New Senior Secured Notes, substantially in the form as Filed on or prior to the
Confirmation Date.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 9
<PAGE> 220
Section 2.88 New Senior Secured Notes Indenture Trustee shall
be as designated at the Confirmation Hearing and have the meaning set forth in
the Confirmation Order.
Section 2.89 New Warrant Agent shall be as designated by the
Debtor, with the consent of the Bondholder Committee, at the Confirmation
Hearing and shall have the meaning set forth in the Confirmation Order.
Section 2.90 New Warrant Agreement means the Warrant Agreement
between Reorganized TransTexas, as issuer, and the New Warrant Agent, as agent,
which agreement relates to the New Warrants, substantially in the form as Filed
on or prior to the Confirmation Date.
Section 2.91 New Warrants means the freely transferable rights
issued pursuant to the New Warrant Agreement to purchase shares of the New
Common Stock. The principal economic terms of the New Warrants are set forth on
Annex E hereto.
Section 2.92 Old Common Stock means all authorized, issued and
outstanding shares of the common stock of TransTexas, $.01 par value, as of the
Petition Date.
Section 2.93 Paying Agent means the Disbursing Agent, any
Indenture Trustee, or any other entity contractually authorized and/or obligated
to make Distributions to certain holders of Claims and Interests and similar
intermediaries an agents participating in making or conveying Distributions as
required by the Plan.
Section 2.94 Petition Date means April 19, 1999, the date on
which the Debtor commenced the Chapter 11 Case.
Section 2.95 Plan means this Second Amended Plan of
Reorganization Under Chapter 11 of the Bankruptcy Code proposed by the Debtor
dated as of September 29, 1999, including, without limitation, the annexes,
exhibits and schedules hereto, as the same may be amended or modified from time
to time in accordance with the Confirmation Order, the provisions of the
Bankruptcy Code and the terms hereof.
Section 2.96 Plan Documents means the agreements, documents
and instruments entered into on or as of the Effective Date as contemplated by,
and in furtherance of, the Plan.
Section 2.97 Plan Rate means the "underpayment rate" (as
defined in Section 6612(a)(2) of the Internal Revenue Code of 1986, as amended)
on the Business Day immediately preceding the Confirmation Date, which rate is
the rate of interest charged by the Internal Revenue Service on delinquent
federal income taxes.
Section 2.98 Post-Confirmation Credit Facility means the
$42,500,000 credit facility between the Reorganized Debtor and certain
lender(s), and all ancillary agreements and instruments thereto, in the form as
Filed on or prior to the Confirmation Date.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 10
<PAGE> 221
Section 2.99 Priority Claim means any Claim other than an
Administrative Expense Claim or a Priority Tax Claim, entitled to priority in
payment under Section 507(a) of the Bankruptcy Code.
Section 2.100 Priority Tax Claim means any Claim of a
Governmental Unit of the kind entitled to priority in payment as specified in
Sections 502(i) and 507(a)(8) of the Bankruptcy Code.
Section 2.101 Production Payment Holder Claims means Claims of
TCW Portfolio No. 1555 DRV Sub-Custody Partnership, L.P., TCW DR VI Investment
Partnership, L.P. and TCW Asset Management Company which relate to that certain
agreement entitled the Production Payment Drilling Program dated February 23,
1998; and Claims of TCW DR VI Investment Partnership, L.P. and TCW Asset
Management Company which relate to that certain agreement entitled the
Production Payment Transactions dated September 30, 1998.
Section 2.102 Professionals means those Entities: (a) employed
pursuant to an order of the Bankruptcy Court in accordance with Sections 327 or
1103 of the Bankruptcy Code providing for compensation for services rendered
prior to the Effective Date pursuant to Sections 327, 328, 329, 330 and 331 of
the Bankruptcy Code, or (b) seeking compensation and reimbursement pursuant to
Sections 503(b)(2) or (4) of the Bankruptcy Code.
Section 2.103 Quarterly Distribution Date means the first
Business Day of each quarterly period (i.e., March 31, June 30, September 30,
and December 31) following the Effective Date, or as soon thereafter as
practicable.
Section 2.104 Ratable Proportion means, with reference to any
Distribution on account of any Claim or Interest in any Class or subclass, a
Distribution equal in amount to the ratio (expressed as a percentage) that the
amount of such Claim or number of shares evidencing such Interests, as
applicable, bears to the aggregate amount of Claims or aggregate number of
outstanding shares evidencing such Interests in the same Class or subclass, as
applicable.
Section 2.105 Receivables means all of the Debtor's and
Reorganized Debtor's accounts, contract rights, instruments (including those
evidencing indebtedness owed by affiliates of the Debtor and Reorganized
Debtor), documents, chattel paper, general intangibles relating to accounts,
drafts and acceptances, and all other forms of obligations owing to the Debtor
and Reorganized Debtor arising out of or in connection with the sale or lease of
inventory or the rendition of services, all guarantees and other security
therefor, including all proceeds of the foregoing, whether secured or unsecured,
now existing or hereafter created, and whether or not specifically sold or
assigned to GMAC.
Section 2.106 Registration Rights Agreement means the
registration rights agreement relating to the Reorganization Securities, in
substantially the form as Filed on or prior to the Confirmation Date.
Section 2.107 Registration Statement means a registration
statement pursuant to Section 12 of the Exchange Act.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 11
<PAGE> 222
Section 2.108 Rejection Claim means any Claim arising from the
rejection of any executory contract or unexpired lease, including any Claim of
(a) a lessor for damages resulting from the rejection of a lease of real
property as any such Claim shall be calculated in accordance with Section
502(b)(6) of the Bankruptcy Code or (b) an employee for damages resulting from
the rejection of an employment agreement as any such Claim shall be calculated
in accordance with Section 502(b)(7) of the Bankruptcy Code. A Rejection Claim
shall constitute a General Unsecured Claim.
Section 2.109 Reorganization Securities means the New Senior
Secured Notes, the New Senior Preferred Stock, the New Junior Preferred Stock,
the New Common Stock and the New Warrants.
Section 2.110 Reorganized TransTexas or Reorganized Debtor
means the Debtor from and after the Effective Date.
Section 2.111 Reviewer means the person appointed by the
Bankruptcy Court pursuant to the procedures set forth in the Motion of
TransTexas for Order Establishing Procedures For Determination of Amount and
Priority of Mechanic's Lien Claims filed on September 17, 1999, to review M&M
Lien Claims and prepare a written report of his proposed factual findings and
recommendations for disposition of the M&M Lien Claims.
Section 2.112 Schedules means the schedules of assets and
liabilities and the statement of financial affairs Filed by the Debtor under
Section 521 of the Bankruptcy Code, Bankruptcy Rule 1007 on June 14, 1999, as
amended from time to time.
Section 2.113 Secured Claim means a Claim secured by a Lien on
Collateral to the extent of the value of such Collateral (a) as set forth in the
Plan, (b) as agreed to by the holder of such Claim and the Debtor or (c) as
determined pursuant to a Final Order in accordance with Section 506(a) of the
Bankruptcy Code or, in the event that such Claim is subject to setoff under
Section 553 of the Bankruptcy Code, to the extent of such setoff.
Section 2.114 Secured Tax Claim means a Secured Claim of a
Governmental Unit for property taxes assessed before the commencement of the
Case.
Section 2.115 SubDebt Committee means the Official Committee
of holders of the TransTexas Subordinated Notes in the Chapter 11 Case of
TransTexas, as appointed by the Office of the United States Trustee and
reconstituted from time-to-time, which members are identified in the Disclosure
Statement.
Section 2.116 TARC means TransAmerican Refining Corporation, a
Texas corporation, and a debtor-in-possession, in case number 99-21552, pending
in the Bankruptcy Court and which is jointly administered with the Debtor and
TEC.
Section 2.117 TARC Plan means the Second Amended Plan of
Liquidation under Chapter 11 of the Bankruptcy Code proposed by TARC dated as of
September 29, 1999, including, without limitation the annexes, exhibits and
schedules thereto, as amended from time to time.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 12
<PAGE> 223
Section 2.118 TEC means TransAmerican Energy Corporation, a
Delaware corporation, and a debtor-in-possession, in case number 99-21551,
pending in the Bankruptcy Court and which is jointly administered with the
Debtor and TARC.
Section 2.119 TEC Bondholders means the holders of the TEC
Senior Secured Notes.
Section 2.120 TEC Plan means the Second Amended Plan of
Liquidation under Chapter 11 of the Bankruptcy Code proposed by TEC dated as of
September 29, 1999, including, without limitation, the annexes, exhibits and
schedules thereto, as amended from time to time.
Section 2.121 TEC Senior Secured Notes means, collectively,
the $475 million aggregate principal amount of the 11 1/2 % Senior Secured Notes
due 2002 and the $1.13 billion aggregate principal amount of the 13% Senior
Secured Discount Notes due 2002 issued by TEC pursuant to the TEC Senior Secured
Notes Indenture.
Section 2.122 TEC Senior Secured Notes Indenture means the
Indenture between TEC, as issuer, and Firstar, as Indenture Trustee, dated as of
June 13, 1997, as amended from time to time, which relates to the TEC Senior
Secured Notes.
Section 2.123 Tort Claim means any Claim related to personal
injury, property damage, products liability or other similar Claims against the
Debtor. A Tort Claim shall constitute an Unsecured Claim.
Section 2.124 TransTexas means TransTexas Gas Corporation, a
Delaware corporation and the Debtor and the Debtor-in-Possession.
Section 2.125 TransTexas Senior Secured Loan Agreement means
the Loan Agreement between TransTexas and TEC, dated as of June 13, 1997, as
amended from time to time.
Section 2.126 TransTexas Senior Secured Note Claims means the
Secured Claims of the holder of the $450 million senior secured note dated June
13, 1997, originally made by TransTexas payable to TEC and which was pledged as
Collateral for the TEC Senior Secured Notes.
Section 2.127 TransTexas Senior Secured Note Deficiency Claim
means the Deficiency Claim of the holder of the $450 million senior secured note
dated June 13, 1997, originally made by TransTexas payable to TEC and the Claim
of the holder of the $50 million unsecured note dated January 23, 1998,
originally made by TransTexas payable to TEC.
Section 2.128 TransTexas Subordinated Note Claims means the
Claims of the holders of the TransTexas Subordinated Notes.
Section 2.129 TransTexas Subordinated Notes means the $115.8
million aggregate principal amount of TransTexas 13 3/4% Series D Senior
Subordinated Notes due 2001 issued by TransTexas pursuant to the TransTexas
Subordinated Notes Indenture.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 13
<PAGE> 224
Section 2.130 TransTexas Subordinated Notes Indenture means
the Indenture between TransTexas, as issuer, and Bank One, as Indenture Trustee,
dated as of June 13, 1997, as amended from time to time, which relates to the
TransTexas Subordinated Notes.
Section 2.131 Unclaimed Property means any Cash and
Reorganization Securities unclaimed on or after the applicable distribution date
made in respect of the relevant Allowed Claim or Allowed Interest. Unclaimed
Property shall include: (a) checks (and the funds represented thereby) and
Reorganization Securities, mailed to an address of a holder of a Allowed Claim
or Interest and returned as undeliverable without a proper forwarding address;
(b) funds for uncashed checks; and (c) checks (and the funds represented
thereby) and Reorganization Securities not mailed or delivered because no
address to mail or deliver such property was available.
Section 2.132 Unimpaired means a Claim that is not Impaired.
Section 2.133 Workers' Compensation Claims means any Claims
held by (a) current and former employees of the Debtor, (b) beneficiaries of
current and former employees of the Debtor and (c) Governmental Units, for
payment or reimbursement under and according to the terms of the Workers'
Compensation Programs.
Section 2.134 Workers' Compensation Programs means those
statutorily mandated programs in effect on the Petition Date providing
compensation, paid for by third parties, to employees of the Debtor for
job-related injuries or job related illnesses, which were required to be
maintained under provisions of non-bankruptcy law.
ARTICLE III
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSE CLAIMS AND
PRIORITY TAX CLAIMS AND BONDHOLDER DIP CLAIMS
Section 3.01 Treatment of Allowed Administrative Expenses.
Unless otherwise provided for herein, each holder of an Allowed Administrative
Expense (including, without limitation, all compensation and reimbursement of
expenses of Professionals pursuant to Sections 327, 328, 330, 331, 503(b) or
1103 of the Bankruptcy Code) shall receive 100% of the unpaid Allowed amount of
such Administrative Expense in Cash on or as soon as reasonably practicable
after the later of: (a) the Effective Date; and (b) the date on which such
Administrative Expense becomes Allowed, provided, however, that an Allowed
Administrative Expense representing obligations incurred in the ordinary course
of business consistent with past practices of TransTexas shall be paid in full
or performed by the Reorganized Debtor, in accordance with its terms and
conditions, in the ordinary course of business consistent with such past
practices, provided, further, however, that an Allowed Administrative Expense
may be paid on such other terms and conditions as are agreed to between the
Reorganized Debtor and the holder of such Allowed Administrative Expense. All
Professionals requesting compensation or reimbursement of expenses pursuant to
Sections 327, 328, 330, 331, or 503(b) of the Bankruptcy Code for services
rendered before the Effective Date shall File and serve on Reorganized
TransTexas, the Creditors' Committee, the Bondholder Committee, GMAC and the
United States Trustee an application for final allowance of
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 14
<PAGE> 225
compensation and reimbursement of expenses no later than forty-five (45) days
after the Effective Date. Objections to applications of Professionals for
compensation or reimbursement of expenses must be Filed and served on
Reorganized TransTexas, the United States Trustee, the Bondholder Committee,
GMAC, the Creditors' Committee and the Professionals to whose fee application
the objections are addressed.
Section 3.02 Treatment of Bondholder DIP Secured Claims. The
Bondholder DIP Secured Claims are Allowed in full. Unless otherwise agreed by
the holders of the Bondholder DIP Secured Claims and the Debtor or Reorganized
Debtor, on the Effective Date, each holder of an Allowed Bondholder DIP Secured
Claim shall receive its Ratable Proportion of (a) in Cash, an amount equal to
two-thirds of the sum of (i) the principal amount owing under the Bondholder DIP
Facility on the Effective Date, (ii) all interest accruing thereon in accordance
with the Bondholder DIP Facility and (iii) all fees and other charges relating
thereto in accordance with the Bondholder DIP Facility and (b) Claims and
entitlements under the Extended Bondholder DIP Facility. As more specifically
set forth in, and without in any way limiting, Section 9.01 of the Plan, the
Distributions provided hereunder are in full settlement, release and discharge
of each Bondholder DIP Secured Claim.
Section 3.03 Treatment of Allowed Priority Tax Claims. At the
option of the Reorganized Debtor, each holder of an Allowed Priority Tax Claim
shall receive on account of such Allowed Priority Tax Claim: (a) equal Cash
payments made on the last Business Day of every six (6) month period following
the Effective Date, over a period not exceeding six (6) years after the
assessment of the tax on which such Claim is based, totaling the principal
amount of such Claim plus simple interest on any outstanding balance from the
Effective Date calculated at the Plan Rate; (b) such other treatment agreed to
by the holder of such Allowed Priority Tax Claim and the Reorganized Debtor,
provided such treatment is on more favorable terms to the Reorganized Debtor
than the treatment set forth in clause (a) hereof; or (c) the full amount in
Cash of such Allowed Priority Tax Claim on or as soon as practicable after the
later of: (i) the Effective Date, or (ii) the date on which such Priority Tax
Claim becomes an Allowed Priority Tax Claim. The Reorganized Debtor, shall have
the right, in its sole discretion, to prepay Allowed Priority Tax Claims without
penalty of any sort or nature.
ARTICLE IV
CLASSIFICATION OF CLAIMS AND INTERESTS
Pursuant to Section 1122 of the Bankruptcy Code, set forth
below is a designation of classes of Claims and Interests. Administrative
Expenses and Priority Tax Claims of the kinds specified in Sections 507(a)(1),
502(i) and 507(a)(8) of the Bankruptcy Code have not been classified and are
excluded from the following classes in accordance with Section 1123(a)(1) of the
Bankruptcy Code.
Section 4.01 Class 1 consists of all Priority Claims.
Section 4.02 Class 2 consists of all Secured Tax Claims.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 15
<PAGE> 226
Section 4.03 Class 3 consists of the TransTexas Senior Secured
Note Claims.
Section 4.04 Class 4 consists of the GMAC Secured Claim.
Section 4.05 Class 5 consists of all Miscellaneous Secured
Claims.
Section 4.06 Class 6A consists of all Mineral Interest Secured
Claims.
Section 4.07 Class 6B consists of all M&M Lien Secured Claims.
Section 4.08 Class 7 consists of the TransTexas Senior Secured
Note Deficiency Claims.
Section 4.09 Class 8 consists of all General Unsecured Claims.
Section 4.10 Class 9 consists of all TransTexas Subordinated
Note Claims.
Section 4.11 Class 10 consists of all Convenience Claims.
Section 4.12 Class 11 consists of all Production Payment
Holder Claims.
Section 4.13 Class 12 consists of all Old Common Stock
Interests.
ARTICLE V
TREATMENT OF CLAIMS AND INTERESTS
Section 5.01 Treatment of Allowed Class 1 Claims (Priority
Claims).
(a) Unless otherwise agreed by the holder of an Allowed
Priority Claim and the Debtor, or following the Effective Date, the Reorganized
Debtor, each holder of an Allowed Priority Claim shall receive an amount in Cash
equal to 100% of the Allowed amount of such Claim on account of such Allowed
Priority Claim on or as soon as practicable after the later of: (i) the
Effective Date, or (ii) the date on which such Priority Claim becomes an Allowed
Priority Claim.
(b) As more specifically set forth in, and without any way
limiting, Section 9.01 of this Plan, the Distributions provided in this Section
5.01 are in full settlement, release and discharge of each such holder's
Priority Claim.
(c) Class 1 is Unimpaired. Holders of Allowed Priority Claims
shall be deemed to have accepted the Plan.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 16
<PAGE> 227
Section 5.02 Treatment of Allowed Class 2 Claims (Secured Tax
Claims).
(a) At the option of the Reorganized Debtor, each holder of an
Allowed Secured Tax Claim shall receive on account of its Allowed Secured Tax
Claim one of the following alternatives: (i) equal Cash payments made on the
last Business Day of every six (6) month period following the Effective Date,
over a period not exceeding six (6) years after the assessment of the tax on
which such Claim is based, totaling the principal amount of such Claim plus 12%
interest on any outstanding balance from the Effective Date and a continuation
of its Lien until its Allowed Secured Tax Claim is paid in full; (ii) such other
treatment agreed to by the holder of such Allowed Secured Tax Claim and the
Reorganized Debtor, provided such treatment is on more favorable terms to the
Reorganized Debtor, than the treatment set forth in clause (i) hereof; or (iii)
payment in full of such Allowed Secured Tax Claim on or as soon as practicable
after the later of: (A) the Effective Date, or (B) the date on which such
Secured Tax Claim becomes an Allowed Secured Tax Claim. The Reorganized Debtor,
shall have the right, in its sole discretion, to prepay Allowed Secured Tax
Claims without penalty of any sort or nature.
(b) As more specifically set forth in, and without in any way
limiting, Section 9.01 of this Plan, the Distributions provided in this Section
5.02 are in full settlement, release and discharge of each holder's Secured Tax
Claim.
(c) Class 2 is Impaired. Holders of Allowed Secured Tax Claims
shall be entitled to vote to accept or reject the Plan.
Section 5.03 Treatment of Allowed Class 3 Claim (TransTexas
Senior Secured Note Claims).
(a) The TransTexas Senior Secured Note Claims are Allowed in
full. On the Effective Date, the holder of the Allowed TransTexas Senior Secured
Note Claims shall receive on account of its Allowed TransTexas Senior Secured
Note Claims: (i) all of the New Senior Secured Notes; (ii) all of the New Senior
Preferred Stock issued on the Effective Date; (iii) all of the New Junior
Preferred Stock issued on the Effective Date; (iv) all of the New Common Stock
issued on the Effective Date; (v) all of the New Warrants issued on the
Effective Date; and (vi) an amount in Cash equal to the Maximum GUC Cash Amount.
(b) Subject to the occurrence of the Effective Date, the
holder of Allowed TransTexas Senior Secured Note Claims has agreed to reallocate
and direct the Reorganized Debtor to distribute certain of the Distributions set
forth in Section 5.03(a), and the Reorganized Debtor shall distribute such
Distributions, as follows:
(i) each holder of an Allowed TransTexas Subordinated
Note Claim as of the Distribution Record Date shall receive
its Ratable Proportion of 80 million shares of New Junior
Preferred Stock on the Effective Date or as soon thereafter as
is practicable;
(ii) each holder of an Allowed General Unsecured
Claim shall receive with respect to such General Unsecured
Claim, on the earlier of the
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 17
<PAGE> 228
Effective Date or the date on which such Claim becomes an
Allowed General Unsecured Claim, or as soon thereafter as is
practicable, (a) Cash in an amount equal to its Ratable
Proportion of the Maximum GUC Cash Amount; and (b) its Ratable
Proportion of five million shares of New Senior Preferred
Stock (subject to Sections 6.10 and 7.20);
(iii) each holder of the Old Common Stock on the
Distribution Record Date that is not an Affiliate of the
Debtor shall receive its Ratable Proportion of (a) 52,500
shares of the New Class A Common Stock (which will constitute
4.2% of the New Common Stock) and (b) 109,375 New Warrants on
the Effective Date or as soon thereafter as is practicable;
and
(iv) John R. Stanley, or his designee, shall receive
247,500 shares of the New Class B Common Stock (which will
constitute 19.8% of the New Common Stock) and 515,625 New
Warrants on the Effective Date or as soon thereafter as is
practicable.
(c) Subject to the occurrence of the Effective Date, the
holder of the Allowed TransTexas Senior Secured Note Claims has agreed to allow
Reorganized TransTexas to retain an amount of Cash equal to the aggregate amount
not paid to the holders of Allowed General Unsecured Claims pursuant to Section
5.03(b)(ii).
(d) As more specifically set forth in, and without in any way
limiting, Section 9.01 of this Plan, the Distributions provided in this Section
5.03 are in full settlement, release and discharge of the holder's TransTexas
Senior Secured Note Claims.
(e) Class 3 is Impaired. Holders of Allowed TransTexas Senior
Secured Note Claims shall be entitled to vote to accept or reject the Plan.
Section 5.04 Treatment of Allowed Class 4 Claim (GMAC).
(a) The GMAC Secured Claim is Allowed in full. On the
Effective Date, the Reorganized Debtor shall assume the GMAC Secured Claim,
which shall be paid in accordance with such terms and conditions as are agreed
to in writing between GMAC and the Reorganized Debtor (the "GMAC
Post-Confirmation Agreement"). Among other things, the GMAC Post-Confirmation
Agreement shall provide that the indebtedness and obligations of the Reorganized
Debtor to GMAC shall be secured by a first priority Lien and/or security
interest in and to the Receivables and certain other assets of the Debtor and
Reorganized Debtor, as set forth with specificity therein (the "GMAC
Post-Confirmation Collateral").
(b) Notwithstanding anything to the contrary set forth in any
other provision of this Plan, and any and all Liens and/or security interests in
the assets comprising the GMAC Post-Confirmation Collateral granted by the
Debtor and Reorganized Debtor to any person or entity other than GMAC pursuant
to this Plan and the Confirmation Order or at any time thereafter shall be
subject and subordinate in all respects to the Liens and/or security interests
in the GMAC Post-Confirmation Collateral granted to GMAC pursuant to this Plan,
and the sole remedy and entitlement
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 18
<PAGE> 229
of each such holder of a Lien and/or security interest in the assets comprising
the GMAC Post-Confirmation Collateral other than GMAC shall be to receive, after
the occurrence of an event of default under the Post-Confirmation Agreements,
the liquidation of the collateral granted to GMAC thereunder and repayment in
full of all indebtedness and obligations due to GMAC, the balance of such
proceeds of such assets comprising the GMAC Post-Confirmation Collateral as may
remain.
(c) The indebtedness and obligations of, and rights granted
by, the Debtor to GMAC during the period from the Confirmation Date to the
Effective Date, pursuant to the parties' pre-petition agreements, the GMAC DIP
Facility and the GMAC DIP Order shall remain in full force and effect with
respect to the Debtor and/or the Reorganized Debtor, including without
limitation all right, title, interest, claims, liens and security interests of
GMAC in the Debtor's and/or the Reorganized Debtor's assets, which shall be
deemed continuously perfected.
(d) In consideration for the obligations undertaken by GMAC
pursuant to the Plan, including without limitation pursuant to the
Post-Confirmation Agreement, the Confirmation Order shall provide (collectively,
the "GMAC Waiver and Injunction") that (1) every holder of a Claim or Cause of
Action against the Debtor, including without limitation all Mineral Interest
Claimants, all holders of Priority Tax Claims, all holders of Secured Tax Claims
and all Governmental Units holding Claims for property, severance, sales, use,
personal property and other taxes ("Releasors") shall be deemed hereunder to
have waived, released and relinquished any and all obligations, debts, losses,
damages, liabilities, contracts, controversies, agreements, premises, claims,
causes of action, and demands of any kind whatsoever at law or in equity, direct
or indirect, known or unknown, discovered or undiscovered, asserted or
unasserted against GMAC, its affiliates, successors, assigns, employees and
agents (the "GMAC Releasees") arising out of or relating to the Debtor, Claims
against the Debtor, the Chapter 11 Case, the Plan, the Loans, advances and
financial accommodations provided to the Debtor by GMAC, the Debtor's business
operations and/or management of the affairs of the Debtor and/or its affiliates,
arising at any time on or prior to the Effective Date (the "Released Claims"),
and (2) the Releasors shall be specifically permanently enjoined and restrained
from the commencement, conduct or continuation of any action or proceeding
against the GMAC Releasees upon the Released Claims, in any manner, directly or
indirectly.
(e) Class 4 is Impaired. GMAC shall be entitled to vote to
accept or reject the Plan.
Section 5.05 Treatment of Allowed Class 5 Claims
(Miscellaneous Secured Claims).
(a) At the option of the Reorganized Debtor, on the Effective
Date, each holder of an Allowed Miscellaneous Secured Claim shall receive on
account of its Allowed Miscellaneous Secured Claim one of the following
alternatives: (i) the Reorganized Debtor shall execute a written undertaking in
favor of the holder of such Claim, whereby the Reorganized Debtor shall assume
such Claim and leave unaltered such holder's legal, equitable and contractual
rights with respect to such Claim, (ii) notwithstanding any contractual
provision or applicable law that entitles the holder of such Claim to demand or
receive accelerated payment of such Claim after the occurrence of a default, the
Reorganized Debtor, shall (1) cure any such default that occurred before or
after the
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 19
<PAGE> 230
Petition Date, other than a default of a kind specified in Section 365(b)(2) of
the Bankruptcy Code, (2) reinstate the maturity of such Claim as such maturity
existed before such default, (3) compensate the holder of such Claim for any
damages incurred as a result of any reasonable reliance by such holder on such
contractual provision or such applicable law or (4) execute a written
undertaking in favor of such holder, whereby the Reorganized Debtor shall assume
such Claim and, except as permitted in clauses (1), (2) and (3) hereof, shall
not otherwise alter the legal, equitable or contractual rights of such holder
with respect to such Claim, or (iii) the Reorganized Debtor shall provide such
other treatment agreed to by the holder of such Allowed Miscellaneous Secured
Claim, and the Reorganized Debtor with the prior consent of the Bondholders.
(b) Notwithstanding the foregoing, the Debtor, may elect by
sending written notice, to the Bondholder Committee and to the affected Claim
holder on or before the Confirmation Date to (i) pay the holder of such Allowed
Miscellaneous Secured Claim the allowed Amount thereof, in Cash; (ii) distribute
to the holder of an Allowed Claim in Class 5 the property securing such holder's
Claim, in which event such holder shall be entitled within thirty (30) days of
such election to File a proof of Claim for any deficiency entitled to treatment
as a Claim in Class 8 or be forever barred from thereafter asserting a
Deficiency Claim against the Debtor or the Reorganized Debtor; or (iii) provide
to such holder such treatment, including deferred Cash payments, as shall be
consistent with Section 1129(b) of the Bankruptcy Code.
(c) As more specifically set forth in, and without in any way
limiting, Section 9.01 of this Plan, the Distributions provided in this Section
5.05 are in full settlement, release and discharge of each holder's
Miscellaneous Secured Claim.
(d) Class 5 is Impaired. Holders of such Claims shall be
entitled to vote to accept or reject the Plan. Each Miscellaneous Secured Claim
receiving treatment under Section 5.05(b) above shall be deemed to be in
separate Class for classification, voting and Distribution purposes.
Section 5.06 Treatment of Allowed Class 6A Claims (Mineral
Interest Secured Claims).
(a) Each holder of an Allowed Mineral Interest Secured Claim
shall receive on account of its Allowed Mineral Interest Secured Claim one of
the following alternatives in accordance with the Ballot/Election submitted by
such holder or its predecessor in interest with respect to such Mineral Interest
Secured Claim on or before the Ballot/Election Deadline, on the earlier of the
Effective Date or the date on which such Claim becomes an Allowed Mineral
Interest Secured Claim, or as soon thereafter as is practicable: (i) equal Cash
payments made on the last Business Day in December in each year following the
Effective Date, over a period of five (5) years, totaling the principal amount
of such Claim plus simple interest on any outstanding balance from the Effective
Date calculated at the Plan Rate, and until such Claim is paid in full a
continuing second priority Lien on the Debtor's and Reorganized Debtor's
accounts receivable to the extent that the Claims of the holders of such Mineral
Property Security Claims are attributable to accounts receivable of the Debtor
existing as of the Petition Date, which Lien shall be subject and subordinate in
all respects to the Liens and/or security interests in the GMAC
Post-Confirmation Collateral granted to GMAC pursuant to this Plan, and the sole
remedy and entitlement of each holder of such
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 20
<PAGE> 231
Mineral Property Secured Claims shall be to receive, after the occurrence of an
event of default under the Post-Confirmation Agreements, the liquidation of the
collateral granted to GMAC thereunder and repayment in full of all indebtedness
and obligations due to GMAC, the balance of such proceeds of such accounts
receivable as may remain, or (ii) in Cash, an amount equal to forty percent
(40%) of the Allowed Mineral Interest Secured Claim; provided, however, that
each election made by a holder of an Allowed Mineral Interest Secured Claim
shall be irrevocable and binding on any subsequent holder of such claim; and
provided further, that each holder of an Allowed Mineral Interest Secured Claim
that fails to submit its Ballot/Election on or before the Ballot/Election
Deadline and otherwise in accordance with the instructions contained therein
shall be deemed to have elected to receive equal Cash payments made on the last
Business Day in December in each year following the Effective Date, over a
period of five (5) years, totaling the principal amount of such Claim plus
simple interest on any outstanding balance from the Effective Date calculated at
the Plan Rate, and a continuing Lien securing such Claim until paid in full.
(b) As more specifically set forth in, and without in any way
limiting, Section 9.01 of this Plan, the Distributions provided in this Section
5.06 are in full settlement, release and discharge of each Mineral Interest
Secured Claim.
(c) Class 6A is Impaired. Holders of such Claims shall be
entitled to vote to accept or reject the Plan. Each Mineral Interest Secured
Claim receiving treatment under Section 5.06(b) above shall be deemed to be in a
separate Class for classification, voting and distribution purposes.
Section 5.07 Treatment of Allowed Class 6B Claims (M&M Lien
Secured Claims).
(a) Each holder of an Allowed M&M Lien Secured Claim shall
receive on account of its Allowed M&M Secured Claim, on the earlier of the
Effective Date or the date on which such Claim becomes an Allowed M&M Lien
Secured Claim or as soon thereafter as is practicable, equal Cash Payments made
on the last Business Day in December in each year following the Effective Date,
over a period of five (5) years, totaling the principal amount of such Claim
plus simple interest on any outstanding balance from the Effective Date
calculated at the Plan Rate, and a continuing Lien securing such Claim until
paid in full.
(b) As more specifically set forth in, and without in any way
limiting, Section 9.01 of this Plan, the Distributions provided in this Section
5.07 are in full settlement, release and discharge of each M&M Lien Secured
Claim.
(c) Class 6B is impaired. Holders of such Claims shall be
entitled to vote to accept or reject the Plan. Each M&M Lien Secured Claim
receiving treatment under Section 5.07(b) above shall be deemed to be in a
separate Class for classification, voting and distribution purposes.
Section 5.08 Treatment of Allowed Class 7 Claims (TransTexas
Senior Secured Note Deficiency Claims).
(a) The holder of the TransTexas Senior Secured Note
Deficiency Claims shall receive no Distribution on account of its TransTexas
Senior Secured Notes Deficiency Claims.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 21
<PAGE> 232
(b) Class 7 is Impaired. The holder of such Claim shall be
deemed to have rejected the Plan.
Section 5.09 Treatment of Allowed Class 8 Claims (General
Unsecured Claims).
(a) The holders of Allowed General Unsecured Claims shall
receive no Distribution on account of their General Unsecured Claims under the
Plan.
(b) Class 8 is Impaired. Holders of such Claims shall be
deemed to have rejected the Plan.
Section 5.10 Treatment of Allowed Class 9 Claims (TransTexas
Subordinated Note Claims).
(a) The holders of the TransTexas Subordinated Note Claims
shall receive no Distributions on account of their TransTexas Subordinated Note
Claims.
(b) Class 9 is Impaired. Holders of such Claims shall be
deemed to have rejected the Plan.
Section 5.11 Treatment of Allowed Class 10 Claims (Convenience
Claims).
(a) On the Effective Date, or as soon thereafter as is
practicable, each holder of an Allowed Convenience Claim shall receive on
account of its Allowed Convenience Claim Cash in an amount equal to 100% of its
Allowed Convenience Claim (as reduced in accordance with Section 6.16 of this
Plan), without interest.
(b) As more specifically set forth in, and without in any way
limiting, Section 9.01 of this Plan, the Distributions provided in this Section
5.11 are in full settlement, release and discharge of each holder's Convenience
Claim.
(c) Class 10 is Impaired under this Plan. Holders of such
Claims shall be entitled to vote to accept or reject the Plan.
Section 5.12 Treatment of Allowed Class 11 Claims (Production
Payment Holder Claims).
(a) On the Effective Date, except to the extent that a holder
of an Allowed Production Payment Holder Claim agrees to a different treatment of
such Allowed Production Payment Holder Claim, each Allowed Production Payment
Holder Claim shall be rendered Unimpaired in accordance with Section 1124 of the
Bankruptcy Code. All Allowed Production Payment Holder Claims that are not due
and payable on or before the Effective Date shall be paid in accordance with the
terms of their underlying agreement and in the ordinary course of business of
TransTexas.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 22
<PAGE> 233
(b) As more specifically set forth in, and without in any way
limiting, Section 9.01 of this Plan, the Distributions provided in this Section
5.12 are in full settlement, release and discharge of each Production Payment
Holder Claim.
(c) Class 11 is Unimpaired. Holders of such Claims shall be
deemed to have accepted the Plan.
Section 5.13 Treatment of Allowed Class 12 Interests (Old
Common Stock Interests).
(a) The holders of Old Common Stock Interests shall receive no
Distributions of any kind under the Plan in respect of those Interests.
(b) Class 12 is Impaired under the Plan. Holders of such
Claims shall be deemed to have rejected the Plan.
ARTICLE VI
MEANS FOR IMPLEMENTATION OF THE PLAN
In addition to the provisions set forth elsewhere in this
Plan, the following shall constitute the means for implementation of this Plan.
Section 6.01 General Corporate Matters. Reorganized TransTexas
shall take such action as is necessary under the laws of the States of Delaware
and Texas, federal law and other applicable law to effect the terms and
provisions of the Plan and the Plan Documents.
Section 6.02 Post-Confirmation Financing. On the Effective
Date, the transactions contemplated by the Post-Confirmation Credit Facility
shall be consummated and thereupon become effective.
Section 6.03 Effectiveness of Securities, Instruments and
Agreements. On the Effective Date, all Plan Documents issued or entered into
pursuant to the Plan, including, without limitation, (i) the New Secured Notes
Security Documents, (ii) the New Senior Secured Notes, (iii) the New Senior
Secured Notes Indenture, (iv) the New Senior Preferred Stock, (v) the New Junior
Preferred Stock, (vi) the New Warrant Agreement, (vii) the New Warrants, (viii)
the Registration Rights Agreement, (ix) the Management Agreement, (x) the
Post-Confirmation Credit Facility, (xi) the Extended Bondholder DIP Facility,
(xii) the GMAC DIP Facility, and/or (xiii) any agreement entered into or
instrument issued or in connection with any of the foregoing or any other Plan
Document, shall become effective and binding in accordance with their respective
terms and conditions upon the Entities thereto and shall be deemed to become
effective simultaneously.
Section 6.04 Corporate Action for Reorganized Debtor. On the
Effective Date, the issuance of the New Common Stock, the New Senior Preferred
Stock, the New Junior Preferred Stock, the New Warrants, the election or
appointment of directors and officers pursuant to this Plan, and the other
matters provided in this Plan involving the corporate structure of the
Reorganized
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 23
<PAGE> 234
Debtor shall be deemed to have occurred and shall be in effect from and after
the Effective Date pursuant to Section 303 of the DGCL without any requirement
of further action by the stockholders or directors of the Debtor or the
Reorganized Debtor. On the Effective Date or as soon thereafter as is
practicable, the Reorganized Debtor shall file with the Secretary of State of
the State of Delaware in accordance with Sections 103 and 303 of the DGCL, the
Amended Certificate of Incorporation. The Amended Certificate of Incorporation
shall provide for, among other things, (i) the authorization of 100 million
shares of New Class A Common Stock, (ii) the authorization of 247,500 shares of
New Class B Common Stock; (iii) the authorization of the New Senior Preferred
Stock and the New Junior Preferred Stock, (iv) the indemnification of officers
and directors of the Reorganized Debtor to the fullest extent permitted by
Section 145 of the DGCL, (v) the cancellation of the Old Common Stock, and (vi)
a prohibition on the issuance of nonvoting equity securities to the extent, and
only to the extent, required by Section 1123(a)(6) of the Bankruptcy Code.
Section 6.05 Directors of the Reorganized Debtor. On the
Effective Date, the operation of Reorganized TransTexas shall become the general
responsibility of its New Board of Directors, subject to, and in accordance
with, the Amended Certificate of Incorporation and the Amended By-Laws. The
initial New Board of Directors shall consist of five members identified at the
Confirmation Hearing by the Debtor, with the prior consent of the Bondholder
Committee. Such directors shall be deemed elected or appointed, pursuant to the
Confirmation Order, but shall not take office and shall not be deemed to be
elected or appointed until the occurrence of the Effective Date. Those directors
and officers not continuing in office shall be deemed to have resigned therefrom
as of the Effective Date pursuant to the Confirmation Order.
Section 6.06 Management Agreement. The Management Agreement
supersedes all employment, severance, retention bonus and other agreements
between the Debtor and Mr. John R. Stanley prior to the Effective Date and all
such agreements shall be deemed rejected on the Effective Date. On the Effective
Date, all Claims and Administrative Expenses of Mr. John R. Stanley against the
Debtor under any employment, severance, retention bonus and other agreements, if
any, between Mr. John R. Stanley and the Debtor will be governed by, and
completely satisfied in accordance with, the terms and conditions of the
Management Agreement.
Section 6.07 Approval of Agreements. The solicitation of votes
on the Plan shall be deemed a solicitation for the approval of the Plan
Documents and all transactions contemplated by this Plan. Entry of the
Confirmation Order shall constitute approval of the Plan Documents and such
transactions.
Section 6.08 Employee Benefit Plans. Subject to the occurrence
of the Effective Date, all employee benefit plans, policies and programs of the
Debtor and the Debtor's obligations thereunder, shall survive confirmation of
the Plan, remain unaffected thereby, and not be discharged. Except as otherwise
provided in this Plan, employee benefit plans, policies, and programs shall
include, without limitations, all savings plans, retirement pension plans,
health care plans, disability plans, severance benefit plans, life, accidental
death and dismemberment insurance plans (to the extent not executory contracts
assumed under the Plan) and Workers' Compensation Programs, but shall exclude
all employees' equity or equity-based incentive plans, which Interests shall be
canceled pursuant to the terms hereof.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 24
<PAGE> 235
Section 6.09 Listing of New Common Stock; Registration of
Reorganization Securities. Reorganized TransTexas shall use its best efforts to
cause as soon as practicable after the Effective Date, the shares of New Common
Stock issued hereunder to be listed on a national securities exchange or quoted
in the national market system of the National Association of Securities Dealer's
Automated Quotation System. Within ten days after the Effective Date and in
accordance with the terms of the Registration Rights Agreement, Reorganized
TransTexas will use its best efforts to file, at its expense, and have declared
effective as soon as practicable thereafter, a registration statement or
registration statements under the Securities Act for the offering on a
continuous or delayed basis in the future the Reorganization Securities (the
"Shelf Registration"). All of the Reorganization Securities shall be included in
the Shelf Registration statement. The Reorganized Debtor shall keep the Shelf
Registration effective for a three-year period from the Effective Date and
supplement or make amendments to the Shelf Registration, if required under the
Securities Act or by the rules and regulations promulgated thereunder, or in
accordance with the terms of the Registration Rights Agreement, and have such
supplements and amendments declared effective as soon as practicable after
Filing.
Section 6.10 Distributions to Holders of Allowed Claims and
Interests; Source of Cash and Reorganization Securities for Distributions. On
the Effective Date, Reorganized TransTexas shall deliver to the Disbursing Agent
sufficient Cash and Reorganization Securities to (a) make the Distributions to
be made on the Effective Date to the holders of Allowed Claims and Allowed
Interests, including but not limited to an amount of Cash equal to the Maximum
GUC Cash Amount and five million shares of New Senior Preferred Stock; and (b)
establish reserves for the Classes of Disputed Claims (other than those in Class
8) and Disputed Interests as set forth below. Payments and other distributions
to be made pursuant to the Plan will be available from the Reorganized Debtor's
funds, including funds provided to the Debtor in connection with the
Post-Confirmation Credit Facility.
Section 6.11 Distribution to Holders of TransTexas Senior
Secured Notes. For the purposes of Distributions to the holder of Allowed
TransTexas Senior Secured Note Claims, Firstar shall be deemed to be the sole
holder of all such Claims. All Distributions on account of Allowed TransTexas
Senior Secured Note Claims shall be distributed to Firstar, for further
distribution to the TEC Bondholders pursuant to the terms of the TEC Senior
Secured Notes Indenture, the Plan and the TEC Plan.
Section 6.12 Cancellation and Surrender of Existing
Securities; Cancellation of Indentures.
(a) Cancellation of Existing Securities and Agreements. On the
Effective Date, the TransTexas Senior Secured Notes, the TransTexas Loan
Agreement, the TransTexas Subordinated Notes, the TransTexas Subordinated Notes
Indenture, the Old Common Stock, and any options, warrants, calls,
subscriptions, or other similar rights or other agreements or commitments,
contractual or otherwise, obligating the Debtor to issue, transfer, or sell any
shares of Old Common Stock, or any other capital stock of the Debtor shall be
canceled and the holders thereof shall have no rights, and such instruments
shall evidence no rights, except the right to receive the Distributions to be
made to holders of such instruments under this Plan. After the Indenture
Trustees or their
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 25
<PAGE> 236
agents perform their obligations under the Plan, the Plan Documents and their
respective Indentures, the Indenture Trustees and their agents, successors and
assigns shall be discharged of all of their obligations associated with the
respective Indentures and related agreements and released from all Claims
arising in this Chapter 11 Case, and as of the Effective Date, such Indentures
shall be deemed canceled, except that such cancellation shall not impair the
rights of the holders of the TransTexas Senior Secured Note Claims and the
TransTexas Subordinated Note Claims to receive Distributions under the Plan or
the rights of the Indenture Trustee under their charging liens, if any, pursuant
to the Indentures to the extent that the Indenture Trustee has not received
payment.
(b) Surrender of Existing Securities. As a condition to
receiving any Distribution under the Plan, each holder of a promissory note,
share certificate, or other instrument evidencing a Claim or Interest must
surrender such promissory note, share certificate, or other instrument to the
Reorganized Debtor or its designee. Any holder of a Claim or Interest that fails
to (i) surrender such instrument or (ii) execute and deliver an affidavit of
loss and/or indemnity reasonably satisfactory to the Reorganized Debtor and
furnish a bond in the form, substance, and amount reasonably satisfactory to the
Reorganized Debtor before the later to occur of (1) the second anniversary of
the Effective Date and (2) six (6) months following the date such holder's Claim
becomes an Allowed Claim, shall be deemed to have forfeited all rights, Claims,
and/or Interests and may not participate in any Distribution under the Plan.
Section 6.13 Release of Liens and Perfection of Liens. Except
as otherwise provided in the Plan or in any Plan Document: (a) each holder of
(i) a Miscellaneous Secured Claim, (ii) a Bondholder DIP Secured Claim, (iii) a
Secured Claim other than the GMAC Secured Claim, (iv) a judgment, and (v) a
Mineral Interest Claim, shall on the Effective Date (x) turn over and release to
the Reorganized Debtor any and all Collateral that secures or purportedly
secures such Claim, as they pertain to the properties currently owned or leased
by the Debtor or such Lien shall automatically, and without further action by
the Debtor or Reorganized Debtor, be deemed released, and (y) execute such
documents and instruments as the Reorganized Debtor requests to evidence such
Claim holder's release of such property or Lien; and (b) on the Effective Date,
all right, title and interest in any and all property of the Estate shall revert
or be transferred to the Reorganized Debtor free and clear of all Claims and
Interests, including, without limitation, Liens, escrows, charges, pledges,
encumbrances and/or security Interests of any kind. No Distribution hereunder
shall be made to or on behalf of any Claim holder unless and until such holder
executes and delivers to the Debtor or Reorganized Debtor such release of Liens
or otherwise turns over and releases such Cash, pledge, or other possessory
Lien. Any such holder that fails to execute and deliver such release of Liens
within 120 days of the Effective Date shall be deemed to have no further Claim
against the Debtor, the Reorganized Debtor or its assets or property in respect
of such Claim and shall not participate in any Distribution hereunder.
Notwithstanding the immediately preceding sentence, any holder of a Disputed
Claim shall not be required to execute and deliver such release until such time
as the Claim is Allowed or Disallowed.
Section 6.14 Election of Treatment in Class 8. Each holder of
a Claim in Class 8 may elect, in the Ballot/Election by which it votes to reduce
the amount of its Claim to $500 or less and thereby be deemed a holder of a
Claim in Class 10 for purposes of voting and payment under the Plan. Holders of
Claims in any other class shall not be entitled to make an election into Class
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 26
<PAGE> 237
10 pursuant to this Plan. Any such election shall be effective only upon the
receipt thereof by the Debtor prior to the Confirmation Date. Once the election
is made, and received by the Debtor, such election shall be irrevocable and
binding on any successor-in-interest with respect to such Claim, but shall not
preclude the Debtor and/or other Entities from objecting to such Claim as
reduced.
Section 6.15 Liens Securing New Senior Secured Notes; Further
Transactions. On the Effective Date, the Reorganized Debtor shall execute and
deliver to Firstar, as Indenture Trustee under the New Senior Secured Notes
Indenture, such documents, instruments and agreements as are necessary to confer
the priority of TEC with respect to its Liens under the TransTexas Senior
Secured Loan Agreement and the documents, instruments and agreements entered
into in connection therewith and Firstar under the TEC Senior Secured Notes
Indenture and the documents, instruments and agreements entered into in
connection therewith on Firstar as Indenture Trustee under the New Senior
Secured Notes Indenture and the documents, instruments and agreements entered
into in connection therewith. On the Effective Date, the Reorganized Debtor
shall execute and deliver such further documents, instruments and agreements as
are necessary to effectuate and further evidence the terms and conditions of the
Plan.
ARTICLE VII
DISPUTED CLAIMS, DISPUTED INTERESTS, RESERVES
AND MISCELLANEOUS DISTRIBUTION PROVISIONS
Section 7.01 Objections. An objection to the allowance of a
Claim (other than an Administrative Expense Claim) or Interest shall be in
writing and may be Filed by the Debtor or Reorganized Debtor, or any other party
in interest, at any time on or before the Objection Deadline. The "Objection
Deadline" is the later of (a) the 120th day following the Effective Date unless
such period is extended by order of the Bankruptcy Court, (b) sixty (60) days
after the Filing of the proof of such Claim or Interest or (c) such other date
set by order of the Bankruptcy Court (the application for which may be made on
an ex parte basis). The objecting party shall serve a copy of each such
Objection upon the holder of the Claim or Interest to which it pertains and upon
the Debtor or the Reorganized Debtor, as the case may be, and, prior to the
Effective Date, the Debtor or the Reorganized Debtor will prosecute each
Objection to a Claim or Interest until determined by a Final Order unless the
Debtor or the Reorganized Debtor (i) compromises and settles an Objection to a
Claim or Interest by written stipulation, subject to Bankruptcy Court approval,
if necessary or (ii) withdraws an Objection to a Claim or Interest.
Section 7.02 Amendments to Claims; Claims Filed After the
Confirmation Date. Except as otherwise provided in this Plan, after the
Confirmation Date, a Claim may not be Filed or amended without the authorization
of the Bankruptcy Court and, even with such Bankruptcy Court authorization, may
be amended by the holder of such Claim solely to decrease, but not to increase,
the Face Amount thereof. Except as otherwise provided in this Plan, any new or
amended Claim Filed after the Confirmation Date shall be deemed disallowed in
full and expunged without any action by the Debtor or Reorganized Debtor.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 27
<PAGE> 238
Section 7.03 Reserves for Disputed Claims and Disputed
Interests.
(a) On the Effective Date, Reorganized Debtor shall reserve
sufficient shares of New Common Stock to be issued to the holders of Class 4
Claims and other distributees as specified in Section 5.03.
(b) On the Effective Date, the Reorganized Debtor shall
transmit to the Disbursing Agent, and the Disbursing Agent shall reserve for the
account of each holder of a Disputed Claim or Interest, (i) the property which
would otherwise be distributable to such holder on such date in accordance with
the Plan were such Disputed Claim or Disputed Interest an Allowed Claim or
Allowed Interest, as applicable, on such date, in the Face Amount thereof, or
such other amount as ordered or estimated by the Bankruptcy Court or (ii) such
other property as such holder and the Reorganized Debtor may agree; provided,
however, in no event shall the Cash reserve exceed the Maximum GUC Cash Amount.
Property reserved under this Section 7.03(b) shall be set aside and to the
extent practicable, held by the Disbursing Agent in an interest bearing account
to be established and maintained by the Disbursing Agent pending resolution of
such Disputed Claim, provided, however, that Cash shall be invested in a manner
consistent with the requirements of Section 345 of the Bankruptcy Code or
otherwise ordered by the Bankruptcy Court. To the extent such Disputed Claim or
Disputed Interest becomes an Allowed Claim or Allowed Interest, the property so
reserved for the holder thereof, together with any proceeds thereon, shall be
distributed by the Disbursing Agent to such holder pursuant to, and to the
extent provided for in the Plan.
(c) Any voting rights of Reorganization Securities held in
reserve in respect of a Disputed Claim or Disputed Interest shall be suspended
until such securities are released from such reserve.
Section 7.04 Fluctuation in Value of Securities. The value of
the Reorganization Securities held in reserve under Section 7.03 of the Plan is
likely to fluctuate. The Reorganized Debtor does not represent or warrant that
the value of any Reorganization Securities will not decline after the Effective
Date and they do not otherwise assume any liability or risk of loss which the
holder of a Disputed Claim or Disputed Interest which becomes an Allowed Claim
or Allowed Interest, as applicable, after the Effective Date may suffer by
reason of any decline in value of a reserved Reorganization Securities pending
determination of the amount of such Disputed Claim. The risk or benefit of any
appreciation or depreciation in the value of any reserved Reorganization
Securities shall be borne solely by the Entity to whom such Reorganization
Securities is ultimately distributed.
Section 7.05 Distributions on Account of Disputed Claims. In
determining the amount of Distributions to be made under the Plan to the holders
of Allowed Claims on the Effective Date or a Quarterly Distribution Date, the
appropriate Distributions shall be made as if all the Disputed Claims as of such
Distribution Date were Allowed Claims in the full amount claimed by the holders
thereof, unless otherwise ordered or estimated by the Court. No Distributions
will be made on a Disputed Claim or Disputed Interest unless and until such
Disputed Claim or Disputed Interest becomes an Allowed Claim or Allowed
Interest.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 28
<PAGE> 239
Section 7.06 Quarterly Distributions. On the Quarterly
Distribution Date, the Disbursing Agent shall make Ratable Proportion or other
Distributions of Cash or Reorganization Securities reserved for any Disputed
Claim that has become an Allowed Claim during the preceding quarterly period.
Additionally, on each Quarterly Distribution Date, the Reorganized Debtor, shall
distribute to holders of previously Allowed Class 8 Claims their Ratable
Proportion of distributable cash in the Cash Reserve Account less the total
amount of any Distribution previously received.
Section 7.07 Excess Reserves. On the date on which all Class 8
Claims and Class 10 Claims are either Allowed or Disallowed Claims and all
payments required to be made pursuant to the Plan to the holders of such Allowed
Claims shall have been made, all Cash and Reorganization Securities reserved for
the payment of, or Distribution on, the disallowed portion of Disputed Claims
and Disputed Interests and not required to be otherwise Distributed pursuant to
the Plan, shall immediately and irrevocably vest in the Reorganized Debtor and
the Disbursing Agent shall transmit such property to the Reorganized Debtor,
whereupon the Reorganized Debtor shall thereafter be empowered to take whatever
steps may be necessary to exercise control over such property. Shares of New
Common Stock that are reserved pursuant to Section 7.03 for issuance but not
issued shall remain authorized but unissued New Common Stock.
Section 7.08 Undeliverable or Unclaimed Distributions. Any
Entity that is entitled to receive a Cash Distribution under this Plan but that
fails to cash a check within 120 days of its issuance shall be entitled to
receive a reissued check from the Reorganized Debtor for the amount of the
original check, without any interest, if such Entity requests the Reorganized
Debtor or its designee to reissue such check and provides the Reorganized Debtor
or its designee, with such documentation as the Reorganized Debtor or its
designee requests to verify that such Entity is entitled to such check, prior to
the later of (a) the second anniversary of the Effective Date or (b) six (6)
months after such Claim becomes an Allowed Claim. If an Entity fails to cash a
check within 120 days of its issuance and fails to request reissuance of such
check prior to the later to occur of (a) the second anniversary of the Effective
Date or (b) six (6) months following the date such Entity's Claim becomes an
Allowed Claim, such Entity shall not be entitled to receive any distribution
under this Plan with respect to the amount of such check. If the distribution to
any holder of an Allowed Claim or Interest is returned to the Reorganized Debtor
or its designee as undeliverable, no further distributions will be made to such
holder unless and until the Reorganized Debtor or its designee is notified in
writing of such holder's then-current address.
All Claims for undeliverable distributions must be made on or
before the later to occur of (i) the second anniversary of the Effective Date
and (ii) six (6) months following the date such Entity's Claim becomes an
Allowed Claim or Allowed Interest. After such date, all unclaimed property shall
revert to the Reorganized Debtor and the Claim of any holder or successor to
such holder with respect to such property shall be discharged and forever barred
notwithstanding any federal or state escheatment laws to the contrary.
Section 7.09 Allocation of Consideration. The aggregate
consideration to be distributed to the holders of Allowed Claims in each Class
under this Plan shall be treated as first satisfying an amount equal to the
stated principal amount of the Allowed Claim for such holders and
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 29
<PAGE> 240
any remaining consideration as satisfying accrued, but unpaid, interest through
the Effective Date, if any.
Section 7.10 Distributions to the Holders of General Unsecured
Claims. For purposes of formulating this Plan, the Debtor has estimated the
aggregate total of Allowed General Unsecured Claims, after the resolution of all
disputes, to be approximately $100 million. In connection with the process of
resolution of Disputed Claims, the Bankruptcy Court will determine the amount of
ultimately Allowed General Unsecured Claims and consequently, the final
distributions to holders of Allowed General Unsecured Claims pursuant to this
Plan.
Section 7.11 Transmittal of Distributions and Notices.
(a) Any property or notice other than Cash Distributions made
through Section 7.14 which an Entity is or becomes entitled to receive pursuant
to the Plan shall be delivered by regular mail, postage prepaid, in an envelope
addressed to that Entity at the address indicated on any notice of appearance
Filed by that Entity or his authorized agent prior to the Effective Date. If no
notice of appearance has been Filed, notice shall be sent to the address
indicated on a properly Filed proof of Claim or Interest or, absent such a proof
of Claim or Interest, the address that is Scheduled for that Entity or register
maintained for register securities. The date of Distribution shall be the date
of mailing, and property distributed in accordance with this Section shall be
deemed delivered to such Entity regardless of whether such property is actually
received by that Entity.
(b) A holder of a Claim or Interest may designate a different
address for notices and distributions by notifying the Debtor or the Reorganized
Debtor, or with respect to the holder of a TransTexas Senior Secured Note
Claims, Firstar, or with respect to a holder of a TransTexas Subordinated Note
Claim, Bank One, of that address in writing. The new address shall be effective
upon receipt by the Debtor or the Reorganized Debtor, as the case may be.
(c) Notwithstanding anything contrary herein and above, to the
extent that a Distribution is required to be made to a Paying Agent, the address
for the relevant Claim or Interest shall be the address of the relevant Paying
Agent.
Section 7.12 Distribution Record Date. As of the close of
business on the Distribution Record Date, the transfer register for the
TransTexas Subordinated Notes and the TEC Secured Notes will be closed, and the
Disbursing Agent, Bank One, Firstar and their respective agents will have no
obligation to recognize the transfer of any TransTexas Subordinated Notes
occurring after such time and will be entitled for all purposes herein to
recognize and deal only with those holders of record as of such time.
Section 7.13 Method of Cash Distributions. Any Cash payment to
be made pursuant to this Plan may be made by draft, check, wire transfer, or as
otherwise required or provided in any relevant agreement or applicable law.
Section 7.14 Distributions on Non-Business Days. Any
Distribution due on a day other than a Business Day shall be made, without
interest, on the next Business Day.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 30
<PAGE> 241
Section 7.15 Rounding. Notwithstanding any other provision of
the Plan, only whole numbers of shares of New Senior Preferred Stock, New Junior
Preferred Stock and New Common Stock and whole numbers of New Warrants will be
issued. When any distribution on account of an Allowed Claim would otherwise
result in the issuance of a number of shares of New Senior Preferred Stock, New
Junior Preferred Stock and New Common Stock or a number of New Warrants that is
not a whole number, the actual distribution of shares of such stock or warrants
will be rounded to the next higher or lower whole number as follows: (i)
fractions equal to or greater than 1/2 will be rounded to the next higher whole
number and (ii) fractions less than 1/2 will be rounded to the next lower
number. The total number of shares of New Senior Preferred Stock, New Junior
Preferred Stock and New Common Stock and New Warrants to be distributed to a
Class of Claims or Interests will be adjusted as necessary to account for the
rounding provided for herein. If, as a result of such rounding, the amount of
shares of New Senior Preferred Stock, New Junior Preferred Stock and New Common
Stock or the amount of New Warrants to be distributed to a particular Class
differs from the aggregate number of shares of New Senior Preferred Stock, New
Junior Preferred Stock and New Common Stock or New Warrants to be distributed
pursuant to the Plan to that Class, the aggregate number of shares of New Senior
Preferred Stock, New Junior Preferred Stock and New Common Stock or the amount
of New Warrants specified with respect to such Class will be adjusted upward or
downward to provide for the distribution of New Senior Preferred Stock, New
Junior Preferred Stock and New Common Stock or New Warrants, as the case may be,
in an aggregate number of shares or New Warrants equal to such sum. No
consideration will be provided in lieu of fractional shares or warrants that are
rounded down.
Section 7.16 Withholding Taxes. Any federal, state or local
withholding taxes or other amounts required to be withheld under applicable law
shall be deducted from distributions hereunder. All Entities holding Claims
shall be required to provide any information necessary to effect the withholding
of such taxes.
Section 7.17 Disputed Distributions. If any dispute arises as
to the identity of a holder of an Allowed Claim or an Allowed Interest who is to
receive any distribution, the Disbursing Agent, Firstar, or Bank One may, in
lieu of making such distribution to such Entity, make such distribution into an
escrow account until the disposition thereof shall be determined by Final Order
of the Bankruptcy Court or by written agreement among the interested parties to
such dispute.
Section 7.18 Retention of Rights to Pursue Causes of Action.
Pursuant to Section 1123(b)(3) of the Bankruptcy Code, the Reorganized Debtor
(as representatives of the Debtor's estate) will retain and have the exclusive
right to enforce against any Entity any and all Causes of Action (including,
without limitation, all Causes of Action arising under Sections 510, 544 through
550 and 553 of the Bankruptcy Code or otherwise arising under the Bankruptcy
Code and/or those arising under other applicable law) that arose before the
Effective Date, including all Causes of Action of a trustee and
debtor-in-possession under the Bankruptcy Code, other than those expressly
released or compromised as part of or pursuant to this Plan; provided, however,
that all Causes of Action that arose before the Effective Date relating to any
of the Distributions received by the holder of the TransTexas Senior Secured
Note Claims pursuant to Section 5.03(a) and not reallocated pursuant to 5.03(b)
or retained pursuant to Section 5.03(c) are hereby assigned to Firstar on behalf
of the TEC Bondholders.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 31
<PAGE> 242
Section 7.19 Reviewer Proceedings. All Disputed Secured Claims
of a M&M Lien Claimant shall be referred to the Reviewer. The Reviewer shall
make findings of fact and shall refer all questions of law to the Bankruptcy
Court. The Reviewer shall enter findings and conclusions as to the allowance of
a Disputed Secured Claim of a M&M Lien Claimant; provided, however, that any
party may obtain a trial de novo before the Bankruptcy Court by appealing the
Reviewer's finding and conclusions within 10 days of the Reviewer's Filing of
his report to the Bankruptcy Court.
Section 7.20 Instructions Regarding Sale of New Senior
Preferred Stock. Subsequent to the Effective Date, the Debtor will deliver to
the Disbursing Agent five million shares of New Senior Preferred Stock. The
Executive Committee will instruct the Disbursing Agent when to sell the shares
pursuant to the Instructions Document which will be filed with the Court prior
to the Confirmation Hearing. The Executive Committee intends to sell the stock
as soon as commercially practicable.
ARTICLE VIII
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Section 8.01 Assumption Generally. Except as otherwise
provided in this Plan or in any order of the Bankruptcy Court, subject to the
occurrence of the Effective Date, on the Effective Date, pursuant to Section 365
of the Bankruptcy Code, all executory contracts and unexpired leases not listed
on the Schedule of Rejected Contracts to be served and Filed by the Debtor at
least five (5) days before the Confirmation Hearing (the "Schedule of Rejected
Contracts"), or which is not the subject of a motion to reject as of the
Confirmation Date, and is not rejected under Section 8.06 hereof, are assumed,
subject to the same rights that the Debtor or the Reorganized Debtor held or
holds at, on, or after the Petition Date to modify or terminate such agreements
under applicable nonbankruptcy law. Each contract and lease assumed under this
Section shall be assumed only to the extent, if any, that it constitutes an
executory contract or unexpired lease, and nothing contained herein shall
constitute an admission by the Debtor or the Reorganized Debtor that such
contract or lease is an executory contract or unexpired lease or that the Debtor
or the Reorganized Debtor has any liability thereunder. To the extent the
Bankruptcy Court, or any other court of competent jurisdiction, determines,
either before, on, or after the Effective Date, that any agreement in the form
of a lease of real or personal property identified for assumption in this
Article VIII of the Plan, is, in fact, a secured transaction, the resulting
secured indebtedness arising from such determination shall be treated in
accordance with the applicable section of the Plan. Each executory contract and
unexpired lease assumed pursuant to this Article VIII shall revest in and be
fully enforceable by the Reorganized Debtor in accordance with its terms, except
as modified by the provisions of the Plan, any order of the Bankruptcy Court
authorizing and providing for its assumption, or applicable federal law.
Section 8.02 Approval of Assumptions. Subject to the
occurrence of the Effective Date, the Confirmation Order (except as otherwise
provided therein) shall constitute an order of the Bankruptcy Court approving
the assumptions, revestments and, to the extent not subject to dispute as set
forth in Section 8.04 of the "cure" amounts described in this Article VIII and
the Cure Amount
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 32
<PAGE> 243
Schedule attached to the Schedule of Rejected Contracts pursuant to Section 365
of the Bankruptcy Code effective as of the Effective Date.
Section 8.03 Objections to Assumption of Executory Contracts
and Unexpired Leases.
(a) Any Entity objecting to the Debtor's proposed assumption
of an executory contract or unexpired lease based on a lack of adequate
assurance of future performance or on any ground other than the adequacy of the
"cure" amount set forth in the Cure Amount Schedule, shall File and serve a
written objection to the assumption of such contract or lease within the same
deadline and in the same manner established for Filing objections to
Confirmation of this Plan. Failure to File an objection within the time period
set forth above shall constitute consent to the assumption and revestment of
those contracts and leases, including an acknowledgment that the proposed
assumption provides adequate assurance of future performance.
(b) If any Entity Files an objection to assumption based on
any ground other than the adequacy of the "cure" amount set forth in the Cure
Amount Schedule, and the Bankruptcy Court ultimately determines that the Debtor
cannot assume the executory contract or lease or that the Debtor cannot provide
adequate assurance of future performance as proposed or in any modified proposal
submitted by the Debtor or the Reorganized Debtor, then the unexpired lease or
executory contract shall automatically thereupon be deemed to have been included
on the Schedule of Rejected Contracts and shall be rejected pursuant to Section
8.06 hereof.
Section 8.04 Objections to Proposed "Cure" Amounts.
(a) The Debtor believes that any executory contract of the
Debtor that is not listed on the Schedule of Rejected Contracts or in the Cure
Amount Schedule may be assumed by the Debtor without the payment of any monetary
cure amount. Any party to an executory contract or unexpired lease to be assumed
that asserts arrearages or damages pursuant to Section 365(b)(1) of the
Bankruptcy Code that exceeds the amount set forth in the Cure Amount Schedule,
or which is not listed therein and pertains to an executory contract not listed
in the Schedule of Rejected Contracts must File and serve an objection to the
proposed cure amount within the same deadline and in the same manner established
for Filing objections to Confirmation of this Plan. Failure to assert arrearages
different from the amount set forth on the Cure Amount Schedule or which
pertains to an executory contract not listed in the Schedule of Rejected
Contracts or the Cure Amount Schedule within the time period set forth above
shall constitute consent to the cure amount set forth in the Cure Amount
Schedule or to the Debtor's position that no cure amount must be paid and an
acknowledgment that the amount identified for "cure" on the Cure Amount Schedule
is the only amount necessary to cover any and all outstanding defaults under the
respective executory contract or unexpired lease to be assumed and an
acknowledgment that no other defaults exist under said contract or lease.
(b) To the extent that any objections to the amounts set forth
in the Cure Amount Schedule are timely Filed and served and such objections are
not resolved between the Debtor and the objecting Entities, the Bankruptcy Court
shall resolve such disputes at a hearing to be held at a
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 33
<PAGE> 244
date to be determined by the Bankruptcy Court at the Confirmation Hearing. The
resolution of such disputes shall not affect the Debtor's assumption of the
contracts or leases that are subject of such a dispute, but rather shall affect
only the "cure" amount the Debtor must pay in order to assume such contract or
lease. Notwithstanding the immediately preceding sentence, if the Debtor in its
discretion determines that the amount asserted to be the necessary "cure" amount
would, if ordered by the Bankruptcy Court, make the assumption of the contract
or lease imprudent, then the Debtor may, prior to or at the Confirmation
Hearing, elect to (1) reject the contract or lease pursuant to Section 8.06
hereof, or (2) request an expedited hearing on the resolution of the "cure"
dispute, exclude assumption or rejection of the contract or lease from the scope
of the Confirmation Order, and retain the fight to reject the contract or lease
pursuant to Section 8.06 hereof pending the outcome of such dispute.
Section 8.05 Payment Related to Assumption of Executory
Contracts and Unexpired Leases. If not the subject of dispute pursuant to
Section 8.04 hereof as of Confirmation Date, any monetary defaults under each
executory contract and unexpired lease to be assumed under the Plan shall be
satisfied by the Debtor, pursuant to Section 365(b)(1) of the Bankruptcy Code,
by payment of the amount set forth in the Cure Amount Schedule or such other
amount as ordered by the Bankruptcy Court or agreed upon by the Debtor in Cash
within 60 days following the Effective Date or on such other terms as agreed to
by the parties to such executory contract or unexpired lease. In the event of a
dispute pursuant to Section 8.04, payment of the amount otherwise payable
hereunder shall be made following entry of a Final Order or agreement by the
Debtor or the Reorganized Debtor, as the case may be, and the party to the
contract or lease.
Section 8.06 Executory Contracts and Unexpired Leases to be
Rejected.
(a) Effective as of, and subject to the occurrence of, the
Effective Date, the executory contracts and unexpired leases listed on the
Schedule of Rejected Contracts shall be rejected as of the Effective Date. The
Debtor may amend the Schedule of Rejected Contracts at any time prior to the
Confirmation Hearing (i) by Filing such amendment with the Bankruptcy Court and
serving it on parties directly affected by the amendment; or (ii) with
Bankruptcy Court approval after a hearing on notice to the Creditors' Committee
and the affected parties. Listing a contract or lease by category above or on
the Schedule of Rejected Contracts shall not constitute an admission by the
Debtor or the Reorganized Debtor that such contract or lease, including related
agreements, is an executory contract or unexpired lease or that the Debtor or
the Reorganized Debtor have any liability thereunder.
(b) The Confirmation Order shall constitute an order of the
Bankruptcy Court approving such rejections on the Confirmation Date, pursuant to
Section 365 of the Bankruptcy Code, effective as of the Effective Date. Any
party to an executory contract or unexpired lease identified for rejection as
provided herein may, within the same deadline and in the same manner established
for Filing objections to Confirmation, file any objection thereto. Failure to
file any such objection within the time period set forth above shall constitute
consent and agreement to the rejection.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 34
<PAGE> 245
Section 8.07 Bar Date for Rejection Damages. If the rejection
of an executory contract or unexpired lease pursuant to Section 8.06 above gives
rise to a Claim by the other party or parties to such contract or lease, such
Claim, to the extent that it is timely Filed and is a Miscellaneous Secured
Claim, shall be classified in Class 6, and to the extent that it is timely Filed
and is a General Unsecured Claim, shall be classified in Class 8 or Class 10, as
the case may be; provided, however, that in either event any Claim arising from
the rejection shall be forever barred and shall not be enforceable against the
Debtor, the Reorganized Debtor, their affiliates, their successors, estates, or
their properties, unless a proof of Claim is Filed and served on the Debtor or
the Reorganized Debtor within thirty days after the earlier of (a) the date of
entry of the first order of the Bankruptcy Court rejecting the executory
contract or unexpired lease, or (b) the Confirmation Date.
Section 8.08 Contracts Entered Into on or After the Petition
Date. On the Effective Date, all contracts, leases, and other agreements entered
into by the Debtor on or after the Petition Date, which agreements have not been
terminated in accordance with their terms on or before the Confirmation Date
shall revest in and remain in full force and effect as against the Reorganized
Debtor and the other parties to such contracts, leases and other agreements.
ARTICLE IX
DISCHARGE, RELEASES AND INDEMNIFICATION
Section 9.01 Discharge of All Claims and Interests and
Releases.
(a) Except as otherwise specifically provided by this Plan,
the Confirmation (subject to the occurrence of the Effective Date) shall
discharge the Debtor and the Reorganized Debtor from any debt that arose before
the Confirmation Date, and any debt of the kind specified in Sections 502(g),
502(h) or 502(i) of the Bankruptcy Code, whether or not a proof of Claim is
Filed or is deemed Filed, whether or not such Claim is an Allowed Claim, and
whether or not the holder or such Claim has voted on this Plan.
(b) Except as otherwise specifically provided by this Plan,
the Distributions and rights that are provided in this Plan shall be in complete
satisfaction, discharge and release, effective as of the Confirmation Date (but
subject to the occurrence of the Effective Date) of (i) all Claims and Causes of
Action against, liabilities of, liens on, obligations of and Interests in the
Debtor or the Reorganized Debtor and the assets and properties of the Debtor or
the Reorganized Debtor, whether known or unknown, and (ii) all Causes of Action
(whether known or unknown, either directly or derivatively through the Debtor or
the Reorganized Debtor) against, Claims (as defined in Section 101 of the
Bankruptcy Code) against, liabilities (as guarantor of a Claim or otherwise) of,
Liens on the direct or indirect assets and properties of, and obligations of
successors and assigns of, the Debtor, the Reorganized Debtor and their
successors and assigns based on the same subject matter as any Claim or Interest
or based on any act or omission, transaction or other activity or security,
instrument or other agreement of any kind or nature occurring, arising or
existing prior to the Effective Date that was or could have been the subject of
any Claim or Interest, in each case
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 35
<PAGE> 246
regardless of whether a proof of Claim or Interest was Filed, whether or not
Allowed and whether or not the holder of the Claim or Interest has voted on this
Plan.
(c) On the Effective Date, the Reorganized Debtor, on behalf
of itself and its subsidiaries, shall be deemed to release unconditionally, and
hereby is deemed to release unconditionally on such date (i) each present or
former officer, director, shareholder, employee, consultant, attorney,
accountant and other representatives of the Debtor, (ii) the Creditors'
Committee and, solely in their capacity as members or representatives of the
Creditors' Committee, each consultant, attorney, accountant or other
representative or member of the Creditors' Committee, (iii) the Entities serving
on the Bondholder Committee at any time in the Chapter 11, and, solely in their
capacity as representatives of such holders, each of such Entity's respective
officers, directors, shareholders, partners, agents, employees, consultants,
attorneys, accountants, advisors, affiliates and other representatives, (iv)
Firstar, as Indenture Trustee, and, solely in their capacity as representatives
of Firstar, as Indenture Trustee, each of Firstar's officers, directors,
shareholders, partners, agents, employees, consultants, attorneys, accountants,
advisors, affiliates and other representatives, (v) GMAC and, solely in their
capacity as representatives of GMAC, each of GMAC's officers, directors,
shareholders, partners, agents, employees, consultants, attorneys, accountants,
advisors, affiliates and other representatives and (vi) the holders of
Bondholder DIP Claims and, solely in their capacity as representatives of such
holders, each of such holder's respective officers, directors, shareholders,
partners, agents, employees, consultants, attorneys, accountants, advisors,
affiliates and other representatives (the Entities specified in clauses (i) and
(vi) are referred to collectively as the "Releasees"), from any and all Claims,
obligations, suits, judgments, damages, rights, causes of action and liabilities
whatsoever, whether known or unknown, foreseen or unforeseen, existing or
hereafter arising, in law, equity or otherwise, based in whole or in part upon
or related to any act or omission, transaction, event or other occurrence taking
place on or prior to the Effective Date in any way relating to the Debtor, the
Reorganized Debtor, the Chapter 11 Case, or the Plan, except that no Releasees
shall be released from acts or omissions which are the result of willful
misconduct and except that no officers or directors of the Debtor shall be
released with respect to (x) any indebtedness of such Releasee to Debtor or
Debtor-in-Possession for money borrowed by such Releasee, (y) any setoff or
counterclaim Debtor or Debtor-in-Possession may have or assert against any such
Releasee, provided that the aggregate amount thereof shall not exceed the
aggregate amount of any Claims held or asserted by such Releasee against Debtor
or Debtor-in-Possession, as the Case may be and (z) Claims arising from the
fraud, willful misconduct or gross negligence of such Releasee.
(d) On the Effective Date, each holder of a Claim and/or an
Interest shall be deemed to have released unconditionally, and hereby is deemed
to release unconditionally on such date, the Releasees, from any and all rights,
Claims, causes of action, obligations, suits, judgments, damages and liabilities
whatsoever which any such holder may be entitled to assert, whether known or
unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity
or otherwise, based in whole or in part upon or relating to any act or omission,
transaction, event or other occurrence taking place on or before the Effective
Date in any way relating to the Reorganized Debtor, the Debtor, the Chapter 11
Case or the Plan, except that no Releasees shall be released from acts or
omissions which are the result of willful misconduct.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 36
<PAGE> 247
(e) If and to the extent that the Bankruptcy Court concludes
that the Plan cannot be confirmed with any portion of the foregoing releases,
then the Debtor, with the prior consent of the Bondholder Committee, reserves
the right to amend the Plan so as to give effect as much as possible to the
foregoing releases, or to delete them.
Section 9.02 Indemnification. Notwithstanding any other
provisions of the Plan, the obligations of the Debtor to indemnify its present
and former directors, officers and employees against any obligations,
liabilities, costs or expenses pursuant to the articles of incorporation or
by-laws of the Debtor, applicable state law, specific agreement or any
combination of the foregoing shall not survive the Effective Date and shall be
discharged, regardless of whether indemnification is owed in connection with an
event occurring prior to, upon or subsequent to the Petition Date, provided,
however, that the Reorganized Debtor shall take all such actions as are
necessary to maintain in full force and effect the existing insurance policies
until such time as it may expire by its terms and directors and officers of the
Debtor covered by the existing insurance policies shall be entitled to make
Claims thereunder pursuant to the terms thereof notwithstanding the provisions
of this Section 9.02.
Section 9.03 Conclusion of Chapter 11 Case and Dissolution of
Creditors' Committee and SubDebt Committee.
Except with respect to any appeal of an order in the Chapter
11 Case, and any matters related to any proposed modification of the Plan, on
the Effective Date, the Creditors' Committee and the SubDebt Committee shall be
dissolved and the members, employees, agents, advisors, affiliates and
representatives (including, without limitation, attorneys, financial advisors,
and other Professionals) of each thereof shall thereupon be released from and
discharged of and from all further authority, duties, responsibilities and
obligations related to, arising from and in connection with or related to the
Chapter 11 Case and shall be indemnified (including for reasonable attorneys'
fees and costs) by the Reorganized Debtor for any and all acts performed, or
omissions, in connection with or related to the Chapter 11 Case, except for acts
or omissions as shall constitute fraud, willful misconduct or gross negligence
of their duties. Notwithstanding the foregoing, for a period not to exceed 2
years from the Effective Date, the Executive Committee (and its counsel) shall
continue for the sole purpose of monitoring and, if necessary, participating in
the claims objection process of the Debtor.
ARTICLE X
CONDITIONS TO OCCURRENCE OF THE EFFECTIVE DATE
Section 10.01 Conditions to Occurrence of the Effective Date.
The following are conditions precedent to the occurrence of the Effective Date:
(a) The Bankruptcy Court shall have entered an order
confirming the TEC Plan, and the TEC Plan and the order confirming the TEC Plan
shall each be in form and substance satisfactory to the Bondholder Committee and
the Debtor.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 37
<PAGE> 248
(b) The Bankruptcy Court shall have entered an order
confirming the TARC Plan, and the TARC Plan and the order confirming the TARC
Plan shall each be in form and substance satisfactory to the Bondholder
Committee and the Debtor.
(c) The order confirming the TEC Plan shall have become a
Final Order (as such term is defined in the TEC Plan).
(d) The order confirming the TARC Plan shall have become a
Final Order (as such term is defined in the TARC Plan).
(e) The Confirmation Order shall have been entered and become
a Final Order in form and substance satisfactory to the Debtor and the
Bondholder Committee.
(f) The Debtor shall have sufficient Cash under the
Post-Confirmation Credit Facility and otherwise to satisfy all Cash obligations
under the Plan due on or as of the Effective Date, including but not limited to
the Maximum GUC Cash Amount.
(g) The Amended Certificate of Incorporation shall have been
filed with the Secretary of State of Delaware in accordance with such State's
corporation laws and the Amended By-Laws shall have been adopted by the
Reorganized Debtor and in form and substance acceptable to the Bondholder
Committee.
(h) All authorizations, consents and regulatory approvals
required, if any, in connection with the Plan's effectiveness shall have been
obtained.
(i) No order of a court shall have been entered and shall
remain in effect restraining the Debtor from consummating the Plan.
(j) The Debtor and the Bondholder Committee shall each have
approved each of the Plan Documents and such Plan Documents shall have been
executed in accordance with their terms.
(k) All amounts required to be paid pursuant to Section 3.02
shall have been paid in full in Cash to the Bondholder Lenders.
Section 10.02 Waiver of Conditions to Occurrence of the
Effective Date. The Debtor may waive, with the prior consent of the Bondholder
Committee, one or more of the conditions to the occurrence of the Effective
Date.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 38
<PAGE> 249
ARTICLE XI
EFFECTS OF PLAN CONFIRMATION
Section 11.01 Binding Effect. Upon Confirmation, and pursuant
to Section 1141(a) of the Bankruptcy Code, the provisions of the Plan will bind
the Debtor, the Bondholder Committee, the Creditors Committee, the SubDebt
Committee, and all Creditors and Interest holders, including their successors
and assigns, whether or not they accept the Plan. The Claims and distributions
under the Plan to Creditors are in full and complete settlement of all Claims
and Interests.
Section 11.02 Reorganized Debtor. The Debtor shall, as the
Reorganized Debtor, continue to exist after the Effective Date as a separate
corporate entity, with all the powers of a corporation under applicable law,
without prejudice to any right to terminate such existence (whether by merger or
otherwise) under applicable law after the Effective Date.
Section 11.03 Revesting and Vesting. Except as otherwise
provided in this Plan, pursuant to Section 1123(a)(5) and 1141 of the Bankruptcy
Code, all property comprising the Estate shall revest in the Reorganized Debtor
or its successor, free and clear of all Claims, Liens, charges, encumbrances and
Interests of Creditors and equity security holders on the Effective Date. As of
the Effective Date, the Reorganized Debtor may operate its businesses and use,
acquire and dispose of property and settle and compromise Claims or Interests
without supervision of the Court free of any restrictions of the Bankruptcy Code
or Bankruptcy Rules, other than those restrictions expressly imposed by the Plan
and the Confirmation Order. Without limiting the foregoing, the Reorganized
Debtor may pay the charges it incurs for Professional fees, disbursements,
expenses, or related support services after the Effective Date without any
application to the Court.
Section 11.04 Injunction. Except as otherwise provided in the
Plan, the Confirmation Order shall provide, among other things, that all
Entities who have held, hold or may hold Claims against or Interests in the
Debtor are, with respect to any such Claims or Interests, permanently enjoined
from and after the Confirmation Date from: (a) commencing, conducting or
continuing in any manner, directly or indirectly, any suit, action or other
proceeding of any kind (including, without limitation, any proceeding in a
judicial, arbitral, administrative or other forum) against or affecting the
Debtor, the Reorganized Debtor, any member of the Bondholder Committee or
Firstar, any of their property, or any direct or indirect transferee of any
property of, or direct or indirect successor in interest to, the Debtor, or any
property of any such transferee or successor; (b) enforcing, levying, attaching
(including, without limitation, any pre-judgment attachment), collecting or
otherwise recovering by any manner or means, whether directly or indirectly, of
any judgment, award, decree or order against the Debtor, the Reorganized Debtor,
any member of the Bondholder Committee or Firstar, any of their property, or any
direct or indirect transferee of any property of, or direct or indirect
successor in interest to, the Debtor, or any property of any such transferee or
successor; (c) creating, perfecting or otherwise enforcing in any manner,
directly or indirectly, any encumbrance of any kind against the Debtor, the
Reorganized Debtor, any member of the Bondholder Committee or Firstar, any of
their property, or any direct or indirect transferee of any property of, or
successor in interest to, any of the foregoing Entities; (d) asserting any right
of setoff, subrogation, or recoupment of any kind, directly or indirectly,
against any obligation due the
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 39
<PAGE> 250
Debtor, the Reorganized Debtor, any member of the Bondholder Committee or
Firstar, any of their property, or any direct or indirect transferee of any
property of, or successor in interest to, the Debtor; and (e) acting or
proceeding in any manner, in any place whatsoever, that does not conform to or
comply with the provisions of the Plan.
ARTICLE XII
ADMINISTRATIVE PROVISIONS
Section 12.01 Retention of Jurisdiction. Notwithstanding entry
of the Confirmation Order, the Bankruptcy Court shall retain jurisdiction as is
legally permissible, including, without limitation, for the following purposes:
(a) to determine (i) any Disputed Claims, Disputed Interests
and all related Claims accruing after the Confirmation Date including rights and
liabilities under contracts giving rise to such Claims, (ii) the validity,
extent, priority and nonavoidability of consensual and nonconsensual liens and
other encumbrances, (iii) preconfirmation tax liability pursuant to Section 505
of the Bankruptcy Code, and (iv) controversies and disputes regarding the
interpretation of the Plan and documents executed in connection therewith;
(b) to allow, disallow, estimate, liquidate or determine any
Claim or Interest against the Debtor and to enter or enforce any order requiring
the Filing of any such Claim or Interest before a particular date;
(c) to approve all matters related to the assumption,
assumption and assignment, or rejection of any executory contract or unexpired
lease of any of the Debtor pursuant to Section 365 of the Bankruptcy Code and
Article VII herein;
(d) to determine requests for payment of administrative
expenses entitled to priority under Section 507(a)(1) of the Bankruptcy Code,
including compensation of parties entitled thereto;
(e) to resolve controversies and disputes regarding the
interpretation and implementation of this Plan, any disputes relating to whether
or not a timely and proper proof of Claim was Filed or whether a Disallowed
Claim or Disallowed Interest should be reinstated;
(f) to implement the provisions of this Plan and entry of
orders in aid of confirmation and consummation of this Plan;
(g) to modify the Plan pursuant to Section 1127 of the
Bankruptcy Code;
(h) to adjudicate any and all Causes of Action that arose in
these Chapter 11 Case preconfirmation or in connection with the implementation
of this Plan, whether or not pending on the Confirmation Date, including without
limitation, any remands of appeals;
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 40
<PAGE> 251
(i) to resolve disputes concerning any reserves with respect
to Disputed Claims, Disputed Interests or the administration thereof;
(j) to resolve any disputes concerning whether a person or
entity had sufficient notice of the Chapter 11 Case, the applicable Claims bar
date, the hearing on the approval of the Disclosure Statement as containing
adequate information, the hearing on the confirmation of this Plan for the
purpose of determining whether a Claim or Interest is discharged hereunder or
for any other purpose;
(k) to determine any and all applications, Claims, Interests,
pending adversary proceedings and contested matters (including, without
limitation, any adversary proceeding or other proceeding to recharacterize
agreements or reclassify Claims or Interests) in these Chapter 11 Case;
(l) to enter and implement such orders as may be appropriate
in the event the Confirmation Order is for any reason stayed, revoked, modified,
or vacated;
(m) to seek the issuance of such orders in aid of execution of
the Plan, to the extent authorized by Section 1142 of the Bankruptcy Code;
(n) to consider any modifications of the Plan, to cure any
defect or omission, or reconcile any inconsistency in any order of the Court,
including, without limitation, the Confirmation Order;
(o) to recover all assets of the Debtor and property of the
Estate, wherever located, including any Causes of Action under Sections 544
through 550 of the Bankruptcy Code;
(p) to hear and resolve matters concerning state, local, and
federal taxes in accordance with Sections 346, 505, and 1146 of the Bankruptcy
Code;
(q) to hear any other matter not inconsistent with the
Bankruptcy Code;
(r) to resolve any and all disputes or controversies relating
to Distributions to be made, and/or reserves to be established, under this Plan,
including, without limitation, Distributions to be made by the Indenture
Trustee; and
(s) to enter a final decree closing the Chapter 11 Case.
(t) to enforce the injunction granted under Section 11.03 of
the Plan and to enforce the GMAC Waiver and Injunction
Section 12.02 Jurisdiction Over the Reorganized Debtor.
Notwithstanding the jurisdiction retained in Section 12.01 hereof, from and
after the Effective Date, the Bankruptcy Court shall not have the power to issue
any order which modifies the Reorganization Securities or the rights of the
holders thereof with respect to such Reorganization Securities.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 41
<PAGE> 252
Section 12.03 Cram Down. If all of the applicable requirements
for confirmation of the Plan are met as set forth in Section 1129(a) of the
Bankruptcy Code except subsection (8) thereof, the Debtor may request the Court
to confirm the Plan pursuant to Section 1129(b) of the Bankruptcy Code,
notwithstanding the requirements of such subsection (8), on the basis that the
Plan is fair and equitable and does not discriminate unfairly with respect to
any Impaired Class that does not vote to accept this Plan as described in the
Disclosure Statement.
Section 12.04 Modification of the Plan. The Debtor reserves
the right, with the prior consent of the Bondholder Committee, to alter, amend
or modify the Plan prior to the entry of the Confirmation Order. After the entry
of the Confirmation Order, the Debtor may, upon order of the Bankruptcy Court
and with the prior consent of the Bondholder Committee, alter, amend or modify
the Plan in accordance with Section 1127(b) of the Bankruptcy Code, or remedy
any defect or omission or reconcile any inconsistency in the Plan in such manner
as may be necessary to carry out the purpose and intent of the Plan.
Section 12.05 Exemption from Certain Transfer Taxes. Pursuant
to Section 1146(c) of the Bankruptcy Code: (a) the issuance, transfer or
exchange of any securities, instruments or documents; (b) the creation of any
other lien, mortgage, deed of trust or other security interest; (c) the making
or assignment of any lease or sublease or the making or delivery of any deed or
other instrument of transfer under, pursuant to, in furtherance of, or in
connection with, the Plan, including, without limitation, any deeds, bills of
sale or assignments executed in connection with any of the transactions
contemplated under the Plan or the revesting, transfer or sale of any real or
personal property of the Debtor pursuant to, in implementation of, or as
contemplated in the Plan, and (d) the issuance, renewal, modification or
securing of indebtedness by such means, and the making, delivery or recording of
any deed or other instrument of transfer under, in furtherance of, or in
connection with, the Plan, including, without limitation, the Confirmation
Order, shall not be subject to any document recording tax, stamp tax, conveyance
fee or other simple tax, mortgage tax, real estate transfer tax, mortgage
recording tax or other similar tax or governmental assessment. Consistent with
the foregoing, each recorder of deeds or similar official for any county, city
or governmental unit in which any instrument hereunder is to be recorded shall,
pursuant to the Confirmation Order, be ordered and directed to accept such
instrument, without requiring the payment of any filing fees, documentary stamp
tax, deed stamps, stamp tax, transfer tax, intangible tax or similar tax.
Section 12.06 Setoffs. Except for distributions to holders of
allowed Bondholder DIP Claims and allowed GMAC Claims (as to which the Debtor
and Reorganized Debtor shall have no right of setoff and/or recoupment) and as
otherwise provided in the Plan, agreements entered into in connection with the
Plan, the Confirmation Order, or in agreements previously approved by Final
Order of the Bankruptcy Court, the Debtor or the Reorganized Debtor, may but
will not be required to, set off against any Claim and the Distributions made
with respect to the Claim, before any distribution is made on account of such
Claim, any and all of the Claims, rights and causes of action of any nature that
the Debtor or the Reorganized Debtor may hold against the holder of such Claim;
provided, however, that neither the failure to effect such a setoff, the
allowance of any Claim hereunder, any other action or omission of the Debtor or
the Reorganized Debtor, nor any provision of this Plan shall constitute a waiver
or release by the Debtor or the Reorganized Debtor of any such
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 42
<PAGE> 253
Claims, rights and causes of action that the Debtor or the Reorganized Debtor
may possess against such holder. To the extent the Reorganized Debtor fails to
set off against a holder of a Claim or Interest and seek to collect a Claim from
the holder of such Claim or Interest after a distribution to the holder of such
Claim or Interest pursuant to the Plan, the Reorganized Debtor shall be entitled
to full recovery on its Claim against the holder of such Claim or Interest.
Section 12.07 Compromise of Controversies. Pursuant to
Bankruptcy Rule 9019, and in consideration for the classification, distribution
and other benefits provided under the Plan, the provisions of this Plan shall
constitute a good faith compromise and settlement of all Claims or controversies
resolved pursuant to the Plan. The entry of the Confirmation Order shall
constitute the Bankruptcy Court's approval of each of the foregoing compromises
or settlements, and all other compromises and settlements provided for in the
Plan, and the Bankruptcy Court's findings shall constitute its determination
that such compromises and settlements are in the best Interests of the Debtor,
the Reorganized Debtor, the Estates, and any Entity holding Claims against the
Debtor.
Section 12.08 Withdrawal or Revocation of the Plan. The Debtor
reserves the right, with the prior consent of the Bondholder Committee, to
revoke or withdraw the Plan prior to the Confirmation Date. If the Plan is
revoked or withdrawn, or if the Confirmation Date does not occur, the Plan shall
have no force and effect.
Section 12.09 Successors and Assigns. The rights, benefits and
obligations of any Entity named or referred to in the Plan shall be binding on,
and shall inure to the benefit of, the heirs, executors, administrators,
successors and/or assigns of such Entity.
Section 12.10 Governing Law. Except to the extent that the
Bankruptcy Code or Bankruptcy Rules are applicable, the rights and obligations
arising under this Plan shall be governed by and construed and enforced in
accordance with the laws of the State of Texas.
Section 12.11 Notices. All notices, requests or demands for
payments provided for in this Plan shall be in writing and shall be deemed to
have been received, by mail, addressed to:
TransTexas Gas Corporation
1300 North Sam Houston Parkway East
Houston, Texas 77032-2949
Attn: Simon Ward
with copies to:
Gardere & Wynne, L.L.P.
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201
Attn: Deirdre B. Ruckman, Esq.
and:
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 43
<PAGE> 254
Bondholder Committee
c/o Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attn: Michael J. Sage, Esq.
Any of the above may, from time to time, change its address for future notices
and other communications hereunder by Filing a notice of the change of address
with the Bankruptcy Court. Any and all notices given under this Plan shall be
effective when received.
Section 12.12 Severability. Except as to terms which would
frustrate the overall purposes of this Plan, should any provision in this Plan
be determined to be unenforceable, such determination shall in no way limit or
affect the enforceability and operative effect of any or all other provisions of
this Plan.
Section 12.13 Interpretation, Rules of Construction,
Computation of Time, and Choice of Law.
(a) The provisions of the Plan shall control over any
descriptions thereof contained in the Disclosure Statement.
(b) Any term used in the Plan that is not defined in the Plan,
either in Article II (Definitions) or elsewhere, but that is used in the
Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to that
term in (and shall be construed in accordance with the rules of construction
under) the Bankruptcy Code or the Bankruptcy Rules. Without limiting the
foregoing, the rules of construction set forth in Section 102 of the Bankruptcy
Code shall apply to the Plan, unless superseded herein.
(c) Unless specified otherwise in a particular reference, all
references in the Plan to Articles, Sections and Exhibits are references to
Articles, Sections and Exhibits of or to the Plan.
(d) Any reference in the Plan to a contract, document,
instrument, release, bylaw, certificate, indenture or other agreement being in a
particular form or on particular terms and conditions means that such document
shall be substantially in such form or substantially on such terms and
conditions.
(e) Any reference in the Plan to an existing document or
Exhibit means such document or Exhibit as it may have been amended, restated,
modified or supplemented as of the Effective Date without limitation to the
provisions set forth in Article VI of this Plan.
(f) Captions and headings to Articles and Sections in the Plan
are inserted for convenience of reference only and shall neither constitute a
part of the Plan nor in any way affect the interpretation of any provisions
hereof.
(g) In computing any period of time prescribed or allowed by
the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 44
<PAGE> 255
(h) All exhibits, annexes and schedules to the Plan are
incorporated into the Plan, and shall be deemed to be included in the Plan,
regardless of when Filed.
(i) Subject to the provisions of any contract, certificate,
bylaws, instrument, release, indenture or other agreement or document entered
into in connection with the Plan, the rights and obligations arising under the
Plan shall be governed by, and construed and enforced in accordance with,
federal law, including the Bankruptcy Code and Bankruptcy Rules.
(j) Where applicable, references to the singular shall include
the plural, and vice- versa.
Section 12.14 No Admissions. Notwithstanding anything herein
to the contrary, nothing contained in the Plan shall be deemed as an admission
by any Entity with respect to any matter set forth herein.
Section 12.15 Limitation of Liability. None of the Debtor, the
Reorganized Debtor, the Creditors' Committee, the Entities serving on the
Bondholder Committee at any time during the Chapter 11 Case, the Bondholder
Lenders, GMAC, the Indenture Trustees, nor any of their respective officers,
directors, partners, employees, members, agents, advisors, affiliates,
underwriters or investment bankers, nor any other professional persons employed
by any of them (collectively, the "Exculpated Persons"), shall have or incur any
liability to any Entity for any act taken or omission made in good faith in
connection with or related to formulating, negotiating, implementing, confirming
or consummating the Plan, the Disclosure Statement or any Plan Document. The
Exculpated Persons shall have no liability to the Debtor, the Reorganized
Debtor, any holder of a Claim, any holder of an Interest, any other party in
interest in the Chapter 11 Case or any other Entity for actions taken or not
taken under the Plan, in connection herewith or with respect thereto, or arising
out of their administration of the Plan or the property to be distributed under
the Plan, in good faith, including, without limitation, failure to obtain
Confirmation or to satisfy any condition or conditions, or refusal to waive any
condition or conditions, to the occurrence of the Effective Date, and in all
respects such Exculpated Persons shall be entitled to rely upon the advice of
counsel with respect to their duties and responsibilities under the Plan.
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 45
<PAGE> 256
Respectfully submitted,
TransTexas Gas Corporation
By: /s/ Ed Donahue
----------------------------------
Name: Ed Donahue
----------------------------------
Title: Vice President
----------------------------------
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 46
<PAGE> 257
ANNEX A
PRINCIPAL TERMS OF THE MANAGEMENT AGREEMENT
<TABLE>
<S> <C>
Parties: The Reorganized Debtor and John R. Stanley.
Term: Three years, subject to two one-year
extensions at the option of John R. Stanley,
provided certain performance tests have been
met.
Compensation: $300,000 per year. Mr. Stanley will also be
given warrants each year during the term of
the Management Agreement to purchase 300,000
shares of New Common Stock at an exercise
price of $120 per share.
Termination Rights: The Reorganized Debtor will have the right
to terminate the Management Agreement for
"cause" (as defined, including, without
limitation, events customarily constituting
cause, a default by the Reorganized Debtor
in the payment of interest or principal
payments due on the New Senior Secured Notes
or dividend or redemption payments due on
the New Senior Preferred Stock and a
bankruptcy filing by the Reorganized
Debtor). Upon termination, Mr. Stanley will
cease to be an officer or director of the
Reorganized Debtor.
Required Approval of Sale: Prior to February 15, 2001, unanimous
approval of the New Board of Directors will
be required to approve a sale of the
Reorganized Debtor, unless the Reorganized
Debtor has filed for protection under the
Bankruptcy Code.
Severance Payment: $3 million, if the Management Agreement is
terminated without cause, or $1.5 million,
if the Management Agreement is terminated
with cause.
</TABLE>
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 47
<PAGE> 258
ANNEX B
PRINCIPAL TERMS OF NEW JUNIOR PREFERRED STOCK
<TABLE>
<S> <C>
Dividends: Holders of the New Junior Preferred Stock
will have the right to receive quarterly
dividends, cumulative from the Effective
Date, in preference to the holders of any
other shares of capital stock of the
Reorganized Debtor, in an amount per share
equal to 8% of the par value per share
annually, payable in kind (i.e., in
additional shares of New Junior Preferred
Stock with an aggregate par value equal to
the dividend amount) quarterly in arrears on
the last day of the third, sixth, ninth and
twelfth months after the Effective Date and
on successive anniversaries of such dates.
Par Value: $1.00 per share.
Liquidation Preference: Par value per share, plus an amount equal to
accrued and unpaid dividends.
Mandatory Redemption: None.
Optional Redemption: The Junior Preferred Stock will be
redeemable, in whole or in part, at the
option of the Reorganized Debtor for cash in
an amount equal to the par value per share
thereof at any time after the New Senior
Secured Notes and the New Senior Preferred
Stock have been retired.
Voting Rights: Holders of New Junior Preferred Stock will
have one-tenth of a vote per share, voting
together with holders of the New Class A
Common Stock, on all matters on which
holders of the New Class A Common Stock are
entitled to vote.
Mandatory Conversion: Shares of the New Junior Preferred Stock
will be automatically converted into shares
of New Common Stock on the basis of .04175
shares of New Class A Common Stock for each
$1 of liquidation
</TABLE>
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 48
<PAGE> 259
<TABLE>
<S> <C>
preference of the New Junior Preferred Stock
if either (i) more than 75 million shares of
the New Senior Preferred Stock are
outstanding after the sixth anniversary of
the Effective Date or (ii) two successive
dividend payments are in arrears on the New
Senior Preferred Stock.
Ranking: The New Junior Preferred Stock will rank
junior to the New Senior Preferred Stock,
and senior to the New Common Stock and to
all preferred stock of the Reorganized
Debtor, if any, that is expressly stated to
be junior to the New Junior Preferred Stock
with respect to the payment of dividends and
amounts upon the liquidation, dissolution or
winding up of the Reorganized Debtor.
Registration: The New Junior Preferred Stock will be
registered pursuant to the Shelf
Registration Statement and freely tradable,
subject to applicable law.
Additional Issuances: Additional issuances of the New Junior
Preferred Stock (other than shares issued to
pay dividends in kind) will be prohibited.
</TABLE>
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 49
<PAGE> 260
ANNEX C
PRINCIPAL TERMS OF NEW SENIOR PREFERRED STOCK
<TABLE>
<S> <C>
Number of Shares: 220 million
Dividends: Subject to the right of the Reorganized
Debtor to pay dividends in kind in the first
two years, as described below, holders of
the New Senior Preferred Stock will have the
right during the first two years after the
Effective Date to receive quarterly cash
dividends, cumulative from the Effective
Date, in preference to holders of any other
shares of capital stock of the Reorganized
Debtor, in an amount per share equal to 10%
per annum of the par value per share payable
quarterly in arrears on the last day of the
third, sixth, ninth and twelfth months after
the Effective Date and on successive
anniversaries of such dates. During the
first two years after the Effective Date, in
lieu of paying cash dividends, the
Reorganized Debtor will be entitled, at its
option, to pay dividends in kind (i.e., in
additional shares of New Senior Preferred
Stock with an aggregate par value equal to
the dividend amount), in an amount per share
equal to 20% per annum of the par value per
share. After the first two years following
the Effective Date, dividends are payable in
cash at the rate of 7.75% per annum of the
par value per share.
Par Value: $1.00 per share.
Liquidation Preference: Par value per share, plus an amount equal to
accrued and unpaid dividends.
Mandatory Redemption: The New Senior Preferred Stock will be
required to be redeemed by the Reorganized
Debtor on the sixth anniversary of the
Effective Date, at 100% of the liquidation
preference per share.
Optional Redemption: Redeemable at the option of the Reorganized
Debtor at an initial price equal to $0.88
per share, increasing by $0.005 per share
per month to a maximum of 100% of the
liquidation preference per share, provided
</TABLE>
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 50
<PAGE> 261
<TABLE>
<S> <C>
that no redemption will be permitted prior
to the time the New Senior Secured Notes
have been retired.
Mandatory Conversion: If either (i) more than 75 million shares of
the New Senior Preferred Stock are
outstanding after the sixth anniversary of
the Effective Date or (ii) two successive
dividend payments are in arrears on the New
Senior Preferred Stock, one-half of the
shares of the New Senior Preferred Stock
will be automatically converted into shares
of the New Common Stock on the basis of
.4175 shares of New Class A Common Stock for
each $1 of liquidation preference of the
shares of New Senior Preferred Stock
converted. The remaining shares of New
Senior Preferred Stock will remain
outstanding.
Voting Rights: Holders of the New Senior Preferred Stock
will have the right, voting separately as a
class, to elect four (4) of the five (5)
directors to the Board of Directors of the
Reorganized Debtor; provided, that if
dividends are in arrears with respect to the
payments due commencing two (2) years after
the Effective Date, such holders will have
the right, voting separately as a class, to
elect all five (5) directors to the Board of
Directors of the Reorganized Debtor. Holders
of the New Senior Preferred Stock will have
one vote per share, voting together with the
New Class A Common Stock, on all matters on
which the holders of the New Class A Common
Stock are entitled to vote generally. The
voting rights of the New Senior Preferred
Stock will not be subject to change absent
the consent of the holders of 75% of the New
Senior Preferred Stock, voting as a class.
Ranking: The New Senior Preferred Stock will rank
senior to all other capital stock of the
Reorganized Debtor with respect to the
payment of dividends and amounts upon
liquidation, dissolution or winding up of
the Reorganized Debtor.
Restrictive Covenants: The New Senior Preferred Stock will contain
covenants limiting the Reorganized Debtor's
ability to (a) incur indebtedness other than
the Post-Confirmation Facility and the
Extended Bondholder DIP Facility (in an
aggregate amount not to exceed $52,500,000),
Liens of holders of Allowed Mineral Interest
Secured Claims electing to continue such
Liens under Section 5.06(a)(i) and the
Ballots/Elections
</TABLE>
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 51
<PAGE> 262
<TABLE>
<S> <C>
and the GMAC Facility, (b) engage in
transactions with affiliates and related
parties, including Mr. John R. Stanley,
absent unanimous approval of the New Board
of Directors and the obtaining of a fairness
opinion from an internationally recognized
investment bank or accounting firm, (c)
dispose of assets or engage in
sale/leaseback transactions, (d) issue
dividends to the holders of the New Common
Stock while the New Senior Preferred Stock
is outstanding, (e) change the Reorganized
Debtor's line of business, (f) consolidate
with or merge into any other Entity or
convey, transfer or lease substantially all
of the Reorganized Debtor's assets, and (g)
authorize or issue any additional shares of
preferred stock (other than shares of New
Senior Preferred Stock and New Junior
Preferred Stock issued to pay dividends in
kind).
Additional Issuances: Additional issuances of the New Senior
Preferred Stock (other than shares issued to
pay dividends in kind) will be prohibited.
Registration: The New Senior Preferred Stock will be
registered pursuant to the Shelf
Registration and freely tradable, subject to
applicable law.
</TABLE>
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 52
<PAGE> 263
ANNEX D
PRINCIPAL TERMS OF NEW SENIOR SECURED NOTES
<TABLE>
<S> <C>
Principal Amount: $200 million.
Interest: 15% per annum, accruing from the Effective
Date, payable semi-annually in arrears, in
cash, beginning six months after the
Effective Date.
Maturity: Five years after the Effective Date.
Mandatory Redemption: None.
Optional Redemption: The New Senior Secured Notes will be
redeemable by the Reorganized Debtor, at its
option, in whole or in part, in cash, at the
redemption prices (expressed as a percentage
of the outstanding principal amount) set
forth below, together with accrued and
unpaid interest, if any, to the redemption
date:
If redeemed during the 12- Redemption
month period beginning Price
---------------------- -----
the Effective Date 115%
1 year after the Effective Date 112%
2 years after the Effective Date 109%
3 years after the Effective Date 106%
4 years after the Effective Date 103%
</TABLE>
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 53
<PAGE> 264
<TABLE>
<S> <C>
Collateral: Lien on all Collateral securing the note
governed by the TransTexas Senior Secured
Loan Agreement and all assets securing the
Bondholder DIP Facility subordinated to the
Liens securing the Post-Confirmation
Facility and the Extended Bondholder DIP
Facility.
Ranking: The New Senior Secured Notes will be senior
indebtedness of the Reorganized Debtor.
Registration: The New Senior Secured Notes will be
registered pursuant to the Shelf
Registration Statement and freely tradable
subject to applicable law.
Restrictive Covenants: The New Senior Secured Notes Indenture will
contain covenants limiting the Reorganized
Debtor's ability to (a) incur indebtedness
other than the Post-Confirmation Facility
and the Extended Bondholder DIP Facility (in
an aggregate amount not to exceed
$52,500,000), Liens of holders of Allowed
Mineral Interest Secured Claims electing to
continue such Liens under Section 5.06(a)(i)
and the Ballots/Elections and the GMAC
Facility, (b) engage in transactions with
affiliates and related parties, including
Mr. John R. Stanley, absent unanimous
approval of the New Board of Directors and
the furnishing of a fairness opinion from an
internationally recognized investment bank
or accounting firm to the indenture trustee
for the New Senior Secured Notes, (c)
dispose of assets or engage in
sale/leaseback transactions, (d) issue
dividends to the holders of the New Common
Stock while the New Senior Secured Notes are
outstanding, (e) change the Reorganized
Debtor's line of business, (f) consolidate
with or merge into any other Entity or
convey, transfer or lease substantially all
of the Reorganized Debtor's assets, and (g)
suffer a change of control.
</TABLE>
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 54
<PAGE> 265
<TABLE>
<S> <C>
Other Provisions: The New Senior Secured Notes Indenture will
contain other customary provisions and such
Indenture will be qualified under the Trust
Indenture Act of 1939, as amended.
</TABLE>
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 55
<PAGE> 266
ANNEX E
PRINCIPAL TERMS OF NEW WARRANTS
<TABLE>
<S> <C>
Amount: 625,000 New Warrants, each to acquire one
share of New Class A Common Stock.
Term: Expire on June 30, 2002.
Exercise Price: $120.00 per share.
Customary Provisions: The New Warrant Agreement will contain
customary terms such as anti-dilution
provisions (however, the anti-dilution
provisions will not provide for any
adjustments relating to shares issued upon
the exercise, if any, of any New Warrants
issued after the Effective Date or upon
conversion, if any, of the New Senior
Preferred Stock or the New Junior Preferred
Stock).
</TABLE>
Second Amended Plan of Reorganization
proposed by TransTexas Gas Corporation Page 56
<PAGE> 267
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
IN RE: )
TRANSAMERICAN REFINING ) CASE NO. 99-21552-C-11
CORPORATION, )
)
)
DEBTOR. )
SECOND AMENDED PLAN OF LIQUIDATION UNDER
CHAPTER 11 OF THE BANKRUPTCY CODE
PROPOSED BY DEBTOR
Dated: September 29, 1999
JORDAN, HYDEN, WOMBLE GARDERE & WYNNE, L.L.P.
& CULBRETH, P.C. John Nabors
Shelby Jordan Deirdre B. Ruckman
Bank America Towers 3000 Thanksgiving Tower
500 N. Shoreline, Suite 900 1601 Elm Street
Corpus Christi, TX 78471 Dallas, TX 75201
COUNSEL FOR DEBTOR SPECIAL COUNSEL FOR
DEBTOR
Appendix 5
<PAGE> 268
TABLE OF CONTENTS
ARTICLE I
INTRODUCTION
<TABLE>
<CAPTION>
<S> <S> <C>
Page
Section 1.01 Introduction....................................................................................1
ARTICLE II
DEFINITIONS
Section 2.01 Administrative Expense..........................................................................1
Section 2.02 Allowed.........................................................................................1
Section 2.03 Allowed Claim or Allowed Interest...............................................................1
Section 2.04 Application to Compromise Controversy...........................................................1
Section 2.05 Ballot Deadline.................................................................................2
Section 2.06 Ballots.........................................................................................2
Section 2.07 Bankruptcy Code.................................................................................2
Section 2.08 Bankruptcy Court................................................................................2
Section 2.09 Bankruptcy Rules................................................................................2
Section 2.10 Bar Date........................................................................................2
Section 2.11 Bondholder Committee............................................................................2
Section 2.12 Bondholder DIP Facility.........................................................................2
Section 2.13 Bondholder Dip Secured Claims...................................................................2
Section 2.14 Bondholder Lenders..............................................................................2
Section 2.15 Business Day....................................................................................2
Section 2.16 Cash............................................................................................3
Section 2.17 Causes of Action................................................................................3
Section 2.18 Chapter 11 Case.................................................................................3
Section 2.19 Claim...........................................................................................3
Section 2.20 Class...........................................................................................3
Section 2.21 Collateral .....................................................................................3
Section 2.22 Confirmation....................................................................................3
Section 2.23 Confirmation Date...............................................................................3
Section 2.24 Confirmation Hearing............................................................................3
Section 2.25 Confirmation Order..............................................................................3
Section 2.26 Creditor........................................................................................3
Section 2.27 Creditors' Committee............................................................................4
Section 2.28 Debtor..........................................................................................4
Section 2.29 Debtor-in-Possession............................................................................4
Section 2.30 Defendants......................................................................................4
Section 2.31 Deficiency Claim................................................................................4
Section 2.32 Disallowed......................................................................................4
</TABLE>
i
<PAGE> 269
<TABLE>
<S> <S> <C>
Section 2.33 Disbursing Agent................................................................................4
Section 2.34 Disclosure Statement............................................................................4
Section 2.35 Disputed Claim..................................................................................4
Section 2.36 Disputed Interest...............................................................................4
Section 2.37 Distribution Record Date........................................................................5
Section 2.38 Distributions...................................................................................5
Section 2.39 Effective Date..................................................................................5
Section 2.40 Entity..........................................................................................5
Section 2.41 Estate..........................................................................................5
Section 2.42 Estate Representative...........................................................................5
Section 2.43 Face Amount.....................................................................................5
Section 2.44 File, Filed or Filing...........................................................................5
Section 2.45 Final Order.....................................................................................5
Section 2.46 Firstar.........................................................................................6
Section 2.47 First Union.....................................................................................6
Section 2.48 General Unsecured Claim.........................................................................6
Section 2.49 Governmental Unit...............................................................................6
Section 2.50 Impaired........................................................................................6
Section 2.51 Indentures......................................................................................6
Section 2.52 Indenture Trustee...............................................................................6
Section 2.53 Indenture Trustee Claim.........................................................................6
Section 2.54 Insured Claim...................................................................................6
Section 2.55 Insured Portion.................................................................................6
Section 2.56 Interest Reserve Accounts.......................................................................7
Section 2.57 Interests.......................................................................................7
Section 2.58 Lawsuit.........................................................................................7
Section 2.59 Lien............................................................................................7
Section 2.60 Litigation Trust................................................................................7
Section 2.61 Litigation Trust Agreement......................................................................7
Section 2.62 Paying Agent....................................................................................7
Section 2.63 Petition Date...................................................................................7
Section 2.64 Plan............................................................................................7
Section 2.65 Plan Documents..................................................................................7
Section 2.66 Priority Claim..................................................................................7
Section 2.67 Professionals ..................................................................................8
Section 2.68 Ratable Proportion..............................................................................8
Section 2.69 Rejection Claim.................................................................................8
Section 2.70 Schedules.......................................................................................8
Section 2.71 Secured Claim...................................................................................8
Section 2.72 SubDebt Committee...............................................................................8
Section 2.73 TARC............................................................................................8
Section 2.74 TARC Common Stock...............................................................................8
Section 2.75 TARC Senior Secured Loan Agreement..............................................................8
Section 2.76 TARC Senior Secured Note .......................................................................9
Section 2.77 TARC Senior Secured Note Claims.................................................................9
Section 2.78 TARC Senior Secured Note Deficiency Claim ......................................................9
Section 2.79 TARC Subordinated Notes.........................................................................9
Section 2.80 TARC Subordinated Notes Indenture...............................................................9
Section 2.81 TCR.............................................................................................9
</TABLE>
ii
<PAGE> 270
<TABLE>
<S> <S> <C>
Section 2.82 TCR Preferred Stock.............................................................................9
Section 2.83 TEC.............................................................................................9
Section 2.84 TEC Bondholders.................................................................................9
Section 2.85 TEC Plan........................................................................................9
Section 2.86 TEC Senior Secured Notes........................................................................9
Section 2.87 TEC Senior Secured Notes Indenture..............................................................9
Section 2.88 Tort Claim.....................................................................................10
Section 2.89 TransTexas.....................................................................................10
Section 2.90 TransTexas Plan................................................................................10
Section 2.91 Unclaimed Property.............................................................................10
Section 2.92 Unimpaired.....................................................................................10
Section 2.93 Workers' Compensation Claims...................................................................10
Section 2.94 Workers' Compensation Programs.................................................................10
ARTICLE III
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSE
CLAIMS AND PRIORITY CLAIMS
Section 3.01 Treatment of Allowed Administrative Expenses...................................................11
Section 3.02 Bondholder DIP Secured Claims. ................................................................11
Section 3.03 Treatment of Allowed Priority Claims...........................................................11
ARTICLE IV
CLASSIFICATION OF CLAIMS AND INTERESTS
Section 4.01 Class 1........................................................................................11
Section 4.02 Class 2........................................................................................11
Section 4.03 Class 3........................................................................................12
Section 4.04 Class 4........................................................................................12
ARTICLE V
TREATMENT OF CLAIMS AND INTERESTS
Section 5.01 Treatment of Allowed Class 1 Claim (TARC Senior Secured Note Claims)...........................12
Section 5.02 Treatment of Allowed Class 2 Claims (General Unsecured Claims).................................12
Section 5.03 Treatment of Allowed Class 3 Claims (TARC Subordinated Note Claims)............................12
Section 5.04 Treatment of Allowed Class 4 Interests (TARC Common Stock Interests)...........................13
</TABLE>
iii
<PAGE> 271
ARTICLE VI
MEANS FOR IMPLEMENTATION OF THE PLAN
<TABLE>
<S> <S> <C>
Section 6.01 General Corporate Matters......................................................................13
Section 6.02 Distributions to Holders of Allowed Claims; Further Transactions...............................13
Section 6.03 Distribution to Holders of TARC Subordinated Notes.............................................13
Section 6.04 Approval of Agreements.........................................................................14
Section 6.05 Cancellation and Surrender of Existing Securities; Cancellation of Indentures..................14
Section 6.06 Estate Representative..........................................................................14
Section 6.07 Litigation Trust...............................................................................15
ARTICLE VII
DISPUTED CLAIMS, DISPUTED INTERESTS, RESERVES
AND MISCELLANEOUS DISTRIBUTION PROVISIONS
Section 7.01 Objections.....................................................................................15
Section 7.02 Amendments to Claims; Claims Filed After the Confirmation Date.................................15
Section 7.03 Payment or Distribution of Disputed Claim or Disputed Interest.................................16
Section 7.04 Timing of Payment or Distribution When a Disputed Claim or Disputed Interest
Becomes an Allowed Claim or Allowed Interest...................................................16
Section 7.05 Undeliverable or Unclaimed Distributions.......................................................16
Section 7.06 Allocation of Consideration....................................................................16
Section 7.07 Distributions to the Holders of General Unsecured Claims.......................................17
Section 7.08 Transmittal of Distributions and Notices.......................................................17
Section 7.09 Distribution Record Date.......................................................................17
Section 7.10 Method of Cash Distributions...................................................................17
Section 7.11 Distributions on Non-Business Days.............................................................17
Section 7.12 Withholding Taxes..............................................................................18
Section 7.13 Disputed Distributions.........................................................................18
Section 7.14 Rights to Pursue Causes of Action..............................................................18
ARTICLE VIII
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Section 8.01 Rejection Generally............................................................................18
Section 8.02 Bar Date for Rejection Damages.................................................................18
ARTICLE IX
DISCHARGE, RELEASES AND INDEMNIFICATION
Section 9.01 No Discharge of Debtor.........................................................................19
Section 9.02 Releases.......................................................................................19
</TABLE>
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<TABLE>
<S> <C> <C>
Section 9.03 Indemnification................................................................................20
Section 9.04 Conclusion of Chapter 11 Cases and Dissolution of Creditors' Committee
and SubDebt Committee..........................................................................20
ARTICLE X
CONDITIONS TO OCCURRENCE OF THE EFFECTIVE DATE
Section 10.01 Conditions to Occurrence of the Effective Date.................................................20
Section 10.02 Waiver of Conditions...........................................................................21
ARTICLE XI
LEGAL BINDING EFFECT
Section 11.01 Effects of Confirmation........................................................................21
ARTICLE XII
ADMINISTRATIVE PROVISIONS
Section 12.01 Retention of Jurisdiction......................................................................21
Section 12.02 Cram Down......................................................................................23
Section 12.03 Modification of the Plan.......................................................................23
Section 12.04 Exemption from Certain Transfer Taxes..........................................................23
Section 12.05 Compromise of Controversies....................................................................24
Section 12.06 Withdrawal or Revocation of the Plan...........................................................24
Section 12.07 Successors and Assigns.........................................................................24
Section 12.08 Governing Law..................................................................................24
Section 12.09 Notices........................................................................................24
Section 12.10 Severability...................................................................................25
Section 12.11 Interpretation, Rules of Construction, Computation of Time, and Choice of
Law............................................................................................25
Section 12.12 No Admissions..................................................................................26
Section 12.13 Limitation of Liability........................................................................26
</TABLE>
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ARTICLE I
INTRODUCTION
Section 1.01 Introduction. This Plan is proposed by
TransAmerican Refining Corporation. Reference is made to the Disclosure
Statement accompanying the Plan for a discussion of each of TransTexas Gas
Corporation's, TransAmerican Energy Corporation's, and TransAmerican Refining
Corporation's history, results of operations, historical financial information
and properties, and for a summary and analysis of this Plan. All holders of
Claims against and Interests in TransAmerican Refining Corporation are
encouraged to read this Plan and the Disclosure Statement in their entirety
before voting to accept or reject the Plan.
ARTICLE II
DEFINITIONS
The following terms used herein shall have the respective
meanings defined below:
Section 2.01 Administrative Expense means (a) any cost or
expense of administration of the Chapter 11 Case (including, without limitation,
the fees and expenses of Professionals) asserted or arising under Sections
503(b), or 507(b) of the Bankruptcy Code, (b) a Claim determined to be an
Administrative Expense pursuant to a Final Order, and (c) any fees or charges
assessed against the Estate under Section 1930, title 28, United States Code.
Section 2.02 Allowed means with respect to Claims and
Interests, (a) any Claim against, or Interest in, the Debtor, proof of which is
timely Filed or by order of the Bankruptcy Court is not or will not be required
to be Filed, (b) any Claim or Interest that has been or is hereafter listed in
the Schedules as neither disputed, contingent or unliquidated, and for which no
timely Filed proof of Claim has been Filed, (c) any Interest registered in the
stock register maintained by or on behalf of the Debtor as of the Distribution
Record Date or (d) any Claim allowed pursuant to this Plan and, in each such
case in (a), (b) and (c) above, as to which either (i) no objection to the
allowance thereof has been Filed within the applicable period of time fixed by
this Plan, the Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy Court or
(ii) such an objection is so Filed and the Claim and Interest shall have been
allowed pursuant to a Final Order (but only to the extent so allowed).
Section 2.03 Allowed Claim or Allowed Interest means an
Allowed Claim or an Allowed Interest in a specified class. For example, an
Allowed General Unsecured Claim is an Allowed Claim in the General Unsecured
Claims Class and an Allowed Old Common Stock Interest is an Allowed Interest in
the Old Common Stock Interest Class.
Section 2.04 Application to Compromise Controversy means the
application pursuant to Bankruptcy Rule 9019 to compromise and settle the
Adversary Proceeding No. 99-2215 commenced by Firstar, as Indenture Trustee, vs.
TEC, TARC and First Union on July 28, 1999.
Second Amended Plan of Liquidation proposed by TransAmerican Refining
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Section 2.05 Ballot Deadline means the date set by the
Bankruptcy Court as the last date on which Ballots may be cast to vote on the
Plan.
Section 2.06 Ballots means the ballots that accompany the Plan
and Disclosure Statement upon which holders of Impaired Claims and Impaired
Interests entitled to vote on the Plan shall indicate their acceptance or
rejection of the Plan.
Section 2.07 Bankruptcy Code means Title 11, United States
Code, as amended from time to time, as applicable to the Chapter 11 Case.
Section 2.08 Bankruptcy Court means the United States
Bankruptcy Court for the Southern District of Texas, Corpus Christi Division,
having jurisdiction over the Chapter 11 Case or such other court of competent
jurisdiction as may obtain such jurisdiction in the future.
Section 2.09 Bankruptcy Rules means the Federal Rules of
Bankruptcy Procedure as promulgated by the United States Supreme Court under
Section 2075, title 28, United States Code, as amended from time to time,
applicable to the Chapter 11 Case, and any local rules of the Bankruptcy Court.
Section 2.10 Bar Date means as to Creditors other than
Governmental Units, September 27, 1999, as the final date for Filing proofs of
Claim or proofs of Interest herein; and as to Governmental Units, October 18,
1999, as the date for Filing Proofs of Claim or Proofs of Interest herein.
Section 2.11 Bondholder Committee means an unofficial
committee composed of the following TEC Bondholders: Credit Suisse First Boston
Corporation, Oaktree Capital Management, L.L.C., Angelo Gordon & Co., L.P. and
Merrill Lynch Asset Management, L.P.; provided, however, each of the foregoing
Entities shall cease to be a member of such committee from any date on which it
ceases to hold or manage at least $50,000,000 in principal amount of the TEC
Senior Secured Notes.
Section 2.12 Bondholder DIP Facility means the
Debtor-In-Possession loans and other financial accommodations provided pursuant
to the Credit Agreement among TransTexas, as borrower, the Debtor and TEC, as
guarantors, and the Bondholder Lenders dated as of April 27, 1999, as amended,
and all ancillary agreements and instruments thereto.
Section 2.13 Bondholder Dip Secured Claims means the Secured
Claims of the Bondholder Lenders arising under the Bondholder DIP Facility.
Section 2.14 Bondholder Lenders means Credit Suisse First
Boston Management Corporation, Angelo Gordon & Co., L.P., and Oaktree Capital
Management, L.L.C. and their respective successors and assigns.
Section 2.15 Business Day means any day other than a Saturday,
Sunday or legal holiday.
Second Amended Plan of Liquidation proposed by TransAmerican Refining
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Section 2.16 Cash means currency, a certified check, a
cashier's check or a wire transfer of immediately available funds from any
source or a check drawn on a domestic bank.
Section 2.17 Causes of Action means any and all actions,
causes of action, suits, accounts, controversies, agreements, promises, rights
to legal remedies, rights to equitable remedies, rights to payment, and Claims,
whether known or unknown, reduced to judgment, not reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, secured, unsecured and whether asserted or assertable directly or
indirectly or derivatively, in law, equity or otherwise.
Section 2.18 Chapter 11 Case means the Debtor's voluntary case
pending in the Bankruptcy Court under Chapter 11 of the Bankruptcy Code as case
number 99-21552.
Section 2.19 Claim means any right to (a) payment from the
Debtor, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured, known or unknown, or (b) an equitable
remedy for breach of performance if such breach gives rise to a right of payment
from the Debtor, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured,
or unsecured, known or unknown.
Section 2.20 Class means any group of substantially similar
Claims or Interests classified by the Plan pursuant to Section 1129(a)(1) of the
Bankruptcy Code.
Section 2.21 Collateral means any property or interest in
property of the Estate subject to a Lien to secure the payment or performance of
a Claim, which Lien is not subject to avoidance under the Bankruptcy Code.
Section 2.22 Confirmation means the entry of the Confirmation
Order on the docket maintained by the Clerk of the Bankruptcy Court with respect
to the Chapter 11 Case.
Section 2.23 Confirmation Date means the date on which the
Confirmation Order is entered on the docket maintained by the Clerk of the
Bankruptcy Court with respect to the Chapter 11 Case.
Section 2.24 Confirmation Hearing means the hearing held by
the Bankruptcy Court regarding confirmation of the Plan pursuant to Section 1129
of the Bankruptcy Code, as such hearing may be adjourned or continued from time
to time.
Section 2.25 Confirmation Order means the order of the
Bankruptcy Court confirming the Plan pursuant to Section 1129 of the Bankruptcy
Code and approving the settlement and compromise effectuated under Section
5.03(a) of the Plan.
Section 2.26 Creditor means any Entity that is the holder of a
Claim that arose on or before the Petition Date or a Claim of the kind specified
in Section 502(g), 502(h) or 502(i) of the Bankruptcy Code.
Second Amended Plan of Liquidation proposed by TransAmerican Refining
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Section 2.27 Creditors' Committee means the Official Committee
of Unsecured Creditors in the Chapter 11 cases of the Debtor, TEC and
TransTexas, as appointed by the Office of the United States Trustee and
reconstituted from time to time, which members are identified in the Disclosure
Statement.
Section 2.28 Debtor means TransAmerican Refining Corporation,
a Texas corporation, the debtor in the Chapter 11 Case.
Section 2.29 Debtor-in-Possession means the Debtor in its
capacity as a debtor in possession in the Chapter 11 Case under Sections 1101,
1107 and 1108 of the Bankruptcy Code.
Section 2.30 Defendants means Bill Elder, WWL-TV, A.H. Belo,
the defendants in the Lawsuit.
Section 2.31 Deficiency Claim means with respect to a Claim
that is partially secured, the amount by which the Allowed amount of such Claim
exceeds the value of the Collateral which secures such Claim.
Section 2.32 Disallowed means, when used with respect to a
Claim or an Interest, a Claim or an Interest that has been disallowed pursuant
to a Final Order.
Section 2.33 Disbursing Agent means the Estate Representative.
Section 2.34 Disclosure Statement means the Disclosure
Statement relating to the Plan, including, without limitation, all exhibits and
schedules thereto as approved by the Bankruptcy Court pursuant to Section 1125
of the Bankruptcy Code, as such Disclosure Statement may be amended, modified,
or supplemented.
Section 2.35 Disputed Claim means the portion (including, when
appropriate, the whole) of a Claim that is not an Allowed Claim as to which: (a)
a proof of Claim has been Filed, or deemed Filed under applicable law or order
of the Bankruptcy Court; (b) an objection has been or may be timely Filed; and
(c) such objection has not been: (i) withdrawn, (ii) overruled or denied in
whole or in part pursuant to a Final Order, or (iii) granted in whole or part
pursuant to a Final Order. Before the time that an objection has been or may be
Filed, a Claim shall be considered a Disputed Claim (A) if the amount or
classification of the Claim specified in the proof of Claim exceeds the amount
or classification of any corresponding Claim scheduled by the Debtor in its
Schedules, to the extent of such excess; (B) in its entirety, if any
corresponding Claim scheduled by the Debtor has been scheduled as disputed,
contingent or unliquidated in its Schedules; or (C) in its entirety, if no
corresponding Claim has been scheduled by the Debtor in its Schedules.
Section 2.36 Disputed Interest means an Interest, or portion
thereof, that has not become an Allowed Interest.
Second Amended Plan of Liquidation proposed by TransAmerican Refining
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Section 2.37 Distribution Record Date means 5:00 p.m. on the
Business Day immediately preceding the Confirmation Date or other such time and
date designated in the Confirmation Order.
Section 2.38 Distributions means the distributions to be made
pursuant to the Plan.
Section 2.39 Effective Date means a Business Day selected by
the Debtor, with the prior consent of the Bondholder Committee that is the later
of (a) a day that is not less than eleven (11) days after the Confirmation Date
and (b) the first Business Day on which all conditions to the occurrence of the
Effective Date have been satisfied or duly waived.
Section 2.40 Entity means any individual, corporation, limited
or general partnership, joint venture, association, joint stock company, limited
liability company, estate, entity, trust, trustee, United States Trustee,
unincorporated organization, government, governmental unit (as defined in the
Bankruptcy Code), agency or political subdivision thereof.
Section 2.41 Estate means the estate of TARC created by
Section 541 of the Bankruptcy Code upon the commencement of the Chapter 11 Case.
Section 2.42 Estate Representative means the Person appointed
by the Debtor, with the prior consent of the Creditors' Committee and the
Bondholder Committee, who shall be an attorney experienced in commercial
litigation to serve as the Litigation Trustee and the Disbursing Agent.
Section 2.43 Face Amount means: (a) with respect to a
particular Claim (i) if the Claim is listed in the Schedules and the holder of
such Claim has not Filed a proof of Claim within the applicable period of
limitation fixed by the Bankruptcy Court pursuant to the Bankruptcy Code, the
Bankruptcy Rules or other applicable law, the amount of such Claim that is
listed in the Schedules as not disputed, contingent or unliquidated; or (ii) if
the holder of such Claim has Filed a proof of Claim with the Bankruptcy Court
within the applicable period of limitation fixed by the Bankruptcy Court
pursuant to the Bankruptcy Code, the Bankruptcy Rules or other applicable law,
the liquidated amount stated in such proof of Claim, or such amount as is
determined by the Final Order of the Bankruptcy Court; (b) in the case of an
Administrative Expense, the liquidated amount set forth in any application Filed
with respect thereto, or the amount set forth in the Debtor's books and records
or such amount as is determined pursuant to a Final Order; or (c) in all other
cases, zero or such amount as shall be fixed or estimated pursuant to a Final
Order.
Section 2.44 File, Filed or Filing means file, filed or filing
with the Bankruptcy Court in the Chapter 11 Case.
Section 2.45 Final Order means an order or judgment of the
Bankruptcy Court entered by the Clerk of the Bankruptcy Court on the docket in
the Chapter 11 Case, which has not been reversed, vacated or stayed and as to
which (a) the time to appeal, petition for certiorari or move for a new trial,
reargument or rehearing has expired and as to which no appeal, petition for
certiorari or other proceedings for a new trial, reargument or rehearing shall
then be pending or (b)
Second Amended Plan of Liquidation proposed by TransAmerican Refining
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if an appeal, writ of certiorari, new trial, reargument or rehearing thereof has
been sought, such order or judgment of the Bankruptcy Court shall have been
affirmed by the highest court to which such order was appealed, or certiorari
shall have been denied or a new trial, reargument or rehearing shall have been
denied or resulted in no modification of such order, and the time to take any
further appeal, petition for certiorari or move for a new trial, reargument or
rehearing shall have expired; provided, however, that the possibility that a
motion under Rule 60 of the Federal Rules of Civil Procedure, or any analogous
rule under the Bankruptcy Rules, may be Filed relating to such order, shall not
cause such order not to be a Final Order.
Section 2.46 Firstar means Firstar Bank, N.A., formerly known
as Firstar Bank of Minnesota, N.A., as Indenture Trustee for the TEC
Bondholders.
Section 2.47 First Union means First Union National Bank, as
Indenture Trustee for the TARC Subordinated Notes.
Section 2.48 General Unsecured Claim means any Claim that is
not an Administrative Expense, a Priority Claim, a Secured Claim, a TARC Senior
Secured Note Claim, or a TARC Subordinated Note Claim.
Section 2.49 Governmental Unit means a governmental unit as
such term is defined in Section 101(27) of the Bankruptcy Code.
Section 2.50 Impaired means with respect to any Claim or
Interest, impaired within the meaning of Section 1124 of the Bankruptcy Code.
Section 2.51 Indentures means, collectively, the TEC Senior
Secured Notes Indenture and the TARC Subordinated Notes Indenture.
Section 2.52 Indenture Trustee means any entity identified as
the trustee, paying agent or other similar fiduciary under a bond, note or other
debt instrument (including, but not limited to, the TEC Senior Secured Notes and
the TARC Subordinated Notes), whether or not the agreement evidencing the debt
or delineating its terms is denominated as an indenture.
Section 2.53 Indenture Trustee Claim means the fees and
expenses of First Union or Firstar, as Indenture Trustee under their respective
Indentures, or any other successor Indenture Trustee, incurred in their capacity
as such, including the fees and expenses of its counsel.
Section 2.54 Insured Claim means any Claim arising from an
incident or occurrence that is covered under the Debtor's general liability
insurance policies but shall not include Workers' Compensation Claims arising
out of Workers' Compensation Programs and employee benefit plans.
Section 2.55 Insured Portion means the portion of any Insured
Claim that is covered under an applicable Debtor's general liability insurance
policy and would not constitute a Deductible Claim.
Second Amended Plan of Liquidation proposed by TransAmerican Refining
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Section 2.56 Interest Reserve Accounts means the custodial
accounts at First Union in the name of First Union, as Trustee, which were
established pursuant to the TARC Subordinated Notes Indenture.
Section 2.57 Interests means, as of the Petition Date, the
equity Interests in the Debtor, including, without limitation, shares of common
stock and shares of preferred stock of the Debtor and any rights, options,
warrants, calls, subscriptions or other similar rights or agreements,
commitments or outstanding securities obligating the Debtor to issue, transfer
or sell any shares of capital stock of the Debtor.
Section 2.58 Lawsuit means the Debtor's Causes of Action in
that case styled TARC and John Stanley v. Bill Elder, WWL-TV, A.H. Belo,
currently pending in the 19th District Court, East Baton Rough Parish, LA.
Section 2.59 Lien means any charge against, encumbrance upon
or other interest in property, the purpose of which is to secure payment of a
debt or performance of an obligation.
Section 2.60 Litigation Trust means the trust created by the
Litigation Trust Agreement and set up for the benefit of the Class 2 Creditors.
Section 2.61 Litigation Trust Agreement means the Creditor
Litigation Trust Agreement in the form acceptable to the Creditors Committee,
the Debtor and the Bondholders Committee.
Section 2.62 Paying Agent means the Disbursing Agent, any
Indenture Trustee, or any other entity contractually authorized and/or obligated
to make Distributions to certain holders of Claims and Interests and similar
intermediaries an agents participating in making or conveying Distributions as
required by the Plan.
Section 2.63 Petition Date means April 20, 1999, the date on
which the Debtor commenced the Chapter 11 Case.
Section 2.64 Plan means this Second Amended Plan of
Liquidation Under Chapter 11 of the Bankruptcy Code proposed by the Debtor dated
as of September 29, 1999, including, without limitation, the annexes, exhibits
and schedules hereto, as the same may be amended or modified from time to time
in accordance with the Confirmation Order, the provisions of the Bankruptcy Code
and the terms hereof.
Section 2.65 Plan Documents means the Litigation Trust
Agreement and the other agreements, documents and instruments entered into on or
as of the Effective Date as contemplated by, and in furtherance of, the Plan.
Section 2.66 Priority Claim means any Claim other than an
Administrative Expense Claim or a Priority Tax Claim, entitled to priority in
payment under Section 507(a) of the Bankruptcy Code.
Second Amended Plan of Liquidation proposed by TransAmerican Refining
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Section 2.67 Professionals means those Entities: (a) employed
pursuant to an order of the Bankruptcy Court in accordance with Sections 327 or
1103 of the Bankruptcy Code providing for compensation for services rendered
prior to the Effective Date pursuant to Sections 327, 328,329, 330 and 331 of
the Bankruptcy Code, or (b) seeking compensation and reimbursement pursuant to
Sections 503(b)(2) or (4) of the Bankruptcy Code.
Section 2.68 Ratable Proportion means, with reference to any
Distribution on account of any Claim or Interest in any Class or subclass, a
Distribution equal in amount to the ratio (expressed as a percentage) that the
amount of such Claim or number of shares evidencing such Interests, as
applicable, bears to the aggregate amount of Claims or aggregate number of
outstanding shares of Interest in the same Class or subclass, as applicable.
Section 2.69 Rejection Claim means any Claim against the
Debtor arising from the rejection of any executory contract or unexpired lease,
including any Claim of (a) a lessor for damages resulting from the rejection of
a lease of real property as any such Claim shall be calculated in accordance
with Section 502(b)(6) of the Bankruptcy Code or (b) an employee for damages
resulting from the rejection of an employment agreement as any such Claim shall
be calculated in accordance with Section 502(b)(7) of the Bankruptcy Code. A
Rejection Claim shall constitute a General Unsecured Claim.
Section 2.70 Schedules means the schedules of assets and
liabilities and the statement of financial affairs Filed by the Debtor under
Section 521 of the Bankruptcy Code, Bankruptcy Rule 1007 on June 14, 1999, as
amended from time to time.
Section 2.71 Secured Claim means a Claim secured by a Lien on
Collateral to the extent of the value of such Collateral (a) as set forth in the
Plan, (b) as agreed to by the holder of such Claim and the Debtor or (c) as
determined pursuant to a Final Order in accordance with Section 506(a) of the
Bankruptcy Code or, in the event that such Claim is subject to setoff under
Section 553 of the Bankruptcy Code, to the extent of such setoff.
Section 2.72 SubDebt Committee means the Official Committee of
holders of the TransTexas Subordinated Notes in the Chapter 11 case of
TransTexas, as appointed by the Office of the United States Trustee and
reconstituted from time-to-time, which members are identified in the Disclosure
Statement.
Section 2.73 TARC means TransAmerican Refining Corporation, a
Texas corporation, the Debtor and the Debtor-in-Possession.
Section 2.74 TARC Common Stock means all authorized, issued
and outstanding shares of common stock of TARC, $0.1 par value, as of the
Petition Date and all other Interests.
Section 2.75 TARC Senior Secured Loan Agreement means the Loan
Agreement between TARC and TEC, dated as of June 13, 1997, as amended from time
to time.
Second Amended Plan of Liquidation proposed by TransAmerican Refining
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Section 2.76 TARC Senior Secured Note means the fully accreted
$920 million senior secured note dated June 13, 1997, originally made by TARC
payable to TEC and which was pledged as collateral for the TEC Senior Secured
Notes.
Section 2.77 TARC Senior Secured Note Claims means the Claims
of the holder of the TARC Senior Secured Note.
Section 2.78 TARC Senior Secured Note Deficiency Claim means
the Deficiency Claim of the holder of the $920 million senior secured note dated
June 13, 1997, originally made by TARC payable to TEC.
Section 2.79 TARC Subordinated Notes means the $200 million
aggregate principal amount of TARC 16% Senior Subordinated Notes due 2001 issued
by TARC pursuant to the TARC Subordinated Notes Indenture.
Section 2.80 TARC Subordinated Notes Indenture means the
Indenture between TARC, as issuer, and First Union, as Indenture
Trustee, dated as of December 30, 1997, as amended from time to time, which
relate to the TARC Subordinated Notes.
Section 2.81 TCR means TCR Holding Corporation, a Delaware
corporation.
Section 2.82 TCR Preferred Stock means all stock held by TCR
in TransContinental Refining Corporation, d/b/a Orion Refining Corporation
pledged to TEC under that certain Pledge Agreement between TCR and TEC dated
December 15, 1998, as amended.
Section 2.83 TEC means TransAmerican Energy Corporation, a
Delaware corporation, and a debtor-in-possession, in case number 99-21551,
pending in the Bankruptcy Court and which is jointly administered with the
Debtor and TransTexas.
Section 2.84 TEC Bondholders means the holders of the TEC
Senior Secured Notes as of the Distribution Record Date.
Section 2.85 TEC Plan means the Second Amended Plan of
Liquidation under Chapter 11 of the Bankruptcy Code proposed by TEC dated as of
September 29, 1999, including, without limitation, the annexes, exhibits and
schedules thereto, as amended from time to time.
Section 2.86 TEC Senior Secured Notes means, collectively, the
$475 million aggregate principal amount of the 11 1/2 % Senior Secured Notes due
2002 and the $1.13 billion aggregate principal amount of the 13% Senior Secured
Discount Notes due 2002 issued by TEC pursuant to the TEC Senior Secured Notes
Indenture.
Section 2.87 TEC Senior Secured Notes Indenture means the
Indenture between TEC, as issuer, and Firstar, as Indenture Trustee, dated as of
June 13, 1997, as amended from time to time, which relates to the TEC Senior
Secured Notes.
Second Amended Plan of Liquidation proposed by TransAmerican Refining
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Section 2.88 Tort Claim means any Claim related to personal
injury, property damage, products liability or other similar Claims against the
Debtor. A Tort Claim shall constitute an Unsecured Claim.
Section 2.89 TransTexas means TransTexas Gas Corporation, a
Delaware corporation and Debtor-in-Possession, in Case No. 99-21550, pending in
the Bankruptcy Court and which is jointly administered with the Chapter 11 cases
of the Debtor and TEC.
Section 2.90 TransTexas Plan means the Second Amended Plan of
Reorganization under Chapter 11 of the Bankruptcy Code proposed by TransTexas,
dated as of September 29, 1999, including, without limitation, the annexes,
exhibits and schedules thereto, as amended from time to time.
Section 2.91 Unclaimed Property means any Cash unclaimed on or
after the applicable distribution date made in respect of the relevant Allowed
Claim or Allowed Interest. Unclaimed Property shall include: (a) checks (and the
funds represented thereby), mailed to an address of a holder of a Allowed Claim
or Interest and returned as undeliverable without a proper forwarding address;
(b) funds for uncashed checks; and (c) checks (and the funds represented
thereby) not mailed or delivered because no address to mail or deliver such
property was available.
Section 2.92 Unimpaired means a Claim that is not Impaired.
Section 2.93 Workers' Compensation Claims means any Claims
held by (i) current and former employees of the Debtor, (ii) beneficiaries of
current and former employees of the Debtor and (iii) Governmental Units, for
payment or reimbursement under and according to the terms of the Workers'
Compensation Programs.
Section 2.94 Workers' Compensation Programs means those
statutorily mandated programs in effect on the Petition Date providing
compensation, paid for by third parties, to employees of the Debtor for
job-related injuries or job related illnesses, which were required to be
maintained under provisions of non-bankruptcy law.
Second Amended Plan of Liquidation proposed by TransAmerican Refining
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ARTICLE III
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSE CLAIMS AND
PRIORITY CLAIMS
Section 3.01 Treatment of Allowed Administrative Expenses.
Unless otherwise provided for herein, each holder of an Allowed Administrative
Expense (including, without limitation, all compensation and reimbursement of
expenses of Professionals pursuant to Sections 327, 328, 330, 331, 503(b) or
1103 of the Bankruptcy Code) shall receive 100% of the unpaid Allowed amount of
such Administrative Expense in Cash on or as soon as reasonably practicable
after the later of: (a) the Effective Date; and (b) the date on which such
Administrative Expense becomes Allowed, provided, however, that an Allowed
Administrative Expense may be paid on such other terms and conditions as are
agreed to between the Debtor and the holder of such Allowed Administrative
Expense. All Professionals requesting compensation or reimbursement of expenses
pursuant to Sections 327, 328, 330, 331, or 503(b) of the Bankruptcy Code for
services rendered before the Effective Date shall File and serve on the Debtor,
the Creditors' Committee, the Bondholder Committee, and the United States
Trustee an application for final allowance of compensation and reimbursement of
expenses no later than forty-five (45) days after the Confirmation Date.
Objections to applications of Professionals for compensation or reimbursement of
expenses must be Filed and served on the Debtor, the United States Trustee, the
Bondholder Committee, the Creditors' Committee and the Professionals to whose
fee application the objections are addressed.
Section 3.02 Bondholder DIP Secured Claims. The holders of the
Bondholder DIP Secured Claims shall receive no Distribution under this Plan.
Section 3.03 Treatment of Allowed Priority Claims. Each holder
of an Allowed Priority Claim shall receive on account of such Allowed Priority
Claim Cash in an amount equal to the Allowed Amount of its Claim on or as soon
as practicable after the later of: (a) the Effective Date or (b) the date on
which such Priority Claim became an Allowed Priority Claim.
ARTICLE IV
CLASSIFICATION OF CLAIMS AND INTERESTS
Pursuant to Section 1122 of the Bankruptcy Code, set forth
below is a designation of classes of Claims and Interests. Administrative
Expenses and Priority Claims of the kinds specified in Sections 507(a)(1),
502(i) and 507(a)(8) of the Bankruptcy Code have not been classified and are
excluded from the following classes in accordance with Section 1123(a)(1) of the
Bankruptcy Code.
<TABLE>
<S> <C>
Section 4.01 Class 1 consists of the TARC Senior Secured Note Claims.
Section 4.02 Class 2 consists of all General Unsecured Claims.
</TABLE>
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<TABLE>
<S> <C>
Section 4.03 Class 3 consists of all TARC Subordinated Note Claims.
Section 4.04 Class 4 consists of all TARC Common Stock Interests.
</TABLE>
ARTICLE V
TREATMENT OF CLAIMS AND INTERESTS
Section 5.01 Treatment of Allowed Class 1 Claim (TARC Senior
Secured Note Claims).
(a) The TARC Senior Secured Note Claims are Allowed in full.
On the Effective Date, the holder of the Allowed TARC Senior Secured Note Claims
as of the Distribution Record Date shall receive on account of its Allowed TARC
Senior Secured Note Claims all of Debtor's right, title and interest in each
item of Collateral securing any of the Debtor's obligations arising under, in
respect of, or relating to the TARC Senior Secured Note, the TARC Senior Secured
Loan Agreement and/or any other agreement or instrument entered into in
connection therewith, including, without limitation, all of the Debtor's right,
title and interest in the TCR Preferred Stock.
(b) Class 1 is Impaired. Holders of Allowed TARC Senior
Secured Note Claims shall be entitled to vote to accept or reject the Plan.
Section 5.02 Treatment of Allowed Class 2 Claims (General
Unsecured Claims).
(a) Each holder of an Allowed General Unsecured Claim,
together with each holder of a Class 3 Allowed TARC Subordinated Note Claim,
shall receive on account of its Allowed General Unsecured Claim, its Ratable
Proportion of the Litigation Trust.
(b) Class 2 is Impaired under the Plan. Holders of such Claims
shall be entitled to vote to accept or reject the Plan.
Section 5.03 Treatment of Allowed Class 3 Claims (TARC
Subordinated Note Claims).
(a) The TARC Subordinated Note Claims are allowed in full. On
the Effective Date, or as soon thereafter as is practicable, each holder of an
Allowed TARC Subordinated Note Claim as of the Distribution Record Date, shall
be entitled to receive on account of its Allowed TARC Subordinated Note Claim
its Ratable Proportion of 17 1/2% of the funds held in the Interest Reserve
Accounts, less reasonable attorneys' fees and expenses payable to First Union.
Firstar shall receive the remaining 82 1/2% of the funds held in the Interest
Reserve Accounts for the benefit of the TEC Bondholders. The TARC Senior Secured
Note Claimants and the TARC Subordinated Note Claimants have agreed to this
division of the funds in the Interest Reserve Accounts as set forth more
specifically in the Application to Compromise Controversy which is incorporated
by reference herein. Confirmation of the TARC Plan shall be deemed approval of
this compromise and settlement pursuant to Bankruptcy Rule 9019. In addition,
each holder of an Allowed TARC
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Subordinated Note Claim, together with each holder of a Class 2 Allowed General
Unsecured Claim, shall receive on account of its Allowed Claim, its Ratable
Proportion of the Litigation Trust.
(b) Class 3 is Impaired. Holders of such Claims shall be
entitled to vote to accept or reject the Plan.
Section 5.04 Treatment of Allowed Class 4 Interests (TARC
Common Stock Interests).
(a) The holders of TARC Common Stock Interests shall receive
no distributions of any kind under the Plan in respect of those Interests.
(b) Class 4 is Impaired under the Plan. Holders of such
Interests shall be deemed to have rejected the Plan.
ARTICLE VI
MEANS FOR IMPLEMENTATION OF THE PLAN
In addition to the provisions set forth elsewhere in this
Plan, the following shall constitute the means for implementation of this Plan.
Section 6.01 General Corporate Matters. The Debtor shall take
such action as is necessary under the laws of the State of Texas, federal law
and other applicable law to effect the terms and provisions of the Plan and the
Plan Documents.
Section 6.02 Distributions to Holders of Allowed Claims;
Further Transactions. On the Effective Date, the Debtor shall execute and
deliver to the holders of Allowed TARC Senior Secured Note Claims, all
documents, agreements and instruments reasonably requested by Firstar and/or the
Bondholder Committee, to effectuate the treatment of the Allowed TARC Senior
Secured Note Claims. The Reorganized Debtor shall execute such further
documents, instruments and agreements as are necessary to effectuate and further
evidence the terms and conditions of the Plan. For the purposes of the treatment
of the Allowed TARC Senior Secured Note Claims, Firstar shall be deemed to be
the sole holder of all such Claims. All Distributions on account of the Allowed
TARC Senior Secured Note Claims shall be distributed to Firstar, for further
distribution to the TEC Bondholders pursuant to the terms of the TEC Senior
Secured Notes Indenture, the Plan and the Plan Documents. Neither Firstar nor
the TEC Bondholders shall have assumed or be deemed to have assumed any
liabilities or obligations of the Debtor by virtue of the treatment of the
Allowed TARC Senior Secured Note Claims and this Section 6.02.
Section 6.03 Distribution to Holders of TARC Subordinated
Notes. For the purposes of Distributions to the holder of Allowed TARC
Subordinated Note Claims, First Union shall be deemed to be the sole holder of
such Claims. All Distributions on account of Allowed TARC Subordinated Note
Claims shall be distributed to First Union, for further distribution to the TARC
Subordinated Note holders.
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Section 6.04 Approval of Agreements. The solicitation of votes
on the Plan shall be deemed a solicitation for the approval of the Plan
Documents and transactions contemplated by this Plan. Entry of the Confirmation
Order shall constitute approval of such other agreements and transactions as the
Confirmation Order shall so provide.
Section 6.05 Cancellation and Surrender of Existing
Securities; Cancellation of Indentures.
(a) Cancellation of Existing Securities and Agreements. On the
Effective Date, the TARC Common Stock, and any options, warrants, calls,
subscriptions, or other similar rights or other agreements or commitments,
contractual or otherwise, obligating the Debtor to issue, transfer, or sell any
shares of TARC Common Stock, or any other capital stock of the Debtor shall be
canceled and the holders thereof shall have no rights, and such instruments
shall evidence no rights. After the Indenture Trustees or their agents perform
their obligations under the Plan, the Plan Documents and their respective
Indentures, the Indenture Trustees and their agents, successors and assigns
shall be discharged of all of their obligations associated with the respective
Indentures and related agreements and released from all Claims arising in this
Chapter 11 Case, and as of the Effective Date, such Indentures and related
agreements shall be deemed canceled, except that such cancellation shall not
impair the rights of the holders of the TEC Senior Secured Note Claims and the
TARC Subordinated Note Claims to receive Distributions under the Plan or the
rights of the Indenture Trustee under their charging liens, if any, pursuant to
the Indentures to the extent that the Indenture Trustee has not received payment
and, to the extent applicable, a reserve has been established on account of the
Indenture Trustee Claim.
(b) Surrender of Existing Securities. As a condition to
receiving any Distribution under the Plan, each holder of a promissory note,
share certificate, or other instrument evidencing a Claim or Interest must
surrender such promissory note, share certificate, or other instrument to the
Debtor or its designee. Any holder of a Claim or Interest that fails to (a)
surrender such instrument or (b) execute and deliver an affidavit of loss and/or
indemnity reasonably satisfactory to the Debtor or the Estate Representative and
furnish a bond in the form, substance, and amount reasonably satisfactory to the
Debtor or the Estate Representative before the later to occur of (i) the second
anniversary of the Effective Date and (ii) six (6) months following the date
such holder's Claim becomes an Allowed Claim, shall be deemed to have forfeited
all rights, Claims, and/or Interests and may not participate in any Distribution
under the Plan.
Section 6.06 Estate Representative. On the Confirmation Date,
the Plan shall be implemented under the supervision of a representative or
representatives appointed by the Debtor, with the prior consent of the
Creditors' Committee and the Bondholder Committee. The Estate Representative
shall be appointed at or prior to the Confirmation Date. The Estate
Representative shall be entitled to reasonable compensation, subject to the
approval of the Bankruptcy Court. The duties and powers of the Estate
Representative shall include all powers necessary to implement the Plan,
including but not limited to, the following: (i) to compromise, dismiss or
pursue in litigation any and all Claims of the Debtor and its Creditors pending
or existing at Confirmation against the Defendants; (ii) to retain professionals
to assist it in performing its duties hereunder; and (iii) to
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serve as Trustee of the Litigation Trust hereunder and Disbursing Agent
hereunder. Upon the Effective Date, the Creditors Committee shall cease to
exist. In the event the position of the Estate Representative hereunder is
vacated for any reason, the Creditors Committee shall reconvene for the sole
purpose of selecting a successor Estate Representative. If the Creditors
Committee fails to select a successor Estate Representative within thirty days
after the Creditors Committee is reconvened, one shall be selected by the United
States Trustee. The Estate Representative shall be required to disclose his or
her connections, if any, to the Debtor, Creditors, any other party-in-interest
and to the United States Trustee for the Southern District of Texas, Corpus
Christi Division.
Section 6.07 Litigation Trust. On the Confirmation Date: (i) a
Litigation Trust shall be established for the purpose of pursuing Claims of the
Debtor or its Creditors against the Defendants; (ii) the Estate Representative
shall be authorized to execute a Litigation Trust Agreement and take all other
steps necessary to establish the Litigation Trust; and (iii) the Claims of the
Debtor against the Defendants shall be assigned to the Litigation Trust as
successor in interest to the Debtor.
The Claims assigned to the Litigation Trust shall include only
the Claims of the Debtor and its Estate against the Defendants. The decision of
whether or not to pursue the litigation at all or to compromise Claims once they
have been asserted shall be in the sole discretion of the Estate Representative.
ARTICLE VII
DISPUTED CLAIMS, DISPUTED INTERESTS, RESERVES
AND MISCELLANEOUS DISTRIBUTION PROVISIONS
Section 7.01 Objections. An objection to the allowance of a
Claim (other than an Administrative Expense Claim) or Interest shall be in
writing and may be Filed by the Debtor, or the Estate Representative, or any
other party in interest, at any time on or before the Objection Deadline. The
"Objection Deadline" is the later of (a) the 120th day following the Effective
Date unless such period is extended by order of the Bankruptcy Court, (b) sixty
(60) days after the Filing of the proof of such Claim or Interest or (c) such
other date set by order of the Bankruptcy Court (the application for which may
be made on an ex parte basis). The objecting party shall serve a copy of each
such Objection upon the holder of the Claim or Interest to which it pertains and
upon the Debtor, or the Estate Representative, as the case may be, and, prior to
the Effective Date, the Creditors' Committee. The Debtor or the Estate
Representative will prosecute each Objection to a Claim or Interest until
determined by a Final Order unless the Debtor or the Estate Representative (i)
compromises and settles an Objection to a Claim or Interest by written
stipulation, subject to Bankruptcy Court approval, if necessary or (ii)
withdraws an Objection to a Claim or Interest.
Section 7.02 Amendments to Claims; Claims Filed After the
Confirmation Date. Except as otherwise provided in this Plan, after the
Confirmation Date, a Claim may not be Filed or amended without the authorization
of the Bankruptcy Court and, even with such Bankruptcy Court authorization, may
be amended by the holder of such Claim solely to decrease, but not to increase,
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the Face Amount thereof. Except as otherwise provided in this Plan, any new or
amended Claim Filed after the Confirmation Date shall be deemed disallowed in
full and expunged without any action by the Debtor.
Section 7.03 Payment or Distribution of Disputed Claim or
Disputed Interest. No payment or distribution will be made in respect of a
Disputed Claim or Disputed Interest unless and until such Disputed Claim or
Disputed Interest becomes an Allowed Claim or Allowed Interest. Notwithstanding
the foregoing, on or as soon as practicable after the Objection Deadline, the
Estate Representative shall make Distributions to holders of Disputed Claims or
Disputed Interest to the extent, and only to the extent, the portion of such
Claim or Interest is not subject to a pending objection.
Section 7.04 Timing of Payment or Distribution When a Disputed
Claim or Disputed Interest Becomes an Allowed Claim or Allowed Interest. Subject
to the provisions of this Plan and the Litigation Trust Agreement, Distributions
with respect to each Disputed Claim that becomes an Allowed Claim that would
have otherwise been made had the Claim been an Allowed Claim on the Effective
Date shall be made within thirty (30) days after the date on which such Disputed
Claim becomes an Allowed Claim.
Section 7.05 Undeliverable or Unclaimed Distributions. Any Entity that is
entitled to receive a Cash Distribution under this Plan but that fails to cash a
check within 120 days of its issuance shall be entitled to receive a reissued
check from the Disbursing Agent for the amount of the original check, without
any interest, if such Entity requests the Disbursing Agent or its designee to
reissue such check and provides the Disbursing Agent or its designee, with such
documentation as the Disbursing Agent or its designee requests to verify that
such Entity is entitled to such check, prior to the later of (a) the second
anniversary of the Effective Date or (b) six (6) months after such Claim becomes
an Allowed Claim. If an Entity fails to cash a check within 120 days of its
issuance and fails to request reissuance of such check prior to the later to
occur of (a) the second anniversary of the Effective Date or (b) six (6) months
following the date such Entity's Claim becomes an Allowed Claim, such Entity
shall not be entitled to receive any distribution under this Plan with respect
to the amount of such check. If the distribution to any holder of an Allowed
Claim is returned to the Disbursing Agent or its designee as undeliverable, no
further distributions will be made to such holder unless and until the
Disbursing Agent or its designee is notified in writing of such holder's
then-current address.
All Claims for undeliverable distributions must be made on or
before the later to occur of (i) the second anniversary of the Effective Date
and (ii) six (6) months following the date such Entity's Claim becomes an
Allowed Claim. After such date, all unclaimed property shall revert to the
Disbursing Agent and the Claim of any holder or successor to such holder with
respect to such property shall be discharged and forever barred notwithstanding
any federal or state escheatment laws to the contrary.
Section 7.06 Allocation of Consideration. The aggregate
consideration to be distributed to the holders of Allowed Claims in each Class
under this Plan shall be treated as first satisfying an amount equal to the
stated principal amount of the Allowed Claim for such holders and
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any remaining consideration as satisfying accrued, but unpaid, interest through
the Effective Date, if any.
Section 7.07 Distributions to the Holders of General Unsecured
Claims. In connection with the process of resolution of Disputed Claims, the
Bankruptcy Court will determine the amount of ultimately Allowed General
Unsecured Claims and consequently, the final distributions to holders of Allowed
General Unsecured Claims pursuant to this Plan.
Section 7.08 Transmittal of Distributions and Notices.
(a) Any property or notice other than Cash Distributions made
through Section 7.05 which an Entity is or becomes entitled to receive pursuant
to the Plan shall be delivered by regular mail, postage prepaid, in an envelope
addressed to that Entity at the address indicated on any notice of appearance
Filed by that Entity or his authorized agent prior to the Effective Date. If no
notice of appearance has been Filed, notice shall be sent to the address
indicated on a properly Filed proof of Claim or, absent such a proof of Claim or
Interest, the address that is Scheduled for that Entity or register maintained
for register securities. The date of Distribution shall be the date of mailing,
and property distributed in accordance with this Section shall be deemed
delivered to such Entity regardless of whether such property is actually
received by that Entity.
(b) A holder of a Claim may designate a different address for
notices and distributions by notifying the Debtor or after the Effective Date,
the Estate Representative, or with respect to the holder of a TARC Senior
Secured Note Claims, Firstar, or with respect to a holder of a TARC Subordinated
Note Claim, First Union, of that address in writing. The new address shall be
effective upon receipt by the Debtor, the Estate Representative, Firstar or
First Union, as the case may be.
(c) Notwithstanding anything contrary herein and above, to the
extent that a Distribution is required to be made to a Paying Agent, the address
for the relevant Claim shall be the address of the relevant Paying Agent.
Section 7.09 Distribution Record Date. As of the close of
business on the Distribution Record Date, the transfer register for the TARC
Subordinated Notes and the TEC Senior Secured Notes will be closed, and the
Disbursing Agents, First Union and Firstar and their respective agents will have
no obligation to recognize the transfer of any TARC Subordinated Notes or the
transfer of any TEC Senior Secured Notes occurring after such time and will be
entitled for all purposes herein to recognize and deal only with those holders
of record as of such time.
Section 7.10 Method of Cash Distributions. Any Cash payment to
be made pursuant to this Plan may be made by draft, check, wire transfer, or as
otherwise required or provided in any relevant agreement or applicable law.
Section 7.11 Distributions on Non-Business Days. Any
Distribution due on a day other than a Business Day shall be made, without
interest, on the next Business Day.
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Section 7.12 Withholding Taxes. Any federal, state or local
withholding taxes or other amounts required to be withheld under applicable law
shall be deducted from distributions hereunder. All Entities holding Claims
shall be required to provide any information necessary to effect the withholding
of such taxes.
Section 7.13 Disputed Distributions. If any dispute arises as
to the identity of a holder of an Allowed Claim or an Allowed Interest who is to
receive any distribution, the Disbursing Agent, Firstar, or Bank One may, in
lieu of making such distribution to such Entity, make such distribution into an
escrow account until the disposition thereof shall be determined by Final Order
of the Bankruptcy Court or by written agreement among the interested parties to
such dispute.
Section 7.14 Rights to Pursue Causes of Action. Firstar shall
have the exclusive right to enforce against any Entity any and all Causes of
Action (including, without limitation, all Causes of Action arising under
Sections 510, 544 through 550 and 553 of the Bankruptcy Code or otherwise
arising under the Bankruptcy Code and/or those arising under other applicable
law) that arose before the Effective Date, including all Causes of Action of a
trustee and debtor-in-possession under the Bankruptcy Code, other than (i) those
expressly released or compromised as part of or pursuant to this Plan and (ii)
the Lawsuit; provided, however, that Firstar shall have no obligation to pursue
any such Cause of Action unless directed by a majority in principal amount of
the holders of the TEC Senior Secured Notes, in accordance with the terms of the
TEC Senior Secured Notes Indenture.
ARTICLE VIII
TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES
Section 8.01 Rejection Generally. On the Effective Date,
pursuant to Section 365 of the Bankruptcy Code, all executory contracts and
unexpired leases are rejected. The Confirmation Order shall constitute an Order
of the Bankruptcy Court approving the rejection of all of the Debtor's executory
contracts and unexpired leases.
Section 8.02 Bar Date for Rejection Damages. If the rejection
of an executory contract or unexpired lease pursuant to Section 8.01 above gives
rise to a Claim by the other party or parties to such contract or lease, such
Claim, to the extent that it is timely Filed it is a General Unsecured Claim,
shall be classified in Class 2. A proof of Claim for rejection damages must be
Filed and served on the Debtor or the Estate Representative, as the case may be,
within forty-five days after the earlier of (a) the date of entry of the first
order of the Bankruptcy Court rejecting the executory contract or unexpired
lease, or (b) the Confirmation Date.
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ARTICLE IX
DISCHARGE, RELEASES AND INDEMNIFICATION
Section 9.01 No Discharge of Debtor. The Plan provides for
liquidation of all of the Debtor's assets and the discontinuance of its
business. Accordingly, and pursuant to Section 1141(d)(3) of the Bankruptcy
Code, the Debtor shall not receive a discharge.
Section 9.02 Releases.
(a) On the Effective Date, the Debtor shall be deemed to
release unconditionally, and hereby is deemed to release unconditionally on such
date (i) each present or former officer, director, shareholder, employee,
consultant, attorney, accountant and other representatives of the Debtor, (ii)
the Creditors' Committee and, solely in their capacity as members or
representatives of the Creditors' Committee, each consultant, attorney,
accountant or other representative or member of the Creditors' Committee, (iii)
the entities serving on the Bondholder Committee at any time during the Chapter
11 Case and, solely in their capacity as representatives of such holders, each
of such entity's respective officers, directors, shareholders, partners, agents,
employees, consultants, attorneys, accountants and other representatives, (iv)
Firstar as Indenture Trustee, and, solely in their capacity as representatives
of Firstar, as Indenture Trustee, each of such Entity's officers, directors,
shareholders, employees, consultants, attorneys, accountants, advisors,
affiliates and other representatives, (v) First Union as Indenture Trustee, and,
solely in their capacity as representatives of First Union, as Indenture
Trustee, each of such Entity's officers, directors, shareholders, employees,
consultants, attorneys, accountants, advisors, affiliates and other respective
members, (vi) the holders of Bondholder DIP Claims and, solely in their capacity
as representatives of such holders, each of such holder's respective officers,
directors, shareholders, partners, agents, employees, consultants, attorneys,
accountants, advisors, affiliates and other representatives (the Entities
specified in clauses (i), (ii), (iii), (iv), (v) and (vi) are referred to
collectively as the "Releasees"), from any and all Claims, obligations, suits,
judgments, damages, rights, causes of action and liabilities whatsoever, whether
known or unknown, foreseen or unforeseen, existing or hereafter arising, in law,
equity or otherwise, based in whole or in part upon or related to any act or
omission, transaction, event or other occurrence taking place on or prior to the
Effective Date in any way relating to the Debtor, the Chapter 11 Case, or the
Plan, except that no Releasees shall be released from acts or omissions which
are the result of willful misconduct, except that no Releasees shall be released
from acts or omissions which are the result of willful misconduct and no
officers or directors of the Debtor shall be released with respect to (x) any
indebtedness of such Releasee to Debtor or Debtor-in-Possession for money
borrowed by such Releasee, (y) any setoff or counterclaim Debtor or Debtor-
in-Possession may have or assert against any such Releasee, provided that the
aggregate amount thereof shall not exceed the aggregate amount of any Claims
held or asserted by such Releasee against Debtor or Debtor-in-Possession, as the
Case may be and (z) Claims arising from the fraud, willful misconduct or gross
negligence of such Releasee.
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(b) On the Effective Date, each holder of a Claim and/or an
Interest shall be deemed to have released unconditionally, and hereby is deemed
to release unconditionally on such date, the Releasees, from any and all rights,
Claims, causes of action, obligations, suits, judgments, damages and liabilities
whatsoever which any such holder may be entitled to assert, whether known or
unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity
or otherwise, based in whole or in part upon any act or omission, transaction,
event or other occurrence taking place on or before the Effective Date in any
way relating to the Debtor, the Chapter 11 Case or the Plan, except that no
Releasees shall be released from acts or omissions which are the result of
willful misconduct.
(c) If and to the extent that the Bankruptcy Court concludes
that the Plan cannot be confirmed with any portion of the foregoing releases,
then the Debtor, with the prior consent of the Bondholders Committee, reserves
the right to amend the Plan so as to give effect as much as possible to the
foregoing releases, or to delete them.
Section 9.03 Indemnification. Notwithstanding any other
provisions of the Plan, the obligations of the Debtor to indemnify its present
and former directors, officers and employees against any obligations,
liabilities, costs or expenses pursuant to the articles of incorporation or
by-laws of the Debtor, applicable state law, specific agreement or any
combination of the foregoing shall not survive the Effective Date and shall be
discharged, regardless of whether indemnification is owed in connection with an
event occurring prior to, upon or subsequent to the Petition Date.
Section 9.04 Conclusion of Chapter 11 Cases and Dissolution of
Creditors' Committee and SubDebt Committee.
Except with respect to any appeal of an order in the Chapter
11 Case, and any matters related to any proposed modification of the Plan, on
the Effective Date, the Creditors' Committee and the SubDebt Committee shall be
dissolved and the members, employees, agents, advisors and representatives
(including, without limitation, attorneys, financial advisors, and other
Professionals) of each thereof shall thereupon be released from and discharged
of and from all further authority, duties, responsibilities and obligations
related to, arising from and in connection with the Chapter 11 Case.
ARTICLE X
CONDITIONS TO OCCURRENCE OF THE EFFECTIVE DATE
Section 10.01 Conditions to Occurrence of the Effective Date.
The following are conditions precedent to the occurrence of the Effective Date:
(a) The Bankruptcy Court shall have entered an order
confirming the TEC Plan, and the TEC Plan and the order confirming the TEC Plan
shall each be in form and substance satisfactory to the Bondholder Committee and
the Debtor.
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(b) The Bankruptcy Court shall have entered an order
confirming the TransTexas Plan, and the TransTexas Plan and the order confirming
the TransTexas Plan shall each be in form and substance satisfactory to the
Bondholder Committee and the Debtor.
(c) The order confirming the TEC Plan shall have become a
Final Order (as such term is defined in the TEC Plan).
(d) The order confirming the TransTexas Plan shall have become
a Final Order (as such term is defined in the TransTexas Plan).
(e) The Confirmation Order shall have been entered and become
a Final Order in form and substance satisfactory to the Debtor and the
Bondholder Committee.
(f) The Debtor shall have sufficient Cash, to satisfy all Cash
obligations under the Plan due on or as of the Effective Date.
(g) No order of a court shall have been entered and shall
remain in effect restraining the Debtor from consummating the Plan.
(h) The Debtor and the Bondholder Committee shall each have
approved each of the Plan Documents and such Plan Documents shall have been
executed in accordance with their terms.
Section 10.02 Waiver of Conditions. The Debtor may waive, with
the prior consent of the Bondholder Committee, one or more of the conditions to
the occurrence of the Effective Date.
ARTICLE XI
LEGAL BINDING EFFECT
Section 11.01 Effects of Confirmation. Upon Confirmation, and
pursuant to Section 1141(a) of the Bankruptcy Code, the provisions of the Plan
will bind the Debtor, the Bondholder Committee, the Creditors' Committee, the
SubDebt Committee, the Estate Representative and all Creditors and Interest
holders, including their successors and assigns, whether or not they accept the
Plan. The Claims and distributions under the Plan to Creditors are in full and
complete settlement of all Claims and Interests.
ARTICLE XII
ADMINISTRATIVE PROVISIONS
Section 12.01 Retention of Jurisdiction. Notwithstanding entry
of the Confirmation Order, the Bankruptcy Court shall retain jurisdiction as is
legally permissible, including, without limitation, for the following purposes:
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(a) to determine (i) any Disputed Claims, Disputed Interests
and all related Claims accruing after the Confirmation Date including rights and
liabilities under contracts giving rise to such Claims, (ii) the validity,
extent, priority and nonavoidability of consensual and nonconsensual liens and
other encumbrances and (iii) preconfirmation tax liability pursuant to Section
505 of the Bankruptcy Code;
(b) to allow, disallow, estimate, liquidate or determine any
Claim or Interest against the Debtor and to enter or enforce any order requiring
the Filing of any such Claim or Interest before a particular date;
(c) to approve all matters related to the rejection of any
executory contract or unexpired lease of the Debtor pursuant to Section 365 of
the Bankruptcy Code;
(d) to determine requests for payment of administrative
expenses entitled to priority under Section 507(a)(1) of the Bankruptcy Code,
including compensation of parties entitled thereto;
(e) to resolve controversies and disputes regarding the
interpretation and implementation of this Plan, any disputes relating to whether
or not a timely and proper proof of Claim was Filed or whether a Disallowed
Claim or Disallowed Interest should be reinstated;
(f) to implement the provisions of this Plan and entry of
orders in aid of confirmation and consummation of this Plan;
(g) to modify the Plan pursuant to Section 1127 of the
Bankruptcy Code;
(h) to adjudicate any and all Causes of Action that arose in
this Chapter 11 Case preconfirmation or in connection with the implementation of
this Plan, whether or not pending on the Confirmation Date, including without
limitation, any remands of appeals;
(i) to resolve disputes concerning any reserves with respect
to Disputed Claims, Disputed Interests or the administration thereof;
(j) to resolve any disputes concerning whether a person or
entity had sufficient notice of the Chapter 11 Case, the Bar Date, the hearing
on the approval of the Disclosure Statement as containing adequate information,
the hearing on the confirmation of this Plan for the purpose of determining
whether a Claim or Interest is discharged hereunder or for any other purpose;
(k) to determine any and all applications, Claims, Interests,
pending adversary proceedings and contested matters (including, without
limitation, any adversary proceeding or other proceeding to recharacterize
agreements or reclassify Claims or Interests) in this Chapter 11 Case;
(l) to enter and implement such orders as may be appropriate
in the event the Confirmation Order is for any reason stayed, revoked, modified,
or vacated;
Second Amended Plan of Liquidation proposed by TransAmerican Refining
Corporation Page 22
<PAGE> 295
(m) to seek the issuance of such orders in aid of execution of
the Plan, to the extent authorized by Section 1142 of the Bankruptcy Code;
(n) to consider any modifications of the Plan, to cure any
defect or omission, or reconcile any inconsistency in any order of the Court,
including, without limitation, the Confirmation Order;
(o) to recover all assets of the Debtor and property of the
Estate, wherever located, including any Causes of Action under Sections 544
through 550 of the Bankruptcy Code and the Lawsuit;
(p) to hear and resolve matters concerning state, local, and
federal taxes in accordance with Sections 346, 505, and 1146 of the Bankruptcy
Code;
(q) to hear any other matter not inconsistent with the
Bankruptcy Code;
(r) to resolve any and all disputes or controversies relating
to Distributions to be made, and/or reserves to be established, under this Plan,
including, without limitation, the Distributions to be made by either Indenture
Trustee and the rights of such Indenture Trustee; and
(s) to enter a final decree closing the Chapter 11 Case.
Section 12.02 Cram Down. If all of the applicable requirements
for confirmation of the Plan are met as set forth in Section 1129(a) of the
Bankruptcy Code except subsection (8) thereof, the Debtor, with the prior
consent of the Bondholder Committee, may request the Court to confirm the Plan
pursuant to Section 1129(b) of the Bankruptcy Code, notwithstanding the
requirements of such subsection (8), on the basis that the Plan is fair and
equitable and does not discriminate unfairly with respect to any Impaired Class
that does not vote to accept this Plan as described in the Disclosure Statement.
Section 12.03 Modification of the Plan. The Debtor, with the
prior consent of the Bondholder Committee, reserves the right, to alter, amend
or modify the Plan prior to the entry of the Confirmation Order. After the entry
of the Confirmation Order, the Debtor, with the prior consent of the Bondholder
Committee, may, upon order of the Bankruptcy Court, alter, amend or modify the
Plan in accordance with Section 1127(b) of the Bankruptcy Code, or remedy any
defect or omission or reconcile any inconsistency in the Plan in such manner as
may be necessary to carry out the purpose and intent of the Plan.
Section 12.04 Exemption from Certain Transfer Taxes. Pursuant
to Section 1146(c) of the Bankruptcy Code: (a) the issuance, transfer or
exchange of any securities, instruments or documents; (b) the creation of any
other lien, mortgage, deed of trust or other security interest; (c) the making
or assignment of any lease or sublease or the making or delivery of any deed or
other instrument of transfer under, pursuant to, in furtherance of, or in
connection with, the Plan, including, without limitation, any deeds, bills of
sale or assignments executed in connection with any of the transactions
contemplated under the Plan or the revesting, transfer or sale of any real or
Second Amended Plan of Liquidation proposed by TransAmerican Refining
Corporation Page 23
<PAGE> 296
personal property of the Debtor pursuant to, in implementation of, or as
contemplated in the Plan, and (d) the issuance, renewal, modification or
securing of indebtedness by such means, and the making, delivery or recording of
any deed or other instrument of transfer under, in furtherance of, or in
connection with, the Plan, including, without limitation, the Confirmation
Order, shall not be subject to any document recording tax, stamp tax, conveyance
fee or other simple tax, mortgage tax, real estate transfer tax, mortgage
recording tax or other similar tax or governmental assessment. Consistent with
the foregoing, each recorder of deeds or similar official for any county, city
or governmental unit in which any instrument hereunder is to be recorded shall,
pursuant to the Confirmation Order, be ordered and directed to accept such
instrument, without requiring the payment of any filing fees, documentary stamp
tax, deed stamps, stamp tax, transfer tax, intangible tax or similar tax.
Section 12.05 Compromise of Controversies. Pursuant to
Bankruptcy Rule 9019, and in consideration for the classification, distribution
and other benefits provided under the Plan, the provisions of this Plan shall
constitute a good faith compromise and settlement of all Claims or controversies
resolved pursuant to the Plan. The entry of the Confirmation Order shall
constitute the Bankruptcy Court's approval of each of the foregoing compromises
or settlements, and all other compromises and settlements provided for in the
Plan, and the Bankruptcy Court's findings shall constitute its determination
that such compromises and settlements are in the best interests of the Debtor,
the Estates, and any Entity holding Claims against the Debtor.
Section 12.06 Withdrawal or Revocation of the Plan. The
Debtor, with the prior consent of the Bondholder Committee, reserves the right
to revoke or withdraw the Plan prior to the Confirmation Date. If the Plan is
revoked or withdrawn, or if the Confirmation Date does not occur, the Plan shall
have no force and effect.
Section 12.07 Successors and Assigns. The rights, benefits and
obligations of any Entity named or referred to in the Plan shall be binding on,
and shall inure to the benefit of, the heirs, executors, administrators,
successors and/or assigns of such Entity.
Section 12.08 Governing Law. Except to the extent that the
Bankruptcy Code or Bankruptcy Rules are applicable, the rights and obligations
arising under this Plan shall be governed by and construed and enforced in
accordance with the laws of the State of Texas.
Section 12.09 Notices. All notices, requests or demands for
payments provided for in this Plan shall be in writing and shall be deemed to
have been received, by mail, addressed to:
TransAmerican Refining Corporation
1300 North Sam Houston Parkway East
Houston, Texas 77032-2949
Attn: Simon Ward
with copies to:
Gardere & Wynne, L.L.P.
3000 Thanksgiving Tower
Second Amended Plan of Liquidation proposed by TransAmerican Refining
Corporation Page 24
<PAGE> 297
1601 Elm Street
Dallas, Texas 75201
Attn: Deirdre B. Ruckman, Esq.
and:
Bondholder Committee
c/o Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attn: Michael J. Sage, Esq.
Any of the above may, from time to time, change its address for future notices
and other communications hereunder by Filing a notice of the change of address
with the Bankruptcy Court. Any and all notices given under this Plan shall be
effective when received.
Section 12.10 Severability. Except as to terms which would
frustrate the overall purposes of this Plan, should any provision in this Plan
be determined to be unenforceable, such determination shall in no way limit or
affect the enforceability and operative effect of any or all other provisions of
this Plan.
Section 12.11 Interpretation, Rules of Construction,
Computation of Time, and Choice of Law.
(a) The provisions of the Plan shall control over any
descriptions thereof contained in the Disclosure Statement.
(b) Any term used in the Plan that is not defined in the Plan,
either in Article II (Definitions) or elsewhere, but that is used in the
Bankruptcy Code or the Bankruptcy Rules shall have the meaning assigned to that
term in (and shall be construed in accordance with the rules of construction
under) the Bankruptcy Code or the Bankruptcy Rules. Without limiting the
foregoing, the rules of construction set forth in Section 102 of the Bankruptcy
Code shall apply to the Plan, unless superseded herein.
(c) Unless specified otherwise in a particular reference, all
references in the Plan to Articles, Sections and Exhibits are references to
Articles, Sections and Exhibits of or to the Plan.
(d) Any reference in the Plan to a contract, document,
instrument, release, bylaw, certificate, indenture or other agreement being in a
particular form or on particular terms and conditions means that such document
shall be substantially in such form or substantially on such terms and
conditions.
(e) Any reference in the Plan to an existing document or
Exhibit means such document or Exhibit as it may have been amended, restated,
modified or supplemented as of the Effective Date without limitation to the
provisions set forth in Article VI of this Plan.
Second Amended Plan of Liquidation proposed by TransAmerican Refining
Corporation Page 25
<PAGE> 298
(f) Captions and headings to Articles and Sections in the Plan
are inserted for convenience of reference only and shall neither constitute a
part of the Plan nor in any way affect the interpretation of any provisions
hereof.
(g) In computing any period of time prescribed or allowed by
the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply.
(h) All exhibits, annexes and schedules to the Plan are
incorporated into the Plan, and shall be deemed to be included in the Plan,
regardless of when Filed.
(i) Subject to the provisions of any contract, certificate,
bylaws, instrument, release, indenture or other agreement or document entered
into in connection with the Plan, the rights and obligations arising under the
Plan shall be governed by, and construed and enforced in accordance with,
federal law, including the Bankruptcy Code and Bankruptcy Rules.
(j) Where applicable, references to the singular shall include
the plural and vice-versa.
Section 12.12 No Admissions. Notwithstanding anything herein
to the contrary, nothing contained in the Plan shall be deemed as an admission
by any Entity with respect to any matter set forth herein.
Section 12.13 Limitation of Liability. None of the Debtor, the
Creditors' Committee, the Entities serving on the Bondholder Committee, at any
time during the Chapter 11 Case, the Bondholder Lenders, the Indenture Trustees,
nor any of their respective officers, directors, employees, members, agents,
underwriters or investment bankers, nor any other professional persons employed
by any of them (collectively, the "Exculpated Persons"), shall have or incur any
liability to any Entity for any act taken or omission made in good faith in
connection with or related to formulating, negotiating, implementing, confirming
or consummating the Plan, the Disclosure Statement or any Plan Document. The
Exculpated Persons shall have no liability to the Debtor, any holder of a Claim,
any holder of an Interest, any other party in interest in the Chapter 11 Case or
any other Entity for actions taken or not taken under the Plan, in connection
herewith or with respect hereto, or arising out of their administration of the
Plan or the property to be distributed under the Plan, in good faith, including,
without limitation, failure to obtain Confirmation or to satisfy any condition
or conditions, or refusal to waive any condition or conditions, to the
occurrence of the Effective Date, and in all respects such Exculpated Persons
shall be entitled to rely upon the advice of counsel with respect to their
duties and responsibilities under the Plan.
Second Amended Plan of Liquidation proposed by TransAmerican Refining
Corporation Page 26
<PAGE> 299
Respectfully submitted,
TransAmerican Refining Corporation
By: /s/ ED DONAHUE
---------------------------------------
Name: Ed Donahue
---------------------------------------
Title: Vice President
---------------------------------------
Second Amended Plan of Liquidation proposed by TransAmerican Refining
Corporation Page 27
<PAGE> 300
Summary Liquidation Analysis
The following is a summary liquidation analysis of TransTexas assuming
a hypothetical Chapter 7 liquidation in which a court appointed trustee would
liquidate the assets of TransTexas. The liquidation analysis has been prepared
by TransTexas solely for the purpose of estimating the proceeds available in a
Chapter 7 liquidation of TransTexas to illustrate that the TransTexas Plan meets
the "Best Interest" test and provide at least equal or greater value to all
Impaired Classes of Creditors and Interest Holders than would be provided in a
hypothetical conversion to Chapter 7 liquidation. Nothing contained in these
valuations is intended to or may constitute a concession by, or admission of,
TransTexas for any other purposes.
It is possible that a conversion to a Chapter 7 case could result in
liquidation expenses being greater or less than the estimated amount. Such
expenses are in part dependent on the length of time of the liquidation. The
liquidation analysis assumes that there will be no income or transfer tax
liabilities resulting from Chapter 7 proceedings.
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Appendix 6 - Page 1
<PAGE> 301
SUMMARY LIQUIDATION ANALYSIS ($,000'S)
<TABLE>
<CAPTION>
BALANCE AS OF CHAPTER 7
SOURCES OF LIQUIDATION PROCEEDS JULY 31, 1999 LIQUIDATION
<S> <C> <C>
Cash $ 16,670 $ 16,670
Accounts Receivable $ 24,187 $ 24,187 (1)
Receivable from Affiliate $ 1,075 $ -- (2)
Inventories $ 2,592 $ 1,296 (3)
Total Oil & Gas Properties $ 219,639 $ 236,065 (4)
Other Non-Oil & Gas P., P. & E. $ 48,461 $ 37,218 (5)
Less Costs to Liquidate $ (2,845) (6)
Other Assets (Debt Issuance Costs) $ 22,805 $ -- (7)
Less Chapter 7 expenses (938) (8)
ASSETS AVAILABLE FOR DISTRIBUTION $ 335,429 $ 311,653
</TABLE>
<TABLE>
<CAPTION>
PERCENT
USES OF LIQUIDATION PROCEEDS CLAIM AMOUNT DISTRIBUTION RECOVERY
<S> <C> <C> <C>
Production Payment $ 49,796 $ 49,796 (9) 100.0%
Administrative Claims $ 32,568 $ 32,568 (10) 100.0%
TransTexas Senior Secured Note $ 450,000 $ 229,289 51.0%
TOTAL $ 532,364 $ 311,653 58.5%
</TABLE>
FOOTNOTES
(1) It is assumed that uncollectible receivables are written down by the
debtor prior to July 31, 1999
(2) Assumed to have no liquidation value
(3) Assumed to realize 50% of book value in liquidation scenario
(4) As estimated by Scotia Group
(5) Book value of all other non-oil & gas assets, less liabilities
(6) Assumes 1% transaction fee
(7) Capitalized Debt Issuance costs are not a recoverable asset in a
liquidation. This asset is assumed to have no liquidation value
(8) General administrative liquidation expenses
(9) Unimpaired in Liquidation
(10) Includes Post-petition accounts payable, accrued liabilities,
borrowings and other liabilities
Also includes administrative and other priority expenses
FIRST AMENDED JOINT DISCLOSURE STATEMENT FOR DEBTORS'
PLANS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Appendix 6 - Page 2
<PAGE> 1
EXHIBIT T3F
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
------- ---------
<S> <C>
310(a)(1)............................................................................... 7.10
(a)(2)............................................................................ 7.10
(a)(3)............................................................................ N.A.
(a)(4)............................................................................ N.A.
(a)(5)............................................................................ 7.10
(b)............................................................................... 7.8; 7.10
(c)............................................................................... N.A.
311(a).................................................................................. 7.11
(b)............................................................................... 7.11
(c)............................................................................... N.A.
312(a).................................................................................. 2.5
(b)............................................................................... 14.3
(c)............................................................................... 14.3
313(a).................................................................................. 7.6
(b)(1)............................................................................ 7.6
(b)(2)............................................................................ 7.6
(c)............................................................................... 7.6; 14.2
(d)............................................................................... 7.6
314(a).................................................................................. 4.8; 14.2
(b)............................................................................... 12.3(b)
(c)(1)............................................................................ 2.2; 7.2; 14.4
(c)(2)............................................................................ 7.2; 14.4
(c)(3)............................................................................ N.A.
(d)............................................................................... 12.3(b); 12.4(b); 12.5(b)
(e)............................................................................... 14.6
(f)............................................................................... N.A.
315(a).................................................................................. 7.1(b)
(b)............................................................................... 7.5; 14.2
(c)............................................................................... 7.1(a)
(d)............................................................................... 6.11; 7.1(c)
(e)............................................................................... 6.13
316(a)(last sentence)................................................................... 2.9
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
(a)(1)(A)......................................................................... 6.11
(a)(1)(B)......................................................................... 6.12
(a)(2)............................................................................ N.A.
(b)............................................................................... 6.12; 6.8
(c)............................................................................... 10.5
317(a)(1)............................................................................... 6.3
(a)(2)............................................................................ 6.4
(b)............................................................................... 2.4
318(a).................................................................................. 14.1
</TABLE>
- --------------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
ii
