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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
TRANSTEXAS GAS CORPORATION
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(Exact name of Registrant as Specified in its Charter)
Delaware 76-0401023
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(State of Incorporation or Organization) (IRS Employer Identification No.)
1300 N. Sam Houston Parkway East, Suite 310
Houston, Texas 77032
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(Address of Principal Executive Offices) (Zip Code)
If this form relates to the registration of a class of securities pursuant
to Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), check the following box. [ ]
If this form relates to the registration of a class of securities pursuant
to Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), check the following box. [ ]
Securities Act registration file number to which this form
relates:_____________________ (if applicable).
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
To Be So Registered Each Class Is To Be Registered
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Securities to be registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $0.01 par value
Series A Senior Preferred Stock, $1.00 par value
Series A Junior Preferred Stock, $1.00 par value
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(Title of Class)
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ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
TransTexas Gas Corporation, a Delaware corporation (the "Company"), is
authorized, pursuant to its Amended and Restated Certificate of
Incorporation, to issue up to (i) 100,000,000 shares of Class A Common
Stock, $0.01 par value (the "Class A Common Stock"), (ii) 247,500
shares of Class B Common Stock, $0.01 par value (the "Class B Common
Stock" and, together with the Class A Common Stock, the "Common
Stock"), and (iii) 500,000,000 shares of Preferred Stock, $1.00 par
value, of which 328,667,820 shares are designated Series A Senior
Preferred Stock (the "Senior Preferred Stock"), and 37,469,711 shares
are designated Series A Junior Preferred Stock (the "Junior Preferred
Stock" and, together with the Senior Preferred Stock, the "Preferred
Stock").
On March 17, 2000, the Company issued, pursuant to the Plan of
Reorganization in its bankruptcy proceeding, (i) 1,002,500 shares of
Class A Common Stock, (ii) 247,500 shares of Class B Common Stock,
(iii) 222,455,320 shares of Senior Preferred Stock and (iv) 20,716,080
shares of Junior Preferred Stock.
Common Stock
Voting Rights. Subject to the rights described below of holders of the
Preferred Stock and the Class B Common Stock to elect certain
directors, holders of shares of Common Stock will be entitled to one
vote per share on any matter submitted to a vote of stockholders,
including the election of directors to fill vacancies which are not
otherwise designated to be filled by the holders of the Preferred
Stock or Class B Common Stock. Cumulative voting will be prohibited.
The holders of the 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 Senior Preferred Stock are not
entitled to elect all five directors of the Company.
The Common Stock will not be redeemable, will not have any conversion
rights and will not be subject to call. Holders of shares of Common
Stock will have no preemptive rights to maintain their respective
percentage ownership in future offerings or sales of stock of the
Company. Subject to restrictions in certain agreements, and provided
that no dividends may be paid on the Common Stock so long as the
Senior Preferred Stock is outstanding, the holders of 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 the Company
out of funds legally available therefor. Upon liquidation, dissolution
or winding-up of the affairs of the Company, the holders of Common
Stock will be entitled to participate equally and ratably, in
proportion to the number of shares held, in the net assets of the
Company available for distribution to holders of Common Stock. The
shares of Common Stock currently outstanding are validly issued, fully
paid and nonassessable.
Dividend Policy. The Company's ability to pay cash dividends in the
future will be restricted by certain agreements and (with respect to
the Common Stock) the provisions of the Company's Certificate of
Incorporation relating to the Preferred Stock, and will depend upon
the Company's debt levels, earnings 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 the Company's capital requirements
and financial condition.
Limitations on Liability of Directors. The Company's Certificate of
Incorporation contains a provision that is designed to limit the
directors' liability to the extent permitted by the Delaware General
Corporation Law and any amendments thereto. Under current law,
directors will not be held liable to the Company 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 the
Company 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.
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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 the Company 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.
The Company's Certificate of Incorporation does not eliminate its
directors' duty of care. The inclusion of this provision in the
Company's 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 the Company 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. The Company's Certificate
of Incorporation and Bylaws provide that the Company will indemnify
its officers and directors to the fullest extent permitted by Delaware
law. In addition, the Company has customary directors' and officers'
liability insurance policies for its directors and officers.
Senior Preferred Stock
Voting Rights. The holders of the Senior Preferred Stock have the
right, voting separately as a class, to elect four of the five
directors to the Board of Directors of the Company; provided, that if
dividends have not been paid with respect to the payments due on the
Senior Preferred Stock commencing March 15, 2002, such holders will
have the right, voting separately as a class, to elect all five
directors to the 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 of funds for such payment. Holders of the Senior
Preferred Stock will have one vote per share, voting together with the
Class A Common Stock (and the Junior Preferred Stock and any other
series or classes of Company stock entitled to vote with the Class A
Common Stock), on all matters on which holders of the Class A Common
Stock are entitled to vote generally.
In addition, so long as any Senior Preferred Stock is outstanding, the
affirmative vote or consent of the holders of at least a majority of
all outstanding shares of Senior Preferred Stock, voting separately as
a class, will be required to (i) amend, alter or repeal any provision
of the Certificate of Incorporation or Bylaws of the Company; (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 Senior Preferred
Stock as to dividends or upon liquidation, dissolution or winding up
of the Company; (iii) waive any covenant contained in the Certificate
of Designation for the Senior Preferred Stock; (iv) subject to Article
VI of the Certificate of Incorporation, consummate any merger,
consolidation or sale of substantially all the assets of the Company,
or (v) effect any reclassification of the Senior Preferred Stock.
Also, so long as any Senior Preferred Stock is outstanding, the
affirmative vote or consent of the holders of at least 75% of all
outstanding shares of Senior Preferred Stock, voting separately as a
class, will be required to amend the voting rights of the Senior
Preferred Stock.
Dividends. Holders of shares of Senior Preferred Stock will be
entitled to receive, when, as and if declared by the Board of
Directors out of funds at the time legally available therefor,
dividends, as follows: (i) subject to the option of the Company to pay
dividends in kind as described below, quarterly cash dividends, in
preference to holders of any other shares of capital stock of the
Company, at an annual rate of $0.10 per share, payable quarterly on
the 15th day of March, June, September and December of each year,
commencing June 15, 2000, 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
period ending March 15, 2002, in lieu of paying cash dividends, the
Company will be entitled, at its option, to pay dividends in kind
(i.e., in additional shares of Senior Preferred Stock with an
aggregate par value equal to
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the dividend amount), at an annual rate of $0.20 per share. After
March 15, 2002, dividends will be payable in cash at an annual rate of
$0.0775 per share. Dividends will accrue and be cumulative from the
date of the immediately preceding dividend payment date, except with
respect to the first dividend which shall accrue from the date of
issuance of the Senior Preferred Stock. Dividends will be payable to
holders of record as they appear on the stock books of the Company on
such record dates as are fixed by the Board of Directors.
The Senior Preferred Stock will be junior as to dividends to any
series or class of the Company's stock hereafter issued that ranks
senior as to dividends to the Senior Preferred Stock ("senior dividend
stock"), and if at any time the Company has failed to pay or declare
and set apart for payment accrued and unpaid dividends on any senior
dividend stock, the Company may not pay any dividend on the Senior
Preferred Stock. The Senior Preferred Stock will have priority as to
dividends over the Junior Preferred Stock, the Common Stock and any
series or class of the Company's stock hereafter issued that ranks
junior as to dividends to the Senior Preferred Stock ("junior dividend
stock"), and no dividend (other than dividends payable solely in
Junior Preferred Stock, Common Stock or any other series or class of
the Company's stock hereafter issued that ranks junior as to dividends
and as to liquidation rights to the Senior Preferred Stock) may be
declared, paid or set apart for payment on, and no purchase,
redemption or other acquisition may be made by the Company of, any
junior dividend stock unless all accrued and unpaid dividends on the
Senior Preferred Stock have been paid or declared and set apart for
payment. The Company may not pay dividends on any class or series of
the Company's stock having parity with the 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 Senior Preferred Stock; and the Company may not pay
dividends on the 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 Senior Preferred Stock or any parity
dividend stock, all dividends declared on the 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 Senior
Preferred Stock and such parity dividend stock will bear the same
ratio that accrued and unpaid dividends per share on the Senior
Preferred Stock and such parity dividend stock bear to each other.
The amount of dividends payable per share of 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 Senior Preferred Stock which may be in
arrears.
Under Delaware law, the Company 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 the Company, holders of shares of 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, before any payment or distribution is made to the
holders of Junior Preferred Stock, Common Stock or any series or class
of the Company's stock hereafter issued that ranks junior as to
liquidation rights to the Senior Preferred Stock, but the holders of
the shares of the 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 the Company's
stock hereafter issued that ranks senior as to liquidation rights to
the Senior Preferred Stock ("senior liquidation stock") has been paid
in full. The holders of Senior Preferred Stock and all series or
classes of the Company's stock hereafter issued that rank on a parity
as to liquidation rights with the 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
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shares of the Senior Preferred Stock, the holders of such shares will
not be entitled to any further participation in any distribution of
assets by the Company. Neither a consolidation, merger or other
business combination of the Company with or into another corporation
or other entity nor a sale or transfer of all or part of the Company's
assets for cash, securities or other property will be considered a
liquidation, dissolution or winding up of the Company.
Mandatory Redemption. The Company will be required to redeem the
Senior Preferred Stock on March 15, 2006, at 100% of the liquidation
preference per share.
Redemption at Option of The Company. The Senior Preferred Stock may be
redeemed for cash, in whole or in part, at any time at the option of
the Company, 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 Company's 15% Senior Secured Notes due
2005 have been retired.
If fewer than all of the outstanding shares of Senior Preferred Stock
are to be redeemed, the Company will select those to be redeemed pro
rata or by lot as the Board of Directors may determine. In the event
that the Company has failed to pay accrued and unpaid dividends on the
Senior Preferred Stock, it may not redeem any of the then outstanding
shares of the Senior 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 Senior Preferred Stock to be redeemed at the address shown on the
stock transfer books of the Company. After the redemption date,
dividends will cease to accrue on the shares of 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
Senior Preferred Stock are outstanding after March 15, 2006 or (ii)
two dividend payments have not been paid on the Senior Preferred
Stock, one-half of the outstanding shares of the Senior Preferred
Stock will be automatically converted into shares of Class A Common
Stock at a rate of .3461 shares of Class A Common Stock for each $1 of
liquidation preference of the shares of Senior Preferred Stock
converted.
The Certificate of Designation contains appropriate anti-dilution
provisions with respect to the Senior Preferred Stock.
Restrictive Covenants. The Certificate of Designation contains
restrictive covenants comparable to the restrictive covenants
contained in the Indenture governing the Company's 15% Senior Secured
Notes due 2005.
Other Provisions. The outstanding shares of Senior Preferred Stock are
duly and validly issued, fully paid and nonassessable. The holders of
the shares of Senior Preferred Stock will have no preemptive rights
with respect to any securities of the Company.
Junior Preferred Stock
Voting Rights. Holders of the Junior Preferred Stock will have one
vote per share (voting together with the Class A Common Stock, the
Senior Preferred Stock and any other series or classes of Company
stock entitled to vote with the Class A Common Stock), on all matters
on which holders of the Class A Common Stock are entitled to vote
generally. If no shares of Senior Preferred Stock are outstanding, the
holders of the Junior Preferred Stock will have the right, voting
separately as a class, to elect two directors to the Board of
Directors. In exercising such voting rights, each outstanding share of
Junior 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.
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In addition, so long as any Junior Preferred Stock is outstanding, the
affirmative vote or consent of the holders of at least a majority of
all outstanding shares of Junior Preferred Stock, voting separately as
a class, will be required to (i) amend, alter or repeal any provision
of the Certificate of Incorporation or the Bylaws of the Corporation;
(ii) authorize or issue, or increase the authorized amount of any
additional class or series of Junior Stock of the Corporation; (iii)
waive any covenant contained in the Certificate of Designation for the
Junior Preferred Stock; (iv) subject to Article VI of the Certificate
of Incorporation, consummate any merger, consolidation or sale of
substantially all the assets of the Corporation; or (v) effect any
reclassification of the Junior Preferred Stock. Also, so long as any
Junior Preferred Stock is outstanding, the affirmative vote or consent
of the holders of at least 75% of all outstanding shares of Junior
Preferred Stock, voting separately as a class, will be required to
amend the voting rights of the Junior Preferred Stock.
Dividends. Holders of shares of Junior Preferred Stock will be
entitled to receive, when, as and if declared by the Board of
Directors out of funds at the time legally available therefor,
dividends, as follows: (i) during the period ending March 15, 2006
(the "First Dividend Period"), at a rate equal to $0.10 per share per
annum, and (ii) at any time thereafter (the "Second Dividend Period"),
at a rate equal to $0.20 per share per annum, payable quarterly on the
15th day of March, June, September and December of each year,
commencing June 15, 2000, 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. Dividends
shall only be payable in kind (i.e. in additional shares of Junior
Preferred Stock with an aggregate par value equal to the dividend
amount) during the First Dividend Period. During the Second Dividend
Period, dividends shall be paid both (i) in cash at a rate of $0.10
per share per annum and (ii) in kind at a rate of $0.10 per share per
annum. Dividends will accrue and be cumulative from the date of the
immediately preceding dividend payment date, except with respect to
the first dividend, which shall accrue from the date of issuance of
the Junior Preferred Stock. Dividends will be payable to holders of
record as they appear on the stock books of the Company on such record
dates as are fixed by the Board of Directors.
The amount of dividends payable per share of 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 Junior Preferred Stock which may be in
arrears.
Under Delaware law, the Company 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 the Company, holders of shares of 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, before any payment or distribution is made to the
holders of Common Stock or any series or class of the Company's stock
hereafter issued that ranks junior as to liquidation rights to the
Junior Preferred Stock, but the holders of the shares of the Junior
Preferred Stock will not be entitled to receive the liquidation
preference of such shares until the liquidation preference of the
Senior Preferred Stock and any other series or class of the Company's
stock hereafter issued that ranks Junior as to liquidation rights to
the Junior Preferred Stock ("junior liquidation stock") has been paid
in full. The holders of Junior Preferred Stock and all series or
classes of the Company's stock hereafter issued that rank on a parity
as to liquidation rights with the 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 Junior Preferred Stock, the holders of such shares will
not be entitled to any further participation in any distribution of
assets by the Company.
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The voluntary sale, conveyance, exchange or transfer (for cash, shares
of stock, securities or other consideration) of all or substantially
all the property or assets of the Company and the consolidation or
merger of the Company with or into one or more other corporations or
other entities shall be deemed to be a liquidation, dissolution, or
winding up of the Company, voluntarily or involuntarily, except in the
case of a merger where the Company is the surviving entity and the
shareholders of the Company immediately prior to such merger
collectively own at least a majority of the Voting Stock of the
surviving corporation in such merger.
Mandatory Redemption. The Company will be required to redeem the
Junior Preferred Stock on March 15, 2010 at 100% of the liquidation
preference per share.
Redemption at Option of Company. The Junior Preferred Stock may be
redeemed for cash, in whole or in part, at any time at the option of
the Company, for an amount equal to 100% of the liquidation preference
per share; provided, however, that no redemption shall be permitted
prior to the time that all of the Company's 15% Senior Secured Notes
due 2005 and the Senior Preferred Stock have been retired.
If fewer than all of the outstanding shares of Junior Preferred Stock
are to be redeemed, the Company will select those to be redeemed pro
rata or by lot as the Board of Directors may determine. In the event
that the Company has failed to pay accrued and unpaid dividends on the
Junior Preferred Stock, it may not redeem any of the then outstanding
shares of the 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 Junior Preferred Stock to be redeemed at the address shown on the
stock transfer books of the Company. After the redemption date,
dividends will cease to accrue on the shares of 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
Senior Preferred Stock are outstanding after March 15, 2006 or (ii)
two dividend payments have not been paid on the Senior Preferred
Stock, all of the outstanding shares of the Junior Preferred Stock
will be automatically converted into shares of Class A Common Stock at
the rate of 0.1168 shares of Class A Common Stock for each $1 of
liquidation preference of the shares of Junior Preferred Stock
converted.
The Certificate of Designation contains appropriate anti-dilution
provisions with respect to the Junior Preferred Stock.
Other Provisions. The outstanding shares of Junior Preferred Stock are
duly and validly issued, fully paid and nonassessable. The holders of
the shares of Junior Preferred Stock will have no preemptive rights
with respect to any securities of the Company.
ITEM 2. EXHIBITS.
The following exhibits are filed as a part of this registration statement:
3.1 -- Amended and Restated Certificate of Incorporation.
3.2 -- Certificate of Designation for Series A Senior Preferred Stock.
3.3 -- Certificate of Designation for Series A Junior Preferred Stock.
3.4 -- Amended and Restated Bylaws.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
TRANSTEXAS GAS CORPORATION
DATE: April 26, 2000 By: /s/ ED DONAHUE
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Name: Ed Donahue
Title: Vice President, Chief Financial
Officer and Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
No. Description Page
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<S> <C> <C>
3.1 Amended and Restated Certificate of Incorporation.
3.2 Certificate of Designation for Series A Senior Preferred Stock.
3.3 Certificate of Designation for Series A Junior Preferred Stock.
3.4 Amended and Restated Bylaws.
</TABLE>
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EXHIBIT 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
TRANSTEXAS GAS CORPORATION
Pursuant to the provisions of Sections 245 and 303 of the General
Corporation Law of the State of Delaware (the "DGCL"), TransTexas Gas
Corporation, a corporation organized and existing under and by virtue of the
DGCL (the "Corporation"), does hereby certify as follows:
FIRST: The name of the Corporation is TransTexas Gas Corporation.
SECOND: The Corporation's Certificate of Incorporation was filed with
the Secretary of State of Delaware on May 7, 1993. The Certificate of
Incorporation was amended on August 20, 1993 and on February 9, 1994.
THIRD: This Amended and Restated Certificate of Incorporation amends
and restates the Certificate of Incorporation, as amended to date, and has been
duly adopted in accordance with Sections 242, 245 and 303 of the DGCL, pursuant
to the authority granted to the Corporation under Section 303 of the DGCL to put
into effect and carry out the Debtor's Second Amended Plan of Reorganization
(the "Plan") under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code"). Provision for the making of this Amended and Restated
Certificate of Incorporation is contained in the order of the Bankruptcy Court
having jurisdiction under the Bankruptcy Code for the reorganization of the
Corporation.
The Certificate of Incorporation is hereby restated to read in full as
follows:
ARTICLE I
The name of the Corporation is TransTexas Gas Corporation.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, Corporation Trust Center, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
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ARTICLE IV
A. The total number of shares of capital stock that the Corporation
shall have the authority to issue is 600,247,500, of which (i) 100,000,000
shares shall be shares of Class A Common Stock with a par value of $0.01 per
share (the "Class A Common Stock"), (ii) 247,500 shares shall be shares of Class
B Common Stock with a par value of $0.01 per share (the "Class B Common Stock"),
and (iii) 500,000,000 shares shall be shares of Preferred Stock, par value $1.00
per share (the "Preferred Stock").
B. Preferred Stock. The Board of Directors is expressly authorized to
provide for the issuance of all or any shares of the Preferred Stock in one or
more classes or series, and to fix for such class or series the voting powers
(if any) and such distinctive designations, preferences and relative,
participating, optional or other special rights and such qualifications,
limitations or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors providing for the
issuance of such class or series and as may be permitted by the DGCL, including,
without limitation, the authority to provide that any such class or series may
be (i) subject to redemption at such time or times and at such price or prices,
(ii) entitled to receive dividends (which may be cumulative or non-cumulative)
at such rates, on such conditions, and at such times, and payable in preference
to, or in such relation to, the dividends payable on any other class or classes
or any other series, (iii) entitled to such rights upon the dissolution of, or
upon any distribution of the assets of, the Corporation, or (iv) convertible
into, or exchangeable for, shares of any other class or classes of stock, or of
any other series of the same or any other class or classes of stock, of the
Corporation at such price or prices or at such rates of exchange and with such
adjustments, all as may be stated in such resolution or resolutions.
C. Common Stock. The following is a statement of the relative powers,
preferences and participating, optional or other special rights, and the
qualifications, limitations and restrictions of the Class A Common Stock and
Class B Common Stock of the Corporation:
1. Except as otherwise set forth below in this Article IV, the
relative powers, preferences and participating, optional or other special
rights, and the qualifications, limitations or restrictions of the Class A
Common Stock and Class B Common Stock shall be identical in all respects.
2. Subject to the rights of the holders of Preferred Stock,
and subject to any other provisions of this Certificate of Incorporation,
holders of Class A Common Stock and Class B Common Stock shall be entitled to
receive ratably such dividends and other distributions in cash, stock of any
corporation (other than Common Stock of the Corporation) or property of the
Corporation as may be declared thereon by the Board of Directors from time to
time out of assets or funds of the Corporation legally available therefor. In
the case of dividends or other distributions payable in Common Stock, including
distributions pursuant to stock splits or divisions of Common Stock of the
Corporation, only shares of Class A Common Stock shall be paid or distributed
with respect to Class A Common Stock and only shares of Class B Common Stock
shall be paid or
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distributed with respect to Class B Common Stock. Neither the shares of Class A
Common Stock nor the shares of Class B Common Stock may be reclassified,
subdivided or combined unless such reclassification, subdivision or combination
occurs simultaneously and in the same proportion for each class. However,
holders of shares of Class A Common Stock and Class B Common Stock will have no
preemptive rights to maintain their respective percentage ownership in future
offerings or sales of stock of the Corporation. Upon liquidation, dissolution or
winding up of the affairs of the Corporation, the holders of the Class A Common
Stock and the Class B Common Stock shall be entitled to participate equally and
ratably, in proportion to the number of shares held, in the net assets of the
Corporation available for distribution to holders of the Class A Common Stock
and Class B Common Stock.
3. Subject to the rights of the holders of the Preferred Stock and the
Class B Common Stock to elect certain directors, holders of shares of Class A
Common Stock and Class B Common Stock shall be entitled to one vote in person or
by proxy for each share of Class A Common Stock and Class B Common Stock
standing in his or her name on the transfer books of the Corporation in
connection with all matters submitted to a vote of stockholders, including the
election of directors to fill vacancies which are not otherwise designated to be
filled by the holders of Preferred Stock or Class B Common Stock. Except as may
be otherwise required by law or by this Certificate of Incorporation, the
holders of Class A Common Stock and Class B Common Stock shall vote together as
a single class and their votes shall be counted and totaled together, subject to
any voting rights which may be granted to the holders of Preferred Stock, on all
matters submitted to a vote of stockholders of the Corporation.
(a) Subject to the rights of the holders of the Preferred
Stock to elect directors, the holders of the Class B Common Stock shall have the
right, voting separately as a class, to elect one director of the Corporation;
provided, that if John R. Stanley's employment with the Corporation as Chief
Executive Officer has been terminated pursuant to the provisions of his
employment agreement with the Corporation as a result of a disabling illness or
injury, the holders of the Class B Common Stock will continue to have the right
to elect one director of the Corporation so long as the director so elected is
not John R. Stanley. Cumulative voting will be prohibited in the election of
directors.
4. The Class B Common Stock will be automatically converted on a share
for share basis into shares of Class A Common Stock upon (a) the direct or
indirect transfer of the Class B Common Stock or any interest therein by the
holder thereof to any person other than (i) John R. Stanley (or his heirs, his
estate or any trust in which he or his family members have, directly or
indirectly, a beneficial interest in excess of 50%) or any member of his family,
or (ii) a person that is directly or indirectly controlled by, or under direct
or indirect common control with, John R. Stanley or (b) the termination of John
R. Stanley as Chief Executive Officer and a director of the Corporation if such
termination is a "Non-economic Termination" pursuant to the provisions of his
employment agreement with the Corporation. For purposes hereof, members of a
person's family include his spouse and his and his spouse's parents,
grandparents, aunts, uncles, brothers, sisters, children and grandchildren, as
well as any of their spouses. For purposes hereof, the term "control" means the
possession, direct or indirect, of the power to direct or cause the direction of
the
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management and policies of a person, whether through the ownership of voting
securities, by contract or otherwise.
ARTICLE V
The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors. The number of directors of the
Corporation shall be fixed in the manner provided in the Bylaws of the
Corporation, and, until changed in the manner provided in the Bylaws, shall be
five.
The directors shall be divided into three classes, designated Class I,
Class II and Class III. Each class shall consist, as nearly as possible, of
one-third of the total number of directors constituting the entire Board of
Directors. Class I shall initially consist of John Whitmire and Walter Piontek.
Class II shall initially consist of Gerald Bennett and Ronald Benson. Class III
shall initially consist of John R. Stanley. Each director shall serve for a term
ending at the annual meeting in the third year following the annual meeting at
which such director was elected, provided, however, that the term of the
directors named above to Class I shall end at the annual meeting in 2001, the
term of the directors in Class II named above shall end at the annual meeting in
2002, and the term of the director in Class III named above shall end at the
annual meeting in 2003; provided, however, that each director shall hold office
after the annual meeting at which his term is scheduled to end until his
successor shall be elected and shall qualify, subject, however, to prior death,
resignation, disqualification or removal from office in the manner hereinafter
provided. The Board of Directors shall apportion any increase or decrease in the
number of directorships among the classes so as to make the number of directors
in each class as nearly equal as possible.
At each annual election of Directors of the Corporation, such Directors
chosen to succeed those whose terms then expire shall be of the same class as
the Directors of the Corporation they succeed, unless, by reason of any
intervening changes in the authorized number of Directors of the Corporation,
the Board of Directors shall designate one or more directorships whose term then
expires as directorships of another class in order more nearly to achieve
equality of number of Directors of the Corporation among the classes.
Notwithstanding that the three classes of Directors of the Corporation
shall be as nearly equal in number of Directors as possible, in the event of any
change in the authorized number of Directors of the Corporation, each Director
of the Corporation then continuing to serve as such shall nevertheless continue
as a Director of the class of which he is a member until the expiration of his
current term, or his prior death, resignation or removal in accordance with the
Amended and Restated Certificate of Incorporation and the Bylaws of the
Corporation. If any newly created directorship may, consistent with the
provision that the three classes shall be as nearly equal in number of Directors
of the Corporation as possible, be allocated to one or two or more classes, the
Board of Directors shall allocate it to that of the available classes whose
terms of office are due to expire at the earliest date following such
allocation.
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<PAGE> 5
Any director may be removed, but only for cause, and by the affirmative
vote by written ballot of a majority of voting interest of the stockholders of
record of the Corporation entitled to vote for the election of such director,
given at an annual meeting or at a special meeting of the stockholders called
for that purpose in the manner provided in the Bylaws of the Corporation. The
vacancy in the Board of Directors caused by any such removal or otherwise shall
be filled by the affirmative vote of such stockholders at such meeting or at a
subsequent special meeting of the stockholders called for such purpose in a
manner provided in the Bylaws of the Corporation.
Any director elected to fill a newly created directorship resulting
from an increase in the number of any class of directors shall hold office for a
term that shall coincide with the remaining term of the other directors of that
class. Any director elected to fill a vacancy not resulting from an increase in
the number of directors shall have the same term as the remaining term of his
predecessor. In no case will a decrease in the number of directors shorten the
term of any incumbent director. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may only be
filled by written ballot of a majority of voting interest of the stockholders of
record of the Corporation entitled to vote for the election of such directors,
given at an annual meeting or at a special meeting of the stockholders called
for that purpose in a manner provided in the Bylaws of the Corporation.
ARTICLE VI
In addition to any other affirmative vote that may be required by law,
the Amended and Restated Certificate of Incorporation or the Bylaws of the
Corporation:
(a) any merger, consolidation or share exchange of the
Corporation or any subsidiary of the Corporation with any Related Person; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition by the Corporation or any subsidiary of the Corporation to,
with or for the benefit of any Related Person or any Affiliate of any Related
Person, or by any Related Person or any Affiliate of any Related Person to the
Corporation or any subsidiary of the Corporation, of any assets or properties
having an aggregate Fair Market Value of $50,000,000 or more; or
(c) any adoption of any plan or proposal by the Corporation
for the liquidation or dissolution of the Corporation voluntarily caused or
proposed by or on behalf of a Related Person or any Affiliate of any Related
Person; or
(d) any series or combination of transactions having, directly
or indirectly, the same effect as any of the foregoing; or
(e) any agreement, contract or other arrangement entered into
by the Corporation providing, directly or indirectly, for any of the foregoing
shall require the affirmative vote of holders
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of (x) at least 66-2/3% of the then outstanding Voting Stock, voting together as
a single class and (y) at least a majority of the then outstanding Voting Stock
not Beneficially Owned, directly or indirectly, by any Related Person with
respect to such Business Combination, voting together as a single class. Such
affirmative vote shall be required, notwithstanding the fact that no vote may be
required by, or that a lesser percentage or separate class vote may be specified
in, applicable law, any provision of the Restated Certificate of Incorporation
other than this Article VI, the Bylaws of the Corporation or any agreement with
any national securities exchange or otherwise.
For purposes of this Article VI.
(a) The term "Affiliate," used to indicate a relationship to a
specified Person, shall mean a Person that directly, or indirectly through one
or more intermediaries, controls, is controlled by, or is under common control
with, such specified Person.
(b) A Person shall be a "Beneficial Owner" of any shares of
any class or series of capital stock of the Corporation (i) which such Person or
any of its Affiliates beneficially owns, directly or indirectly; or (ii) which
such Person or any of its Affiliates has, directly or indirectly, (A) the right
or obligation to acquire (whether such right or obligation is exercisable
immediately or only after the passage of time or the occurrence of an event),
pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, warrants or
options, or otherwise; provided, however, that a Person shall not be deemed the
beneficial owner of any stock tendered pursuant to a tender or exchange offer
made by such Person or any of such Person's Affiliates until such tendered stock
is accepted for purchase or exchange, or (B) the right to vote or dispose of,
including pursuant to any agreement, arrangement or understanding (whether or
not in writing); provided, however, that a Person shall not be deemed the
beneficial owner of any stock because of such Person's right to vote such stock
if the agreement, arrangement or understanding to vote such stock arises solely
from a revocable proxy or consent given in response to a proxy or consent
solicitation made to ten (10) or more Persons pursuant to, and in accordance
with, the applicable provisions of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); or (iii) which
is beneficially owned, directly or indirectly, by any other Person (or any
Affiliate thereof) with which such Person or any of its Affiliates has any
agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting or disposing of such stock; or (iv) of
which such Person would be the Beneficial Owner pursuant to the terms of Rule
13d-3 of the General Rules and Regulations under Exchange Act, as in effect on
February 29, 2000. Stock shall be deemed "Beneficially Owned" by the Beneficial
Owner or Owners thereof.
(c) The term "Bondholder Committee" shall mean the unofficial
committee of holders of the TEC Senior Secured Notes (as defined below) formed
in connection with the Corporation's case under Chapter 11 of Title 11, United
States Code, as amended (Case No. 99- 21550-C-11), in the United States
Bankruptcy Court for the Southern District of Texas, Corpus Christi Division)
composed of the following entities: Credit Suisse First Boston Corporation,
Oaktree Capital Management, L.L.C., and Angelo Gordon & Co., L.P. or any
Affiliate thereof.
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(d) The term "Business Combination" shall mean any transaction
which is referred to in any one or more of subparagraphs (a) through (g) of
paragraph (1) of this Article VI.
(e) The term "Fair Market Value" shall mean, in the case of
securities, the average of the closing sale prices during the thirty (30)-day
period immediately preceding the date in question of such security on the
principal United States securities exchange registered under the Exchange Act on
which such security is listed (or the composite tape therefor) or, if such
securities are not listed on any such exchange, the average of the closing bid
quotations with respect to such security during the thirty (30)-day period
preceding the date in question on the NASDAQ National Market or any similar
system then in use or, if no such quotations are available, the fair market
value on the date in question of such security as determined in good faith by at
least a majority of all Continuing Directors; and in the case of property other
than cash or securities, the fair market value of such property on the date in
question as determined in good faith by at least a majority of all Continuing
Directors.
(f) The term "Person" shall mean any individual, firm,
corporation, partnership, limited liability company, association, joint venture,
trust, estate or other entity or organization.
(g) The term "Related Person" shall mean any Person (other
than members of the Bondholders Committee, the Corporation or any subsidiary of
the Corporation and other than any profit-sharing, employee stock ownership or
other employee benefit plan of the Corporation or any subsidiary of the
Corporation or any trustee of or fiduciary with respect to any such plan when
acting in such capacity) who or which (i) is the Beneficial Owner of 10% or more
of the aggregate voting power of all outstanding Voting Stock; or (ii) is an
Affiliate of the Corporation and, at any time within the two (2)-year period
immediately prior to the date in question, was the Beneficial Owner of 10% or
more of the aggregate voting power of all outstanding Voting Stock; or (iii) is
an assignee of or has otherwise succeeded to any shares of any class or series
of capital stock of the Corporation which were at any time within the two
(2)-year period immediately prior to the date in question Beneficially Owned by
any Related Person, if such assignment or succession shall have occurred in the
course of a privately negotiated transaction rather than an open market
transaction. For the purposes of determining whether a Person is a Related
Person, the number of shares of any class or series of capital stock of the
Corporation deemed to be outstanding shall include shares of such class or
series of which the Person is deemed the Beneficial Owner, but shall not include
any other shares which may be issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, exchange rights, warrants
or options.
(h) Nothing contained in this Article VI shall be construed to relieve
any Related Person from any fiduciary obligation imposed by law.
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ARTICLE VII
In furtherance of, and not in limitation of the powers conferred by
statute, the Board of Directors shall have the power to adopt, amend or repeal
the Bylaws of the Corporation.
ARTICLE VIII
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner
prescribed by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation provided, however, that any amendment to
Article XI shall require the affirmative vote of the holders of a majority of
the outstanding shares of Class B Common Stock and provided, further, however,
that any amendment to Article VI shall require the affirmative vote of holders
of (X) at least 66 2/3% of the then outstanding Voting Stock, voting together as
a single class, and (Y) at least a majority of the then outstanding Voting Stock
not Beneficially Owned, directly or indirectly, by any Related Person, voting
together as a single class.
ARTICLE IX
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for conduct as a director,
provided that this Article shall not eliminate the liability of a director for
any act or omission for which such elimination of liability is not permitted
under the DGCL. No amendment to the DGCL that further limits the act or
omissions for which elimination of liability is permitted shall affect the
liability of a director for any act or omission which occurs prior to the
effective date of such amendment.
ARTICLE X
The Corporation shall indemnify to the fullest extent permitted by the
DGCL any person who has been made, or is threatened to be made, a party to an
action, suit, or proceeding, whether civil, criminal, administrative,
investigative, or otherwise (including an action, suit or proceeding by or in
the right of the Corporation), by reason of the fact that the person is or was a
director or officer of the Corporation, or a fiduciary within the meaning of the
Employee Retirement Income Security Act of 1974 with respect to an employee
benefit plan of the Corporation, or serves or served at the request of the
Corporation as a director, or as an officer, or as a fiduciary of an employee
benefit plan, of another corporation, partnership, joint venture, trust or other
enterprise. In addition, subject to the terms of the Corporation's Bylaws, the
Corporation shall pay for or reimburse any expenses incurred by such persons who
are parties to such proceedings, in advance of the final disposition of such
proceedings, to the full extent permitted by the DGCL.
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ARTICLE XI
Notwithstanding any other provision of this Certificate of
Incorporation and any provision of law that otherwise so empowers the
Corporation, the Corporation shall not, without a unanimous act of the
directors, prior to February 15, 2001, consolidate or merge with or into any
other entity or convey or transfer its properties and assets substantially as an
entirety to any entity, unless the Corporation has filed for protection under
the Bankruptcy Code.
ARTICLE XII
Notwithstanding any other provision contained herein, the Corporation,
as a Debtor (as defined in the Plan) under the Plan shall not issue nonvoting
equity securities in connection with the Plan and shall comply, to the extent
applicable, with Section 1123(a)(6) of the Bankruptcy Code. After the Effective
Date (as defined in the Plan), this Article XII may be amended or repealed by
the affirmative vote of a majority of the outstanding stock entitled to vote
thereon in accordance with Section 242 of the DGCL.
ARTICLE XIII
All shares of capital stock of the Corporation that are authorized,
issued and outstanding, as well as any options, warrants, calls, subscriptions,
or other similar rights or other agreements or commitments, contractual or
otherwise, obligating the Corporation to issue, transfer or sell any shares of
capital stock, prior to the filing of this Amended and Restated Certificate of
Incorporation shall be canceled on the Effective Date (as defined in the Plan),
and the holders thereof shall have no further rights with respect thereto,
except as provided in the Plan.
ARTICLE XIV
No action required to be taken or that may be taken at any annual or
special meeting of the stockholders of the Corporation may be taken without a
meeting, and the power of the stockholders of the Corporation to consent in
writing to the taking of any action by written consent without a meeting is
specifically denied, except for action by unanimous written consent, which is
expressly allowed.
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IN WITNESS WHEREOF, TransTexas Gas Corporation has caused this Amended
and Restated Certificate of Incorporation to be signed by Ed Donahue, its Vice
President, Chief Financial Officer and Secretary this 15th day of March, 2000.
TRANSTEXAS GAS CORPORATION
By: /s/ Ed Donahue
--------------------------------------
Name: Ed Donahue
Title: Vice President, Chief Financial
Officer and Secretary
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EXHIBIT 3.2
TRANSTEXAS GAS CORPORATION
CERTIFICATE OF DESIGNATION
FOR
SERIES A SENIOR
PREFERRED STOCK
---------------------------------
Pursuant to Section 303
of the General Corporation Law of the State of Delaware
---------------------------------
TransTexas Gas Corporation (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "DGCL"), does hereby certify that pursuant to the provisions of
Section 303 of the DGCL, the Corporation, pursuant to the Order dated February
7, 2000 of the United States Bankruptcy Court for the Southern District of
Texas (the "Order") adopted the following resolution effective as of March 15,
2000 (the "Effective Time"), which resolution remains in full force and effect
as of the Effective Time:
WHEREAS, the Corporation is authorized, pursuant to Section
303 of the DGCL, without further action by its directors or stockholders to put
into effect and carry out the Order including making any change in its capital
or capital stock;
WHEREAS, it is the desire of the Corporation, pursuant to
such authority, to authorize and fix the terms of the series of Preferred Stock
designated as Series A Senior Preferred Stock; and
WHEREAS, capitalized terms used herein and not otherwise
defined shall have the meanings set forth in Section 9 hereof;
NOW THEREFORE, be it resolved, that the terms and provisions
of such series and all other right or preferences granted to or imposed upon
such series or the holders thereof are as herein set forth:
1. Designation. Of the authorized but unissued shares of
Preferred Stock, 328,667,820 shares are designated Series A Senior Preferred
Stock (the "Senior Preferred Stock"). The Senior Preferred Stock will have a
par value equal to $1.00 per share.
2. Rank. The Senior Preferred Stock shall, with respect to
dividend rights or rights upon liquidation, dissolution and winding-up of the
Corporation, rank junior to any series or class of the Corporation's stock
hereafter issued that is expressly designated as ranking senior to the Senior
Preferred Stock (the "Senior Stock"). The Series A Preferred Stock shall, with
respect to dividend rights or rights upon liquidation, dissolution and
winding-up of the Corporation, rank pari passu with any series or class of the
Corporation's stock hereafter issued that is expressly designated as ranking
pari passu with the Senior Preferred Stock (the "Pari
<PAGE> 2
Passu Stock"). The Senior Preferred Stock shall, with respect to dividend
rights or rights upon liquidation, dissolution and winding-up of the
Corporation, rank senior to the Corporation's Series A Junior Preferred Stock
(the "Junior Preferred Stock"), the Corporation's Class A Common Stock (the
"Class A Common Stock"), the Corporation's Class B Common Stock (which together
with the Class A Common Stock shall be referred to as the "Common Stock") and
any series or class of the Corporation's stock hereafter issued that is not
expressly designated as Pari Passu Stock or Senior Stock (collectively, the
"Junior Stock"). Subject to the restrictions contained in Sections 7 and 8
herein, this Certificate of Designation shall not be construed to prohibit the
Corporation from authorizing or issuing, in accordance with its Certificate of
Incorporation and Bylaws, as the same may be amended and in effect from time to
time, any classes or series of equity securities of the Corporation ranking
senior to or pari passu with the Senior Preferred Stock with respect to
dividend rights or rights upon liquidation, dissolution and winding-up of the
Corporation or both.
3. Dividends.
(a) The holders of the shares of the Senior Preferred
Stock shall be entitled to be paid, when, as and if declared by the Board of
Directors of the Corporation out of funds legally available for the payment of
dividends, quarterly dividends at the rate equal to, (i) during the two year
period commencing at the Effective Time, $0.10 per share per annum and, (ii) at
any time thereafter, $0.0775 per share per annum, payable quarterly on March
15, June 15, September 15 and December 15 of each year, commencing June 15,
2000 (each, a "Dividend Payment Date"). If any Dividend Payment Date falls on a
Saturday or Sunday or a day on which the banks are authorized to close in New
York, New York, the applicable dividend shall be payable on the following
business day. Except as otherwise provided in this Section 3, dividends shall
be payable in cash. During the two year period commencing at the Effective
Time, the Corporation, on a Dividend Payment Date, shall have the option to pay
dividends, in whole or in part, in kind (the "PIK Dividends") in lieu of cash
dividends at the rate equal to $0.20 per share per annum. The PIK Dividends
shall be payable by issuing additional fully paid and nonassessable shares of
Senior Preferred Stock at a rate of 0.20 of one share for each outstanding
share of Senior Preferred Stock for which a dividend is payable, and the
issuance of such additional shares shall constitute full payment of such
dividend. Such dividends shall, if declared, be paid to the holders of record
of the Senior Preferred Stock at the close of the business day on March 1, June
1, September 1 and December 1 of each year, commencing June 1, 2000. Each of
such quarterly dividends shall be fully cumulative and shall accrue (whether or
not declared), without interest, from the date of the immediately preceding
Dividend Payment Date, except with respect to the first dividend payment which
will accrue from the date of issuance of the Senior Preferred Stock. The amount
of dividends payable on a Dividend Payment Date will be computed on the basis
of a 360-day year of twelve 30-day months and will accrue on a daily basis. If,
at the time of any Dividend Payment Date, the Corporation has failed to pay, or
declare and set apart for payment dividends payable pursuant to the terms of
any Senior Stock, the Corporation shall not pay or declare and set apart for
payment any dividends payable on such Dividend Payment Date until all unpaid
dividends on such Senior Stock shall have been paid or set apart for payment.
(b) As long as any shares of the Senior Preferred
Stock are outstanding and (i) dividends on the Senior Preferred Stock for any
Dividend Payment Date shall not have been paid or declared and set apart for
payment (ii) or the Redemption Price (as defined below)
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shall not have been paid on the Redemption Date (as defined below) pursuant to
Section 6, the Corporation shall not declare, pay or set apart for payment any
dividends (other than a dividend payable in Junior Stock) on shares of any
class of Junior Stock, or make any payment for, or set apart for payment for,
the purchase, redemption, retirement or other acquisition of any shares of any
class of Junior Stock. As long as any shares of the Senior Preferred Stock are
outstanding, the Corporation shall not declare, pay or set apart for payment
any dividends on the Senior Preferred Stock or any Parri Passu Stock unless all
declared and unpaid dividends on such Senior Preferred Stock and Parri Passu
Stock have been paid or declared and set apart for payment. In the event that
all dividends are not paid in full on the Senior Preferred Stock or any Parri
Passu Stock in accordance with the terms thereof, all dividends declared on the
Senior Preferred Stock and such Parri Passu Stock shall be declared and paid
ratably in proportion to the amounts which would be payable on all such shares
if all dividends thereon were declared and paid in full in accordance with the
terms therein.
4. Liquidation Preference.
(a) Subject to the rights of holders of any Senior
Stock, upon any voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Corporation, the holder of each share of the Senior
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders an amount
equal to $1.00 for each share of Senior Preferred Stock then held by such
holder plus an amount equal to the aggregate of all dividends not paid on a
Dividend Payment Date pursuant to Section 3 through the date of payment
(whether or not earned or declared and whether or not there are funds legally
available for the payment of dividends) (such amount being herein called the
"Liquidation Preference") before any payment shall be made or any assets
distributed to the holders of any Junior Stock. If the assets of the
Corporation are not sufficient to pay in full the payments payable to the
holders of outstanding shares of Senior Preferred Stock and any Pari Passu
Stock upon the liquidation, dissolution or winding up of the affairs of the
Corporation, then the holders of all such shares shall share on a pro rata
basis with all other holders of shares of Senior Preferred Stock and Pari Passu
Classes in such distribution of assets in proportion to the Liquidation
Preference of the respective shares.
(b) For the purposes of this Section 4, the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all the property or assets of
the Corporation and the consolidation or merger of the Corporation with or into
one or more other corporations or other entities shall be deemed to be a
liquidation, dissolution or winding up of the Corporation, voluntarily or
involuntarily, except in the case of a merger where the Corporation is the
surviving corporation and the shareholders of the Corporation immediately prior
to such merger collectively own at least a majority of the voting stock of the
surviving corporation in such merger.
5. Conversion.
(a) Mandatory Conversion.
(i) If either (1) more than 75 million shares of
Senior Preferred Stock are outstanding at any time after the
sixth anniversary of the Effective Time or (2) the
Corporation fails to pay dividends in accordance with Section
3 herein on any two Dividend Payment Dates, one-half of the
outstanding shares of Senior Preferred Stock
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<PAGE> 4
shall be automatically converted into fully paid and
non-assessable shares of Class A Common Stock at the rate of
0.3461 Class A Common Shares for each $1.00 of liquidation
preference (the "Conversion Ratio") of the shares of Senior
Preferred Stock so converted. Any shares of Senior Preferred
Stock converted pursuant to this provision shall be allocated
among the holders to the Senior Preferred Stock on a pro rata
basis.
(ii) Upon the occurrence of the event specified in
Section 5(a)(i) above, the outstanding shares of Senior
Preferred Stock shall be converted automatically without any
further action by the holders of such shares and whether or
not the certificates representing such shares are surrendered
to the Corporation or its transfer agent; provided, however,
that the Corporation shall not be obligated to issue
certificates evidencing the shares of Class A Common Stock
issuable upon such conversion unless the certificates
evidencing such shares of Senior Preferred Stock are either
delivered to the Corporation or its transfer agent as
provided below, or the holder thereof notifies the
Corporation or its transfer agent that such certificates have
been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation to indemnify the Corporation
from any loss incurred by it in connection with such
certificates. Upon the occurrence of such automatic
conversion of the Senior Preferred Stock, the holders of
Senior Preferred Stock shall surrender the certificates
representing each share of Senior Preferred Stock ("Old
Certificates") at the office of the Corporation or any
transfer agent for the Senior Preferred Stock. Thereupon,
there shall be issued and delivered to such holder promptly
at such office and in its name as shown on such surrendered
certificate or certificates, (1) a certificate or
certificates for the number of shares of Class A Common Stock
into which the shares of Senior Preferred Stock surrendered
were convertible on the date on which such automatic
conversion occurred, and (2) a certificate or certificates
for one-half of the number of shares of Senior Preferred
Stock represented by the Old Certificates surrendered by such
holder.
(b) Adjustments to Conversion Ratio.
(i) Adjustment for Stock Splits and Combinations. If
the Corporation shall at any time or from time to time after
the date that the first share of Senior Preferred Stock is
issued (the "Original Issue Date"), effect a subdivision of
the outstanding Class A Common Stock without a corresponding
subdivision of the Senior Preferred Stock, the Conversion
Ratio in effect immediately before that subdivision shall be
proportionately increased. Conversely, if the Corporation
shall at any time or from time to time after the Original
Issue Date combine the outstanding shares of Class A Common
Stock into a smaller number of shares without a corresponding
combination of the Senior Preferred Stock, the Conversion
Ratio in effect immediately before the combination shall be
proportionately decreased. Any adjustment under this Section
5(b)(i) shall become effective at the close of business on
the date the subdivision or combination becomes effective.
(ii) Adjustment for Common Stock Dividends and
Distributions. If the Corporation at any time or from time to
time after the Original Issue Date makes, or fixes a record
date for the determination of holders of Class A Common Stock
entitled to receive, a dividend or other distribution payable
in additional shares of Class A Common Stock, in each such
event the Conversion Ratio that is then in effect shall be
increased as of the time of such issuance or, in the event
such record date is
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fixed, as of the close of business on such record date, by
multiplying the Conversion Ratio then in effect by a fraction
(1) the numerator of which is the total number of shares of
Class A Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such
record date, as applicable, plus the number of shares of Class
A Common Stock issuable in payment of such dividend or
distribution, and (2) the denominator of which is the total
number of shares of Class A Common Stock issued and
outstanding immediately prior to the time of such issuance or
the close of business on such record date; provided, however,
that if such record date is fixed and such dividend is not
fully paid or if such distribution is not fully made on the
date fixed therefor, the Conversion Ratio shall be recomputed
accordingly as of the close of business on such record date
and thereafter the Conversion Ratio shall be adjusted pursuant
to this Section 5(b)(ii) to reflect the actual payment of such
dividend or distribution.
(iii) Adjustments for Other Dividends and
Distributions. If the Corporation at any time or from time to
time after the Original Issue Date makes, or fixes a record
date for the determination of holders of Class A Common Stock
entitled to receive, a dividend or other distribution payable
in (1) securities of the Corporation other than shares of
Class A Common Stock (including rights to purchase securities
or property), (2) evidences of indebtedness of the
Corporation or (3) assets of the Corporation (other than cash
dividends or distributions paid out of earnings or retained
surplus of the Corporation), in each such event provision
shall be made so that the holders of the Senior Preferred
Stock shall receive upon conversion thereof, in addition to
the number of shares of Class A Common Stock receivable
thereupon, the amount of other securities, evidences of
indebtedness or assets of the Corporation which they would
have received had their Senior Preferred Stock been converted
into Class A Common Stock on the date of such event and had
they thereafter, during the period from the date of such
event to and including the conversion date, retained such
securities receivable by them as aforesaid during such
period, subject to all other adjustments called for during
such period under this Section 5 with respect to the rights
of the holders of the Senior Preferred Stock or with respect
to such other securities, evidences of indebtedness or assets
by their respective terms.
(iv) Adjustment for Reclassification, Exchange and
Substitution. If at any time or from time to time after the
Original Issue Date, the Class A Common Stock issuable upon
the conversion of the Senior Preferred Stock is changed into
the same or a different number of shares of any class or
classes of stock, whether by recapitalization,
reclassification or otherwise or in case of any
reorganization, consolidation or merger of the Corporation
with or into another corporation in which the Corporation is
not the surviving corporation or any sale or transfer of all
or substantially all of the assets of the Corporation (other
than a subdivision or combination of shares or stock dividend
provided for elsewhere in this Section 5), in any such event
each holder of Senior Preferred Stock shall have the right
thereafter to convert such stock, to the extent convertible,
into the kind and amount of stock and other securities and
property receivable upon such recapitalization,
reclassification or other change by holders of the maximum
number of shares of Class A Common Stock into which such
shares of Senior Preferred Stock could have been converted
immediately prior to such recapitalization,
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reclassification or change, all subject to further adjustment
as provided herein or with respect to such other securities or
property by the terms thereof.
(v) Adjustment for Sales of Common Stock Below
Market Price. If the Corporation shall issue any additional
shares of Class A Common Stock (other than as provided in
Sections 5(b)(i) through 5(b)(iv) above) at a price per share
less than the then current Market Price per share of Class A
Common Stock (as of the date of such issuance), then the
Conversion Ratio shall be increased by multiplying the
Conversion Ratio by a fraction of which (i) the numerator
shall be the current market price, and (ii) the denominator
shall be (A) the sum of (1) the number of shares of Class A
Common Stock outstanding immediately prior to the issuance of
such additional shares of Class A Common Stock multiplied by
the current market price and (2) the aggregate consideration,
if any, received and deemed received by the Corporation upon
the issuance of such additional shares of Class A Common
Stock (B) divided by the total number of shares of Class A
Common Stock outstanding immediately after the issuance of
such additional shares of Class A Common Stock.
(vi) Notice of Adjustment. In each case of an
adjustment or readjustment of the Conversion Ratio for the
number of shares of Class A Common Stock or other securities,
evidences of indebtedness or assets issuable upon conversion
of the Senior Preferred Stock, if the Senior Preferred Stock
is then convertible pursuant to this Section 5, the
Corporation, at its expense, shall compute such adjustment or
readjustment in accordance with the provisions hereof and
prepare a certificate showing such adjustment or
readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to each registered holder of Senior
Preferred Stock at the holder's address as shown in the
Corporation's books. The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon
which such adjustment or readjustment is based, including a
statement of (1) the consideration received or deemed to be
received by the Corporation for any additional shares of
Class A Common Stock issued or sold or deemed to have been
issued or sold, (2) the Conversion Ratio at the time in
effect, (3) the number of additional shares of Class A Common
Stock and (4) the type and amount, if any, of other property
which at the time would be received upon conversion of the
Senior Preferred Stock.
(c) No Fractional Securities. No fractional shares of
Class A Common Stock shall be issued upon conversion of shares of Senior
Preferred Stock. Instead of any fractional shares of Common which would
otherwise be issuable upon conversion of any share or shares of Senior
Preferred Stock, the Corporation shall pay a cash adjustment in respect of such
fraction in such amount as the Board of Directors of the Corporation shall in
good faith determine.
(d) Taxes. If a holder converts shares of Senior
Preferred Stock, the Corporation shall pay any documentary, stamp or similar
issue or transfer tax due on the issue of securities of the Corporation to the
holder upon the conversion. The holder shall pay any such tax due because any
shares are issued in a name other than the holder's.
(e) Reservation of Shares. The Corporation shall at
all times reserve out of its authorized but unissued shares of Class A Common
Stock, or such shares held in treasury, enough of such shares to permit the
conversion of all of the Senior Preferred Stock then
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outstanding into shares of Class A Common Stock issuable upon such conversion.
All shares of Class A Common Stock issued upon due conversion of shares of
Senior Preferred Stock shall be validly issued, fully paid and non-assessable.
6. Redemption.
(a) Mandatory Redemption. Subject to the provisions of
Section 5, the Corporation shall redeem the outstanding shares of Senior
Preferred Stock on the sixth anniversary of the Effective Time at an amount
equal to 100% of the Liquidation Preference per share.
(b) Optional Redemption. At any time and from time to
time after the Effective Time, if all of the Corporation's 15% Senior Secured
Notes due 2005 have been retired, the Corporation may redeem all or any portion
of the then outstanding Senior Preferred Stock. Such redemption shall be for an
amount in cash initially equal to $0.88 per share (the "Optional Redemption
Price") plus the aggregate of all dividends not paid on a Dividend Payment Date
in accordance with the provisions of this Section 6. The Optional Redemption
Price shall be increased on the 15th day of each month following the Effective
Time by $.005 per share; provided, however, that the Optional Redemption Price
shall not exceed 100% of the Liquidation Preference per share.
(c) Redemption Procedure. If the Corporation shall
determine to redeem less than all shares of the Senior Preferred Stock then
outstanding pursuant Section 6(a), (i) the shares to be redeemed shall be
selected pro rata (or as nearly as may be) so that the number of shares
redeemed from each holder shall bear the same proportion to all the shares to
be redeemed that the total number of shares then held by such holder bears to
the total number of shares then outstanding or (ii) the shares to be redeemed
shall be selected by lot.
(d) Notice. Notice of every redemption pursuant to
this Section 6 shall be mailed, first class, postage prepaid, not less than 20
nor more than 60 days prior to the date fixed for redemption (the "Redemption
Date"), to each holder's address as it appears on the books of the Corporation.
Each such notice shall state: the Redemption Date; the number of shares of
Senior Preferred Stock to be redeemed, and, if less than all shares of Senior
Preferred Stock held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; the redemption price applicable to the
shares to be redeemed; the place or places where such shares are to be
surrendered; and that dividends on shares to be redeemed will no longer be
payable on a Dividend Payment Date after the Redemption Date.
(e) Rights of Holders. Notice having been mailed as
aforesaid, from and after the Redemption Date (unless the Corporation defaults
in providing money for the payment of the redemption price) dividends on shares
called for redemption shall no longer be payable on a Dividend Payment Date
after the Redemption Date, said shares shall no longer be deemed to be
outstanding, all rights of holders thereof as stockholders of the Corporation
(except the right to receive the redemption price thereof, without interest)
shall terminate, and, upon surrender, in accordance with said notice, of the
certificates representing any such shares (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation shall so require), such
shares shall be redeemed by the Corporation at the applicable redemption price;
provided, however, that the Corporation may include in such notice a statement
that the money required for the payment of the redemption price will be
deposited on a specified date, prior to the Redemption Date, with
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<PAGE> 8
a specified bank or trust company (which shall have an office in The City of
New York and which shall have a combined capital and surplus of not less than
$1,000,000,000) in trust for the benefit of holders of shares called for
redemption, and, notice having been given, from and after such deposit shares
called for redemption shall no longer be deemed to be outstanding and all
rights with respect to such shares shall forthwith upon such deposit cease and
terminate except for the right to receive the amount payable upon surrender of
the certificates representing such shares from such bank or trust company (but
not from the Corporation). If less than all the shares represented by any
surrendered certificate are redeemed, a new certificate representing the
unredeemed shares shall be issued to the holder who surrendered such
certificate. Holders of shares of Senior Preferred Stock called for redemption
shall not be entitled to any interest allowed by any such depositary on money
deposited to effect the redemption but any such interest shall be paid to the
Corporation. Any money deposited as aforesaid for redemption of any shares and
remaining unclaimed for four years and eleven months after the date of such
deposit shall then be repaid to the Corporation upon its request, and the
holders of such shares shall thereafter look only to the Corporation for
payment of the redemption price thereof, without interest.
(f) Status of Redeemed Shares. Any share of Senior
Preferred Stock redeemed or otherwise purchased or acquired by the Corporation
shall be retired, shall no longer be deemed outstanding, and shall not be
reissued.
7. Voting Rights.
(a) The holders of record of shares of Senior
Preferred Stock shall be entitled to one vote per share (voting with the Common
Stock, the Junior Preferred Stock and any other series or classes of the
Corporation's stock entitled to vote with the Class A Common Stock) on any
matters for which the holders of the Class A Common Stock are entitled to vote
generally.
(b) In addition to the voting rights described in
paragraph (a) of this Section 7, the holders of the Senior Preferred Stock
shall have the right, voting separately as a class, to elect four of the five
directors to the Corporation's Board of Directors. Commencing on the second
anniversary of the Effective Time, whenever dividends of the Senior Preferred
Stock shall not be paid on a Dividend Payment Date, the holders of the Senior
Preferred Stock shall have the right, voting separately as a class, to elect
all five directors of the Corporation's Board of Directors until all such
unpaid dividends have been paid or set apart for payment. Immediately upon the
termination of the right of the holders of the Senior Preferred Stock as a
class to elect the fifth director, the term of such fifth director so elected
will terminate.
(c) As long as any shares of Senior Preferred Stock
remain outstanding, the affirmative vote or consent of the holders of at least
a majority of all outstanding shares of Senior Preferred Stock, voting
separately as a class, shall be required to (i) amend, alter or repeal any
provision of the Certificate of Incorporation or the Bylaws of the Corporation;
(ii) authorize or issue, or increase the authorized amount of any additional
class or series of Senior Stock of the Corporation; (iii) waive any covenant
contained in Section 8 herein; (iv), subject to Article VI of the Certificate
of Incorporation, consummate any merger, consolidation or sale of substantially
all the assets of the Corporation; or (v) effect any reclassification of the
Senior Preferred Stock; provided, however, that the provisions of this Section
7 shall not be amended without the
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affirmative vote or consent of the holders of at least a 75% of all outstanding
shares of Senior Preferred Stock, voting separately as a class.
(d) For the purposes of subparagraphs (b) and (c) of
this Section 7, each holder of Senior Preferred Stock shall be entitled to one
vote per share.
8. Covenants.
(a) Limitation on Restricted Payments. The Corporation
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, make any Restricted Payment.
(b) Payment of Taxes and Other Claims. The Corporation
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
Corporation or any of its Subsidiaries or any of their respective properties
and assets; provided, however, that the Corporation 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 contested in good faith
by appropriate proceedings and for which disputed amounts adequate reserves
have been established in accordance with GAAP.
(c) Maintenance of Properties and Insurance.
(i) Each of the Corporation 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.
(ii) Each of the Corporation 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. Without limiting the
foregoing, each of the Corporation 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
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bodily injury, death or property damage occurring on, in or
about the properties of the Corporation and its Subsidiaries.
(d) SEC Reports. Whether or not the Corporation is
subject to the reporting requirements of Section 13 or Section 15(d) of the
Exchange Act, the Corporation shall deliver to each stockholder of Senior
Preferred Stock, within 15 days after it is or would have been (if the
Corporation were subject to such reporting requirements) required to file such
with the Securities and Exchange Commission (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 Corporation
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 Corporation'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.
(e) Limitation on Status as Investment Company or
Public Utility Company. The Corporation 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.
(f) Limitation on Transactions with Affiliates.
(i) The Corporation shall not, and shall not permit
any of its Subsidiaries to, enter directly or indirectly
into, or permit to exist, any Affiliate Transaction with any
Officer Affiliate, except for (A) transactions that
constitute Permitted Investments under clause (vi) of the
definition of the term "Permitted Investments" herein, (B)
employee compensation arrangements relating to the full-time
employment of Officer Affiliates by the Corporation or any of
its Subsidiaries, (C) the Services Agreement, and (D)
transactions effected pursuant to and in accordance with the
terms of the Services Agreement.
(ii) The Corporation shall not, and shall not permit
any of its Subsidiaries to, enter directly or indirectly
into, or permit to exist, any Affiliate Transaction with any
Non-Officer Affiliate, except for (A) transactions made in
good faith, the terms of which are (x) fair and reasonable to
the Corporation or such Subsidiary, as the case may be, (y)
at least as favorable as the terms which could be obtained by
the Corporation 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 be unanimously approved by the Board of Directors of
the Corporation or its Subsidiary which is the transacting
party pursuant to a Board Resolution, as fair and reasonable
to the Corporation or such Subsidiary, as the case may be,
and on terms
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which are at least as favorable as the terms which could be
obtained by the Corporation or such Subsidiary, as the case
may be, on an arm's length basis with Persons who are not
Affiliates, (B) transactions between the Corporation and any
of its wholly owned Subsidiaries or transactions between
wholly owned Subsidiaries of the Corporation, (C)
transactions pursuant to the Corporation's Senior Secured
Notes, the Security Documents, the Services Agreement and the
Registration Rights Agreements, in each case, as amended, (D)
transactions effected pursuant to and in accordance with the
terms and provisions of any court order relating to the
Debtors' First Amended Objection to Claims of Orion Refining
Corporation (TransTexas Claim No. 1187) and TCR Holding
Corporation (TransTexas Claim No. 971) filed on February 11,
2000, in the TransTexas Case, and (E) any employee
compensation arrangement or ordinary course expense advance.
(iii) Without limiting the foregoing provisions of
Section 8(f)(ii), with respect to any Affiliate Transaction
or series of Affiliate Transactions (other than any Affiliate
Transaction described in clauses (B), (C), or (D) of Section
8(f)(ii) with an aggregate value in excess of $5 million, the
Corporation must first obtain a favorable written opinion as
to the fairness of such transaction to the Corporation 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.
(g) Limitation on Incurrences of Additional Debt and
Issuances of Disqualified Capital Stock. Except as set forth in this Section
(g), from and after the Effective Time, the Corporation 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:
(i) Debt evidenced by the Senior Secured Notes or
the Guarantee;
(ii) Subordinated Debt of the Corporation solely to
any wholly owned Subsidiary of the Corporation, or Debt of
any wholly owned Subsidiary of the Corporation solely to the
Corporation or to any wholly owned Subsidiary of the
Corporation; provided, however, that if any Subsidiary
holding such Debt, for any reason, is no longer deemed a
Subsidiary of the Corporation, any outstanding Debt Incurred
by the Corporation or another Subsidiary pursuant to this
Section 8(g)(ii) shall constitute a new Incurrence of Debt
and be subject to the restrictions of Section 8(g);
(iii) Debt outstanding under a Revolving Credit
Facility in an aggregate principal amount at any one time not
to exceed the Borrowing Base as at the time in effect, plus
any amount outstanding under the Revolving Credit Facility to
the extent incurred pursuant to Section 8(g)(x);
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(iv) Debt in an aggregate principal amount
outstanding not to exceed at any one time $120 million,
provided, however, that the aggregate principal amount
outstanding under 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 8(g)(x);
(v) Debt of the Corporation 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
9;
(vi) any guaranty of Debt permitted by clauses
(iii), (iv), or (x) hereof, which guaranty shall not be
included in the determination of the amount of Debt which may
be incurred pursuant to (iii), (iv), or (x) hereof;
(vii) The Corporation or any Subsidiary of the
Corporation may Incur Debt as an extension, renewal,
replacement, or refunding of any item of the Debt permitted
to be incurred by Section 8(g)(i) or (x), Debt existing on
the Issue Date (other than the Post Confirmation Credit
Facility and the Revolving Credit Facility) that is secured
by assets of Galveston Bay Pipeline, up to a maximum
principal amount of such Debt so extended, renewed, replaced
or refunded under this Section 8(g)(vii) not to exceed
$2,000,000, (iii) Debt existing on the Effective Date (other
than the Post Confirmation Credit Facility and the Revolving
Credit Facility) that is secured by assets of Galveston Bay
Processing, up to a maximum principal amount of such Debt so
extended, renewed, replaced or refunded under this Section
8(g)(vii) not to exceed $10,000,000, or (iv) the Debt
permitted to be incurred by this Section 8(g)(vii)(each such
item of Debt is referred 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
(vii) 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 an 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 Senior Preferred Stock to an extent no less favorable
in respect thereof to the holders of the Senior Preferred
Stock than the related Debt being refinanced;
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(viii) 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 the Corporation in accordance with
GAAP) and not constituting any amounts due to banks or other
financial institutions;
(ix) Swap Obligations of the Corporation;
(x) Debt of the Corporation to holders of Allowed
Priority Tax Claims under the Plan or to holders of Allowed
Claims in classes 2, 5, 6A or 6B under the Plan, or Debt
under surety bonds, letters of credit or reimbursement
obligations related to or constituting collateral securing
the Corporation's obligations thereunder;
(xi) the Corporation 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; and
(xii) letters of credit and reimbursement
obligations relating thereto to the extent collateralized by
cash or Cash Equivalents.
Debt incurred and Disqualified Capital Stock issued by any
Person that is not a Subsidiary of the Corporation, 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 Corporation 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 Corporation or one of its
Subsidiaries.
For the purpose of determining compliance with this Section
8(g), (A) if an item of Debt meets the criteria of more than one of the types
of Debt described in the above clauses, the Corporation 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 value shall be
deemed to be equal to the amount of the liability in respect thereof determined
in accordance with GAAP.
Notwithstanding anything to the contrary contained in this
Section 8(g) or in Section 8(i), the Company shall not effect the consummation
of, and shall not permit Galveston Bay Pipeline or Galveston Bay Processing, as
the case may be, to consummate, a GB Facility Financing unless an amount equal
to the Net GB Financing Proceeds resulting therefrom is (i) used by Galveston
Bay Pipeline or Galveston Bay Processing, as the case may be, for Capital
Expenditures in a Related Business of such Person within 180 days after the
date of consummation of such GB Facility Financing, (ii) distributed by
Galveston Bay Pipeline or Galveston Bay Processing, as the case may be, to the
Company and used by the Company for
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Capital Expenditures in a Related Business of such the Company, each within 180
days after the date of consummation of such GB Facility Financing, (iii) used,
in part, as contemplated in the preceding clause (i), and used, in part, as
contemplated in the preceding clause (ii), or (iv) to the extent not used in
accordance with clause (i), (ii) or (iii) preceding within 180 days after the
date of consummation of such GB Facility Financing, distributed by Galveston
Bay Pipeline or Galveston Bay Processing, as the case may be, to the Company
and, on the 181st day after the date of consummation of such GB Facility
Financing, such amount, if any, distributed to the Company pursuant to this
clause (iv) shall be deemed to be included within the Net Cash Proceeds subject
to application pursuant to Section 8(j)(ii).
(h) Limitations on Restricting Subsidiary Dividends.
The Corporation 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 Corporation
to pay dividends or make other distributions on the Capital Stock of any
Subsidiary of the Corporation, except encumbrances and restrictions existing
under the Indenture, the Post Confirmation Credit Facility or the Revolving
Credit Facility (or any refinancing of any such Debt facilities incurred in
accordance with Section 8(g)(vii) of this Certificate of Designation), and any
agreement of a Person acquired by the Corporation or a Subsidiary of the
Corporation, 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.
(i) Limitation on Liens. The Corporation 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 8(i), if a Lien meets the criteria of more than one
of the types of Permitted Liens, the Corporation 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.
(j) Limitation on Asset Sales.
(i) The Corporation 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 (1)
applied to a Note Redemption; (2) used to make cash payments
in the ordinary course of business and consistent with past
practices that are not otherwise prohibited by the Indenture
or this Certificate of Designation, provided, however, that
the aggregate amount so used pursuant to this clause (2) 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 (3) of this Section 8(j)(i) below);
(3) used for Capital Expenditures in a Related Business
within 180 days after the date of such Asset Sale; or (4)
with respect to an Asset Sale by the Corporation 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
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<PAGE> 15
Asset Sale consists of cash, Cash Equivalents or Exchange
Assets, or any combination thereof. Notwithstanding anything
to the contrary contained in this Section 8(j), the Company
shall not effect the consummation of, and shall not permit
Galveston Bay Pipeline or Galveston Bay Processing, as the
case may be, to consummate, a GB Facility Asset Sale unless
an amount equal to the Net GB Financing Proceeds resulting
therefrom is (i) distributed by Galveston Bay Pipeline or
Galveston Bay Processing, as the case may be, to the Company
and used by the Company for Capital Expenditures in a Related
Business of such the Company, each within 180 days after the
date of consummation of such GB Facility Asset Sale, or (ii)
to the extent not used in accordance with clause (i)
preceding within 180 days after the date of consummation of
such GB Facility Asset Sale, applied by the Company as
provided in Section 8(j)(ii).
(ii) To the extent of the balance of such Net Cash
Proceeds remaining after application in accordance with
Section 8(j)(i), the Corporation shall make an offer to the
holders of the Senior Secured Notes to purchase Senior
Secured Notes pursuant to and subject to the conditions
contained in the Indenture. Notwithstanding the foregoing
provision of this paragraph, the Corporation and its
Subsidiaries shall not be required to apply any Net Cash
Proceeds in accordance with this Section 8(j)(ii) except to
the extent that the aggregate Net Cash Proceeds from all
Asset Sales which are not applied in accordance with Section
8(j)(i) or with this Section 8(j)(ii) exceeds $5 million.
Pending application of Net Cash Proceeds pursuant to this
Section 8(j)(ii), such Net Cash Proceeds shall be invested in
Permitted Investments.
(iii) To the extent of the balance of such Net Cash
Proceeds remaining after application of the provisions of
Sections 8(j)(i) and 8(j)(ii), the Corporation shall redeem
the outstanding shares of Senior Preferred Stock at an amount
equal to 100% of the Liquidation Preference; provided, that
if less than all of the outstanding shares of Senior
Preferred Stock are redeemed pursuant to this Section
8(j)(iii), the shares to be redeemed shall be selected pro
rata in accordance with the provisions of Section 6(c)(i)
herein.
(iv) The Corporation 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 Senior Preferred Stock
pursuant to this Section 8(j). To the extent that the
provisions of any securities laws or regulations conflict
with provisions of this Section 8(j), the Corporation shall
comply with the applicable securities laws and regulations
and shall not be deemed to have breached its obligations
under this Section 8(j) by virtue of such compliance.
(v) Notwithstanding the foregoing limitations on
Asset Sales and restrictions on and requirements for the use
of Net Cash Proceeds therefrom, the Corporation 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 Sections 8(j)(i), 8(j)(ii) or
8(j)(iii):
(1) the Corporation or any Subsidiary of
the Corporation may convey, sell, lease, transfer,
or otherwise dispose of any or all of its assets
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<PAGE> 16
(upon voluntary liquidation or otherwise) to the
Corporation or to a wholly owned Subsidiary of the
Corporation;
(2) the Corporation and its Subsidiaries
may engage in Asset Sales not otherwise permitted in
clauses (1) or (3) through (6) of this Section
(8)(j)(v), provided, however, that the aggregate
proceeds from all such Asset Sales and the fair
market value of all assets sold pursuant to this
clause (2) does not exceed $1 million in any
twelve-month period;
(3) the Corporation and its Subsidiaries
may engage in Asset Sales incident to and resulting
from a merger, consolidation or sale of
substantially all the assets of the Corporation;
(4) the Corporation 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;
(5) the Corporation 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;
(6) the Corporation and its Subsidiaries
may convey, sell, transfer or otherwise dispose of
Hydrocarbons or other mineral products in the
ordinary course of business; and
(7) the Corporation and its Subsidiaries
may convey, sell, transfer or otherwise dispose of
Drilling Production Payments (whether or not
relating to Drilling Programs) 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 (including,
without limitation, reimbursement of the Company and
its Subsidiaries for Capital Expenditures already
made) or to make a Repurchase Offer.
(vi) For the purpose of determining compliance with
this Section 8(j) with respect to the application or use of
the Net Cash Proceeds of any Asset Sale consummated by the
Corporation or any Subsidiary of the Corporation, 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 8(j)(i) or Section 8(j)(v),
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
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<PAGE> 17
Net Cash Proceeds shall be applied or used, and may, at its
option and in its sole discretion, elect either (1) 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 8(j)(i) or Section
8(j)(v), 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 (2) 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
8(j)(i) or Section 8(j)(v) 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.
(k) Limitations on Line of Business. The Corporation
shall not, and shall not permit any Subsidiary of the Corporation 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.
(l) Separate Existence and Formalities. The
Corporation covenants and agrees that:
(i) it will maintain procedures designed to prevent
commingling of the funds of the Corporation and its
Subsidiaries;
(ii) all actions taken by the Corporation and its
Subsidiaries will be taken pursuant to authority granted by
the Board of Directors of the Corporation and its
Subsidiaries, to the extent required by law or the
Corporation's and its Subsidiaries' Certificate of
Incorporation or By-laws;
(iii) the Corporation 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;
(iv) the Corporation 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;
(v) the Corporation and its Subsidiaries will not
knowingly mislead any other Person as to the identity or
authority of the Corporation and its Subsidiaries; and
(vi) it will maintain procedures designed to assure
that all written communications of the Corporation and its
Subsidiaries, including, without
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<PAGE> 18
limitation, letters, invoices, purchase orders, contracts,
statements and applications, will appropriately identify the
entity on whose behalf such communication is made.
9. Definitions.
"Accounts" means "accounts," as that term is defined in
Article 9 of the Uniform Commercial Code, together with the proceeds and
products thereof.
"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, (ii) any
officer, director or controlling shareholder of such other Person, or (iii) any
officer of such specified Person or 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).
"Affiliate Transaction" means, with respect to any Person,
any transaction or series of related transactions with any Affiliate of such
Person (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 any such Affiliate).
"Allowed Claim" shall have the meaning specified in the Plan.
"Allowed Priority Tax Claim" shall have the meaning specified
in the Plan.
"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 Corporation or any Subsidiary of the Corporation, whether owned on the
Issue Date or thereafter acquired; provided, however, that "Asset Sale" shall
not include (i) any disposition of Inventory or Receivables, (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
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<PAGE> 19
case shall be treated as an Asset Sale hereunder), (iii) any issuance or
disposition of securities that is made pursuant to and in accordance with the
Plan or the Order, or (iv) the Davis Transactions.
"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 GAAP, or, in the event that such rate of interest is not reasonably
determinable, discounted at the rate of interest borne by the Senior Secured
Notes) of the Capitalized Lease Obligation during the remaining term of the
Capital Lease included in such Sale and Leaseback Transaction (including any
period for which such Capital Lease has been extended or may, at the option of
the lessor, be extended).
"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 Corporation
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 Corporation 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 Corporation may utilize, to the extent reasonable, the most
recent available information for purposes of calculating the Borrowing Base.
"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.
"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.
"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
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<PAGE> 20
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.
"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 holders of the Senior Preferred Stock, 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.
"Collateral" means (a) the assets of the Corporation which
are mortgaged or pledged for the benefit of the Holders pursuant to the terms
of the Security Documents, and (b) the assets of any Person that are mortgaged
or pledged for the benefit of the Holders pursuant to the terms of the Security
Documents, but does not include the Guarantees.
"Company Entities" means the Corporation and each of its
Subsidiaries.
"Confirmation Order" means the Order Confirming Debtor's
Second Amended, Modified and Restated Plan of Reorganization entered by the
court in the TransTexas case on February 7, 2000, as the same may be amended or
modified.
"Davis Transactions" shall mean the transfer and conveyance
by the Corporation of certain properties to Davis Petroleum Corp. and any
related transactions, all as approved by the Order of the Bankruptcy Court
dated November 30, 1999, in case No. 99-21550-C-11, in the United States
Bankruptcy Court for the Southern District of Texas, Corpus Christi Division.
"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
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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.
"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 the TCW/Southern
Production Payment or a Production Payment conveyed to a third party in
accordance with the provisions of Sections 8(g) and 8(j), but excludes any
Production Payment related to a Drilling Program.
"Drilling Program" means any current or future arrangement
between the Corporation or any Subsidiary of the Corporation 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 Corporation or such Subsidiary
and (ii) the Corporation 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."
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<PAGE> 22
"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 equipment (as such term is defined in
the Uniform Commercial Code), including, without limitation, 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.
"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 Corporation or
any Subsidiary of the Corporation in exchange for assets of the Corporation 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 Corporation 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 Corporation or such Subsidiary in
connection with such Asset Sale; provided, however, that during any fiscal year
the Corporation 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 Corporation or such
Subsidiaries that include proved reserves, and such assets acquired by the
Corporation or such Subsidiaries shall constitute "Exchange Assets" hereunder.
"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 Corporation.
"Guarantee" means a guarantee under Section 13.1 of the
Indenture.
"Guarantor" means each Subsidiary of the Corporation that
becomes (or is required to become) a guarantor of the obligations of the
Corporation under the terms of this Certificate of Designation.
"Galveston Bay Pipeline" means Galveston Bay Pipeline
Company, a subsidiary of the Company.
"Galveston Bay Processing" means Galveston Bay Processing
Corporation, a subsidiary of the Company.
"GB Facility Asset Sale" means:
(a) With respect to Galveston Bay Pipeline, the sale
of all or substantially all of the assets (but which assets may be exclusive of
Inventory and Receivables)
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of Galveston Bay Pipeline other than a Sale and Leaseback Transaction resulting
in a Capital Lease which constitutes, as to Galveston Bay Pipeline, a GB
Financing Document; and
(b) With respect to Galveston Bay Processing, the sale
of all or substantially all of the assets (but which assets may be exclusive of
Inventory and Receivables) of Galveston Bay Processing other than a Sale and
Leaseback Transaction resulting in a Capital Lease which constitutes, as to
Galveston Bay Processing, a GB Financing Document.
"GB Facility Financing" means:
(a) With respect to Galveston Bay Pipeline, (i) the
Incurrence of Debt by, including the renewal or extension of Debt previously
Incurred by, the Company or Galveston Bay Pipeline that is secured by a
mortgage or deed of trust constituting, with respect to Galveston Bay Pipeline,
a GB Financing Document, (ii) a Sale and Leaseback Transaction resulting in a
Capital Lease which constitutes, as to Galveston Bay Pipeline, a GB Financing
Document; and
(b) With respect to Galveston Bay Processing, (i) the
Incurrence of Debt by, including the renewal or extension of Debt previously
Incurred by, the Company or Galveston Bay Processing that is secured by a
mortgage or deed of trust constituting, with respect to Galveston Bay
Processing, a GB Financing Document, (ii) a Sale and Leaseback Transaction
resulting in a Capital Lease which constitutes, as to Galveston Bay Pipeline, a
GB Financing Document.
"GB Financing Document" means:
(a) With respect to Galveston Bay Pipeline, (i) a
mortgage or deed of trust pursuant to which Galveston Bay Pipeline encumbers
all or substantially all of its rights, titles and interests in and to all or
substantially all of the GB Pipeline Facility for the purpose of securing Debt
of Galveston Bay Processing, or (ii) a Capital Lease to which Galveston Bay
Pipeline is party as lessee executed by Galveston Bay Pipeline in connection
with the closing of a Sale and Leaseback transaction pursuant to which all or
substantially all of Galveston Bay Pipeline's rights, titles and interests in
and to all or substantially all of the GB Pipeline Facility are conveyed and
concurrently leased back by Galveston Bay Pipeline; and
(b) With respect to Galveston Bay Processing, (i) a
mortgage or deed of trust pursuant to which Galveston Bay Processing encumbers
all or substantially all of its rights, titles and interests in and to all or
substantially all of the GB Processing Facility for the purpose of securing
Debt of Galveston Bay Processing, or (ii) a Capital Lease to which Galveston
Bay Processing is party as lessee executed by Galveston Bay Processing in
connection with the closing of a Sale and Leaseback transaction pursuant to
which all or substantially all of Galveston Bay Processing's rights, titles and
interests in and to all or substantially all of the GB Processing Facility are
conveyed and concurrently leased back by Galveston Bay Processing.
"GB Pipeline Facility" means the dual 16 inch O.D. (gas) and
8 inch O.D. (oil) transmission pipelines, co-owned, as of the date of this
Indenture, by Galveston Bay Pipeline and Davis Petroleum Pipeline L.L.C., that
extend from Lot 12, Block 139 of the San Leon Townsite, Amos Edwards League
Survey, Abstact 10, Galveston County, Texas, to the Eagle Point Platform
(co-owned, as of the date of this Indenture, by the Company and Davis
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Petroleum Corp.) in State Tract 331, Galveston Bay, Texas, including the real
property, interests in real property, and the personal property, plant and
equipment associated with such pipelines.
"GB Processing Facility" means the property, plant and
equipment comprising the hydrocarbon processing facility owned and operated by
Galveston Bay Processing at Winnie, Texas (including the real property and
interests in real property, situated in Winnie, Jefferson County, Texas,
associated with such facility).
"Headquarters Facility" means the real property (including
the improvements thereon, the fixtures, other than trade fixtures, affixed or
attached thereto, and the personal property used in connection with the
operation thereof) owned by the Company and located at 1300 North Sam Houston
Parkway East, Houston, Texas.
"Hedging Subsidiary" means a Subsidiary of the Corporation
engaged solely in the business of facilitating Permitted Hedging Transactions
with the Corporation or any of its Subsidiaries.
"Hydrocarbons" means oil, natural gas, condensate, and
natural gas liquids.
"Indenture" means the Indenture dated as of March 15, 2000,
by and between the Corporation, as issuer, and Firstar Bank, N.A., as Trustee,
with respect to 15% Senior Secured Notes due 2005.
"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, as to any Person, such
Person's now owned or hereafter acquired inventory (as such term is defined in
the Uniform Commercial Code), including without limitation, casing, drill pipe
and other supplies accounted for as inventory by the Corporation 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 or with respect to 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 Article XIII of the Indenture,
the entering into of any guarantee of, or other credit support or contingent
obligation with respect to, Debt or
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<PAGE> 25
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 Senior
Secured Notes under the Indenture.
"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, any lease deemed to
constitute a security interest under the applicable Uniform Commercial Code,
the Lessor's interest under a Capital Lease, and any option or other agreement
to give any security interest).
"Market Price" means (i) if the Common Stock is listed on any
securities exchange, quoted in the Nasdaq National Market, or quoted in the
over-the-counter market, the Closing Price of the Common Stock averaged over
the 5 consecutive trading days ending on the date immediately prior to the date
as of which the Market Price is to be determined, or (ii) if the Common Stock
is not listed on any securities exchange, quoted in the Nasdaq National Market,
or quoted in the over-the-counter market, the fair value of the Common Stock
determined by agreement between the Corporation and the holders of a majority
of the outstanding Senior Preferred Stock or, if they are unable to reach
agreement within a reasonable period of time, the fair value of the Common
Stock as determined by an independent appraiser selected by the holders of the
Senior Preferred Stock (which appraiser shall be a nationally recognized
investment banking firm or "big 5" accounting firm, and the fees and expenses
of such appraiser shall be borne by the Corporation), which determination shall
be final and binding upon the Corporation and the holders of the outstanding
Senior Preferred Stock.
"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
Corporation 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
Corporation pursuant to the Indenture, any one or more of the Security
Documents, and/or the Senior Secured 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 Corporation 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
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with such Asset Sale, including the amount (estimated in good faith by the
Corporation) of income, franchise, sales and other applicable taxes to be paid,
payable or accrued by the Corporation or any Subsidiary of the Corporation (in
each case as estimated in good faith by the Corporation or such Subsidiary
without giving effect to tax attributes unrelated to such Asset Sale) in
connection with such Asset Sale, (ii) the aggregate amount of cash so received
which is used to retire any then existing Debt of the Corporation or its
Subsidiaries (other than the Senior Secured Notes), as the case may be, which
is required by the terms of such Debt to be repaid in connection with such
Asset Sale, and (iii) in the case of a GB Facility Asset Sale, the aggregate
amount of cash so received that is used to retire any then-existing Debt
secured by such assets as are so conveyed, sold, transferred or otherwise
disposed of.
"Net GB Financing Proceeds" means an amount equal to the
aggregate amount of cash received by the Company and by Galveston Bay Pipeline
or Galveston Bay Processing, as the case may be, in respect of a GB Facility
Financing to which Galveston Bay Pipeline or Galveston Bay Processing, as the
case may be, is a party as borrower or mortgagor, less the sum of (i) all
reasonable out-of-pocket fees, commissions, and other expenses incurred in
connection with such GB Facility Financing, 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 by Galveston Bay
Pipeline or Galveston Bay Processing, as the case may be (in each case as
estimated in good faith by the Company or by Galveston Bay Pipeline or
Galveston Bay Processing, as the case may be, without giving effect to tax
attributes unrelated to such GB Facility Financing), in connection with such GB
Facility Financing, (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 GB Facility Financing, (iii) the aggregate
amount of cash so received which is used to retire any then existing Debt
(other than the Notes) that is secured by assets of Galveston Bay Pipeline or
Galveston Bay Processing, as the case may be, and (iv) the aggregate amount of
cash so received which is used to retire indebtedness of the Company in respect
of Allowed Priority Tax Claims under the Plan, Allowed Claims of prepetition
secured creditors in class 2 under the Plan, and Allowed Claims of prepetition
secured creditors in class 6B under the Plan.
"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).
"Non-Officer Affiliate" means, as to any specified Person,
any Affiliate of such Person that is not an Officer Affiliate of such Person.
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"Note Redemption" means a redemption of Senior Secured Notes
by the Corporation pursuant to Article III of the Indenture.
"Note Repurchase" means a purchase of Senior Secured Notes by
the Corporation pursuant to the provisions of Section 4.14(b) et seq. of the
Indenture.
"Officer Affiliate" means, as to any specified Person, any
other Person who is an Affiliate of such specified Person by reason of such
other Person's inclusion within the class of Persons described in clause (iii)
of the definition of the term "Affiliate" set forth herein, whether or not such
other Person is included within either or both of the classes of Persons
described in clauses (i) and (ii) of the definition of the term "Affiliate" set
forth herein and any Affiliate of such other Person (other than the Corporation
or its Subsidiaries).
"Outstanding" Securities. The term "outstanding", when used
with reference to shares of stock, shall mean issued shares, excluding shares
held by the Corporation, or a subsidiary thereof.
"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 Corporation
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
Corporation and its Subsidiaries, (i) trade credit extended to Persons in the
ordinary course of business; (ii) purchases of Cash Equivalents; (iii)
Investments by the Corporation or its wholly owned Subsidiaries in wholly owned
Subsidiaries of the Corporation; (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) Investments and
expenditures made in the ordinary course of business by the Corporation 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
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<PAGE> 28
agreements, partnership agreements (whether general or limited), subscription
agreements, stock purchase agreements and other similar agreements with third
parties; provided, however, that in the case of any joint venture engaged in
processing, gathering, marketing or transporting oil or gas, (1) all Debt of
such joint venture that would not otherwise constitute Debt of one of the
Company Entities shall be deemed Debt of the Corporation in proportion to its
direct or indirect ownership interest in such joint venture, and (2) 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; (ix) the Guarantee and any guaranty by the
Corporation or any Subsidiary of the Corporation that is permitted under
Section 8(g)(vi); (x) deposits permitted by the definition of Permitted Liens
or any extension, renewal, or replacement of any of them, (xi) an Investment in
Capital Stock resulting from an Asset Sale pursuant to Section 8(j); and (xii)
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 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 Corporation'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 Corporation'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
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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 and (3) Liens (including extensions and renewals thereof) encumbering
assets owned by Galveston Bay Processing or Galveston Bay Pipeline to secure a
GB Facility Financing; (i) Liens securing (1) Allowed Priority Tax Claims under
the Plan, (2) Allowed Claims in classes 2, 5, 6A or 6B under the Plan, (3) Debt
incurred pursuant to Section 8(g)(x), or (4) refinancing Debt incurred pursuant
to Section 8(g)(vii) with respect to Liens described in subsections (1), (2) or
(3) of this clause; (j) Liens granted on (1) Equipment to the extent granted to
secure Debt incurred pursuant to Section 8(g) or (2) Inventory, or (3)
Receivables; (k) Liens constituting or granted in connection with a 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,
or Production Payments granted with respect to undivided interests in, acreage
drilled or to be drilled pursuant to Drilling Programs, Hydrocarbons produced
therefrom and the proceeds of such Hydrocarbons to secure or to provide
provision for payment of the Company's obligations under such Drilling
Programs, 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 Corporation 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 Corporation or its
Subsidiaries; (n) any extension, renewal, or replacement of Liens created
pursuant to any of clauses (a) through (g), (k) through (m), or (q) through (s)
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 constituting or 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) Liens on
the proceeds of any property subject to a Permitted Lien (other than Net GB
Financing Proceeds that are received directly by the Corporation or that are
distributed to the Corporation by Galveston Bay Pipeline or Galveston Bay
Property, as the case may be) or on deposit accounts containing any such
proceeds; (r) Liens on the proceeds of any property that is not Collateral; (s)
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; (t) Liens of
the Trustee under the Indenture; and (u) Liens under the Security Documents;
(v) Liens securing the Post Confirmation Credit Facility; and (w) Liens
(including extensions and renewals thereof) on the Headquarters Facility,
provided,
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however, that (1) such Liens are created solely for the purpose of securing
Debt Incurred by the Company concurrently with the creation of such Liens, (2)
the principal amount of the Debt secured by such Liens at the time of
Incurrence does not exceed 100% of the Appraised Value of the Headquarters
Facility as determined by an Appraisal dated not more than six (6) months prior
to the date on which such Liens are created, and (3) any such Lien shall not
extend to or cover any property or assets other than the Headquarters Facility
and any leases and rents derived from the ownership and operation of the
Headquarters 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 Corporation's Second Amended Plan of
Reorganization, dated September 29, 1999, filed in the TransTexas Case,
together with any amendments made at the Confirmation Hearing and incorporated
therein, including, without limitation, the modifications set forth in the
Company's Second Amended, Modified and Restated Plan of Reorganization, dated
January 25, 2000, filed in the TransTexas Case and to which reference is made
in the Confirmation Order, and together with any amendments or modifications
made after the entry of the Confirmation Order in accordance with the
provisions of Section 12.04 of the Plan or of any Plan Order.
"Plan Order" means the Confirmation Order or any other order
entered in the TransTexas Case in accordance with the provisions of Section
12.04 of the Plan.
"Post Confirmation Credit Facility" means the $52,500,000
credit facility between the Company and the Post Confirmation Credit Facility
Lenders, which credit facility is or will be secured by (a) Liens on the Shared
Collateral ranking prior to the Liens securing the Notes, (b) Liens on
Inventory and Receivables, and includes any extension, renewal, replacement or
refunding of such credit facility.
"Post Confirmation Credit Facility Lenders" shall have the
meaning specified in the Plan.
"Presale of Gas" means any advance payment agreement or other
arrangement pursuant to which the Corporation 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 Corporation 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.
"Production Payment" means a Dollar-Denominated Production
Payment or a Volumetric Production Payment.
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"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.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of March 15, 2000, by and among the Corporation and the
Initial Holders.
"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.
"Reserve Report" means a report prepared by independent
petroleum engineers with respect to Hydrocarbon reserves in accordance with
guidelines published by the SEC.
"Restricted Investment" means any direct or indirect
Investment by the Corporation or any Subsidiary of the Corporation 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 dividend,
distribution, or other payment to the Corporation from any of its Subsidiaries,
(iv) 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, (v) any dividends made pursuant to the certificate of
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<PAGE> 32
designation of the Senior Preferred Stock, (vi) any deposits, payments or
distributions made pursuant to and in accordance with the Plan or a Plan Order,
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 8(g)(vii).
"Revolving Credit Facility" means any revolving credit
facility, other than the Post Confirmation Credit Facility, between the
Company, on the one hand, and any one or more banks or other lenders, on the
other hand, and includes any revolving credit facility effected by the Company
in extension, renewal, replacement or refunding of an existing revolving credit
facility.
"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 Corporation or any Subsidiary of the
Corporation; 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
Corporation or a Subsidiary of the Corporation transfers such property to a
Person and leases it back from such Person pursuant to a Capital Lease.
"Security Agreement" means each security agreement, pledge
agreement, assignment, financing statement or similar document, however styled,
executed by the Corporation, 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 Inventory and Receivables), which shall be excepted from
the Lien thereof) to secure all or any part of (a) the obligations of the
Corporation pursuant to the Indenture, any one or more of the Security
Documents, and/or the Senior Secured Notes.
"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 the obligations of the
Corporation pursuant to the Indenture, any one or more of the Security
Documents, and/or the Senior Secured Notes, whether executed before, on or
after the Issue Date, and (b) each Intercreditor Agreement.
"Senior Secured Notes" means the 15% Senior Secured Notes due
2004, as supplemented from time to time in accordance with the terms hereof,
issued under the Indenture.
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"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 Senior
Secured Notes and the Post Confirmation Credit Facility.
"Southern" means Southern Producer Services, L.P.
"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 Senior Secured Notes is paid in full, and (ii) is subordinate and junior in
right of payment to the Senior Secured Notes in the event of a liquidation.
"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 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 (viii) of the definition thereof shall not
be deemed a Subsidiary.
"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.
"TCW" means, collectively, TCW Portfolio No. 1555 DR V
Sub-Custody Partnership, L.P., and TCW DR VI Investment Partnership, L.P.
"TCW/Southern" means Southern and TCW, together with their
successors and assigns as owners of the TCW/Southern Production Payment.
"TCW/Southern Order" means the Order of the Bankruptcy Court
dated February 2, 2000, in case No. 99-21550-C-11, in the United States
Bankruptcy Court for the Southern District of Texas, Corpus Christi Division,
approving TCW/Southern Production Payment Transaction.
"TCW/Southern Production Payment" means the Drilling
Production Payment conveyed, as contemplated by the TCW/Southern Order and as
part of the TCW/Southern Production Payment Transaction, by Borrower to
TCW/Southern pursuant to that
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certain Production Payment Conveyance dated as of March 14, 2000, as from time
to time supplemented and amended.
"TCW/Southern Production Payment Transaction" means the
"Production Payment Transaction" defined and described in, and approved by, the
TCW/Southern Order.
"TNGC Holdings" means TNGC Holdings Corporation, a Delaware
corporation.
"Uniform Commercial Code" means the Uniform Commercial Code
as in effect in the State of New York.
"Vehicles" means all trucks, automobiles, trailers and other
vehicles covered by a certificate of title.
"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.
10. New Issuances of Senior Preferred Stock. After the date
that shares of Senior Preferred Stock are first issued, no new shares of Senior
Preferred Stock shall be issued other than to pay PIK Dividends in accordance
with Section 3.
11. Headings. The headings of the paragraphs, subparagraphs,
clauses, and sub-clauses of this Certificate of Designations are for
convenience of reference only and shall not define, limit, or affect any of the
provisions hereof.
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IN WITNESS WHEREOF, TransTexas Gas Corporation has caused
this certificate to be signed by its Vice President, Chief Financial Officer
and Secretary, and Assistant Secretary, respectively, this 15th day of March,
2000.
/s/ Ed Donahue
----------------------------------------------------------
Ed Donahue, Vice President, Chief Financial
Officer and Secretary
/s/ Ann F. Gullion
----------------------------------------------------------
Ann Gullion, Assistant Secretary
<PAGE> 1
EXHIBIT 3.3
TRANSTEXAS GAS CORPORATION
CERTIFICATE OF DESIGNATION
FOR
SERIES A JUNIOR
PREFERRED STOCK
---------------------------------
Pursuant to Section 303
of the General Corporation Law of the State of Delaware
---------------------------------
TransTexas Gas Corporation (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "DGCL"), does hereby certify that pursuant to the provisions of
Section 303 of the DGCL, the Corporation, pursuant to the Order dated February
7, 2000 of the United States Bankruptcy Court for the Southern District of Texas
(the "Order") adopted the following resolution effective as of March 15, 2000
(the "Effective Time"), which resolution remains in full force and effect as of
the Effective Time:
WHEREAS, the Corporation is authorized, pursuant to Section 303 of the
DGCL, without further action by its directors or stockholders to put into effect
and carry out the Order including making any change in its capital or capital
stock;
WHEREAS, it is the desire of the Corporation, pursuant to such
authority, to authorize and fix the terms of the series of Preferred Stock
designated as Series A Junior Preferred Stock; and
WHEREAS, capitalized terms used herein and not otherwise defined shall
have the meanings set forth in Section 9 hereof;
NOW THEREFORE, be it resolved, that the terms and provisions of such
series and all other right or preferences granted to or imposed upon such series
or the holders thereof are as herein set forth:
1. Designation. Of the authorized but unissued shares of Preferred
Stock, 37,469,711 shares are designated Series A Junior Preferred Stock (the
"Junior Preferred Stock"). The Junior Preferred Stock will have a par value
equal to $1.00 per share.
2. Rank. The Junior Preferred Stock shall, with respect to dividend
rights or rights upon liquidation, dissolution and winding-up of the
Corporation, rank junior to the Corporation's Series A Senior Preferred Stock
(the "Senior Preferred Stock") and any series or class of the Corporation's
stock hereafter issued that is expressly designated as ranking senior to
<PAGE> 2
the Junior Preferred Stock (collectively, the "Senior Stock"). The Series A
Preferred Stock shall, with respect to dividend rights or rights upon
liquidation, dissolution and winding-up of the Corporation, rank pari passu with
any series or class of the Corporation's stock hereafter issued that is
expressly designated as ranking pari passu with the Junior Preferred Stock (the
"Pari Passu Stock"). The Junior Preferred Stock shall, with respect to dividend
rights or rights upon liquidation, dissolution and winding-up of the
Corporation, rank senior to the Corporation's Class A Common Stock (the "Class A
Common Stock"), the Corporation's Class B Common Stock (which together with the
Class A Common Stock shall be referred to as the "Common Stock") and any series
or class of the Corporation's stock hereafter issued that is not expressly
designated as Pari Passu Stock or Senior Stock (collectively, the "Junior
Stock"). This Certificate of Designation shall not be construed to prohibit the
Corporation from authorizing or issuing, in accordance with its Certificate of
Incorporation and Bylaws, as the same may be amended and in effect from time to
time, any classes or series of equity securities of the Corporation ranking
senior to or pari passu with the Junior Preferred Stock with respect to dividend
rights or rights upon liquidation, dissolution and winding-up of the Corporation
or both.
3. Dividends. The holders of the shares of the Junior Preferred Stock
shall be entitled to be paid, when, as and if declared by the Board of Directors
of the Corporation out of funds legally available for the payment of dividends,
quarterly dividends at the rate equal to, (i) until the sixth anniversary of the
Effective Time (the "First Dividend Period"), $0.10 per share per annum, and
(ii) at any time thereafter (the "Second Dividend Period"), $0.20 per share per
annum, payable quarterly on March 15, June 15, September 15 and December 15 of
each year, commencing June 15, 2000 (each, a "Dividend Payment Date"). If any
Dividend Payment Date falls on a Saturday or Sunday or a day on which the banks
are authorized to close in New York, New York, the applicable dividend shall be
payable on the following business day. Dividends shall only be payable in kind
(the "PIK Dividends") during the First Dividend Period. During the Second
Dividend Period, dividends shall be paid both (i) in cash at a rate of $0.10 per
share per annum and (ii) in PIK Dividends at a rate of $0.10 per share per
annum. In either case, the PIK Dividends shall be payable by issuing additional
fully paid and nonassessable shares of Junior Preferred Stock at a rate of 0.10
of one share for each outstanding share of Junior Preferred Stock for which a
dividend is payable. The issuance of such additional shares shall constitute
full payment of such dividend. Dividends shall, if declared, be paid to the
holders of record of the Junior Preferred Stock at the close of the business day
on March 1, June 1, September 1 and December 1 of each year, commencing June 1,
2000. Each of such quarterly dividends shall be fully cumulative and shall
accrue (whether or not declared), without interest, from the date of the
immediately preceding Dividend Payment Date, except with respect to the first
dividend payment which will accrue from the date of issuance of the Junior
Preferred Stock. The amount of dividends payable on a Dividend Payment Date will
be computed on the basis of a 360-day year of twelve 30-day months.
4. Liquidation Preference.
(a) Subject to the rights of holders of any Senior Stock, upon
any voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, the holder of each share of the Junior Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders an amount equal to
$1.00 for each share of Junior Preferred Stock then held by such holder plus an
amount
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<PAGE> 3
equal to the aggregate of all dividends not paid on a Dividend Payment Date
pursuant to Section 3 through the date of payment (whether or not earned or
declared and whether or not there are funds legally available for the payment of
dividends) (such amount being herein called the "Liquidation Preference") before
any payment shall be made or any assets distributed to the holders of any Junior
Stock. If the assets of the Corporation are not sufficient to pay in full the
payments payable to the holders of outstanding shares of Junior Preferred Stock
and any Pari Passu Stock upon the liquidation, dissolution or winding up of the
affairs of the Corporation, then the holders of all such shares shall share on a
pro rata basis with all other holders of shares of Junior Preferred Stock and
Pari Passu Stock in such distribution of assets in proportion to the Liquidation
Preference of the respective shares.
(b) For the purposes of this Section 4, the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property or assets of the
Corporation and the consolidation or merger of the Corporation with or into one
or more other corporations or other entities shall be deemed to be a
liquidation, dissolution or winding up of the Corporation, voluntarily or
involuntarily, except in the case of merger where the Corporation is the
surviving corporation and the shareholders of the Corporation immediately prior
to such merger collectively own at least a majority of the Voting Stock of the
surviving corporation in such merger.
5. Conversion.
(a) Mandatory Conversion.
(i) If either (1) more than 75 million shares of Senior
Preferred Stock are outstanding at any time after the sixth anniversary of
the Effective Time or (2) the Corporation fails to pay dividends on the
Senior Preferred Stock in accordance with the terms thereof on any two
Dividend Payment Dates (as defined in the Certificate of Designation for
the Senior Preferred Stock), all of the outstanding shares of Junior
Preferred Stock shall be automatically converted into fully paid and
non-assessable shares of Class A Common Stock at the rate of 0.1168 Class A
Common Shares for each $1.00 of Liquidation Preference (the "Conversion
Ratio") of the shares of Junior Preferred Stock so converted.
(ii) Upon the occurrence of the event specified in paragraph
(i) above, the outstanding shares of Junior Preferred Stock shall be
converted automatically without any further action by the holders of such
shares and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent; provided, however,
that the Corporation shall not be obligated to issue certificates
evidencing the shares of Class A Common Stock issuable upon such conversion
unless the certificates evidencing such shares of Junior Preferred Stock
are either delivered to the Corporation or its transfer agent as provided
below, or the holder thereof notifies the Corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from
any loss incurred by it in connection with such certificates. Upon the
occurrence of such automatic conversion of the Junior Preferred Stock, the
holders of Junior Preferred Stock shall surrender the certificates
representing such shares at the office of the
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<PAGE> 4
Corporation or any transfer agent for the Junior Preferred Stock.
Thereupon, there shall be issued and delivered to such holder promptly at
such office and in its name as shown on such surrendered certificate or
certificates, a certificate or certificates for the number of shares of
Class A Common Stock into which the shares of Junior Preferred Stock
surrendered were convertible on the date on which such automatic conversion
occurred.
(b) Adjustments to Conversion Ratio.
(i) Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time or from time to time after the date that the
first share of Junior Preferred Stock is issued (the "Original Issue
Date"), effect a subdivision of the outstanding Class A Common Stock
without a corresponding subdivision of the Junior Preferred Stock, the
Conversion Ratio in effect immediately before that subdivision shall be
proportionately increased. Conversely, if the Corporation shall at any time
or from time to time after the Original Issue Date combine the outstanding
shares of Class A Common Stock into a smaller number of shares without a
corresponding combination of the Junior Preferred Stock, the Conversion
Ratio in effect immediately before the combination shall be proportionately
decreased. Any adjustment under this Section 5(b)(i) shall become effective
at the close of business on the date the subdivision or combination becomes
effective.
(ii) Adjustment for Common Stock Dividends and
Distributions. If the Corporation at any time or from time to the Original
Issue Date makes, or fixes a record date for the determination of holders
of Class A Common Stock entitled to receive, a dividend or other
distribution payable in additional shares of Class A Common Stock, in each
such event the Conversion Ratio that is then in effect shall be increased
as of the time of such issuance or, in the event such record date is fixed,
as of the close of business on such record date, by multiplying the
Conversion Ratio then in effect by a fraction (1) the numerator of which is
the total number of shares of Class A Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on
such record date, as applicable, plus the number of shares of Class A
Common Stock issuable in payment of such dividend or distribution, and (2)
the denominator of which is the total number of shares of Class A Common
Stock issued and outstanding immediately prior to the time of such issuance
or the close of business on such record date; provided, however, that if
such record date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed therefor, the Conversion
Ratio shall be recomputed accordingly as of the close of business on such
record date and thereafter the Conversion Ratio shall be adjusted pursuant
to this Section 5(b)(ii) to reflect the actual payment of such dividend or
distribution.
(iii) Adjustments for Other Dividends and Distributions. If
the Corporation at any time or from time to time after the Original Issue
Date makes, or fixes a record date for the determination of holders of
Class A Common Stock entitled to receive, a dividend or other distribution
payable in (1) securities of the Corporation other than shares of Class A
Common Stock (including rights to purchase securities or property), (2)
evidences of indebtedness of the Corporation or (3) assets of the
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<PAGE> 5
Corporation (other than cash dividends or distributions paid out of
earnings or retained surplus of the Corporation), in each such event
provision shall be made so that the holders of the Junior Preferred Stock
shall receive upon conversion thereof, in addition to the number of shares
of Class A Common Stock receivable thereupon, the amount of other
securities, evidences of indebtedness or assets of the Corporation which
they would have received had their Junior Preferred Stock been converted
into Class A Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and including
the conversion date, retained such securities receivable by them as
aforesaid during such period, subject to all other adjustments called for
during such period under this Section 5 with respect to the rights of the
holders of the Junior Preferred Stock or with respect to such other
securities, evidences of indebtedness or assets by their respective terms.
(iv) Adjustment for Reclassification, Exchange and
Substitution. If at any time or from time to time after the Original Issue
Date, the Class A Common Stock issuable upon the conversion of the Junior
Preferred Stock is changed into the same or a different number of shares of
any class or classes of stock, whether by recapitalization,
reclassification or otherwise or in case of any reorganization,
consolidation or merger of the Corporation with or into another corporation
in which the Corporation is not the surviving corporation or any sale or
transfer of all or substantially all of the assets of the Corporation
(other than a subdivision or combination of shares or stock dividend
provided for elsewhere in this Section 5), in any such event each holder of
Junior Preferred Stock shall have the right thereafter to convert such
stock into the kind and amount of stock and other securities and property
receivable upon such recapitalization, reclassification or other change by
holders of the maximum number of shares of Class A Common Stock into which
such shares of Junior Preferred Stock could have been converted immediately
prior to such recapitalization, reclassification or change, all subject to
further adjustment as provided herein or with respect to such other
securities or property by the terms thereof.
(v) Adjustment for Sales of Common Stock Below Market
Price. If the Corporation shall issue any additional shares of Class A
Common Stock (other than as provided in Sections 5(b)(i) through 5(b)(iv)
above) at a price per share less than the then current Market Price per
share of Class A Common Stock (as of the date of such issuance), then the
Conversion Ratio shall be increased by multiplying the Conversion Ratio by
a fraction of which (i) the numerator shall be the current market price,
and (ii) the denominator shall be (A) the sum of (1) the number of shares
of Class A Common Stock outstanding immediately prior to the issuance of
such additional shares of Class A Common Stock multiplied by the current
market price and (2) the aggregate consideration, if any, received and
deemed received by the Corporation upon the issuance of such additional
shares of Class A Common Stock (B) divided by the total number of shares of
Class A Common Stock outstanding immediately after the issuance of such
additional shares of Class A Common Stock.
(vi) Notice of Adjustment. In each case of an adjustment or
readjustment of the Conversion Ratio for the number of shares of Class A
Common Stock or other securities, evidences of indebtedness or assets
issuable upon conversion of the
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<PAGE> 6
Junior Preferred Stock, if the Junior Preferred Stock is then convertible
pursuant to this Section 5, the Corporation, at its expense, shall compute
such adjustment or readjustment in accordance with the provisions hereof
and prepare a certificate showing such adjustment or readjustment, and
shall mail such certificate, by first class mail, postage prepaid, to each
registered holder of Junior Preferred Stock at the holder's address as
shown in the Corporation's books. The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (1) the
consideration received or deemed to be received by the Corporation for any
additional shares of Class A Common Stock issued or sold or deemed to have
been issued or sold, (2) the Conversion Ratio at the time in effect, (3)
the number of additional shares of Class A Common Stock and (4) the type
and amount, if any, of other property which at the time would be received
upon conversion of the Junior Preferred Stock.
(c) No Fractional Securities. No fractional shares of Class A
Common Stock shall be issued upon conversion of shares of Junior Preferred
Stock. Instead of any fractional shares of Common which would otherwise be
issuable upon conversion of any share or shares of Junior Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fraction in such
amount as the Board of Directors of the Corporation shall in good faith
determine.
(d) Taxes. If a holder converts shares of Junior Preferred
Stock, the Corporation shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of securities of the Corporation to the holder
upon the conversion. The holder shall pay any such tax due because any shares
are issued in a name other than the holder's.
(e) Reservation of Shares. The Corporation shall at all times
reserve out of its authorized but unissued shares of Class A Common Stock, or
such shares held in treasury, enough of such shares to permit the conversion of
all of the Junior Preferred Stock then outstanding into shares of Class A Common
Stock issuable upon such conversion. All shares of Class A Common Stock issued
upon due conversion of shares of Junior Preferred Stock shall be validly issued,
fully paid and non-assessable.
6. Redemption.
(a) Mandatory Redemption. Subject to the provisions of Section
5, the Corporation shall redeem the outstanding shares of Junior Preferred Stock
on the tenth anniversary of the Effective Time at an amount equal to 100% of the
Liquidation Preference per share.
(b) Optional Redemption: At any time and from time to time after
the Effective Time, if all of the Corporation's 15% Senior Secured Notes due
2005 and all of the Senior Preferred Stock have been retired, the Corporation
may redeem all or any portion of the then outstanding Junior Preferred Stock,
for an amount in cash equal to the Liquidation Preference of the shares redeemed
in accordance with the provisions of this Section 6; provided, however, that, if
the Corporation has failed to pay dividends on the Junior Preferred Stock on a
Dividend Payment Date pursuant to Section 3, the Corporation shall not redeem
any shares of
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<PAGE> 7
Junior Preferred Stock in accordance with this Section 6 until all such unpaid
dividends and (except with respect to shares to be redeemed) the then current
quarterly dividends on the Junior Preferred Stock have been paid in full.
(c) Redemption Procedure. If the Corporation shall determine to
redeem less than all shares of the Junior Preferred Stock then outstanding
pursuant to Section (a), (i) the shares to be redeemed shall be selected pro
rata (or as nearly as may be) so that the number of shares redeemed from each
holder shall bear the same proportion to all the shares to be redeemed that the
total number of shares then held by such holder bears to the total number of
shares then outstanding or (ii) the shares to be redeemed shall be selected by
lot.
(d) Notice. Notice of every redemption pursuant to this Section
6 shall be mailed, first class, postage prepaid, not less than 20 nor more than
60 days prior to the date fixed for redemption (the "Redemption Date"), to each
holder's address as it appears on the books of the Corporation. Each such notice
shall state: the Redemption Date; the number of shares of Junior Preferred Stock
to be redeemed, and, if less than all shares of Junior Preferred Stock held by
such holder are to be redeemed, the number of such shares to be redeemed from
such holder; the redemption price applicable to the shares to be redeemed; the
place or places where such shares are to be surrendered; and that dividends on
shares to be redeemed will no longer be payable on a Dividend Payment Date after
the Redemption Date.
(e) Rights of Holders. Notice having been mailed as aforesaid,
from and after the Redemption Date (unless the Corporation defaults in providing
money for the payment of the redemption price) dividends on shares called for
redemption shall no longer be payable on a Dividend Payment Date after the
Redemption Date, said shares shall no longer be deemed to be outstanding, all
rights of holders thereof as stockholders of the Corporation (except the right
to receive the redemption price thereof, without interest) shall terminate, and,
upon surrender, in accordance with said notice, of the certificates representing
any such shares (properly endorsed or assigned for transfer, if the Board of
Directors of the Corporation shall so require), such shares shall be redeemed by
the Corporation at the applicable redemption price; provided, however, that the
Corporation may include in such notice a statement that the money required for
the payment of the redemption price will be deposited on a specified date, prior
to the Redemption Date, with a specified bank or trust company (which shall have
an office in The City of New York and which shall have a combined capital and
surplus of not less than $1,000,000,000) in trust for the benefit of holders of
shares called for redemption, and, notice having been given, from and after such
deposit shares called for redemption shall no longer be deemed to be outstanding
and all rights with respect to such shares shall forthwith upon such deposit
cease and terminate except for the right to receive the amount payable upon
surrender of the certificates representing such shares from such bank or trust
company (but not from the Corporation). If less than all the shares represented
by any surrendered certificate are redeemed, a new certificate representing the
unredeemed shares shall be issued to the holder who surrendered such
certificate. Holders of shares of Junior Preferred Stock called for redemption
shall not be entitled to any interest allowed by any such depositary on money
deposited to effect the redemption but any such interest shall be paid to the
Corporation. Any money deposited as aforesaid for redemption of any shares and
remaining unclaimed for four years and eleven months after the date of such
deposit shall then be repaid to the Corporation upon its request, and
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<PAGE> 8
the holders of such shares shall thereafter look only to the Corporation for
payment of the redemption price thereof, without interest.
(f) Status of Redeemed Shares. Any share of Junior Preferred
Stock redeemed or otherwise purchased or acquired by the Corporation shall be
retired, shall no longer be deemed outstanding, and shall not be reissued.
7. Voting Rights.
(a) The holders of record of shares of Junior Preferred Stock
shall be entitled to one vote per share of Junior Preferred Stock (voting with
the Class A Common Stock, the Senior Preferred Stock and any other series or
classes of the Corporation's stock entitled to vote with the Class A Common
Stock) on any matters for which the holders of the Class A Common Stock are
entitled to vote generally; provided, however, that any shares held by the
Corporation or any entity controlled by the Corporation shall not have any
voting rights. If no shares of Senior Preferred Stock are outstanding, the
holders of the Junior Preferred Stock shall have the right, voting separately as
a class, to elect 2 directors to the Corporation's Board of Directors.
(b) As long as any shares of Junior Preferred Stock remain
outstanding, the affirmative vote or consent of the holders of at least a
majority of all outstanding shares of Junior Preferred Stock, voting separately
as a class, shall be required to (i) amend, alter or repeal any provision of the
Certificate of Incorporation or the Bylaws of the Corporation; (ii) authorize or
issue, or increase the authorized amount of any additional class or series of
Junior Stock of the Corporation; (iii) waive any covenant contained in Section 8
herein; (iv), subject to Article VI of the Certificate of Incorporation,
consummate any merger, consolidation or sale of substantially all the assets of
the Corporation; or (v) effect any reclassification of the Junior Preferred
Stock; provided, however, that the provisions of this Section 7 shall not be
amended without the affirmative vote or consent of the holders of at least a 75%
of all outstanding shares of Junior Preferred Stock, voting separately as a
class.
8. Covenants. On the first date (the "Covenant Date") that all of the
Senior Secured Notes (including any refinancings thereof permitted by the
Indenture) have been retired and there are no shares of Senior Preferred Stock
outstanding and thereafter so long as any shares of Junior Preferred Stock
remain outstanding, the Corporation shall comply with the following covenants:
(a) Limitation on Restricted Payments. The Corporation shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
make any Restricted Payment.
(b) Payment of Taxes and Other Claims. The Corporation 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
Corporation or any of its Subsidiaries or any of their respective properties and
assets; provided, however, that the Corporation 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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<PAGE> 9
contested in good faith by appropriate proceedings and for which disputed
amounts adequate reserves have been established in accordance with GAAP.
(c) Maintenance of Properties and Insurance.
(i) Each of the Corporation 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.
(ii) Each of the Corporation 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. Without limiting the foregoing, each of the Corporation 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 Corporation and its
Subsidiaries.
(d) SEC Reports. Whether or not the Corporation is subject to
the reporting requirements of Section 13 or Section 15(d) of the Exchange Act,
the Corporation shall deliver to each stockholder of Junior Preferred Stock,
within 15 days after it is or would have been (if the Corporation were subject
to such reporting requirements) required to file such with the Securities and
Exchange Commission (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 Corporation 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
Corporation'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
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which it is or would have (if it were subject to such reporting obligations)
been required to file with the SEC.
(e) Limitation on Status as Investment Company or Public Utility
Company. The Corporation 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.
(f) Limitation on Transactions with Affiliates.
(i) The Corporation shall not, and shall not permit any of
its Subsidiaries to, enter directly or indirectly into, or permit
to exist, any Affiliate Transaction with any Officer Affiliate,
except for (A) transactions that constitute Permitted Investments
under clause (vi) of the definition of the term "Permitted
Investments" herein, (B) employee compensation arrangements
relating to the full-time employment of Officer Affiliates by the
Corporation or any of its Subsidiaries, (C) the Services
Agreement, and (D) transactions effected pursuant to and in
accordance with the terms of the Services Agreement.
(ii) The Corporation shall not, and shall not permit any of
its Subsidiaries to, enter directly or indirectly into, or permit
to exist, any Affiliate Transaction with any Non-Officer
Affiliate, except for (A) transactions made in good faith, the
terms of which are (x) fair and reasonable to the Corporation or
such Subsidiary, as the case may be, (y) at least as favorable as
the terms which could be obtained by the Corporation 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 be unanimously approved by the
Board of Directors of the Corporation or its Subsidiary which is
the transacting party pursuant to a Board Resolution, as fair and
reasonable to the Corporation 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 Corporation or such Subsidiary, as
the case may be, on an arm's length basis with Persons who are
not Affiliates, (B) transactions between the Corporation and any
of its wholly owned Subsidiaries or transactions between wholly
owned Subsidiaries of the Corporation, (C) transactions pursuant
to the Services Agreement and the Registration Rights Agreements,
in each case, as amended, (D) transactions effected pursuant to
and in accordance with the terms and provisions of any court
order relating to the Debtors' First Amended Objection to Claims
of Orion Refining Corporation (TransTexas Claim No. 1187) and TCR
Holding Corporation (TransTexas Claim No. 971) filed on February
11, 2000, in the TransTexas Case, and (E) any employee
compensation arrangement or ordinary course expense advance.
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(iii) Without limiting the foregoing provisions of Section
8(f)(ii), with respect to any Affiliate Transaction or series of
Affiliate Transactions (other than any Affiliate Transaction
described in clauses (B), (C), or (D) of Section 8(f)(ii) with an
aggregate value in excess of $5 million, the Corporation must
first obtain a favorable written opinion as to the fairness of
such transaction to the Corporation 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.
(g) Limitation on Incurrences of Additional Debt and
Issuances of Disqualified Capital Stock. Except as set forth in this Section
(g), from and after the Effective Time, the Corporation 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:
(i) Debt evidenced by the Senior Secured Notes or the
Guarantee;
(ii) Subordinated Debt of the Corporation solely to any
wholly owned Subsidiary of the Corporation, or Debt of any wholly
owned Subsidiary of the Corporation solely to the Corporation or
to any wholly owned Subsidiary of the Corporation; provided,
however, that if any Subsidiary holding such Debt, for any
reason, is no longer deemed a Subsidiary of the Corporation, any
outstanding Debt Incurred by the Corporation or another
Subsidiary pursuant to this Section 8(g)(ii) shall constitute a
new Incurrence of Debt and be subject to the restrictions of
Section 8(g);
(iii) Debt outstanding under a Revolving Credit Facility in
an aggregate principal amount at any one time not to exceed the
Borrowing Base as at the time in effect, plus any amount
outstanding under the Revolving Credit Facility to the extent
incurred pursuant to Section 8(g)(x);
(iv) Debt in an aggregate principal amount outstanding not
to exceed at any one time $120 million, provided, however, that
the aggregate principal amount outstanding under 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 8(g)(x);
(v) Debt of the Corporation 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 9;
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<PAGE> 12
(vi) any guaranty of Debt permitted by clauses (iii), (iv),
or (x) hereof, which guaranty shall not be included in the
determination of the amount of Debt which may be incurred
pursuant to (iii), (iv), or (x) hereof;
(vii) The Corporation or any Subsidiary of the Corporation
may Incur Debt as an extension, renewal, replacement, or
refunding of any item of the Debt permitted to be incurred by
Section 8(g)(i) or (x), Debt existing on the Issue Date (other
than the Post Confirmation Credit Facility and the Revolving
Credit Facility) that is secured by assets of Galveston Bay
Pipeline, up to a maximum principal amount of such Debt so
extended, renewed, replaced or refunded under this Section
8(g)(vii) not to exceed $2,000,000, (iii) Debt existing on the
Effective Date (other than the Post Confirmation Credit Facility
and the Revolving Credit Facility) that is secured by assets of
Galveston Bay Processing, up to a maximum principal amount of
such Debt so extended, renewed, replaced or refunded under this
Section 8(g)(vii) not to exceed $10,000,000, or (iv) the Debt
permitted to be incurred by this Section 8(g)(vii)(each such item
of Debt is referred 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 (vii) 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 an 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 Senior Preferred Stock to an extent no less favorable in
respect thereof to the holders of the Senior Preferred Stock than
the related Debt being refinanced;
(viii) 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 the Corporation in accordance with GAAP) and not
constituting any amounts due to banks or other financial
institutions;
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<PAGE> 13
(ix) Swap Obligations of the Corporation;
(x) Debt of the Corporation to holders of Allowed Priority
Tax Claims under the Plan or to holders of Allowed Claims in
classes 2, 5, 6A or 6B under the Plan, or Debt under surety
bonds, letters of credit or reimbursement obligations related to
or constituting collateral securing the Corporation's obligations
thereunder;
(xi) the Corporation 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; and
(xii) letters of credit and reimbursement obligations
relating thereto to the extent collateralized by cash or Cash
Equivalents.
Debt incurred and Disqualified Capital Stock issued by any Person
that is not a Subsidiary of the Corporation, 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 Corporation 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 Corporation or one of its Subsidiaries.
For the purpose of determining compliance with this Section 8(g),
(A) if an item of Debt meets the criteria of more than one of the types of Debt
described in the above clauses, the Corporation 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 value shall be deemed to be equal to
the amount of the liability in respect thereof determined in accordance with
GAAP.
Notwithstanding anything to the contrary contained in this
Section 8(g) or in Section 8(i), the Company shall not effect the consummation
of, and shall not permit Galveston Bay Pipeline or Galveston Bay Processing, as
the case may be, to consummate, a GB Facility Financing unless an amount equal
to the Net GB Financing Proceeds resulting therefrom is (i) used by Galveston
Bay Pipeline or Galveston Bay Processing, as the case may be, for Capital
Expenditures in a Related Business of such Person within 180 days after the date
of consummation of such GB Facility Financing, (ii) distributed by Galveston Bay
Pipeline or Galveston Bay Processing, as the case may be, to the Company and
used by the Company for Capital Expenditures in a Related Business of such the
Company, each within 180 days after the date of consummation of such GB Facility
Financing, (iii) used, in part, as contemplated in the preceding clause (i), and
used, in part, as contemplated in the preceding clause (ii), or (iv) to the
extent not used in accordance with clause (i), (ii) or (iii) preceding within
180 days after the date of consummation of such GB Facility Financing,
distributed by Galveston Bay Pipeline or Galveston Bay Processing, as the case
may be, to the Company and, on the 181st day after the date of consummation of
such GB Facility Financing, such amount, if any, distributed to the
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Company pursuant to this clause (iv) shall be deemed to be included within the
Net Cash Proceeds subject to application pursuant to Section 8(j)(ii).
(h) Limitations on Restricting Subsidiary Dividends. The
Corporation 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 Corporation to pay dividends
or make other distributions on the Capital Stock of any Subsidiary of the
Corporation, except encumbrances and restrictions existing on the Covenant Date
or under the Indenture, the Post Confirmation Credit Facility or the Revolving
Credit Facility (or any refinancing of any such Debt facilities incurred in
accordance with Section 8(g)(vi) of this Certificate of Designation) and any
agreement of a Person acquired by the Corporation or a Subsidiary of the
Corporation, 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.
(i) Limitation on Liens. The Corporation 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 8(i), if a Lien meets the criteria of more than one of the types of
Permitted Liens, the Corporation 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.
(j) Limitation on Asset Sales.
(i) The Corporation 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 (1) used to make cash payments in the
ordinary course of business and consistent with past practices that are not
otherwise prohibited by this Certificate of Designation, provided, however,
that the aggregate amount so used pursuant to this clause (1) 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 (2) of
this Section 8(j)(i) below); (2) used for Capital Expenditures in a Related
Business within 180 days after the date of such Asset Sale; or (3) with
respect to an Asset Sale by the Corporation 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. Notwithstanding anything to the contrary contained
in this Section 8(j), the Company shall not effect the consummation of, and
shall not permit Galveston Bay Pipeline or Galveston Bay Processing, as the
case may be, to consummate, a GB Facility Asset Sale unless an amount equal
to the Net GB Financing Proceeds resulting therefrom is (i) distributed by
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<PAGE> 15
Galveston Bay Pipeline or Galveston Bay Processing, as the case may be, to
the Company and used by the Company for Capital Expenditures in a Related
Business of such the Company, each within 180 days after the date of
consummation of such GB Facility Asset Sale, or
(ii) to the extent not used in accordance with clause (i)
preceding within 180 days after the date of consummation of such GB
Facility Asset Sale, applied by the Company as provided in Section
8(j)(ii). (ii) To the extent of the balance of such Net Cash Proceeds
remaining after application of the provisions of Section 8(j)(i), the
Corporation shall redeem the outstanding shares of Junior Preferred Stock
at an amount equal to 100% of the Liquidation Preference; provided, that if
less than all of the outstanding shares of Junior Preferred Stock are
redeemed pursuant to this Section 8(j)(ii), the shares to be redeemed shall
be selected pro rata in accordance with the provisions of Section 6(c)(i)
herein.
(iii) The Corporation 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 Junior
Preferred Stock pursuant to this Section 8(j). To the extent that the
provisions of any securities laws or regulations conflict with provisions
of this Section 8(j), the Corporation shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached
its obligations under this Section 8(j) by virtue of such compliance.
(iv) Notwithstanding the foregoing limitations on Asset Sales and
restrictions on and requirements for the use of Net Cash Proceeds
therefrom, the Corporation 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
Sections 8(j)(i) or 8(j)(ii):
(1) the Corporation or any Subsidiary of the Corporation
may convey, sell, lease, transfer, or otherwise dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to the Corporation or
to a wholly owned Subsidiary of the Corporation;
(2) the Corporation and its Subsidiaries may engage in
Asset Sales not otherwise permitted in clauses (1) or (3) through (6) of
this Section (8)(j)(iv), provided, however, that the aggregate proceeds
from all such Asset Sales and the fair market value of all assets sold
pursuant to this clause (2) does not exceed $1 million in any twelve-month
period;
(3) the Corporation and its Subsidiaries may engage in
Asset Sales incident to and resulting from a merger, consolidation or sale
of substantially all the assets of the Corporation;
(4) the Corporation and its Subsidiaries may sell, assign,
lease, license, transfer, abandon or otherwise dispose of (a) damaged, worn
out,
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<PAGE> 16
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;
(5) the Corporation 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;
(6) the Corporation and its Subsidiaries may convey, sell,
transfer or otherwise dispose of Hydrocarbons or other mineral products in
the ordinary course of business; and
(7) the Corporation and its Subsidiaries may convey, sell,
transfer or otherwise dispose of Drilling Production Payments (whether or
not relating to Drilling Programs) 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 (including, without limitation, reimbursement of
the Company and its Subsidiaries for Capital Expenditures already made) or
to make a Repurchase Offer.
(v) For the purpose of determining compliance with this Section
8(j) with respect to the application or use of the Net Cash Proceeds of any
Asset Sale consummated by the Corporation or any Subsidiary of the
Corporation, 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 8(j)(i) or Section 8(j)(iv), 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 (1) 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 8(j)(i)
or Section 8(j)(iv), 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 (2) 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 8(j)(i) or Section
8(j)(iv) 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
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<PAGE> 17
eligible category of application or use in effect at the time such
application or use is effected.
(k) Limitations on Line of Business. The Corporation shall not,
and shall not permit any Subsidiary of the Corporation 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.
(l) Separate Existence and Formalities. The Corporation
covenants and agrees that:
(i) it will maintain procedures designed to prevent
commingling of the funds of the Corporation and its Subsidiaries;
(ii) all actions taken by the Corporation and its
Subsidiaries will be taken pursuant to authority granted by the Board of
Directors of the Corporation and its Subsidiaries, to the extent required
by law or the Corporation's and its Subsidiaries' Certificate of
Incorporation or By-laws;
(iii) the Corporation 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;
(iv) the Corporation 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;
(v) the Corporation and its Subsidiaries will not knowingly
mislead any other Person as to the identity or authority of the Corporation
and its Subsidiaries; and
(vi) it will maintain procedures designed to assure that all
written communications of the Corporation 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.
9. Definitions.
"Accounts" means "accounts," as that term is defined in Article 9
of the Uniform Commercial Code, together with the proceeds and products thereof.
"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, (ii) any officer,
director or controlling shareholder of such other Person, or (iii) any officer
of such specified Person or 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
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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).
"Affiliate Transaction" means, with respect to any Person, any
transaction or series of related transactions with any Affiliate of such Person
(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 any such Affiliate).
"Allowed Claim" shall have the meaning specified in the Plan.
"Allowed Priority Tax Claim" shall have the meaning specified in
the Plan.
"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
Corporation or any Subsidiary of the Corporation, whether owned on the Issue
Date or thereafter acquired; provided, however, that "Asset Sale" shall not
include (i) any disposition of Inventory or Receivables, (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), (iii) any issuance or
disposition of securities that is made pursuant to and in accordance with the
Plan or the Order, or (iv) the Davis Transactions.
"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 GAAP, or, in the event that such rate of interest is not reasonably
determinable, discounted at the rate of interest borne by the Senior Secured
Notes) of the Capitalized Lease Obligation during the remaining term of the
Capital Lease included in such Sale and Leaseback Transaction (including any
period for which such Capital Lease has been extended or may, at the option of
the lessor, be extended).
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"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 Corporation 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
Corporation 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
Corporation may utilize, to the extent reasonable, the most recent available
information for purposes of calculating the Borrowing Base.
"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.
"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.
"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.
"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
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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 holders of the Junior Preferred
Stock, 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.
"Collateral" means (a) the assets of the Corporation which are
mortgaged or pledged for the benefit of the Holders pursuant to the terms of the
Security Documents, and (b) the assets of any Person that are mortgaged or
pledged for the benefit of the Holders pursuant to the terms of the Security
Documents, but does not include the Guarantees.
"Company Entities" means the Corporation and each of its
Subsidiaries.
"Confirmation Order" means the Order Confirming Debtor's Second
Amended, Modified and Restated Plan of Reorganization entered by the court in
the TransTexas case on February 7, 2000, as the same may be amended or modified.
"Davis Transactions" shall mean the transfer and conveyance by
the Corporation of certain properties to Davis Petroleum Corp. and any related
transactions, all as approved by the Order of the Bankruptcy Court dated
November 30, 1999, in case No. 99-21550-C-11, in the United States Bankruptcy
Court for the Southern District of Texas, Corpus Christi Division.
"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)
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<PAGE> 21
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.
"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 the TCW/Southern Production
Payment or a Production Payment conveyed to a third party in accordance with the
provisions of Sections 8(g) and 8(j), but excludes any Production Payment
related to a Drilling Program.
"Drilling Program" means any current or future arrangement
between the Corporation or any Subsidiary of the Corporation 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 Corporation or such Subsidiary
and (ii) the Corporation 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 equipment (as such term is defined in
the Uniform Commercial Code), including, without limitation, Vehicles, drilling
rigs, workover rigs, fracture stimulation equipment, well site compressors,
rolling stock and related equipment and other assets accounted
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<PAGE> 22
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.
"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 Corporation or any
Subsidiary of the Corporation in exchange for assets of the Corporation 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 Corporation 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 Corporation or such Subsidiary in connection with such Asset
Sale; provided, however, that during any fiscal year the Corporation 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 Corporation or such Subsidiaries that include proved
reserves, and such assets acquired by the Corporation or such Subsidiaries shall
constitute "Exchange Assets" hereunder.
"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 Corporation.
"Galveston Bay Pipeline" means Galveston Bay Pipeline Company, a
subsidiary of the Company.
"Galveston Bay Processing" means Galveston Bay Processing
Corporation, a subsidiary of the Company.
"GB Facility Asset Sale" means:
(a) With respect to Galveston Bay Pipeline, the sale of all
or substantially all of the assets (but which assets may be exclusive of
Inventory and Receivables) of Galveston Bay Pipeline other than a Sale and
Leaseback Transaction resulting in a Capital Lease which constitutes, as to
Galveston Bay Pipeline, a GB Financing Document; and
(b) With respect to Galveston Bay Processing, the sale of
all or substantially all of the assets (but which assets may be exclusive of
Inventory and Receivables) of Galveston Bay Processing other than a Sale and
Leaseback Transaction resulting in a Capital Lease which constitutes, as to
Galveston Bay Processing, a GB Financing Document.
"GB Facility Financing" means:
(a) With respect to Galveston Bay Pipeline, (i) the
Incurrence of Debt by, including the renewal or extension of Debt previously
Incurred by, the Company or Galveston Bay Pipeline that is secured by a mortgage
or deed of trust constituting, with respect to Galveston Bay Pipeline, a GB
Financing Document, (ii) a Sale and Leaseback Transaction
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<PAGE> 23
resulting in a Capital Lease which constitutes, as to Galveston Bay Pipeline, a
GB Financing Document; and
(b) With respect to Galveston Bay Processing, (i) the
Incurrence of Debt by, including the renewal or extension of Debt previously
Incurred by, the Company or Galveston Bay Processing that is secured by a
mortgage or deed of trust constituting, with respect to Galveston Bay
Processing, a GB Financing Document, (ii) a Sale and Leaseback Transaction
resulting in a Capital Lease which constitutes, as to Galveston Bay Pipeline, a
GB Financing Document.
"GB Financing Document" means:
(a) With respect to Galveston Bay Pipeline, (i) a mortgage
or deed of trust pursuant to which Galveston Bay Pipeline encumbers all or
substantially all of its rights, titles and interests in and to all or
substantially all of the GB Pipeline Facility for the purpose of securing Debt
of Galveston Bay Processing, or (ii) a Capital Lease to which Galveston Bay
Pipeline is party as lessee executed by Galveston Bay Pipeline in connection
with the closing of a Sale and Leaseback transaction pursuant to which all or
substantially all of Galveston Bay Pipeline's rights, titles and interests in
and to all or substantially all of the GB Pipeline Facility are conveyed and
concurrently leased back by Galveston Bay Pipeline; and
(b) With respect to Galveston Bay Processing, (i) a
mortgage or deed of trust pursuant to which Galveston Bay Processing encumbers
all or substantially all of its rights, titles and interests in and to all or
substantially all of the GB Processing Facility for the purpose of securing Debt
of Galveston Bay Processing, or (ii) a Capital Lease to which Galveston Bay
Processing is party as lessee executed by Galveston Bay Processing in connection
with the closing of a Sale and Leaseback transaction pursuant to which all or
substantially all of Galveston Bay Processing's rights, titles and interests in
and to all or substantially all of the GB Processing Facility are conveyed and
concurrently leased back by Galveston Bay Processing.
"GB Pipeline Facility" means the dual 16 inch O.D. (gas) and 8
inch O.D. (oil) transmission pipelines, co-owned, as of the date of this
Indenture, by Galveston Bay Pipeline and Davis Petroleum Pipeline L.L.C., that
extend from Lot 12, Block 139 of the San Leon Townsite, Amos Edwards League
Survey, Abstact 10, Galveston County, Texas, to the Eagle Point Platform
(co-owned, as of the date of this Indenture, by the Company and Davis Petroleum
Corp.) in State Tract 331, Galveston Bay, Texas, including the real property,
interests in real property, and the personal property, plant and equipment
associated with such pipelines.
"GB Processing Facility" means the property, plant and equipment
comprising the hydrocarbon processing facility owned and operated by Galveston
Bay Processing at Winnie, Texas (including the real property and interests in
real property, situated in Winnie, Jefferson County, Texas, associated with such
facility).
"Guarantee" means a guarantee under Section 13.1 of the
Indenture.
"Guarantor" means each Subsidiary of the Corporation that becomes
(or is required to become) a guarantor of the obligations of the Corporation
under the terms of this Certificate of Designation or the Indenture.
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<PAGE> 24
"Headquarters Facility" means the real property (including the
improvements thereon, the fixtures, other than trade fixtures, affixed or
attached thereto, and the personal property used in connection with the
operation thereof) owned by the Company and located at 1300 North Sam Houston
Parkway East, Houston, Texas.
"Hedging Subsidiary" means a Subsidiary of the Corporation
engaged solely in the business of facilitating Permitted Hedging Transactions
with the Corporation or any of its Subsidiaries.
"Hydrocarbons" means oil, natural gas, condensate, and natural
gas liquids.
"Indenture" means the Indenture dated as of March 15, 2000, by
and between the Corporation, as issuer, and Firstar Bank, N.A., as Trustee, with
respect to 15% Senior Secured Notes due 2005.
"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 as to any Person, such Person's
now owned or hereafter acquired inventory (as such term is defined in the
Uniform Commercial Code), including without limitation, casing, drill pipe and
other supplies accounted for as inventory by the Corporation 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 or with respect to 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 Article XIII of the Indenture, 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
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<PAGE> 25
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 Senior
Secured Notes under the Indenture.
"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, any lease deemed to constitute a
security interest under the applicable Uniform Commercial Code, the Lessor's
interest under a Capital Lease, and any option or other agreement to give any
security interest).
"Market Price" means (i) if the Common Stock is listed on any
securities exchange, quoted in the Nasdaq National Market, or quoted in the
over-the-counter market, the Closing Price of the Common Stock averaged over the
5 consecutive trading days ending on the date immediately prior to the date as
of which the Market Price is to be determined, or (ii) if the Common Stock is
not listed on any securities exchange, quoted in the Nasdaq National Market, or
quoted in the over-the-counter market, the fair value of the Common Stock
determined by the agreement between the Corporation and the holders of a
majority of the outstanding Junior Preferred Stock or, if they are unable to
reach agreement within a reasonable period of time, the fair value of the Common
Stock as determined by an independent appraiser selected by the holders of the
Junior Preferred Stock (which appraiser shall be a nationally recognized
investment banking firm or "big 5" accounting firm, and the fees and expenses of
such appraiser shall be borne by the Corporation), which determination shall be
final and binding upon the Corporation and the holders of the outstanding Junior
Preferred Stock.
"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
Corporation 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
Corporation pursuant to the Indenture, any one or more of the Security
Documents, and/or the Senior Secured 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 Corporation 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 Corporation) of income, franchise, sales and
other applicable taxes to be paid, payable or accrued by the Corporation or any
Subsidiary of the Corporation (in each case as estimated in good faith by the
Corporation or such Subsidiary without giving effect to tax attributes unrelated
to such Asset Sale) in connection with such Asset Sale, (ii) the aggregate
amount of cash so received which is
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<PAGE> 26
used to retire any then existing Debt of the Corporation or its Subsidiaries
(other than the Senior Secured Notes), as the case may be, which is required by
the terms of such Debt to be repaid in connection with such Asset Sale, and
(iii) in the case of a GB Facility Asset Sale, the aggregate amount of cash so
received that is used to retire any then-existing Debt secured by such assets as
are so conveyed, sold, transferred or otherwise disposed of.
"Net GB Financing Proceeds" means an amount equal to the
aggregate amount of cash received by the Company and by Galveston Bay Pipeline
or Galveston Bay Processing, as the case may be, in respect of a GB Facility
Financing to which Galveston Bay Pipeline or Galveston Bay Processing, as the
case may be, is a party as borrower or mortgagor, less the sum of (i) all
reasonable out-of-pocket fees, commissions, and other expenses incurred in
connection with such GB Facility Financing, 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 by Galveston Bay Pipeline
or Galveston Bay Processing, as the case may be (in each case as estimated in
good faith by the Company or by Galveston Bay Pipeline or Galveston Bay
Processing, as the case may be, without giving effect to tax attributes
unrelated to such GB Facility Financing), in connection with such GB Facility
Financing, (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 GB Facility Financing, (iii) the aggregate amount
of cash so received which is used to retire any then existing Debt (other than
the Notes) that is secured by assets of Galveston Bay Pipeline or Galveston Bay
Processing, as the case may be, and (iv) the aggregate amount of cash so
received which is used to retire indebtedness of the Company in respect of
Allowed Priority Tax Claims under the Plan, Allowed Claims of prepetition
secured creditors in class 2 under the Plan, and Allowed Claims of prepetition
secured creditors in class 6B under the Plan.
"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).
"Non-Officer Affiliate" means, as to any specified Person, any
Affiliate of such Person that is not an Officer Affiliate of such Person.
"Officer Affiliate" means, as to any specified Person, any other
Person who is an Affiliate of such specified Person by reason of such other
Person's inclusion within the class of Persons described in clause (iii) of the
definition of the term "Affiliate" set forth herein,
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whether or not such other Person is included within either or both of the
classes of Persons described in clauses (i) and (ii) of the definition of the
term "Affiliate" set forth herein and any Affiliate of such other Person (other
than the Corporation or its Subsidiaries.
"Outstanding" Securities. The term "outstanding", when used with
reference to shares of stock, shall mean issued shares, excluding shares held by
the Corporation, or a subsidiary thereof.
"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 Corporation 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
Corporation and its Subsidiaries, (i) trade credit extended to Persons in the
ordinary course of business; (ii) purchases of Cash Equivalents; (iii)
Investments by the Corporation or its wholly owned Subsidiaries in wholly owned
Subsidiaries of the Corporation; (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) Investments and
expenditures made in the ordinary course of business by the Corporation 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; provided, however, that in the case of any joint
venture engaged in processing, gathering, marketing or transporting oil or gas,
(1) all Debt of such joint venture that would not otherwise constitute Debt of
one of the Company Entities shall be deemed Debt of the Corporation in
proportion to its direct or indirect ownership interest in such joint venture,
and (2) such joint venture shall be reasonably anticipated, at the time of
Investment, to enhance the value of the reserves of the Company
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<PAGE> 28
Entities or marketability of production from such reserves; (ix) the Guarantee
and any guaranty by the Corporation or any subsidiary of the Corporation that is
permitted under Section 8(g)(v); (x) deposits permitted by the definition of
Permitted Liens or any extension, renewal, or replacement of any of them, (xi)
an Investment in Capital Stock resulting from an Asset Sale pursuant to Section
8(j); and (xii) 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 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
Corporation'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
Corporation'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 and (3) Liens (including extensions and
renewals thereof) encumbering assets owned by Galveston Bay Processing or
Galveston Bay Pipeline to secure a GB Facility Financing; (i) Liens securing (1)
Allowed Priority Tax Claims under the Plan, (2) Allowed Claims in classes 2, 5,
6A or 6B under the Plan, (3) Debt incurred pursuant to Section 8(g)(ix), or (4)
refinancing Debt incurred pursuant to
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Section 8(g)(vi) with respect to Liens described in subsections (1), (2) or (3)
of this clause; (j) Liens granted on (1) Equipment to the extent granted to
secure Debt incurred pursuant to Section 8(g) or (2) Inventory or (3)
Receivables; (k) Liens constituting or granted in connection with a 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,
or Production Payments granted with respect to undivided interests in, acreage
drilled or to be drilled pursuant to Drilling Programs, Hydrocarbons produced
therefrom and the proceeds of such Hydrocarbons to secure or to provide
provision for payment of the Company's obligations under such Drilling Programs,
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 Corporation 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 Corporation or its Subsidiaries; (n) any
extension, renewal, or replacement of Liens created pursuant to any of clauses
(a) through (g), (d) through (l), or (p) through (v) 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 (m)
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) Liens on the proceeds of any property subject to a Permitted
Lien (other than Net GB Financing Proceeds that are received directly by the
Corporation or that are distributed to the Corporation by Galveston Bay Pipeline
or Galveston Bay Property, as the case may be) or on deposit accounts containing
any such proceeds; (r) Liens on the proceeds of any property that is not
Collateral; (s) 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;
(t) Liens of the Trustee under the Indenture; (u) Liens under the Security
Documents; (v) Liens securing the Post Confirmation Credit Facility; and (w)
Liens (including extensions and renewals thereof) on the Headquarters Facility,
provided, however, that (1) such Liens are created solely for the purpose of
securing Debt Incurred by the Company concurrently with the creation of such
Liens, (2) the principal amount of the Debt secured by such Liens at the time of
Incurrence does not exceed 100% of the Appraised Value of the Headquarters
Facility as determined by an Appraisal dated not more than six (6) months prior
to the date on which such
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Liens are created, and (3) any such Lien shall not extend to or cover any
property or assets other than the Headquarters Facility and any leases and rents
derived from the ownership and operation of the Headquarters 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 Corporation's Second Amended Plan of
Reorganization, dated September 29, 1999, filed in the TransTexas Case, together
with any amendments made at the Confirmation Hearing and incorporated therein,
including, without limitation, the modifications set forth in the Company's
Second Amended, Modified and Restated Plan of Reorganization, dated January 25,
2000, filed in the TransTexas Case and to which reference is made in the
Confirmation Order, and together with any amendments or modifications made after
the entry of the Confirmation Order in accordance with the provisions of Section
12.04 of the Plan or of any Plan Order.
"Plan Order" means the Confirmation Order or any other order
entered in the TransTexas Case in accordance with the provisions of Section
12.04 of the Plan.
"Post Confirmation Credit Facility" means the $52,500,000 credit
facility between the Company and the Post Confirmation Credit Facility Lenders,
which credit facility is or will be secured by (a) Liens on the Shared
Collateral ranking prior to the Liens securing the Notes, (b) Liens on Inventory
and Receivables, and includes any extension, renewal, replacement or refunding
of such credit facility.
"Post Confirmation Credit Facility Lenders" shall have the
meaning specified in the Plan.
"Presale of Gas" means any advance payment agreement or other
arrangement pursuant to which the Corporation, 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 Corporation 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 (k) or (n) of the definition of "Permitted Liens,"
(iii) Permitted Hedging Transactions, or (iv) an Asset Sale involving
Hydrocarbon reserves.
"Production Payment" means a Dollar-Denominated Production
Payment or a Volumetric Production Payment.
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"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.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of March 15, 2000, by and among the Corporation and the
Initial Holders.
"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.
"Reserve Report" means a report prepared by independent petroleum
engineers with respect to Hydrocarbon reserves in accordance with guidelines
published by the SEC.
"Restricted Investment" means any direct or indirect Investment
by the Corporation or any Subsidiary of the Corporation 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, distribution or other
redemption payments made to the holders of the Junior Preferred Stock with
respect to the Junior Preferred Stock, (iv) any dividend, distribution, or other
payment to the Corporation from any of its Subsidiaries, (v) any defeasance,
redemption, repurchase, or
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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 8(g)(vi).
"Revolving Credit Facility" means any revolving credit facility
other than the Post Confirmation Credit Facility, between the Company, on the
one hand, and any one or more banks or other lenders, on the other hand, and
includes any revolving credit facility effected by the Company in extension,
renewal, replacement or refunding of an existing revolving credit facility.
"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 Corporation or any Subsidiary of the Corporation; 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 Corporation
or a Subsidiary of the Corporation transfers such property to a Person and
leases it back from such Person pursuant to a Capital Lease.
"Security Agreement" means each security agreement, pledge
agreement, assignment, financing statement or similar document, however styled,
executed by the Corporation, 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 Inventory and Receivables), which shall be excepted from the Lien
thereof) to secure all or any part of (a) the obligations of the Corporation
pursuant to the Indenture, any one or more of the Security Documents, and/or the
Senior Secured Notes.
"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 the obligations of the
Corporation pursuant to the Indenture, any one or more of the Security
Documents, and/or the Senior Secured Notes, whether executed before, on or after
the Issue Date, and (b) each Intercreditor Agreement.
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"Senior Secured Notes" means the 15% Senior Secured Notes due
2004, as supplemented from time to time in accordance with the terms hereof,
issued under the Indenture.
"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 Senior
Secured Notes and the Post Confirmation Credit Facility.
"Southern" means Southern Producer Services, L.P.
"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
Senior Secured Notes is paid in full, and (ii) is subordinate and junior in
right of payment to the Senior Secured Notes in the event of a liquidation.
"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
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 (viii) of the definition thereof shall not be deemed a Subsidiary.
"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.
"TCW" means, collectively, TCW Portfolio No. 1555 DR V
Sub-Custody Partnership, L.P., and TCW DR VI Investment Partnership, L.P.
"TCW/Southern" means Southern and TCW, together with their
successors and assigns as owners of the TCW/Southern Production Payment.
"TCW/Southern Order" means the Order of the Bankruptcy Court
dated February 2, 2000, in case No. 99-21550-C-11, in the United States
Bankruptcy Court for the Southern District of Texas, Corpus Christi Division,
approving TCW/Southern Production Payment Transaction.
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<PAGE> 34
"TCW/Southern Production Payment" means the Drilling Production
Payment conveyed, as contemplated by the TCW/Southern Order and as part of the
TCW/Southern Production Payment Transaction, by Borrower to TCW/Southern
pursuant to that certain Production Payment Conveyance dated as of March 14,
2000, as from time to time supplemented and amended.
"TCW/Southern Production Payment Transaction" means the
"Production Payment Transaction" defined and described in, and approved by, the
TCW/Southern Order.
"TNGC" means TNGC Holdings Corporation, a Delaware corporation.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect in the State of New York.
"Vehicles" means all trucks, automobiles, trailers and other
vehicles covered by a certificate of title.
"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.
10. New Issuances of Junior Preferred Stock. After the date that
shares of Junior Preferred Stock are first issued, no new shares of Junior
Preferred Stock shall be issued other than to pay PIK Dividends in accordance
with Section 3.
11. Headings. The headings of the paragraphs, subparagraphs, clauses,
and sub-clauses of this Certificate of Designations are for convenience of
reference only and shall not define, limit, or affect any of the provisions
hereof.
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IN WITNESS WHEREOF, TransTexas Gas Corporation has caused this
certificate to be signed by its Vice President, Chief Financial Officer and
Secretary, and Assistant Secretary, respectively, this 15th day of March, 2000.
/s/ Ed Donahue
-------------------------------------
Ed Donahue, Vice President, Chief
Financial Officer and Secretary
/s/ Ann F. Gullion
-------------------------------------
Ann Gullion, Assistant Secretary
<PAGE> 1
EXHIBIT 3.4
AMENDED AND RESTATED
BYLAWS
OF
TRANSTEXAS GAS CORPORATION
(A DELAWARE CORPORATION)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I - OFFICES...............................................................................................1
Section 1. Registered Office.............................................................1
Section 2. Other Offices.................................................................1
ARTICLE II - MEETINGS OF STOCKHOLDERS.............................................................................1
Section 1. Time and Place of Meetings....................................................1
Section 2. Annual Meetings...............................................................1
Section 3. Notice of Annual Meetings.....................................................1
Section 4. Special Meetings..............................................................1
Section 5. Notice of Special Meetings....................................................2
Section 6. Quorum........................................................................2
Section 7. Organization..................................................................2
Section 8. Voting........................................................................3
Section 9. List of Stockholders..........................................................3
Section 10. Inspectors of Votes...........................................................3
Section 11. No Stockholder Action by Written Consent......................................4
Section 12. Notice of Stockholder Business and Nominations................................4
ARTICLE III - BOARD OF DIRECTORS..................................................................................6
Section 1. Powers........................................................................6
Section 2. Number, Qualification, and Term of Office.....................................6
Section 3. Resignations..................................................................6
Section 4. Removal of Directors..........................................................7
Section 5. Vacancies.....................................................................7
Section 6. Committees....................................................................7
ARTICLE IV - MEETINGS OF THE BOARD OF DIRECTORS...................................................................8
Section 1. Place of Meetings.............................................................8
Section 2. Annual Meetings...............................................................8
Section 3. Regular Meetings..............................................................8
Section 4. Special Meetings; Notice......................................................8
Section 5. Quorum and Manner of Acting...................................................8
Section 6. Remuneration..................................................................9
Section 7. Actions Without a Meeting.....................................................9
Section 8. Presence at Meetings by Means of Communications
Equipment.....................................................................9
ARTICLE V - NOTICES...............................................................................................9
Section 1. Type of Notice................................................................9
Section 2. Waiver of Notice..............................................................9
Section 3. When Notice Is Unnecessary...................................................10
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI - OFFICERS............................................................................................10
Section 1. General......................................................................10
Section 2. Election or Appointment......................................................10
Section 3. Salaries of Elected Officers.................................................10
Section 4. Term.........................................................................10
Section 5. Chairman of the Board........................................................11
Section 6. Chief Executive Officer......................................................11
Section 7. President....................................................................11
Section 8. Vice Presidents..............................................................12
Section 9. Assistant Vice Presidents....................................................12
Section 10. Secretary....................................................................12
Section 11. Assistant Secretaries........................................................12
Section 12. Chief Financial Officer......................................................12
Section 13. Treasurers...................................................................13
Section 14. Controller...................................................................13
Section 15. Assistant Controllers........................................................13
ARTICLE VI - INDEMNIFICATION.....................................................................................14
Section 1. Actions Other Than by or in the Right of the Corporation.....................14
Section 2. Actions by or in the Right of the Corporation................................14
Section 3. Determination of Right to Indemnification....................................14
Section 4. Right to Indemnification.....................................................15
Section 5. Prepaid Expenses.............................................................15
Section 6. Right to Indemnification upon Application;
Procedure upon Application...................................................15
Section 7. Other Rights and Remedies....................................................15
Section 8. Insurance....................................................................16
Section 9. Mergers......................................................................16
Section 10. Savings Provision............................................................16
ARTICLE VII - CERTIFICATES REPRESENTING STOCK....................................................................16
Section 1. Right to Certificate.........................................................16
Section 2. Facsimile Signatures.........................................................17
Section 3. New Certificates.............................................................17
Section 4. Transfers....................................................................17
Section 5. Record Date..................................................................17
Section 6. Registered Stockholders......................................................18
ARTICLE VIII - GENERAL PROVISIONS................................................................................18
Section 1. Dividends....................................................................18
Section 2. Reserves.....................................................................18
Section 3. Annual Statement.............................................................18
Section 4. Checks.......................................................................18
Section 5. Fiscal Year..................................................................18
Section 6. Corporate Seal...............................................................19
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE IX - AMENDMENTS..........................................................................................19
CERTIFICATION....................................................................................................20
</TABLE>
iii
<PAGE> 5
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other place or places, both within and without the State of Delaware, as the
Board of Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. TIME AND PLACE OF MEETINGS. All meetings of the stockholders
for the election of directors shall be held at such time and place, either
within or without the State of Delaware, as shall be designated from time to
time by the Board of Directors and stated in the notice of the meeting. Meetings
of stockholders for any other purpose may be held at such time and place, within
or without the State of Delaware, as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
SECTION 2. ANNUAL MEETINGS. Annual meetings of stockholders shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which meeting
the stockholders shall elect by a plurality of the votes of the shares of the
persons present in person or represented by proxy and entitled to vote those
directors belonging to the class or classes of directors to be elected at such
meeting and transact such other business as may properly be brought before the
meeting.
SECTION 3. NOTICE OF ANNUAL MEETINGS. Written notice of the annual
meeting, stating the place, date, and hour of the meeting, shall be given to
each stockholder of record entitled to vote at such meeting not less than 10 or
more than 60 days before the date of the meeting.
SECTION 4. SPECIAL MEETINGS. Special meetings of the stockholders for
any purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called at any time by order of the Board of
Directors, and shall be called by the Chairman of the Board, the Chief Executive
Officer, the President, or the Secretary at the request in writing of the
holders of shares of capital stock of the Corporation representing not less than
a majority of all the votes entitled to be voted on any issue proposed to be
considered at the proposed special meeting, unless the Certificate of
Incorporation provides for a different percentage, in which event such provision
of the Certificate of Incorporation shall govern. Such request shall state the
purpose or purposes of the proposed special meeting. Business transacted at any
special meeting of the stockholders shall be limited to the purposes stated in
the notice.
1
<PAGE> 6
SECTION 5. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting, stating the place, date, and hour of the meeting and the purpose or
purposes for which the meeting is called, shall be given to each stockholder of
record entitled to vote at such meeting not less than 10 or more than 60 days
before the date of the meeting.
SECTION 6. QUORUM. Except as otherwise provided by statute or the
Certificate of Incorporation, the holders of stock having a majority of the
voting power of the stock entitled to be voted thereat, present in person or
represented by proxy, shall constitute a quorum for the transaction of business
at all meetings of the stockholders. If, however, such quorum shall not be
present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time without notice (other than
announcement at the meeting at which the adjournment is taken of the time and
place of the adjourned meeting) until a quorum shall be present or represented.
At such adjourned meeting, at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally notified. If the adjournment is for more than 30 days, or if after
the adjournment a new record date is fixed for the adjourned meeting, notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
SECTION 7. ORGANIZATION. At each meeting of the stockholders, the
Chairman of the Board or the Chief Executive Officer, determined as provided in
Article V of these Bylaws, or if those officers shall be absent therefrom,
another officer of the Corporation chosen as chairman present in person or by
proxy and entitled to vote thereat, or if all the officers of the Corporation
shall be absent therefrom, a stockholder holding of record shares of stock of
the Corporation, so chosen, shall act as chairman of the meeting and preside
thereat. The Secretary, or if he shall be absent from such meeting or shall be
required pursuant to the provisions of this Section 7 to act as chairman of such
meeting, the person (who shall be an Assistant Secretary, if an Assistant
Secretary shall be present thereat) whom the chairman of such meeting shall
appoint, shall act as secretary of such meeting and keep the minutes thereof.
The chairman of the meeting shall be entitled to make such
rules and regulations for the conduct of the meetings of stockholders as he
shall deem necessary, appropriate and convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the Corporation and their duly authorized and constituted proxies, and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting and matters which are to be voted
on by ballot. Unless and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.
2
<PAGE> 7
SECTION 8. VOTING. Except as otherwise provided in the Certificate of
Incorporation, each stockholder shall, at each meeting of the stockholders, be
entitled to one vote in person or by proxy for each share of stock of the
Corporation held by him and registered in his name on the books of the
Corporation on the date fixed pursuant to the provisions of Section 5 of Article
VII of these Bylaws as the record date for the determination of stockholders who
shall be entitled to notice of and to vote at such meeting. Shares of its own
stock belonging to the Corporation or to another corporation, if a majority of
the shares entitled to vote in the election of directors of such other
corporation is held directly or indirectly by the Corporation, shall not be
entitled to vote. Any vote by stock of the Corporation may be given at any
meeting of the stockholders by the stockholder entitled thereto, in person or by
his proxy appointed by an instrument in writing subscribed by such stockholder
or by his attorney thereunto duly authorized and delivered to the Secretary of
the Corporation or to the secretary of the meeting; provided, however, that no
proxy shall be voted or acted upon after three years from its date, unless said
proxy shall provide for a longer period. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and unless otherwise made
irrevocable by law. At all meetings of the stockholders all matters, except
where other provision is made by law, the Certificate of Incorporation, or these
Bylaws, shall be decided by the vote of a majority of the votes cast by the
stockholders present in person or by proxy and entitled to vote thereat, a
quorum being present. Unless demanded by a stockholder of the Corporation
present in person or by proxy at any meeting of the stockholders and entitled to
vote thereat, or so directed by the chairman of the meeting, the vote thereat on
any question other than the election or removal of directors need not be by
written ballot. Upon a demand of any such stockholder for a vote by written
ballot on any question or at the direction of such chairman that a vote by
written ballot be taken on any question, such vote shall be taken by written
ballot. On a vote by written ballot, each ballot shall be signed by the
stockholder voting, or by his proxy, if there be such proxy, and shall state the
number of shares voted.
SECTION 9. LIST OF STOCKHOLDERS. It shall be the duty of the Secretary
or other officer of the Corporation who shall have charge of its stock ledger,
either directly or through another officer of the Corporation designated by him
or through a transfer agent appointed by the Board of Directors, to prepare and
make, at least 10 days before every meeting of the stockholders, a complete list
of the stockholders entitled to vote thereat, arranged in alphabetical order,
and showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least 10 days before said meeting, either at
a place within the city where said meeting is to be held, which place shall be
specified in the notice of said meeting, or, if not so specified, at the place
where said meeting is to be held. The list shall also be produced and kept at
the time and place of said meeting during the whole time thereof, and may be
inspected by any stockholder of record who shall be present thereat. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, such list or the books of the Corporation, or to vote
in person or by proxy at any meeting of stockholders.
SECTION 10. INSPECTORS OF VOTES. At each meeting of the stockholders,
the chairman of such meeting may appoint one or more Inspectors of Votes to act
thereat, unless the Board of Directors shall have theretofore made such
appointments. Each Inspector of Votes so appointed
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shall first subscribe an oath or affirmation faithfully to execute the duties of
an Inspector of Votes at such meeting with strict impartiality and according to
the best of his ability. Such Inspector of Votes, if any, shall take charge of
the ballots, if any, at such meeting and, after the balloting thereat on any
question, shall count the ballots cast thereon and shall make a report in
writing to the secretary of such meeting of the results thereof. An Inspector of
Votes need not be a stockholder of the Corporation, and any officer of the
Corporation may be an Inspector of Votes on any question other than a vote for
or against his election to any position with the Corporation or on any other
question in which he may be directly interested.
SECTION 11. NO STOCKHOLDER ACTION BY WRITTEN CONSENT. Any action
required or permitted to be taken by the stockholders of the Corporation must be
effected at a duly called annual or special meeting of such stockholders and may
not be effected by any consent in writing of such stockholders.
SECTION 12. NOTICE OF STOCKHOLDER BUSINESS AND NOMINATIONS. (a) At any
annual meeting of stockholders, only such business shall be conducted as shall
have been properly brought before the meeting. To be properly brought before an
annual meeting, business must be (i) specified in the notice of the meeting (or
any supplement thereto) given by or at the direction of the Board of Directors,
(ii) otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (iii) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 120 calendar days prior to the anniversary date of the
immediately preceding annual meeting; provided, however, that in the event that
no annual meeting was held in the previous year or the date of the annual
meeting is not within 30 days before or after such anniversary date, in order
for a stockholder's notice to be timely it must be received no later than the
close of business on the later of the 120th calendar day prior to the annual
meeting or the 10th calendar day following the date on which public announcement
of the date of the meeting is first made. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder proposes to bring
before the annual meeting: (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business, (iii) the class
and number of shares of the Corporation which are beneficially owned by the
stockholder, (iv) any material interest of the stockholder in such business, and
(v) any other information that is required to be provided by the stockholder
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), in his capacity as a proponent to a stockholder proposal.
Notwithstanding the foregoing, in order to include information with respect to a
stockholder proposal in the proxy statement and form of proxy for a
stockholders' meeting, stockholders must provide notice as required by the
regulations promulgated under the Exchange Act. Notwithstanding anything
contained in these Bylaws to the contrary, no business shall be conducted at any
annual meeting except in accordance with the procedures set forth in this
Section 12(a). The chairman of the annual meeting shall, if the facts warrant,
determine and declare at the meeting that business was not properly brought
before the meeting and in accordance with the
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provisions of this Section 12(a), and, if he should so determine, he shall so
declare at the meeting that any such business not properly brought before the
meeting shall not be transacted.
(b) Only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors of the
Corporation, except as may be otherwise provided in the Certificate of
Incorporation with respect to the right of holders of certain classes of stock
to nominate and elect a specified number of directors in certain circumstances.
Nominations of persons for election to the Board of Directors may be made at any
annual meeting of stockholders (i) by or at the direction of the Board of
Directors (or any duly authorized committee thereof), or (ii) by any stockholder
of the Corporation (A) who is a stockholder of record on the date of the giving
of the notice provided for in this Section 12 and on the record date for the
determination of stockholders entitled to vote at such annual meeting and (B)
who complies with the notice procedures set forth in this Section 12(b). Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation in accordance with the provisions of paragraph (a) of this
Section 12. Such stockholder's notice shall set forth (i) as to each person, if
any, whom the stockholder proposes to nominate for election or re-election as a
director: (A) the name, age, business address and residence address of such
person, (B) the principal occupation or employment of such person, (C) the class
and number of shares of the Corporation which are beneficially owned by such
person, (D) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or person) pursuant to which the nominations are to be made by the stockholder,
and (E) any other information relating to such person that is required to be
disclosed in solicitations of proxies for elections of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the Exchange
Act (including without limitation such person's written consent to being named
in the proxy statement, if any, as a nominee and to serving as a director is
elected); and (ii) as to such stockholder giving notice, the information
required to be provided pursuant to paragraph (a) of this Section 12. At the
request of the Board of Directors, any person nominated by a stockholder for
election as a director shall furnish to the Secretary of the Corporation that
information required to be set forth in the stockholder's notice of nomination
which pertains to the nominee. No person shall be eligible for election as a
director of the Corporation unless nominated in accordance with the procedures
set forth in this paragraph (b). The chairman of the meeting shall, if the facts
warrant, determine and declare at the meeting that a nomination was not made in
accordance with the procedures prescribed by these Bylaws, and if he should so
determine, he shall so declare at the meeting, and the defective nomination
shall be disregarded.
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ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The business and affairs of the Corporation shall be
managed by its Board of Directors, which shall have and may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute, the Certificate of Incorporation, or these Bylaws directed or required
to be exercised or done by the stockholders.
SECTION 2. NUMBER, QUALIFICATION, AND TERM OF OFFICE. The number of
directors which shall constitute the whole Board of Directors shall not be less
than five (5). Within the limits above specified, the number of directors which
shall constitute the whole Board of Directors shall be determined by resolution
of the Board of Directors or by the stockholders at any annual or special
meeting or otherwise pursuant to action of the stockholders. Directors need not
be stockholders.
The directors shall be divided into three classes, designated
Class I, Class II and Class III. Each class shall consist, as nearly as
possible, of one-third of the total number of directors constituting the entire
Board of Directors. Class I shall initially consist of John Whitmire and Walter
Piontek. Class II shall initially consist of Gerald Bennett and Ronald Benson.
Class III shall initially consist of John R. Stanley. Each director shall serve
for a term ending at the annual meeting in the third year following the annual
meeting at which such director was elected, provided, however, that the term of
the directors named above to Class I shall end at the annual meeting in 2001,
the term of the directors in Class II named above shall end at the annual
meeting in 2002, and the term of the director in Class III named above shall end
at the annual meeting in 2003; provided, however, that each director shall hold
office after the annual meeting at which his term is scheduled to end until his
successor shall be elected and shall qualify, subject, however, to prior death,
resignation, disqualification or removal from office in the manner hereinafter
provided. The Board of Directors shall apportion any increase or decrease in the
number of directorships among the classes so as to make the number of directors
in each class as nearly equal as possible.
Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy and entitled to vote on the
election of such directors at any annual or special meeting of stockholders.
Such election shall be by written ballot.
SECTION 3. RESIGNATIONS. Any director may resign at any time by giving
written notice of his resignation to the Corporation. Any such resignation shall
take effect at the time specified therein, or if the time when it shall become
effective shall not be specified therein, then it shall take effect immediately
upon its receipt by the Secretary. Unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. If
the resignation of a director is effective at a future time, a successor shall
be elected by written ballot of a majority of voting interest of the
stockholders of record of the Corporation entitled to vote for such director, at
a special meeting of the stockholders called for the purpose of filling the
vacancy caused by such resignation, prior to such effective time, and that
successor shall take office when such resignation
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becomes effective. If a successor has not been elected prior to the effective
date of such resignation, a successor shall be elected in accordance with
Section 5 of this Article III.
SECTION 4. REMOVAL OF DIRECTORS. Any director may be removed, but only
for cause, at any time, by the affirmative vote by written ballot of a majority
of voting interest of the stockholders of record of the Corporation entitled to
vote for the election of such director, given at an annual meeting or at a
special meeting of the stockholders called for that purpose. The vacancy in the
Board of Directors caused by any such removal or otherwise shall be filled by
the affirmative vote of such stockholders at such meeting or at a subsequent
special meeting of the stockholders called for such purpose.
SECTION 5. VACANCIES. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may only be
filled by written ballot of a majority of voting interest of the stockholders of
record of the Corporation entitled to vote for the election of such directors,
given at an annual meeting or at a special meeting of the stockholders called
for that purpose. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. Any director elected to
fill a newly created directorship resulting from an increase in any class of
directors shall hold office for a term that shall coincide with the remaining
term of the other directors of that class. Any director elected to fill a
vacancy not resulting from an increase in the number of directors shall have the
same term as the remaining term of his predecessor.
SECTION 6. COMMITTEES. The Board of Directors of the Corporation may,
by resolution or resolutions passed by a majority of the whole Board of
Directors, designate an Audit Committee or a Compensation Committee, each of
which shall consist of at least three (3) directors of the Corporation, all of
whom shall be independent as defined in the listing standards of the New York
Stock Exchange, American Stock Exchange or National Association of Securities
Dealers, Inc. The Audit Committee shall select and engage, on behalf of the
Corporation, independent public accountants, provided said independent
accountants are from a "big 5" accounting firm, to audit the books of account
and other corporate records of the Corporation and to perform such other duties
as the Audit Committee may from time to time prescribe. The Audit Committee
shall transmit financial statements certified by such independent public
accountants to the Board of Directors after the close of each fiscal year. The
selection of independent public accountants for each fiscal year shall be made
in advance of the annual meeting of stockholders in such fiscal year and shall
be submitted for ratification or rejection at such meeting. The Audit Committee
shall confer with such accountants and review and approve the scope of the audit
of the books of account and other corporate records of the company. From time to
time the Audit Committee shall report to and advise the Board of Directors
concerning the scope and results of its consultation and review and such other
matters relating to the internal controls, accounting practices, financial
structure and financial reporting of the Corporation as the Audit Committee
believes merit review by the Board of Directors. The Audit Committee shall
review the services provided by, the independence of, and the fees charged by
the independent certified public accountants, and from time to time shall report
upon the same to the Board of Directors. The Audit Committee shall have the
power to confer with and direct the officers of the Corporation to the extent
necessary to review the internal controls,
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accounting practices, financial structure and financial reporting of the
Corporation. The Audit Committee also shall perform such other functions and
exercise such other powers as may be delegated to it from time to time by the
Board of Directors. The Compensation Committee shall fix from time to time the
salaries of members of the Board of Directors and officers of the Corporation.
It also shall perform such functions as may be delegated to it under the
provisions of any bonus, supplemental compensation, special compensation or
stock option plan of the Corporation. Except as provided in this Section 6, the
Board of Directors of the Corporation shall not delegate any authority to any
other committee, whether made up of directors, officers or otherwise.
ARTICLE IV
MEETINGS OF THE BOARD OF DIRECTORS
SECTION 1. PLACE OF MEETINGS. The Board of Directors of the Corporation
may hold meetings, both regular and special, either within or without the State
of Delaware.
SECTION 2. ANNUAL MEETINGS. The first meeting of each newly elected
Board of Directors shall be held immediately following the annual meeting of
stockholders, and no notice of such meeting to the newly elected directors shall
be necessary in order legally to constitute the meeting, provided a quorum shall
be present. In the event such meeting is not held immediately following the
annual meeting of stockholders, the meeting may be held at such time and place
as shall be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors, or as shall be specified in a written waiver
signed by all of the directors.
SECTION 3. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as shall from time to
time be determined by the Board of Directors.
SECTION 4. SPECIAL MEETINGS; NOTICE. Special meetings of the Board of
Directors may be called by the Chairman of the Board, the Chief Executive
Officer, the President, or the Secretary on 48 hours' notice to each director,
either personally or by telephone or by mail, telegraph, telex, cable, wireless,
or other form of recorded communication; special meetings shall be called by the
Chairman of the Board, the Chief Executive Officer, the President, or the
Secretary in like manner and on like notice on the written request of two
directors. Notice of any such meeting need not be given to any director,
however, if waived by him in writing or by telegraph, telex, cable, wireless, or
other form of recorded communication, or if he shall be present at such meeting.
SECTION 5. QUORUM AND MANNER OF ACTING. At all meetings of the Board of
Directors, a quorum for the transaction of business shall be constituted if a
majority of all directors at the time in office are present at the meeting, and
the act of a majority of the directors present at any meeting at which a quorum
is present shall be the act of the Board of Directors.
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If a quorum shall not be present at any meeting of the Board
of Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
SECTION 6. REMUNERATION. Unless otherwise expressly provided by
resolution adopted by the Board of Directors, none of the directors shall, as
such, receive any stated remuneration for his services; but the Board of
Directors may at any time and from time to time by resolution provide that a
specified sum shall be paid to any director of the Corporation, either as his
annual remuneration as such director or member of any committee or as
remuneration for his attendance at each meeting of the Board of Directors or any
such committee. The Board of Directors may also likewise provide that the
Corporation shall reimburse each director for any expenses paid by him on
account of his attendance at any meeting. Nothing in this Section 11 shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving remuneration therefor.
SECTION 7. ACTIONS WITHOUT A MEETING. Unless otherwise restricted by
the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board of
Directors or committee, as the case may be, consent thereto in writing and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors or the committee.
SECTION 8. PRESENCE AT MEETINGS BY MEANS OF COMMUNICATIONS EQUIPMENT.
Members of the Board of Directors or of any committee designated by the Board of
Directors may participate in a meeting of the Board of Directors or such
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting conducted pursuant to this Section 14 shall
constitute presence in person at such meeting.
ARTICLE V
NOTICES
SECTION 1. TYPE OF NOTICE. Whenever, under the provisions of any
applicable statute, the Certificate of Incorporation, or these Bylaws, notice is
required to be given to any director or stockholder, it shall not be construed
to mean personal notice, but such notice may be given in writing, in person or
by mail, addressed to such director or stockholder, at his address as it appears
on the records of the Corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in the
United States mail. Notice to directors may also be given in any manner
permitted by Article III hereof and shall be deemed to be given at the time when
first transmitted by the method of communication so permitted.
SECTION 2. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of any applicable statute, the Certificate of
Incorporation, or these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto, and transmission of a waiver
of notice by a
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director or stockholder by mail, telegraph, telex, cable, wireless, or other
form of recorded communication may constitute such a waiver.
SECTION 3. WHEN NOTICE IS UNNECESSARY. Whenever, under the provisions
of the Delaware General Corporation Law, the Certificate of Incorporation, or
these Bylaws, any notice is required to be given to any stockholder, such notice
need not be given to the stockholder if:
(a) notice of two consecutive annual meetings and all
notices of meetings held during the period between
those annual meetings, if any, or
(b) all (but in no event less than two) payments (if sent
by first class mail) of distributions or interest on
securities during a 12-month period,
have been mailed to that person, addressed at his address as shown on the
records of the Corporation, and have been returned undeliverable. Any action or
meeting taken or held without notice to such a person shall have the same force
and effect as if the notice had been duly given. If such a person delivers to
the Corporation a written notice setting forth his then current address, the
requirement that notice be given to that person shall be reinstated.
ARTICLE VI
OFFICERS
SECTION 1. GENERAL. The elected officers of the Corporation shall be a
President and a Secretary. The Board of Directors may also elect or appoint a
Chairman of the Board, Chief Executive Officer, one or more Vice Presidents, one
or more Assistant Vice Presidents, one or more Assistant Secretaries, a Chief
Financial Officer, one or more Treasurers, a Controller, one or more Assistant
Controllers, and such other officers and agents as may be deemed necessary or
advisable from time to time, all of whom shall also be officers. Two or more
offices may be held by the same person.
SECTION 2. ELECTION OR APPOINTMENT. The Board of Directors at its
annual meeting shall elect or appoint, as the case may be, the officers to fill
the positions designated in or pursuant to Section 1 of this Article V. Officers
of the Corporation may also be elected or appointed, as the case may be, at any
other time.
SECTION 3. SALARIES OF ELECTED OFFICERS. The salaries of all elected
officers of the Corporation shall be fixed by the Board of Directors.
SECTION 4. TERM. Each officer of the Corporation shall hold his office
until his successor is duly elected or appointed and qualified or until his
earlier resignation or removal. Any officer may resign at any time upon written
notice to the Corporation. Any officer elected or appointed by the Board of
Directors may be removed at any time by the affirmative vote of a majority of
the whole
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Board of Directors. Any vacancy occurring in any office of the Corporation by
death, resignation, removal, or otherwise may be filled by the Board of
Directors or the appropriate committee thereof.
SECTION 5. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the Board of Directors and at meetings of the
stockholders.
SECTION 6. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall
advise and counsel the other officers of the Corporation, and shall exercise
such powers and perform such duties as shall be assigned to or required of him
from time to time by the Board of Directors, provided, that the Chief Executive
Officer shall not be authorized to cause the Corporation to make any capital
expenditures in excess of $500,000.00 in one transaction or series of related
transactions unless approved by the Board of Directors. In the absence of the
Chairman of the Board or in the event of his inability or refusal to act, the
Chief Executive Officer shall preside at all meetings of stockholders, except as
may otherwise be provided by statute, and at all meetings of the Board of
Directors. He shall see that all orders and resolutions of the Board of
Directors and the stockholders are carried into effect. He shall have general
authority to execute bonds, deeds, and contracts in the name of the Corporation
and affix the corporate seal thereto; to sign stock certificates; to cause the
employment or appointment of such employees and agents of the Corporation as the
proper conduct of operations may require, and to fix their compensation, subject
to the provisions of these Bylaws; to remove or suspend any employee or agent
who shall have been employed or appointed under his authority or under authority
of an officer subordinate to him; to suspend for cause, pending final action by
the authority which shall have elected or appointed him, any officer subordinate
to the Chief Executive Officer; and, in general, to exercise all the powers and
authority usually appertaining to the chief operating officer of a corporation,
except as otherwise provided in these Bylaws.
SECTION 7. PRESIDENT. In the absence of a Chief Executive Officer, the
President shall be the ranking and chief executive officer of the Corporation
and shall have the duties and responsibilities, and the authority and power, of
the Chief Executive Officer. In the absence of the Chairman of the Board and the
Chief Executive Officer, or in the event of their inability or refusal to act,
the President shall preside at all meetings of stockholders, except as may
otherwise be provided by statute, and at all meetings of the Board of Directors.
The President shall be the chief operating officer of the Corporation and,
subject to the provisions of these Bylaws, shall have general supervision of the
affairs of the Corporation and shall have general and active control of all its
business. He shall have general authority to execute bonds, deeds, and contracts
in the name of the Corporation and affix the corporate seal thereto; to sign
stock certificates; to cause the employment or appointment of such employees and
agents of the Corporation as the proper conduct of operations may require, and
to fix their compensation, subject to the provisions of these Bylaws; to remove
or suspend any employee or agent who shall have been employed or appointed under
his authority or under authority of an officer subordinate to him; to suspend
for cause, pending final action by the authority which shall have elected or
appointed him, any officer subordinate to the President; and, in general, to
exercise all the powers and authority usually appertaining to the chief
operating officer of a corporation, except as otherwise provided in these
Bylaws, provided, that the President shall not be authorized to cause the
Corporation to make any capital expenditures in excess of $500,000.00 in one
transaction or series of related transactions unless approved by the Board of
Directors.
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SECTION 8. VICE PRESIDENTS. In the absence of the President or in the
event of his inability or refusal to act, the Vice President (or in the event
there be more than one Vice President, the Vice Presidents in the order
designated, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President and, when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The Vice Presidents shall perform such other duties and have such
other powers as the Board of Directors, the Chief Executive Officer or the
President may from time to time prescribe.
SECTION 9. ASSISTANT VICE PRESIDENTS. In the absence of a Vice
President or in the event of his inability or refusal to act, the Assistant Vice
President (or in the event there shall be more than one, the Assistant Vice
Presidents in the order designated by the Board of Directors, or in the absence
of any designation, then in the order of their appointment) shall perform the
duties and exercise the powers of that Vice President, and shall perform such
other duties and have such other powers as the Board of Directors, the Chief
Executive Officer, the President, or the Vice President under whose supervision
he is appointed may from time to time prescribe.
SECTION 10. SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of the stockholders and record all the
proceedings of the meetings of the Corporation and of the Board of Directors in
a book to be kept for that purpose. He shall give, or cause to be given, notice
of all meetings of the stockholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors, the Chief Executive Officer or the President, under whose
supervision he shall be. He shall have custody of the corporate seal of the
Corporation, and he, or an Assistant Secretary, shall have authority to affix
the same to any instrument requiring it, and when so affixed, it may be attested
by his signature or by the signature of such Assistant Secretary. The Board of
Directors may give general authority to any other officer to affix the seal of
the Corporation and to attest the affixing by his signature. The Secretary shall
keep and account for all books, documents, papers, and records of the
Corporation, except those for which some other officer or agent is properly
accountable. He shall have authority to sign stock certificates and shall
generally perform all the duties usually appertaining to the office of the
secretary of a corporation.
SECTION 11. ASSISTANT SECRETARIES. In the absence of the Secretary or
in the event of his inability or refusal to act, the Assistant Secretary (or, if
there shall be more than one, the Assistant Secretaries in the order designated
by the Board of Directors, or in the absence of any designation, then in the
order of their appointment) shall perform the duties and exercise the powers of
the Secretary and shall perform such other duties and have such other powers as
the Board of Directors, the Chief Executive Officer, the President, or the
Secretary may from time to time prescribe.
SECTION 12. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. He shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the Chief
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Executive Officer and the Board of Directors, at its regular meetings or when
the Board of Directors so requires, an account of all his transactions as Chief
Financial Officer and of the financial condition of the Corporation. If required
by the Board of Directors, he shall give the Corporation a bond (which shall be
renewed every six years) in such sum and with such surety or sureties as shall
be satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in case of his
death, resignation, retirement, or removal from office, of all books, papers,
vouchers, money, and other property of whatever kind in his possession or under
his control belonging to the Corporation. The Chief Financial Officer shall be
under the supervision of the Vice President in charge of finance, if one is so
designated, and he shall perform such other duties as may be prescribed by the
Board of Directors, the Chief Executive Officer, the President, or any such Vice
President in charge of finance.
SECTION 13. TREASURERS. The Treasurer or Treasurers shall assist the
Chief Financial Officer, and in the absence of the Chief Financial Officer or in
the event of his inability or refusal to act, the Treasurer (or in the event
there shall be more than one, the Treasurers in the order designated by the
Board of Directors, or in the absence of any designation, then in the order of
their appointment) shall perform the duties and exercise the powers of the Chief
Financial Officer and shall perform such other duties and have such other powers
as the Board of Directors, Chief Executive Officer, the President, or the Chief
Financial Officer may from time to time prescribe.
SECTION 14. CONTROLLER. The Controller, if one is appointed, shall have
supervision of the accounting practices of the Corporation and shall prescribe
the duties and powers of any other accounting personnel of the Corporation. He
shall cause to be maintained an adequate system of financial control through a
program of budgets and interpretive reports. He shall initiate and enforce
measures and procedures whereby the business of the Corporation shall be
conducted with the maximum efficiency and economy. If required, he shall prepare
a monthly report covering the operating results of the Corporation. The
Controller shall be under the supervision of the Vice President in charge of
finance, if one is so designated, and he shall perform such other duties as may
be prescribed by the Board of Directors, the Chief Executive Officer, the
President, or any such Vice President in charge of finance.
SECTION 15. ASSISTANT CONTROLLERS. The Assistant Controller or
Assistant Controllers shall assist the Controller, and in the absence of the
Controller or in the event of his inability or refusal to act, the Assistant
Controller (or, if there shall be more than one, the Assistant Controllers in
the order designated by the Board of Directors, or in the absence of any
designation, then in the order of their appointment) shall perform the duties
and exercise the powers of the Controller and perform such other duties and have
such other powers as the Board of Directors, the Chief Executive Officer, the
President, or the Controller may from time to time prescribe.
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ARTICLE VI
INDEMNIFICATION
SECTION 1. ACTIONS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the Corporation), by reason of the
fact that he is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise (all of such persons being hereafter
referred to in this Article as a "Corporate Functionary"), against expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit, or
proceeding, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, or conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation or, with respect to any
criminal action or proceeding, that he had reasonable cause to believe that his
conduct was unlawful.
SECTION 2. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a Corporate Functionary against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, except that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been adjudged to be
liable to the Corporation, unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
SECTION 3. DETERMINATION OF RIGHT TO INDEMNIFICATION. Any
indemnification under Sections 1 or 2 of this Article VI (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the Corporate Functionary is proper
in the circumstances because he has met the applicable standard of conduct set
forth in Sections 1 or 2 of this Article VI. Such determination shall be made
(i) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit, or proceeding, or (ii) if
such a quorum is not obtainable, or, even if obtainable if a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (iii) by the stockholders.
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SECTION 4. RIGHT TO INDEMNIFICATION. Notwithstanding the other
provisions of this Article VI, to the extent that a Corporate Functionary has
been successful on the merits or otherwise in defense of any action, suit, or
proceeding referred to in Sections 1 or 2 of this Article VI (including the
dismissal of a proceeding without prejudice or the settlement of a proceeding
without admission of liability), or in defense of any claim, issue, or matter
therein, he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
SECTION 5. PREPAID EXPENSES. Expenses incurred in defending a civil or
criminal action, suit, or proceeding shall be paid by the Corporation in advance
of the final disposition of such action, suit, or proceeding, upon receipt of an
undertaking by or on behalf of the Corporate Functionary to repay such amount if
it shall ultimately be determined he is not entitled to be indemnified by the
Corporation as authorized in this Article VI.
SECTION 6. RIGHT TO INDEMNIFICATION UPON APPLICATION; PROCEDURE UPON
APPLICATION. Any indemnification under Sections 2, 3 and 4, or any advance under
Section 5, of this Article VI shall be made promptly upon, and in any event
within 60 days after, the written request of the Corporate Functionary, unless
with respect to applications under Sections 2, 3 or 5 of this Article VI, a
determination is reasonably and promptly made by the Board of Directors by
majority vote of a quorum consisting of disinterested directors that such
Corporate Functionary acted in a manner set forth in such Sections as to justify
the Corporation in not indemnifying or making an advance of expenses to the
Corporate Functionary. If no quorum of disinterested directors is obtainable,
the Board of Directors shall promptly direct that independent legal counsel
shall decide whether the Corporate Functionary acted in a manner set forth in
such Sections as to justify the Corporation's not indemnifying or making an
advance of expenses to the Corporate Functionary. The right to indemnification
or advance of expenses granted by this Article VI shall be enforceable by the
Corporate Functionary in any court of competent jurisdiction if the Board of
Directors or independent legal counsel denies his claim, in whole or in part, or
if no disposition of such claim is made within 60 days. The expenses of the
Corporate Functionary incurred in connection with successfully establishing his
right to indemnification, in whole or in part, in any such proceeding shall also
be indemnified by the Corporation.
SECTION 7. OTHER RIGHTS AND REMEDIES. The indemnification and
advancement of expenses provided by or granted pursuant to this Article VI shall
not be deemed exclusive of any other rights to which any person seeking
indemnification and advancement of expenses may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors, or otherwise, both
as to action in his official capacity and as to action in another capacity while
holding such office, and shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a Corporate Functionary
and shall inure to the benefit of the heirs, executors, and administrators of
such a person. Any repeal or modification of these Bylaws or relevant provisions
of the Delaware General Corporation Law and other applicable law, if any, shall
not affect any then existing rights of a Corporate Functionary to
indemnification or advancement of expenses.
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SECTION 8. INSURANCE. Upon resolution passed by the Board of Directors,
the Corporation may purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee, or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee,
or agent of another corporation, partnership, joint venture, trust, or other
enterprise against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article VI.
SECTION 9. MERGERS. For purposes of this Article VI, references to "the
Corporation" shall include, in addition to the resulting or surviving
corporation, constituent corporations (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees, or agents, so that any person who is or was a
director, officer, employee, or agent of such constituent corporation or is or
was serving at the request of such constituent corporation as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise shall stand in the same position under the provisions
of this Article VI with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
SECTION 10. SAVINGS PROVISION. If this Article VI or any portion hereof
shall be invalidated on any ground by a court of competent jurisdiction, the
Corporation shall nevertheless indemnify each Corporate Functionary as to
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement with respect to any action, suit, proceeding, or investigation,
whether civil, criminal, or administrative, including a grand jury proceeding or
action or suit brought by or in the right of the Corporation, to the full extent
permitted by any applicable portion of this Article VI that shall not have been
invalidated.
ARTICLE VII
CERTIFICATES REPRESENTING STOCK
SECTION 1. RIGHT TO CERTIFICATE. Every holder of stock in the
Corporation shall be entitled to have a certificate, signed by, or in the name
of the Corporation by, the Chief Executive Officer, the President, or a Vice
President and by the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by him in the Corporation. If the
Corporation shall be authorized to issue more than one class of stock or more
than one series of any class, the powers, designations, preferences, and
relative, participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations, or restrictions of
such preferences or rights shall be set forth in full or summarized on the face
or back of the certificate which the Corporation shall issue to represent such
class or series of stock; provided, that, except as otherwise provided in
Section 202 of the Delaware General Corporation Law, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock a
statement that the Corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences, and relative,
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participating, optional, or other special rights of each class of stock or
series thereof and the qualifications, limitations, or restrictions of such
preferences or rights.
SECTION 2. FACSIMILE SIGNATURES. Any of or all the signatures on the
certificate may be facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent, or registrar at the date of issue.
SECTION 3. NEW CERTIFICATES. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation and alleged to have been
lost, stolen, or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost, stolen, or destroyed
or the issuance of such new certificate.
SECTION 4. TRANSFERS. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation, or authority to
transfer, it shall be the duty of the Corporation, subject to any proper
restrictions on transfer, to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction upon its books.
SECTION 5. RECORD DATE. The Board of Directors may fix in advance a
date, not preceding the date on which the resolution fixing the record date is
adopted, and
(i) not more than 60 days nor less than 10 days preceding
the date of any meeting of stockholders, as a record
date for the determination of the stockholders
entitled to notice of, and to vote at, any such
meeting and any adjournment thereof;
(ii) not more than 10 days after the date on which the
resolution fixing the record date is adopted, as a
record date in connection with obtaining a consent of
the stockholders in writing to corporate action
without a meeting; or
(iii) not more than 60 days before the date for payment of
any dividend or distribution, or the date for the
allotment of rights, or the date when any change, or
conversion or exchange of capital stock shall go into
effect, or the date on which any other lawful action
shall be taken, as the record date for determining
the stockholders entitled to receive payment of any
such dividend or distribution, or to receive any such
allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of
capital stock or other lawful action of the
Corporation,
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and in such case such stockholders and only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to such notice of,
and to vote at, any such meeting and any adjournment thereof (provided, however,
that the Board of Directors may fix a new record date for an adjourned meeting),
or to give such consent, or to receive payment of such dividend or distribution,
or to receive such allotment of rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid.
SECTION 6. REGISTERED STOCKHOLDERS. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not provided by the laws of the State of Delaware.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, if any, subject to the provisions of the Certificate of
Incorporation, may be declared by the Board of Directors at any regular meeting,
pursuant to law. Dividends may be paid in cash, in property, or in shares of the
capital stock, subject to the provisions of the Certificate of Incorporation.
SECTION 2. RESERVES. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from time to time, in their absolute discretion,
thinks proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
for such other purpose as the Board of Directors shall think conducive to the
interest of the Corporation, and the Board of Directors may modify or abolish
any such reserve in the manner in which it was created.
SECTION 3. ANNUAL STATEMENT. The Board of Directors shall present at
each annual meeting, and at any special meeting of the stockholders when called
for by vote of the stockholders, a full and clear statement of the business and
condition of the Corporation.
SECTION 4. CHECKS. All checks or demands for money and promissory notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time prescribe.
SECTION 5. FISCAL YEAR. The fiscal year of the Corporation shall be
determined by the Board of Directors.
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SECTION 6. CORPORATE SEAL. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization, and the word
"Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed, affixed, reproduced, or otherwise.
ARTICLE IX
AMENDMENTS
Except as set forth in the Certificate of Incorporation, these Bylaws
may be altered, amended, or repealed or new Bylaws may be adopted by the
stockholders or by the Board of Directors at any regular meeting of the
stockholders or of the Board of Directors or at any special meeting of the
stockholders or of the Board of Directors if notice of such alteration,
amendment, repeal, or adoption of new Bylaws is contained in the notice of such
special meeting.
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CERTIFICATION
I, Ed Donahue, Secretary of the Corporation, hereby certify that the
foregoing is a true, accurate and complete copy of the Amended and Restated
Bylaws of TransTexas Gas Corporation adopted by its Board of Directors as of
March 15, 2000.
/s/ Ed Donahue
-----------------------------------
Ed Donahue, Secretary
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