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EXHIBIT 10.63
SUBORDINATION AGREEMENT
This Subordination Agreement (this "Agreement") is made as of September
7, 2000, by Firstar Bank of Minnesota as Trustee under the Indenture referred to
below (in such capacity, herein called the "Mortgage Holder") and TransTexas Gas
Corporation, a Delaware corporation (herein called "TransTexas") for the benefit
of Southern Producer Services, L.P., TCW Portfolio No. 1555 DR V Sub-Custody
Partnership, L.P. and TCW DR VI Investment Partnership, L.P. (herein
collectively called the "Production Payment Owners").
RECITALS:
1. The Mortgage Holder and TransTexas have entered into that certain
Indenture dated as of March 15, 2000 (herein, as from time to time amended or
supplemented, called the "Indenture"), for the equal and ratable benefit of the
holders of TransTexas's Senior Secured Notes due 2005. Pursuant to the
Indenture, TransTexas has executed and delivered certain mortgages, deeds of
trust, security agreements and financing statements (collectively, the "Security
Documents") to secure such Notes. A true and complete list of such Security
Documents which burden properties in Texas is attached as Schedule 1 hereto and
made a part hereof. Each deed of trust and mortgage listed on Schedule 1 is
herein called a "Mortgage".
2. As described in Section 9.2 of each Mortgage, TransTexas has
heretofore executed and delivered to the Production Payment Owners that certain
Production Payment Conveyance made effective as of 9:00 a.m., Houston, Texas
time on March 1, 2000 (defined in each such Section 9.2 as the "Production
Payment Conveyance" and herein called the "Original Conveyance"), pursuant to
which TransTexas conveyed and assigned to the Production Payment Owners a
certain production payment (defined in each such Section 9.2 as the "Production
Payment" and herein called the "Original Production Payment"). As described in
Section 9.2 of each Mortgage, the Original Conveyance was given pursuant to an
Order of the United States Bankruptcy Court. As contemplated in such Court
Order, the Original Conveyance has heretofore been supplemented by a First
Supplement to Production Payment Conveyance, dated as of June 7, 2000 (the
"First Supplement"), to increase the unliquidated balance of the "Primary Sum"
thereunder. The Original Conveyance and the First Supplement have been recorded
as set forth in Schedule 1 to Exhibit A hereto.
3. Concurrently herewith, in consideration of funds to be paid to
TransTexas, TransTexas and the Production Payment Owners are executing and
delivering that certain Second Supplement to Production Payment Conveyance of
even date herewith (the "Second Supplement") which further supplements and
amends the Original Conveyance. A true and correct copy of the Second Supplement
is attached as Exhibit A hereto and made a part hereof. As used herein,
"Conveyance" means the Original Conveyance as amended and supplemented by the
First Supplement and the Second Supplement, and "Production Payment" has the
meaning given to such term in the Conveyance.
4. Under the Indenture, the Production Payment constitutes "First Lien
Debt" secured by a "Permitted Lien" (as such terms are defined in the
Indenture). Pursuant to Section 11.2(c) of the Indenture, TransTexas has
delivered a "Subordination Request" to the Mortgage
Second Supplement
<PAGE> 2
Holder, asking the Mortgage Holder to enter into this Agreement in order to
subordinate the Mortgage Holder Liens to the Production Payment and the
Conveyance (after taking the Second Supplement into account), and TransTexas has
satisfied the conditions in such Section 11.2(c). (As used herein, "Mortgage
Holder Liens" means all liens, security interests, assignments (of production or
otherwise) and other rights or interests of the Mortgage Holder at any time
existing on or in any properties or assets of TransTexas which are in any way
subject to the Production Payment or the Conveyance, whether such liens,
security interests, assignments and other rights or interests arise under the
Indenture or the Security Documents or by operation of law or otherwise.)
NOW, THEREFORE, in consideration of the foregoing, and in order to
induce the Production Payment Owners to enter into the Second Supplement and pay
funds to TransTexas in connection therewith, the Mortgage Holder and TransTexas
hereby agree as follows:
Section 1. Subordination. The Production Payment and the proceeds
thereof are and hereafter shall be senior in right and priority to all Mortgage
Holder Liens, regardless of the relative priority of the Mortgage Holder Liens
and the Production Payment as determined without regard to this Agreement, and
the same shall have the same validity and effect as if the Conveyance (including
all supplements thereto) had been executed, delivered and properly recorded
prior to the date and time of execution of the Indenture and the date and time
of execution and recordation of the Security Documents. All references in
Section 9.2 of each Mortgage to the "Production Payment Conveyance" shall
hereafter refer to the Conveyance, as defined herein, and all references in
Section 9.2 of each Mortgage to the "Production Payment Conveyance" shall
henceforth refer to the Production Payment Conveyance, as defined herein. As so
modified, the terms of Section 9.2 of each Mortgage are hereby ratified and
confirmed.
Section 2. Acknowledgment of Reliance. The parties acknowledge and
agree that Production Payment Owners have entered into the Second Supplement in
reliance on the priority of the Conveyance, and thus are relying on the waiver,
relinquishment and subordination set forth herein.
Section 3. Governing Law. This Agreement shall be deemed a contract and
instrument made under the laws of the State of Texas and shall be construed and
enforced in accordance with and governed by the laws of such state and the laws
of the United States of America, without regard to principles of conflicts of
law.
Section 4. Invalidity of Particular Provisions. If any term or
provision of this Agreement shall be determined to be illegal or unenforceable,
all other terms and provisions hereof shall nevertheless remain effective and
shall be enforced to the fullest extent permitted by applicable law.
Section 5. Successors and Assigns. This Agreement shall pass to and be
fully binding upon and inure to the benefit of the successors and assigns of
each party hereto (including the Production Payment Owners).
Second Supplement
2
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Section 6. Counterparts. This Agreement may be separately executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same instrument.
IN WITNESS WHEREOF, this Agreement is executed by the parties
hereto on the dates set out below in their respective acknowledgments, to take
effect as of the date first above written.
MORTGAGE HOLDER: FIRSTAR BANK, N.A.,
as Trustee under the Indenture
By: /s/ FRANK P. LESLIE III
------------------------------------
Name: Frank P. Leslie III
------------------------------
Title: Vice President
-----------------------------
TRANSTEXAS: TRANSTEXAS GAS CORPORATION
By: /s/ ED DONAHUE
------------------------------------
Ed Donahue, Vice President
Second Supplement
3
<PAGE> 4
STATE OF MINNESOTA )
)
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me on this 8th day of
September, 2000, by Frank P. Leslie III, as Vice President of Firstar Bank,
N.A., a national banking association, on behalf of such association in its
capacity as Trustee under the above-described Indenture.
[SEAL] /s/ ALYSSA M. NGUYEN
-----------------------------------
Notary Public, State of Minnesota
My commission expires:
-------------------------
STATE OF TEXAS )
)
COUNTY OF HARRIS )
The foregoing instrument was acknowledged before me on this 11th day of
September, 2000, by Ed Donahue as Vice President of TransTexas Gas Corporation,
a Delaware corporation, on behalf of such corporation.
[SEAL] /s/ NANCY L. JAMES
-----------------------------------
Notary Public, State of Texas
My commission expires:
-------------------------
Second Supplement
4
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SCHEDULE 1
TO
SUBORDINATION AGREEMENT
SCHEDULE OF TEXAS RECORDING DATA
COUNTERPARTS
OF THE
MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION,
SECURITY AGREEMENT AND FINANCING STATEMENT,
DATED AS OF MARCH 15, 2000,
FROM TRANSTEXAS GAS CORPORATION, AS MORTGAGOR AND DEBTOR,
TO ROBERT M. GALPERIN, TRUSTEE,
FOR THE BENEFIT OF FIRSTAR BANK, N.A.
IN ITS CAPACITY AS INDENTURE TRUSTEE, AS MORTGAGEE AND SECURED PARTY,
ARE RECORDED IN THE REAL PROPERTY RECORDS IN THE COUNTIES IN THE STATE OF TEXAS
AS SET FORTH IN THE FOLLOWING TABLE:
<TABLE>
<CAPTION>
==================================================================================================================================
RECORDING DATA
COUNTY IN WHICH (REFERENCE IS ALSO MADE TO THE "NOTE" IMMEDIATELY FOLLOWING THIS TABLE)
COUNTERPART IS ----------------------------------------------------------------------------------------
RECORDED DATE REFERENCE / FILE /
(EACH IN THE STATE OF OF INSTRUMENT /
TEXAS) RECORDING VOL/BK PAGE(S) FILM CODE NUMBER DOCUMENT NUMBER
======================= ================= ============ =============== ========================== =============================
<S> <C> <C> <C> <C> <C>
AUSTIN 03/16/00 001522
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
BRAZORIA 03/16/00 00010929
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
CALHOUN 03/21/00 250 86 0062749
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
CHAMBERS 03/17/00 00-449 190 - 303 1688-B
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
COLORADO 03/16/00 330 834 - 930
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
GALVESTON 03/17/00 ###-##-#### GAC200001259
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
HARRIS 03/21/00 ###-##-#### U286247
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
HIDALGO 03/21/00 856646
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
JIM HOGG 03/20/00 17 701 - 797 64,586
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
KENT 03/16/00 2 129 180
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
LIVE OAK 03/20/00 380 407 - 505 00147280
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
SAN JACINTO 03/16/00 00-1612 5898 - 5985
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
STARR 03/16/00 0858 001 - 154 207934
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
VAL VERDE 03/21/00 737 336 - 423 0179838
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
WEBB 03/21/00 891 418 - 506 690351
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
</TABLE>
Second Supplement
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<TABLE>
<CAPTION>
==================================================================================================================================
RECORDING DATA
COUNTY IN WHICH (REFERENCE IS ALSO MADE TO THE "NOTE" IMMEDIATELY FOLLOWING THIS TABLE)
COUNTERPART IS ----------------------------------------------------------------------------------------
RECORDED DATE REFERENCE / FILE /
(EACH IN THE STATE OF OF INSTRUMENT /
TEXAS) RECORDING VOL/BK PAGE(S) FILM CODE NUMBER DOCUMENT NUMBER
======================= ================= ============ =============== ========================== =============================
<S> <C> <C> <C> <C> <C>
WHARTON 03/20/00 361 1 - 129
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
ZAPATA 03/17/00 630 1 - 115 119228
----------------------- ----------------- ------------ --------------- -------------------------- -----------------------------
</TABLE>
NOTE: A COUNTERPART OF THE DEED OF TRUST REFERENCED ABOVE, WITH A COMPLETE
EXHIBIT "A," IS RECORDED IN THE REAL PROPERTY RECORDS OF GALVESTON
COUNTY, TEXAS, AS SET FORTH IN THE FOREGOING TABLE. AS TO THE
COUNTERPARTS OF THE DEED OF TRUST REFERENCED ABOVE THAT ARE RECORDED IN
THE REAL PROPERTY RECORDS OF OTHER COUNTIES IN THE STATE OF TEXAS (AS
INDICATED IN THE TABLE ABOVE), THE EXHIBIT "A" ATTACHED TO EACH SUCH
RECORDED COUNTERPART IDENTIFIES ONLY THOSE REAL PROPERTIES LOCATED IN
THE COUNTY IN THE STATE OF TEXAS IN WHICH SUCH COUNTERPART IS RECORDED.
FOR A COMPLETE LIST OF ALL REAL PROPERTIES IN ALL COUNTIES IN THE STATE
OF TEXAS THAT ARE SUBJECT TO THE DEED OF TRUST REFERENCED ABOVE, REFER
TO, AND REFERENCE IS HEREBY MADE FOR ALL PURPOSES TO, THE COUNTERPART
OF THE DEED OF TRUST REFERENCED ABOVE THAT IS RECORDED IN THE REAL
PROPERTY RECORDS OF GALVESTON COUNTY, TEXAS.
ADDITIONAL SECURITY DOCUMENTS
SECURITY AND PLEDGE AGREEMENT DATED AS OF MARCH 15, 2000, BY AND BETWEEN
TRANSTEXAS GAS CORPORATION, A DELAWARE CORPORATION, AS DEBTOR, AND FIRSTAR BANK,
N.A., IN ITS CAPACITY AS INDENTURE TRUSTEE FOR THE BENEFIT OF HOLDERS OF
TRANSTEXAS GAS CORPORATION'S 15% SENIOR SECURED NOTES DUE 2005.
FINANCING STATEMENT OF FORM UCC-1 FROM TRANSTEXAS GAS CORPORATION, AS DEBTOR, TO
FIRSTAR BANK, N.A., TRUSTEE, AS SECURED PARTY, FILED MARCH 27, 2000, IN THE
OFFICE OF THE SECRETARY OF STATE OF THE STATE OF TEXAS UNDER FILE NUMBER
0000460611.
Second Supplement
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EXHIBIT A
TO
SUBORDINATION AGREEMENT
SECOND SUPPLEMENT TO PRODUCTION PAYMENT CONVEYANCE
Second Supplement
