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EXHIBIT 4.4
DISBURSEMENT AGREEMENT
among
TRANSAMERICAN REFINING CORPORATION,
TRANSAMERICAN ENERGY CORPORATION,
FIRSTAR BANK OF MINNESOTA, N.A.,
as securities intermediary and disbursement agent,
FIRSTAR BANK OF MINNESOTA, N.A.,
as trustee,
and
▇▇▇▇▇ & ▇'▇▇▇▇▇, INC.,
as Construction Supervisor
June 13, 1997
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DISBURSEMENT AGREEMENT
This Disbursement Agreement dated as of June 13, 1997 (this
"Agreement") is entered into by and among TransAmerican Refining Corporation, a
Texas corporation ("TARC"), TransAmerican Energy Corporation, a Delaware
corporation ("TEC"), Firstar Bank of Minnesota, N.A., as securities
intermediary (as defined in the Revised UCC) and disbursement agent (the
"Disbursement Agent"), Firstar Bank of Minnesota, N.A., as trustee, and ▇▇▇▇▇ &
O'Brien, Inc., as Construction Supervisor (the "Construction Supervisor").
WHEREAS, TEC and the Trustee have entered into an Indenture
dated as of June 13, 1997 (the "Indenture"), pursuant to which TEC will issue
$475,000,000 aggregate principal amount of Senior Secured Notes due 2002 and
$1,130,000,000 aggregate principal amount of Senior Secured Discount Notes due
2002 (collectively, the "Notes");
WHEREAS, TEC and TARC have entered into a loan agreement dated
as of the date hereof (the "TARC Loan Agreement"), pursuant to which TEC will
lend to TARC an aggregate of $675,648,920 out of the proceeds of the issuance
of the Notes and TARC will execute a promissory note in such amount in favor of
TEC (the "TARC Intercompany Note" and together with the TARC Loan Agreement,
the "TARC Intercompany Loan Documents");
WHEREAS, as security for the prompt and complete payment and
performance in full of TARC's obligations under the TARC Intercompany Loan
Documents, TARC has granted to TEC a security interest in, among other things,
the TARC Accounts (as defined below);
WHEREAS, as security for the prompt and complete payment and
performance in full of TEC's obligations under the Indenture and the Notes, TEC
has granted to the Trustee a security interest in, among other things, the TARC
Intercompany Loan Documents and the TEC Accounts (as defined below); and
WHEREAS, the Disbursement Agent has agreed to take such action
with respect to the Accounts as is specified herein.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms. Capitalized terms used but not
defined herein and in any schedules and exhibits hereto shall have the meanings
set forth in the TARC Loan Agreement.
As used in this Agreement, the following terms shall have the
following meanings:
"Accounts" means the TARC Disbursement Account, the TEC Disbursement
Account, the Contingency Reserve Account, the Feedstock Reserve Account, the
Operating Reserve Account and the Interest Accumulation Account.
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"Agreement" has the meaning given to such term in the introductory
paragraph hereof.
"Alternate" has the meaning given to such term in Section 3.4(a).
"Budget" means the total budget for the Project attached hereto as
Exhibit A.
"Budgeted Line Item" means a separate line item included within the
Budget relating to a unit or component of the Project and specifying an amount
allocated for achieving Mechanical Completion of such unit or component in
accordance with the Plans.
"Coking Unit Completion Notice" has the meaning given to such term in
Section 5.4(a).
"Collateral Investments" has the meaning given to such term in Section
4.7(a).
"Construction Supervisor" has the meaning given to such term in the
introductory paragraph hereof.
"Construction Supervisor Certificate" has the meaning given to such
term in Section 5.2(c).
"Contingency Reserve Account" has the meaning given to such term in
Section 4.1(b).
"Date of Disbursement" means the date designated as such in each
Disbursement Certificate or TEC Certificate, as the case may be.
"Disbursement Agent" has the meaning given to such term in the
introductory paragraph hereof.
"Disbursement Certificate" has the meaning given to such term in
Section 5.2(a).
"Feedstock Disbursements" has the meaning given to such term in
Section 5.3(b).
"Feedstock Reserve Account" has the meaning given to such term in
Section 4.1(c).
"Final Disbursement Date" has the meaning given to such term in
Section 5.4(d).
"Indenture" has the meaning given to such term in the recitals hereof.
"Initial Disbursement" has the meaning given to such term in Section
5.3(c).
"Interest Accumulation Account" has the meaning given to such term in
Section 4.2(b).
"Mechanical Completion" means with respect to the Project, Phase I,
Phase II or any specified unit or component thereof, sufficient completion of
the construction of the Project, Phase I, Phase II or such specified unit or
component, as the case may be, in accordance with the Plans, so that the
Project, Phase I, Phase II or such unit or component, as the case may be, can
be utilized for its intended purpose.
"Minimum Contingency Reserve Amount" means initially $75,000,000,
subject to reduction as set forth below in this definition. Upon delivery of a
Coking Unit Completion Notice by the Construction Supervisor to the
Disbursement Agent and TEC in accordance with the provisions of Section 5.4(a),
the Minimum Contingency Reserve Amount shall be reduced to zero.
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"New York UCC" means the Uniform Commercial Code as in effect in the
State of New York.
"Notes" has the meaning given to such term in the recitals hereof.
"Offering Circular" means TEC's Offering Circular dated June 5, 1997
relating to the offering of the Notes.
"Operating Disbursement" has the meaning given to such term in Section
5.3(e).
"Operating Reserve Account" has the meaning given to such term in
Section 4.1(d).
"Phase I Budgeted Amount" means the aggregate amount of expenditures
allocated for Phase I in the Budget.
"Phase I Completion Estimate" has the meaning given to such term in
Section 3.2(b).
"Phase I Completion Notice" has the meaning given to such term in
Section 5.4(b).
"Phase II Completion Estimate" has the meaning given to such term in
Section 3.2(b).
"Plans" means the plans and specifications relating to the proposed
expansion and modification of the Refinery, a summary of which is included in
the Offering Circular.
"Project" means the expansion and modification of the Refinery
pursuant to the Plans.
"Project Completion Notice" has the meaning given to such term in
Section 5.4(c).
"Refinery" means refinery owned and operated by TARC and located in
St. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Louisiana, as more fully described in the Offering
Circular.
"Reserve Accounts" means the Contingency Reserve Account, the
Feedstock Reserve Account and the Operating Reserve Account.
"Revised UCC" means Uniform Commercial Code, Revised Article 8,
Investment Securities (with Conforming and Miscellaneous Amendments to Articles
1, 3, 4, 5, 9 and 10), 1994 Official Text, as adopted by the American Law
Institute and the National Conference of Commissioners on Uniform State Laws
and approved by the American Bar Association on February 15, 1995; provided,
however, that if and when the Revised UCC is enacted in the State of New York,
"Revised UCC" shall mean the Revised UCC as enacted in the State of New York
from time to time.
"Special Purpose Disbursements" means Feedstock Disbursements, the
Initial Disbursement, TARC Notes Disbursements, Operating Disbursements and
Interest Disbursements.
"Status Report" has the meaning given to such term in Section 3.2(b).
"Substantial Completion" means with respect to the Project, Phase I,
Phase II or any specified unit or component thereof, (a) the Mechanical
Completion of the Project, Phase I, Phase II or such specified unit or
component, as the case may be and (b) the completion of performance tests of
the Project, Phase I, Phase II or such specified unit or component, as the case
may be, that demonstrate
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performance in all material respects in accordance with the Plans. Without
limiting the generality of the foregoing, (a) Substantial Completion of Phase I
shall include without limitation, the Mechanical Completion of the process
units and supporting facilities set forth under the heading "Business of TARC
-- Capital Improvement Program -- Phase I" in the Offering Circular and the
demonstration to the reasonable satisfaction of the Construction Supervisor
that for a period of at least fifteen consecutive days, the Refinery has
sustained (i) the successful performance of the Delayed Coking Unit, the
Hydrodesulfurization Unit and the Sulfur Recovery System, (ii) an average
feedstock throughput level of at least 150,000 barrels per day and (iii) no net
production of vacuum tower bottoms when using as input a combined feedstock
slate with an average API Gravity of 22 degrees or less, (b) Substantial
Completion of Phase II shall include without limitation, the Mechanical
Completion of the process units and supporting facilities set forth under the
heading "Business of TARC -- Capital Improvement Program -- Phase II" in the
Offering Circular and the demonstration to the reasonable satisfaction of the
Construction Supervisor that for a period of at least 72 uninterrupted hours,
the Refinery has sustained (i) the successful performance of all of the
facilities comprising Phase I plus the Fluid Catalytic Cracking (FCC) Unit, the
FCC Flue Gas Scrubber and the Alkylation Unit, (ii) an average feedstock
throughput level of at least 180,000 barrels per day, and (iii) average
production yields (measured as the liquid volume percent of feedstock
throughput) of refined products with a specific gravity of gasoline or lighter
of at least 40% and of middle distillates or lighter of at least 70%, when
using as input a combined Crude Unit feedstock slate with an average API
Gravity of 22 degrees or less and (c) Substantial Completion of the Project
shall mean the occurrence of both Substantial Completion of Phase I and
Substantial Completion of Phase II.
"TARC" has the meaning given to such term in the introductory
paragraph hereof.
"TARC Accounts" means the TARC Disbursement Account and the Interest
Accumulation Account.
"TARC Disbursement Account" has the meaning given to such term in
Section 4.2(a).
"TARC Intercompany Loan Documents" has the meaning given to such term
in the recitals hereof.
"TARC Intercompany Note" has the meaning given to such term in the
recitals hereof.
"TARC Loan Agreement" has the meaning given to such term in the
recitals hereof.
"TARC Notes Disbursement" has the meaning given to such term in
Section 5.3(d).
"TARC Security Agreement" means the Security and Pledge Agreement
dated as of June 13, 1997 by and between TARC and TEC.
"TEC" has the meaning given to such term in the introductory paragraph
hereof.
"TEC Accounts" means the TEC Disbursement Account, the Contingency
Reserve Account, the Feedstock Reserve Account and the Operating Reserve
Account.
"TEC Certificate" has the meaning given to such term in Section 5.1.
"TEC Disbursement Account" has the meaning given to such term in
Section 4.1(a).
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"TEC Security Agreement" means the Security and Pledge Agreement dated
as of June 13, 1997 by and between TEC and the Trustee.
"TransTexas Dividend/Share Repurchase Program" means the dividend and
share repurchase program (including without limitation the dividend and share
repurchase program described in the Offering Circular) to be implemented by
TransTexas, pursuant to which TransTexas will effect the payment of one or more
dividends on the common stock of TransTexas or the redemption, acquisition or
purchase, pursuant to a tender offer or any other transaction or mechanism, of
any shares of common stock of TransTexas.
"Trustee" means the trustee under the Indenture.
SECTION 1.2 Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding."
ARTICLE II
DISBURSEMENT AGENT
SECTION 2.1 Appointment and Duties.
(a) TEC and TARC acknowledge and agree that Firstar Bank
of Minnesota, N.A. shall act as the Disbursement Agent under this
Agreement, and that the Disbursement Agent is and will act as a
"securities intermediary" (as defined in the Revised UCC) and as a
"financial intermediary" (as defined in the New York UCC as in effect
on the date hereof). TEC and TARC hereby authorize the Disbursement
Agent to take such actions, exercise such powers and perform such
duties as are expressly delegated to the Disbursement Agent by the
terms of this Agreement, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere herein, the Disbursement Agent shall not have any
duties or responsibilities except those expressly set forth herein,
and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or
otherwise exist against the Disbursement Agent.
(b) The Disbursement Agent shall give written notice to
TEC, TARC and the Construction Supervisor of any action taken by it
hereunder (provided that no such notice need be given under
circumstances in which TEC, TARC and the Construction Supervisor shall
have received such notice by any other Person pursuant to the terms of
any other document); such notice shall be given prior to the taking of
such action, unless the Disbursement Agent determines that to do so
would be detrimental to the interests of TEC, in which event such
notice shall be given promptly after the taking of such action.
(c) The Disbursement Agent shall maintain appropriate
books and records with respect to the Accounts in which shall be
recorded all deposits and disbursements hereunder and any Investments
made by the Disbursement Agent and shall permit TEC, TARC or any of
their respective agents or representatives to inspect and to make
copies of such books and records at TARC's sole cost and expense.
(d) The Disbursement Agent shall use its good faith
efforts and utilize prudence in
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performing its duties hereunder consistent with those of similar and
prudent institutions disbursing disbursement control funds.
(e) On or prior to the last day of each calendar month,
the Disbursement Agent shall deliver to each of TEC, TARC and the
Construction Supervisor a reasonably detailed statement showing the
balance of, disbursements from, reserves to, releases from and
deposits to each of the Accounts.
SECTION 2.2 Rights of Disbursement Agent.
(a) The Disbursement Agent may execute any of its duties
under this Agreement by or through agents or attorneys-in-fact and
shall be entitled to rely on advice of counsel concerning all matters
pertaining to such duties, and protected in respect of any action
taken in good faith and in accordance with such advice.
(b) Neither the Disbursement Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with
this Agreement (except for its or such Person's own gross negligence
or willful misconduct) or (ii) responsible in any manner to TEC for
any recitals, statements, representations or warranties made by TARC
or any officer thereof contained in any certificate, report, statement
or other document referenced or provided for in, or received by the
Disbursement Agent under or in connection with, this Agreement. The
Disbursement Agent shall not be under any obligation to TEC to inspect
the properties, books or records of TARC.
(c) The Disbursement Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document or conversation reasonably believed by it to
be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal
counsel (including, without limitation, counsel to TARC), independent
accountants and other experts selected by the Disbursement Agent. The
Disbursement Agent shall be fully justified in failing or refusing to
take any action hereunder if such action would, in the opinion of the
Disbursement Agent, be contrary to law or the terms of this Agreement.
(d) The Disbursement Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default unless
the Disbursement Agent has received written notice from TEC, TARC or
the Trustee, describing such Event of Default and stating that such
notice is a "notice of default." The Disbursement Agent shall take
such action with respect to such Event of Default as shall be required
by this Agreement. No provision of this Agreement shall require the
Disbursement Agent to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 2.3 Resignation and Removal of Disbursement Agent.
(a) Subject to the appointment and acceptance of a
successor Disbursement Agent as provided below, the Disbursement Agent
may, at any time, give a notice of resignation to TEC,
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TARC and the Trustee. Upon receipt of any such notice of resignation,
TARC shall have the right to appoint a successor Disbursement Agent,
which shall be a bank or trust company reasonably acceptable to TEC
and the Trustee. If no successor Disbursement Agent shall have been
appointed by TARC and shall have accepted such appointment within
thirty (30) days after the retiring Disbursement Agent's giving of
notice of resignation, then the retiring Disbursement Agent may
appoint a successor Disbursement Agent, which shall be a bank or trust
company reasonably acceptable to TEC, TARC and the Trustee.
(b) Each of TEC and TARC shall have the right, upon the
expiration of thirty (30) days following delivery of written notice to
the Disbursement Agent and the other party, to cause the Disbursement
Agent to be relieved of its duties hereunder and to select a successor
Disbursement Agent to serve hereunder, which shall be a bank or trust
company reasonably acceptable to the other party.
(c) Upon the acceptance of any appointment as
Disbursement Agent hereunder by a successor Disbursement Agent, (i)
such successor Disbursement Agent, TEC, TARC, the Construction
Supervisor and the Trustee shall enter into an agreement substantially
identical to this Agreement, (ii) such agreement shall provide that
such successor Disbursement Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of
the retiring Disbursement Agent, and that the retiring Disbursement
Agent shall be discharged from its duties and obligations hereunder
and (iii) the retiring Disbursement Agent shall promptly transfer all
Collateral Investments (and other funds on deposit in the Accounts)
within its possession or control to the possession or control of the
successor Disbursement Agent and shall execute and deliver such
notices, instructions and assignment as may be necessary to transfer
the rights of the Disbursement Agent with respect to the Collateral
(and such other funds) to the successor Disbursement Agent. After any
retiring Disbursement Agent's resignation or removal hereunder as
Disbursement Agent, the provisions of this Article shall continue in
effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Disbursement Agent.
SECTION 2.4 Confirmations. The Disbursement Agent hereby confirms
that (i) it is a "securities intermediary" within the meaning of such term in
the Revised UCC, (ii) each of the Accounts is a "securities account" as such
term in defined in Section 8-501(a) of the Revised UCC, (iii) the Disbursement
Agent shall, subject to the terms of this Agreement, treat the Trustee as
entitled to exercise the rights that comprise any financial asset credited to
the account, (iv) all property delivered to the Disbursement Agent pursuant to
this Agreement will be promptly credited to the appropriate Account in
accordance with the terms hereof and (v) all securities or other property
underlying any financial assets credited to the Accounts shall be registered in
the name of the Disbursement Agent, endorsed to the Disbursement Agent or in
blank or credited to another securities account maintained in the name of the
Disbursement Agent.
SECTION 2.5 "Financial Assets" Election. The Disbursement Agent
hereby agrees that each item of property (whether investment property,
financial asset, security, instrument or cash) credited to each of the Accounts
shall be treated as a "financial asset" within the meaning of Section
8-102(a)(9) of the Revised UCC.
SECTION 2.6 Entitlement Orders. If at any time the Disbursement
Agent shall receive an "entitlement order" (within the meaning of Section
8-102(a)(8) of the Revised UCC) issued by the Trustee and relating to any of
the Accounts, the Disbursement Agent shall comply with such entitlement order
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without further consent by TEC, TARC or any other Person.
SECTION 2.7 Representations, Warranties and Covenants of the
Disbursement Agent. The Disbursement Agent hereby makes the following
representations, warranties and covenants:
(a) Each of the Accounts will be maintained in the manner
set forth herein until termination of this Agreement. The
Disbursement Agent shall not change the name or account number of any
of the Accounts without the prior written consent of the Trustee (in
the case of the TEC Accounts) or TEC (in the case of the TARC
Accounts).
(b) No financial asset is or will be registered in the name
of TEC or TARC, payable to the order of TEC or TARC, or specially
endorsed to TEC or TARC, except to the extent such financial asset has
been endorsed to the Disbursement Agent or in blank.
(c) This Agreement is the valid and legally binding obligation
of the Disbursement Agent.
(d) The Disbursement Agent has not entered into, and until the
termination of this Agreement will not enter into, any agreement with
any other Person relating to any of the Accounts and/or any financial
assets credited thereto pursuant to which it has agreed to comply with
entitlement orders (as defined in Section 8-102(a)(8) of the Revised
UCC) of such Person. The Disbursement Agent has not entered into any
other agreement with TEC, TARC or the Trustee purporting to limit or
condition the obligation of the Disbursement Agent to comply with
entitlement orders as set forth in Section 2.6.
SECTION 2.8 Notice of Adverse Claims. Except for the claims and
interest of TEC, the Trustee and of TARC in the Accounts, the Disbursement
Agent does not know of any claim to, or interest in, the Accounts or in any
"financial asset" (as defined in Section 8-102(a) of the Revised UCC) credited
thereto. If any Person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment, execution or
similar process) against any of the Accounts or in any financial asset carried
therein, the Disbursement Agent will promptly notify TEC, the Trustee and TARC
thereof.
SECTION 2.9 Correspondence. The Disbursement Agent will promptly
send copies of all statements, confirmations and other correspondence
concerning the Accounts and/or any financial assets credited thereto
simultaneously to each of TEC, TARC, the Construction Supervisor and the
Trustee in accordance with Section 8.2.
SECTION 2.10 Subordination of Lien; Waiver of Set-Off. In the event
that the Disbursement Agent has or subsequently obtains by agreement, operation
of law or otherwise a security interest in any of the Accounts or any security
entitlement credited thereto, the Disbursement Agent hereby agrees that such
security interest shall be subordinate to the security interests of the Trustee
and of TEC as assigned to the Trustee. The financial assets and other items
credited to the Accounts will not be subject to deduction, set-off, banker's
lien, or any other right in favor of any Person other than the Trustee, except
that the Disbursement Agent may set off (i) all amounts due to it in respect of
its customary fees and expenses for the routine maintenance and operation of
the Accounts, and (ii) the face amount of any checks which have been credited
to the Accounts but are subsequently returned unpaid because of uncollected or
insufficient funds.
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ARTICLE III
CONSTRUCTION SUPERVISOR
SECTION 3.1 Appointment. TARC hereby designates and appoints ▇▇▇▇▇ &
▇'▇▇▇▇▇, Inc., as the Construction Supervisor under this Agreement, and
authorizes the Construction Supervisor to take such actions, exercise such
powers and perform such duties as are expressly delegated to the Construction
Supervisor by the terms of this Agreement, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere herein, the Construction Supervisor shall not have any
duties or responsibilities, except those expressly set forth herein, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Construction Supervisor.
SECTION 3.2 Duties. In addition to those expressly set forth
elsewhere in this Agreement, the Construction Supervisor shall have the
following duties and responsibilities:
(a) The Construction Supervisor shall spend as much time
at the site of the Project as it determines to be reasonably necessary
to fulfill its duties hereunder but shall, in any event, inspect the
Project at least once per calendar week.
(b) During the term of this Agreement, the Construction
Supervisor shall deliver to the Disbursement Agent, TARC and TEC
reasonably detailed written reports on the progress of work on the
Project (each, a "Status Report"), at least once during each period of
two consecutive calendar months beginning on January 1, March 1, May
1, July 1, September 1 and November 1 of each calendar year. Each
Status Report shall include estimates as to (i) the total amount of
additional expenditures required to be incurred in order to achieve
Substantial Completion of Phase I (the "Phase I Completion Estimate")
and, (ii) the total amount of additional expenditures required to be
incurred in order to achieve Substantial Completion of Phase II (the
"Phase II Completion Estimate"). Such estimates shall be based on
estimates and reasonably detailed supporting documentation that TARC
shall prepare and provide to the Construction Supervisor. The
Construction Supervisor shall review such estimates prepared by TARC
as well as such supporting documentation, and if the Construction
Supervisor, in its sole judgment, believes that such estimates are
reasonable, then the Construction Supervisor shall include such
estimates in the Status Report; provided, however, that if the
Construction Supervisor, in its sole judgment, does not believe that
such estimates are reasonable, then the Construction Supervisor shall
revise such estimates in order to produce estimates that it believes
are reasonable, and shall include such revised estimates in the Status
Report. If the Phase I Completion Estimate exceeds the difference
between the Phase I Budgeted Amount and the aggregate amount of funds
expended in connection with Phase I on or prior to the date of the
Status Report, then the Status Report shall include an instruction to
the Disbursement Agent to reserve from the TEC Disbursement Account to
the Contingency Reserve Account an amount equal to the lesser of such
excess and the total amount remaining in the TEC Disbursement Account.
If the difference between the Phase I Budgeted Amount and the
aggregate amount of funds expended in connection with Phase I on or
prior to the date of the Status Report, exceeds the Phase I Completion
Estimate, then the Status Report shall include an instruction to the
Disbursement Agent to release from the Contingency Reserve Account to
the TEC Disbursement Account an amount equal to the lesser of such
excess and the positive difference, if any, between the total amount
remaining in the Contingency Reserve Account and the Minimum
Contingency Reserve Amount; provided, however, that such Status Report
shall include an instruction to the Trustee to not release any funds
from the Contingency
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Reserve Account to the TEC Disbursement Account, if such release would
cause the total amount of funds in the Contingency Reserve Account to
be less than the Minimum Contingency Reserve Amount.
(c) The Construction Supervisor shall review each
Disbursement Certificate submitted by TARC. The Construction
Supervisor shall deliver a Construction Supervisor Certificate to the
Disbursement Agent approving a disbursement if and only if the
Construction Supervisor determines that:
(i) such disbursement has been requested to (A)
reimburse TARC for a Budgeted Line Item or pay for any other
disbursement contemplated in Section 5.3, (B) reimburse TARC
for the cost of work that has been performed on the Project in
accordance with the Plans, (C) reimburse TARC for the cost of
goods or materials necessary for Substantial Completion of the
Project that have been or will be delivered to the Project
site, (D) reimburse TARC for the cost of progress payments
that have been made pursuant to contracts with other Persons
supplying goods or services to TARC that are necessary for
Substantial Completion of the Project, or (E) reimburse TARC
for the cost of deposits to secure letters of credit for goods
or materials to be delivered to the Project site and used in
the Project;
(ii) the reimbursement for which such disbursement is
requested does not cause the total expenditures for Phase II
to exceed $129,000,000 prior to the delivery by the
Construction Supervisor to the Disbursement Agent of a Coking
Unit Completion Notice;
(iii) with respect to any such disbursement relating
to Phase II and requested prior to the delivery of a Coking
Unit Completion Notice by the Construction Supervisor to the
Disbursement Agent and TEC, after giving effect to such
disbursement, there shall remain funds in the TEC Disbursement
Account that are not reserved in any of the Reserve Accounts;
and
(iv) the Construction Supervisor is satisfied, by
representations from TARC (unless the Construction Supervisor
has reason to believe otherwise) or by any other means, that
all of TARC's transactions in connection with the Project for
which a disbursement is requested are arm's length
transactions with unrelated, unaffiliated Persons or are on
terms that are at least as favorable to TARC as the terms that
could be obtained in a comparable transaction made on an arm's
length basis with unrelated, unaffiliated Persons.
(d) Prior to approving any requested disbursement, the
Construction Supervisor shall (i) review invoices for goods and
services provided to the Project for which TARC seeks reimbursement
from any of the Accounts, (ii) review all contracts of TARC pursuant
to which TARC is required to make progress payments, estimated
payments or deposits and for which TARC seeks a disbursement from any
of the Accounts, (iii) review copies of all lien waivers and releases
provided to TARC by its contractors and suppliers and (iv) review all
other documents and information that the Construction Supervisor deems
appropriate in order to determine the accuracy of the information set
forth in the Disbursement Certificate.
(e) If the Construction Supervisor is unable to approve a
disbursement within five (5) Business Days of receipt of the
Disbursement Certificate, the Construction Supervisor shall
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give written notice to TARC, the Disbursement Agent and TEC to such
effect.
SECTION 3.3 Rights of Construction Supervisor.
(a) The Construction Supervisor may execute any of its
duties under this Agreement by or through agents and shall be entitled
to advice of counsel concerning all matters pertaining to such duties.
(b) Neither the Construction Supervisor nor any of its
officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be liable for any action lawfully taken or omitted to
be taken by it or such Person under or in connection with this
Agreement (except for its or such Person's own gross negligence or
willful misconduct).
(c) The Construction Supervisor shall be entitled to
rely, and shall be fully protected in relying, upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to TARC), independent accountants and
other experts selected by the Construction Supervisor. The
Construction Supervisor shall be fully justified in failing or
refusing to take any action hereunder if such action would, in the
opinion of the Construction Supervisor, be contrary to law or the
terms of this Agreement.
(d) If, with respect to a proposed action to be taken by
it, the Construction Supervisor shall determine in good faith that the
provisions of this Agreement relating to the functions or
responsibilities or discretionary powers of the Construction
Supervisor are or may be ambiguous or inconsistent, the Construction
Supervisor shall notify TARC and TEC (identifying the proposed action
and the provisions that it considers are or may be ambiguous or
inconsistent) and may decline either to perform such function or
responsibility or to exercise such discretionary power unless it has
received the written confirmation of TARC and TEC that it concurs in
the circumstances that the action proposed to be taken by the
Construction Supervisor is consistent with the terms of this Agreement
or is otherwise appropriate.
SECTION 3.4 Resignation and Removal of Construction Supervisor.
(a) Subject to the appointment and acceptance of a
successor Construction Supervisor as provided below, the Construction
Supervisor may, at any time, give a notice of resignation to TEC and
TARC. Upon receipt of any such notice of resignation, TARC shall have
the right to appoint a successor Construction Supervisor, which
successor shall not be affiliated with, or under the control of, TARC
or any of its affiliates. If no successor Construction Supervisor
shall have been appointed by TARC and shall have accepted such
appointment within thirty (30) days after the retiring Construction
Supervisor's giving of notice of resignation, then the retiring
Construction Supervisor may appoint a successor Construction
Supervisor, which shall be (i) reasonably acceptable to TARC but not
affiliated with, or under the control of, TARC or any of its
affiliates or (ii) one of the alternate Construction Supervisors set
forth on Schedule I hereto (each, an "Alternate").
(b) TARC and TEC shall each, individually, have the
right, upon the expiration of thirty (30) days following delivery of
written notice to the Construction Supervisor, TARC, TEC
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and the Disbursement Agent, to cause the Construction Supervisor to be
relieved of its duties hereunder and to select a successor
Construction Supervisor to serve hereunder, which shall be either (i)
reasonably acceptable to the other party or (ii) one of the
Alternates; provided, that the successor Construction Supervisor shall
not be affiliated with or under the control of, TARC or any of its
affiliates.
(c) Upon the acceptance of any appointment as
Construction Supervisor hereunder by a successor Construction
Supervisor, (i) such successor Construction Supervisor, the
Disbursement Agent, TEC and TARC shall enter into an agreement
substantially identical to this Agreement, and (ii) such agreement
shall provide that such successor Construction Supervisor shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Construction Supervisor, and
that the retiring Construction Supervisor shall be discharged from its
duties and obligations hereunder. After any retiring Construction
Supervisor's resignation or removal hereunder as Construction
Supervisor, the provisions of this Article shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as Construction Supervisor.
ARTICLE IV
ACCOUNTS
SECTION 4.1 Establishment of the TEC Accounts.
(a) On the date hereof, TEC has opened and shall
hereafter cause to be maintained with and at the corporate trust
department of the Disbursement Agent a custodial account (the "TEC
Disbursement Account") under the sole dominion and control of the
Trustee, in the name of TEC but indicating the lien of the Trustee.
Funds shall be released from the TEC Disbursement Account only in
accordance with the provisions of Article V.
(b) TEC shall maintain with the Disbursement Agent a
segregated subaccount of the TEC Disbursement Account (the
"Contingency Reserve Account") under the sole dominion and control of
the Trustee, in the name of TEC but indicating the lien of the
Trustee. Funds shall be released from the Contingency Reserve Account
only in accordance with the provisions of Section 4.4(b) and Article
V.
(c) TEC shall maintain with the Disbursement Agent a
segregated subaccount of the TEC Disbursement Account (the "Feedstock
Reserve Account") in the name of TEC but indicating the lien of the
Trustee. Funds shall be released from the Feedstock Reserve Account
only in accordance with the provisions of Article V.
(d) TEC shall maintain with the Disbursement Agent a
segregated subaccount of the TEC Disbursement Account (the "Operating
Reserve Account") under the sole dominion and control of the Trustee,
in the name of TEC but indicating the lien of the Trustee. Funds
shall be released from the Operating Reserve Account only in
accordance with the provisions of Article V.
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SECTION 4.2 Establishment of the TARC Accounts.
(a) On the date hereof, TARC has opened and shall
hereafter cause to be maintained with and at the corporate trust
department of the Disbursement Agent a separate custodial account (the
"TARC Disbursement Account") under the sole dominion and control of
the Trustee, in the name of TARC but indicating the lien of the
Trustee as assignee. Funds shall be released from the TARC
Disbursement Account only in accordance with the provisions of Article
V.
(b) TARC shall maintain with the Disbursement Agent a
separate custodial account (the "Interest Accumulation Account") under
the sole dominion and control of the Trustee, in the name of TARC but
indicating the lien of the Trustee as assignee. Funds shall be
released from the Interest Accumulation Account only in accordance
with the provisions of Article V.
SECTION 4.3 Deposits to the Accounts.
(a) On the date hereof, TEC shall deposit $73,293,184.54
in the TEC Disbursement Account. Thereafter, TEC shall deposit
promptly all funds that it receives pursuant to the TransTexas
Dividend/Share Repurchase Program.
(b) On the date hereof, TARC shall deposit in the TARC
Disbursement Account $135,100,255.92 out of the proceeds received by
it from the loan made pursuant to the TARC Intercompany Loan
Documents. Thereafter, TARC shall deposit promptly all funds that it
receives pursuant to the TransTexas Dividend/Share Repurchase Program.
(c) TARC may deposit in the TARC Disbursement Account
insurance proceeds in accordance with Section 4.6 of the Mortgage.
(d) TARC may deposit in the TARC Disbursement Account the
Net Cash Proceeds from Asset Sales in accordance with Section 8.4 of
the TARC Loan Agreement.
SECTION 4.4 Reserves to and Releases from the Reserve Accounts.
(a) Initially, $25,500,000 of the amount deposited in the
TEC Disbursement Account shall be reserved in the Operating Reserve
Account. Upon any additional deposits to the TEC Disbursement Account
pursuant to the provisions of Section 4.3(a), the amount of such
additional deposits shall be reserved in the Contingency Reserve
Account until the aggregate amount reserved therein equals the Minimum
Contingency Reserve Amount, and thereafter, upon any additional
deposits to the TEC Disbursement Account pursuant to the provisions of
Section 4.3(a), the amount of such additional deposits shall be
reserved in the Feedstock Reserve Account, until the aggregate amount
reserved therein equals the difference between $50,000,000 and the
aggregate amount of Feedstock Disbursements made on or prior to the
date on which such amount is so reserved.
(b) Upon receipt of each Status Report, the Disbursement
Agent shall comply promptly (or as promptly as practicable when funds
become available in the appropriate Account) with the instructions, if
any, therein regarding the reserve of funds from the TEC Disbursement
Account to the Contingency Reserve Account or the release of funds
from the Contingency Reserve Account to the TEC Disbursement Account.
Upon delivery by the Construction Supervisor to the Disbursement Agent
of a Coking Unit Completion Notice, the Disbursement
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Agent shall release from the Contingency Reserve Account to the TEC
Disbursement Account all remaining funds in the Contingency Reserve
Account.
SECTION 4.5 Security Interest in the TEC Accounts.
(a) As security for the prompt and complete payment and
performance in full of all obligations under the Indenture and the
Notes, TEC has agreed, pursuant to the TEC Security Agreement, to
grant to the Trustee a security interest in and a lien on and to
pledge and assign to the Trustee all of its right, title and interest
in and to the TEC Accounts and all funds and investments deposited
therein.
(b) The Disbursement Agent acknowledges notice of, and
consents to the terms and provisions of, the TEC Security Agreement
and agrees that notwithstanding anything to the contrary in this or
any other agreement relating to the TEC Accounts, the TEC Accounts are
and will be subject to the terms and conditions of the TEC Security
Agreement, will be held in trust on behalf of the Trustee and not
commingled with any ordinary deposit or commercial bank account, will
be maintained with the corporate trust department of the Disbursement
Agent solely for the Trustee pursuant to the TEC Security Agreement
and will be subject to the written instructions of the Trustee given
in accordance with the TEC Security Agreement.
SECTION 4.6 Security Interest in the TARC Accounts.
(a) As security for the prompt and complete payment and
performance in full of all obligations under the TARC Intercompany
Loan Documents, including without limitation the TARC Intercompany
Note, TARC has agreed, pursuant to the TARC Security Agreement, to
grant to TEC a security interest in and a lien on and to pledge and
assign to TEC all of its right, title and interest in and to the TARC
Accounts and all funds deposited therein. Furthermore, pursuant to
the TEC Security Agreement, TEC has assigned its interest in any
collateral securing the TARC Intercompany Note, including without
limitation the TARC Accounts, to the Trustee.
(b) The Disbursement Agent acknowledges notice of, and
consents to the terms and provisions of, the TARC Security Agreement
and the TEC Security Agreement and agrees that notwithstanding
anything to the contrary in this or any other agreement relating to
the TARC Accounts, the TARC Accounts are and will be subject to the
terms and conditions of the TARC Security Agreement and the TEC
Security Agreement, will be held in trust on behalf of TEC and the
Trustee and not commingled with any ordinary deposit or commercial
bank account, will be maintained with the corporate trust department
of the Disbursement Agent solely for TEC and the Trustee pursuant to
the TARC Security Agreement and the TEC Security Agreement and will be
subject to the written instructions of TEC and the Trustee given in
accordance with the TARC Security Agreement and the TEC Security
Agreement.
SECTION 4.7 Certain Agreements with respect to the Accounts.
(a) In accordance with written instructions received from
TARC, the Disbursement Agent shall, unless otherwise instructed by the
Trustee, (i) invest amounts on deposit in each of the Accounts in such
Cash Equivalents as TEC may select (in the case of the TEC Accounts)
or as TARC may select (in the case of the TARC Accounts) and credit
such Cash Equivalents to the respective Account, (ii) deposit and hold
in the Interest Accumulation Account all interest paid on the Cash
Equivalents referenced in clause (i) above and invest such interest in
such Cash
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Equivalents as TARC may select and credit such Cash Equivalents to the
respective Account, (iii) reinvest other proceeds of the Cash
Equivalents referred to in clause (i) or (ii) above that may mature or
be sold in such Cash Equivalents as TEC may select (in the case of the
TEC Accounts) or as TARC may select (in the case of the TARC Accounts)
and credit such Cash Equivalents to the respective Account (all the
Cash Equivalents referenced in clauses (i) and (ii) above being,
collectively, "Collateral Investments") and (iv) deposit and hold in
the respective Accounts all proceeds that are not invested or
reinvested in Collateral Investments.
(b) All disbursements and releases made pursuant to this
Agreement shall be made by the Disbursement Agent irrespective of, and
without deduction for, any counterclaim, defense, recoupment or
set-off and shall be final, and the Disbursement Agent will not seek
to recover from TEC for any reason any such payment once made.
(c) All service charges and fees with respect to this
Agreement or the Accounts shall be paid by TARC in accordance with the
provisions of Section 6.1(d).
(d) The Trustee and TEC shall be entitled to exercise any
and all rights of TARC in respect of the Accounts in accordance with
the terms of the TEC Security Agreement and the TARC Security
Agreement, respectively, and the Disbursement Agent shall comply with
such exercise, subject to the provisions of Section 8.8.
SECTION 4.8 Valuation of Accounts. For purposes of determining the
value of any amounts in the Accounts, all Collateral Investments shall be
valued at the lower of cost or market value.
ARTICLE V
DISBURSEMENTS FROM THE ACCOUNTS
SECTION 5.1 Priority Disbursements. At any time after the TARC
Intercompany Note is due and payable, upon maturity, acceleration thereof or
otherwise, funds in any of the Accounts specified by TEC shall be disbursed by
the Disbursement Agent to any account specified by TEC, upon receipt of a
certificate of TEC substantially in the form of Exhibit B hereto (each, a "TEC
Certificate"), certifying that such amounts will be applied promptly in
satisfaction of obligations of TARC under the TARC Intercompany Loan Documents.
SECTION 5.2 Conditions to Disbursement of Funds. Funds in the
Accounts shall be disbursed for the account of TARC pursuant to the provisions
of Section 5.3(a) or Section 5.3(b) only upon satisfaction of each of the
conditions set forth below in this Section 5.2. All other disbursements from
the Accounts shall be made only upon satisfaction of each of the conditions set
forth in Section 5.2(d) and Section 5.2(e).
(a) TARC shall have delivered to the Disbursement Agent,
TEC and the Construction Supervisor a written notice substantially in
the form of Exhibit C hereto (the "Disbursement Certificate"),
specifying the amount and date of the requested disbursement. The
Disbursement Certificate shall be executed by a duly authorized
officer of TARC and shall be completed and certified to be accurate by
TARC. The Disbursement Certificate shall specifically identify the
nature of each expense.
(b) In addition to the copy of the Disbursement
Certificate referenced above and the
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documents referenced therein (but without duplication), TARC shall
have delivered, or caused the delivery, to TEC and the Construction
Supervisor copies of invoices, purchase orders, contracts, delivery
receipts, payroll ledgers and any further information or certificates
required hereunder and such other information as TEC or the
Construction Supervisor may from time to time reasonably require to
determine the accuracy of the information set forth in the
Disbursement Certificate.
(c) The Construction Supervisor shall have reviewed and
approved the Disbursement Certificate and shall have sent a written
notice substantially in the form of Exhibit D hereto (the
"Construction Supervisor Certificate") to the Disbursement Agent and
TEC confirming its approval.
(d) If the Project has been materially injured or damaged
by fire or other casualty, funds equal to the amount of any insurance
proceeds received in respect of such fire or other casualty shall have
been deposited in the TARC Disbursement Account in accordance with the
provisions of the Mortgage.
(e) An Event of Default shall not have occurred and be
continuing.
SECTION 5.3 Disbursements from the Accounts.
(a) To the extent that the amount of funds in the TARC
Disbursement Account is greater than zero, all disbursements from the
Accounts (other than Special Purpose Disbursements) shall be made out
of the TARC Disbursement Account until the amount of funds in such
account is exhausted, and thereafter, as long as the TEC Disbursement
Account contains any funds that have not been reserved in any of the
Reserve Accounts, all disbursements from the Accounts (other than
Special Purpose Disbursements) shall be made from the TEC Disbursement
Account out of funds that have not been reserved in any of the Reserve
Accounts. If the amount of funds in the TEC Disbursement Account that
has not been reserved in any of the Reserve Accounts is zero,
disbursements from the Accounts (other than Special Purpose
Disbursements) shall be made first from the Contingency Reserve
Account, until the amount of funds therein is exhausted, and second
from the Feedstock Reserve Account, until the amount of funds therein
is exhausted, third from the Operating Account, until the amount of
funds therein is exhausted and fourth from the Interest Accumulation
Account, until the amount of funds therein is exhausted.
(b) Disbursements of funds specified in a Disbursement
Certificate for the purchase of feedstock to be used in the start up
and subsequent operation of the Delayed Coking Unit and/or Phase I
("Feedstock Disbursements") shall be made out of the Feedstock Reserve
Account; provided, that the Construction Supervisor shall have
previously delivered either a Coking Unit Completion Notice or a Phase
I Completion Notice to the Disbursement Agent.
(c) Notwithstanding any provision hereof to the contrary,
on the first Business Day after the initial deposit of funds into the
TARC Disbursement Account, the Disbursement Agent shall make a
disbursement (the "Initial Disbursement") to TARC in the amount of
$32,000,000 from the TARC Disbursement Account; provided, that the
Disbursement Agent has received a certificate of a duly authorized
officer of TARC certifying that at least $25,000,000 of the Initial
Disbursement shall be applied towards the construction of the Project
and that the remainder of the Initial Disbursement shall be applied
towards the payment of outstanding accounts payable.
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(d) Disbursements ("TARC Notes Disbursements") of funds
specified in a Disbursement Certificate for the payment of interest
on, or the redemption, purchase, defeasance or other retirement of,
any or all of TARC's Guaranteed First Mortgage Discount Notes due 2002
or TARC's Guaranteed First Mortgage Notes due 2002 (collectively,
"TARC Notes") shall be made out of the TARC Disbursement Account.
(e) If requested by TARC pursuant to a Disbursement
Certificate, once during each calendar month, the Disbursement Agent
shall make a disbursement from the Operating Reserve Account (an
"Operating Disbursement") to TARC in the amount requested by TARC (or
such lesser amount as may be reserved in the Operating Reserve
Account); provided, that the amount of each Operating Disbursement may
not exceed $1,500,000 (or $4,500,000 if such amount is to be disbursed
in December 1997); provided, further, that if less than $1,500,000 is
disbursed pursuant to this Section 5.3(e) in any calendar month (or
less than $4,500,000 is disbursed in December 1997), then each such
difference shall be carried forward and shall be added to the amounts
that may be disbursed pursuant to this Section 5.3(e) in one or more
subsequent months.
(f) If requested by TARC or TEC, the Disbursement Agent
shall make disbursements from the Interest Accumulation Account (an
"Interest Disbursement") to TARC or TEC, as the case may be, in the
amount requested by such party (or such lesser amount as may be on
deposit in the Interest Accumulation Account);
(g) Subject to the terms and conditions of the TARC
Security Agreement and the TEC Security Agreement, the Disbursement
Agent shall sell all or such portion of the investments held in the
appropriate Accounts (with the investments having the shortest
maturities sold first) as shall be necessary to fund the requested
disbursement in accordance with the terms hereof and in accordance
with written instructions of TEC or TARC, as the case may be,
delivered to the Disbursement Agent at least one Business Day prior to
any proposed Date of Disbursement.
(h) Subject to the provisions of this Section 5.3, if
TARC has delivered a Disbursement Certificate with all required
supporting information, the Construction Supervisor has delivered a
Construction Supervisor Certificate and the other conditions specified
in Section 5.2 have been satisfied, the Disbursement Agent shall make
the requested disbursement from the appropriate Account by the later
to occur of (i) the requested Date of Disbursement or (ii) the second
Business Day after satisfaction of all such conditions.
SECTION 5.4 Completion of the Project.
(a) Upon Mechanical Completion (in accordance with the
Plans) of the Delayed Coking Unit, the Hydrodesulfurization Unit and
the related Sulfur Recovery System (with a capacity of 160 long tons
per day), all of which are included within Phase I and described in
the Plans, TARC shall give written notice of such Mechanical
Completion to the Construction Supervisor. Promptly after receipt of
such notice, the Construction Supervisor shall determine, by whatever
means it deems appropriate, whether it agrees that such Mechanical
Completion has occurred, and if the Construction Supervisor so agrees,
then the Construction Supervisor shall provide prompt written notice
of such Mechanical Completion (a "Coking Unit Completion Notice") to
the Disbursement Agent and TEC.
(b) Upon Substantial Completion (in accordance with the
Plans) of Phase I, TARC shall give written notice of such Substantial
Completion to the Construction Supervisor.
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Promptly after receipt of such notice, the Construction Supervisor
shall determine, by whatever means it deems appropriate, whether it
agrees that such Substantial Completion has occurred, and if the
Construction Supervisor so agrees, then the Construction Supervisor
shall provide prompt written notice of such Substantial Completion (a
"Phase I Completion Notice") to the Disbursement Agent and TEC.
(c) Upon Substantial Completion (in accordance with the
Plans) of the Project, TARC shall give written notice of such
Substantial Completion to the Construction Supervisor. Promptly after
receipt of such notice, the Construction Supervisor shall determine,
by whatever means it deems appropriate, whether it agrees that such
Substantial Completion has occurred, and if the Construction
Supervisor so agrees, then the Construction Supervisor shall provide
prompt written notice of such Substantial Completion (a "Project
Completion Notice") to the Disbursement Agent and TEC.
(d) If the Construction Supervisor has provided a Project
Completion Notice to the Disbursement Agent and TEC and either (i)
sixty-five (65) days have passed since the date of such Project
Completion Notice and TARC has furnished to the Disbursement Agent and
TEC a clear lien and privilege certificate, dated after such
sixty-five (65) days have passed, from the St. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Clerk of
Court, reflecting no outstanding mechanic's or materialman's liens
with respect to the Project, or (ii) TARC has obtained an endorsement
to its title policy for the Mortgage Property affirmatively insuring
against all liens that may be asserted with respect to the Project and
has delivered evidence of such endorsement to the Disbursement Agent
and TEC, then, within five (5) days after the satisfaction of such
conditions, the Disbursement Agent shall liquidate all investments in
the Accounts and release all amounts remaining on deposit in the
Accounts to TARC in accordance with written instructions provided by
TARC. The date of such release shall be the "Final Disbursement
Date."
ARTICLE VI
COVENANTS OF TARC AND TEC
SECTION 6.1 Covenants of TARC.
(a) Copies of the Contracts, Etc. TARC shall deliver to
the Construction Supervisor and, upon the request of the Disbursement
Agent or TEC, to the Disbursement Agent or TEC (i) as promptly as
practicable, and in any event no later than five (5) Business Days
after the execution thereof, copies of any contract for work or
materials for the Project, or series of related contracts for
substantially the same work or materials, with payments in an amount
equal to or in excess of $100,000, together with all amendments and
modifications thereto, and, upon the request of the Disbursement
Agent, TEC or the Construction Supervisor, copies of any other
contracts for work or materials for the Project, and (ii) as promptly
as practicable, copies of all work permits, building permits and other
required permits.
(b) Access to Information. TARC shall permit and cause
each of its Subsidiaries to permit the Construction Supervisor, TEC
and the Disbursement Agent on reasonable notice and at such times as
shall be reasonably requested (i) to inspect the Plans and the Budget,
(ii) to inspect and review (and receive copies of, if requested) (A)
all contracts relating to the Project, (B) all books and records of
TARC and any of its Subsidiaries related to the Project and (C) such
other information as such Person shall reasonably request relating to
the Project, including copies
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of receipts, invoices and other supporting documentation to
substantiate the costs to be paid from the proceeds of any requested
disbursement hereunder, (iii) to attend any job progress meetings and
(iv) to discuss the Project and other matters related thereto with any
Project engineer, any contractor or subcontractor performing work or
supplying material for the Project or any employee of TARC and its
Subsidiaries.
(c) Delivery of Prepaid Goods and Materials. TARC shall
cause all goods and materials paid for with funds disbursed from any
of the Accounts to be delivered to (to the extent TARC controls such
delivery), and used in, the Project in due course in accordance with
the Plans or cause such goods and materials to be (i) sold for cash
and the proceeds of such sale deposited in the TARC Disbursement
Account or (ii) exchanged for other goods and materials that are
delivered to, and used in, the Project, in the case of each of clause
(i) and (ii) above, to the extent not prohibited pursuant to the terms
of the TARC Intercompany Loan Agreement.
(d) Payment of Fees and Expenses. TARC shall promptly,
but no later than thirty (30) days after its receipt of an invoice,
pay the reasonable fees and expenses of the Disbursement Agent and the
Construction Supervisor in connection with this Agreement. To the
extent available, such fees and expenses may be paid through the TARC
Disbursement Account or the TEC Disbursement Account by including such
amounts in a Disbursement Certificate.
SECTION 6.2 Covenants of TEC. TEC shall give prompt written notice
to the Disbursement Agent upon (i) the occurrence of an Event of Default known
to it and (ii) upon cure or waiver of any such Event of Default known to it.
ARTICLE VII
ARBITRATION
SECTION 7.1 Arbitration. Any disagreement with respect to the
release of funds from any of the Accounts, or any related disagreement with
respect to the construction, meaning or effect of this Agreement, arising out
of this Agreement or concerning the rights or obligations of the parties
hereunder shall be submitted to arbitration, one arbitrator to be chosen by
TARC, one by the Construction Supervisor, and a third to be chosen by the first
two arbitrators before they enter into arbitration. The arbitrators shall be
impartial and shall be active or retired persons with experience in
construction, development and/or construction lending. The third arbitrator
chosen by the first two arbitrators shall also have experience in the petroleum
refining, energy or petrochemical industry.
In the event that either party should fail to choose an arbitrator
within fifteen (15) days following a written request by the other party to
enter into arbitration, the requesting party may choose two arbitrators who
shall, in turn, choose the third arbitrator. If the first two arbitrators have
not chosen a third arbitrator at the end of fifteen (15) days following the
last day of the selection of the first two arbitrators, each of the first two
arbitrators shall name three candidates, of whom the other arbitrator shall
eliminate two, and the determination of the third arbitrator shall be made from
the remaining two candidates by drawing lots. Each party shall present its
case to the arbitrators within fifteen (15) days following the date of the
appointment of the third arbitrator. The decision of a majority of the three
arbitrators shall be final and binding upon both parties. Judgment may be
entered upon the arbitration award in any court having jurisdiction. Each
party shall bear the expense of its own arbitrator and shall jointly and
equally bear with the other the expense of the third arbitrator and of the
arbitration. In the event that the two arbitrators are chosen by one party, as
above provided, the expense of the arbitrators
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and the arbitration shall be equally divided between the two parties. Any such
arbitration shall take place in New Orleans, Louisiana unless some other
location is mutually agreed upon by the parties. The arbitrators shall resolve
any dispute arising hereunder in a manner consistent with the intent of the
parties as expressed in this Agreement. The arbitrators shall not award any
punitive, consequential or exemplary damages or any amount in excess of the
amount to be released from the Accounts. All awards by the arbitrators shall
be payable solely from the amounts on deposit in the Accounts.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Amendments, Etc. No amendment, modification or waiver of
any provisions of this Agreement may be made except by written agreement of the
parties hereto.
SECTION 8.2 Notices, Etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be sufficiently
given if made by hand delivery, by telex, by facsimile or registered or
certified mail, postage prepaid, return receipt requested, addressed as
follows:
To the Disbursement Agent:
Firstar Bank of Minnesota, N.A.
Corporate Trust Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
To TEC:
TransAmerican Energy Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇
with a copy to:
Gardere & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
20
22
To the Construction Supervisor:
▇▇▇▇▇ & ▇'▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇'▇▇▇▇▇
To TARC:
TransAmerican Refining Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇
with a copy to:
Gardere & ▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Any party hereto may by notice to each other party designate such
additional or different addresses as shall be furnished in writing by such
party. Any notice or communication to any party shall be deemed to have been
given or made as of the date so delivered, if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if faxed; five
calendar days after mailing, if sent by registered or certified mail; and one
business day after mailing, if sent by overnight delivery service (except that
a notice of change of address shall not be deemed to have been given until
actually received by the addressee).
SECTION 8.3 No Waiver, Remedies. No failure on the part of the
Disbursement Agent, TEC or any Holder to exercise, and no delay in exercising,
any right under any Security Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.
SECTION 8.4 Indemnity and Expenses.
(a) TARC agrees to indemnify the Disbursement Agent and
the Construction Supervisor, and their officers, directors, employees,
agents, attorneys-in-fact and affiliates (the "Indemnified Parties"),
from and against any and all claims, losses and liabilities directly
or indirectly caused by, related to or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except
claims, losses or liabilities resulting from (i) valid claims of TARC
against such Indemnified Party arising out of a breach of this
Agreement by such Indemnified Party or (ii) such Indemnified Party's
bad faith, gross negligence or willful misconduct, in either case, as
determined by a final judgment of a court of competent jurisdiction.
21
23
(b) TARC shall, promptly upon demand but no later than
thirty (30) days after its receipt of an invoice, pay to the
Disbursement Agent and the Construction Supervisor the amount of any
and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the
Disbursement Agent, TEC or the Construction Supervisor may incur in
connection with (i) this Agreement, (ii) the exercise or enforcement
of any rights hereunder or (iii) the failure by TARC to perform or
observe any of the provisions hereof.
(c) The issuance of a Construction Supervisor's
Certificate or the making of any disbursement from any of the Accounts
or part thereof shall not constitute an approval or acceptance of the
work or material by TEC, the Construction Supervisor or the
Disbursement Agent, nor shall it give rise to any liability or
responsibility related to:
(i) the quality of the work, the quantity of the
work, the rate or progress in completion of the work, or the
sufficiency of materials or labor being supplied in connection
therewith; and
(ii) any errors, omissions, inconsistencies or
other defects of any nature in the Plans.
(d) Any inspection of the work that either TEC, the
Disbursement Agent or the Construction Supervisor may choose to make,
whether through any consulting engineer, agent or employee or officer,
during the progress of the work shall be solely for TEC's, the
Disbursement Agent's or the Construction Supervisor's information, and
under no circumstances will any such inspection be deemed to have been
made for the purpose of supervising or superintending the work or for
the information or protection of any right or interest of any Persons
other than TEC, the Disbursement Agent, the Construction Supervisor or
the Holders.
(e) In no event shall TEC, the Disbursement Agent or the
Construction Supervisor be liable for any Liens that may be filed by
third parties against the Project.
SECTION 8.5 Execution in Counterparts. This Agreement may be
executed in any number of separate counterparts and by different parties hereto
in separate counterparts, each of which, when so executed, shall be deemed to
be an original and all of which, taken together, shall constitute one and the
same agreement. Delivery of an executed counterpart of a signature page to
this Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 8.6 Relationship of Disbursement Agent. The Disbursement
Agent shall not be under any responsibility in respect of the validity or
sufficiency of this Agreement or the execution and delivery hereof or in
respect of the validity or sufficiency of any document or agreement delivered
in connection herewith, including, but not limited to, any document or
agreement the forms of which are attached hereto as Exhibits to this Agreement.
The Disbursement Agent shall not be accountable for the use or application of
the funds in the Accounts or for disbursements therefrom, except as set forth
in this Agreement.
SECTION 8.7 Governing Law; Submission to Jurisdiction, Waiver of Jury
Trial; Etc. THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND THE RIGHTS OF
THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW EXCEPT SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW. EACH OF THE PARTIES HERETO (OTHER
22
24
THAN THE DISBURSEMENT AGENT) HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF
NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. EACH OF THE PARTIES HERETO (OTHER THAN THE DISBURSEMENT AGENT)
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF
THE PARTIES HERETO (OTHER THAN THE DISBURSEMENT AGENT) IRREVOCABLY CONSENTS, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH PARTY AT THE ADDRESS OF SUCH PARTY SET FORTH HEREIN,
SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE DISBURSEMENT AGENT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE OTHER PARTIES HERETO IN ANY OTHER JURISDICTION.
SECTION 8.8 Certain Rights. None of the Disbursement Agent, the
Trustee, the Construction Supervisor, TEC and TARC shall have any rights with
respect to the Accounts, except as specifically set forth in the TARC Loan
Agreement, the TEC Security Agreement, the TARC Security Agreement and this
Agreement. If at any time the Disbursement Agent shall receive a notice, order
or instruction from any Person, which conflicts with a notice, order or
instruction given by the Trustee, the Trustee's notice, order or instruction
shall always prevail. All provisions of this Agreement are subject to the
foregoing sentence.
SECTION 8.9 Confidentiality. The parties agree that they and their
employees have maintained and will maintain, in confidence, all data,
summaries, reports or information of all kinds, whether oral or written,
provided pursuant to this Agreement or acquired or developed in any manner from
any party's personnel or files (the "Confidential Information"), and that they
have not and will not reveal the same to any persons not employed by the party
from whom such information was obtained except: (a) at the written direction of
such party; (b) to the extent necessary to comply with the law, reporting
requirements imposed by the Securities and Exchange Commission or in connection
with any arbitration proceeding, or the valid order of a court of competent
jurisdiction, in which event the disclosing party shall so notify the party
from whom such information was obtained as promptly as practicable (and, if
possible, prior to making any disclosure) and shall seek confidential treatment
of such information; (c) as part of its normal reporting or review procedure to
its parent company, its auditors and its attorneys, and such parent company,
auditors and attorneys agree to be bound by the provisions of this Section; (d)
in order to enforce any of its rights pursuant to, or in any other dispute with
respect to, this Agreement; (e) if, at the time of disclosure to the recipient,
the Confidential Information is in the public domain; (f) if, after disclosure
to the recipient, the Confidential Information becomes part of the public
domain by written publication through no fault of the recipient; or (g) to any
one or more holders of Notes and their representatives and agents.
23
25
SECTION 8.10 Termination. This Agreement shall terminate
automatically thirty (30) days following disbursement of all funds remaining in
the Accounts.
SECTION 8.11 Invalidity. If, for any reason whatsoever, any one or
more of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid in a particular case or in all cases, it
is the intent of the parties hereto that such circumstances shall not have the
effect of rendering any of the other provisions of this Agreement inoperative,
unenforceable or invalid, and the inoperative, unenforceable or invalid
provisions shall be construed as if it were written so as to effectuate to the
maximum extent possible, the intent of the parties hereto.
SECTION 8.12 Assignment. This Agreement is personal to the parties
hereto, and the rights and duties hereunder of any party hereto shall not be
assignable, except with the prior written consent of the other parties hereto
or as described in Section 2.3 or in Section 2.4; provided, however, that the
rights and obligations of TEC hereunder may be assigned to the Trustee in
accordance with the provisions of the TEC Security Agreement. In any event,
this Agreement shall inure to and be binding upon the parties and their
successors and permitted assigns.
SECTION 8.13 Entire Agreement. This Agreement contains the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any and all prior agreements, understandings and commitments,
whether oral or written. This Agreement may only be amended as provided
herein.
SECTION 8.14 Captions. Captions in this Agreement are for
convenience only and shall not be considered or referenced in resolving
questions of interpretation of this Agreement.
24
26
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
TRANSAMERICAN REFINING CORPORATION
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
TRANSAMERICAN ENERGY CORPORATION
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
FIRSTAR BANK OF MINNESOTA, N.A.,
as Disbursement Agent
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
FIRSTAR BANK OF MINNESOTA, N.A.,
as Trustee
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
▇▇▇▇▇ & ▇'▇▇▇▇▇, INC.,
as Construction Supervisor
By:
--------------------------------------
Name:
--------------------------------------
Title:
--------------------------------------
25
27
Schedule I
Alternate Construction Supervisors
Muse, Stancil & Company Pace Consultants
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ernst & Young / ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation
600 ▇▇▇▇▇▇, Suite 2150 ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ Associates ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Engineering Co.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
1
28
Exhibit A
Budget
------
Daily Capacity
Expenditures --------------
to Complete (BPD)
-----------
(dollars in millions)
PHASE 1:
Crude Unit . . . . . . . . . . . . . $ 3 200,000
Delayed Coking Unit . . . . . . . . 27 75,000
Naphtha Pretreater . . . . . . . . . 12 30,000
▇▇. ▇ ▇▇▇▇▇▇▇▇ . . . . . . . . . . . 9 12,000
HDS Unit . . . . . . . . . . . . . . 24 60,000
Sulfur Recovery System . . . . . . . 53 370(1)
Offsite Facilities/Tankage . . . . . 46 N/A
Other . . . . . . . . . . . . . . 3 N/A
Engineering and Administrative . . . 7 N/A
Contingencies (2) . . . . . . . . . 39 N/A
---
Total Phase I . . . . . . . . . . . $223
PHASE II:
FCC Unit . . . . . . . . . . . . . . 115 100,000
FCC Flue Gas Scrubber . . . . . . . 14 N/A
Alkylation Unit . . . . . . . . . . 24 26,000
Offsite Facilities/Tankage . . . . . 26 N/A
Other . . . . . . . . . . . . . . 2 N/A
Engineering and Administrative . . . 3 N/A
Contingencies (2) . . . . . . . . . 20 N/A
---
Total Phase II . . . . . . . 204
---
Total Phase I and
Phase II . . . . . . . . . $427
====
(1) Units are LT/D. Capacity can be increased to 510 LT/D with oxygen
enrichment.
(2) To the extent expenditures exceed the approved capital budget for a
unit or units, the contingencies portion of the budget will be
allocated to specific units.
A-1
29
Exhibit B
[Form of TEC Certificate]
[Date]
Firstar Bank of Minnesota, N.A.,
as Disbursement Agent under the Disbursement
Agreement referenced below
Corporate Trust Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
TransAmerican Refining Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ & O'Brien, Inc.,
as Construction Supervisor under the Disbursement
Agreement referenced below
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇'▇▇▇▇▇
Ladies and Gentlemen:
We refer to (i) the Disbursement Agreement dated as of June
13, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Disbursement Agreement") among TransAmerican Refining Corporation, a Texas
corporation ("TARC"), TransAmerican Energy Corporation, a Delaware corporation
("TEC"), Firstar Bank of Minnesota, N.A., as Disbursement Agent, Firstar Bank
of Minnesota, N.A., as Trustee, and ▇▇▇▇▇ & O'Brien, Inc., as Construction
Supervisor, and (ii) the Loan Agreement dated as of June 13, 1997 (as amended,
supplemented or otherwise modified from time to time, the "TARC Loan
Agreement") between TEC and TARC. Capitalized terms used but not defined
herein have the respective meanings given to such terms in the Disbursement
Agreement and the TARC Loan Agreement.
TEC hereby requests that the Disbursement Agent disburse funds
from the Accounts in an aggregate amount equal to $______________, on
______________ (the "Date of Disbursement"). In connection with the requested
disbursement of funds, TEC hereby represents, warrants and certifies that
B-1
30
such funds will be applied promptly to the satisfaction of TARC's obligations
under the TARC Intercompany Loan Documents. Such disbursement is to be made by
liquidating investments in the Accounts and making payment to TEC in accordance
with the following procedures and instructions:
[Insert procedures and instructions]
TRANSAMERICAN ENERGY CORPORATION
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
B-2
31
Exhibit C
[Form of Disbursement Certificate]
DISBURSEMENT CERTIFICATE NO. ___
[Date]
Firstar Bank of Minnesota, N.A.,
as Disbursement Agent under the Disbursement
Agreement referenced below
Corporate Trust Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
TransAmerican Energy Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ & ▇'▇▇▇▇▇, Inc.,
as Construction Supervisor under the Disbursement
Agreement referenced below
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇'▇▇▇▇▇
Ladies and Gentlemen:
We refer to (i) the Disbursement Agreement dated as of June
13, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Disbursement Agreement") among TransAmerican Refining Corporation, a Texas
corporation ("TARC"), TransAmerican Energy Corporation, a Delaware corporation
("TEC"), Firstar Bank of Minnesota, N.A., as Disbursement Agent, Firstar Bank
of Minnesota, N.A., as Trustee, and ▇▇▇▇▇ & ▇'▇▇▇▇▇, Inc., as Construction
Supervisor, and (ii) the Loan Agreement dated as of June 13, 1997 (as amended,
supplemented or otherwise modified from time to time, the "TARC Loan
Agreement") between TEC and TARC. Capitalized terms used but not defined
herein have the respective meanings given to such terms in the Disbursement
Agreement and the TARC Loan Agreement.
TARC hereby requests that the Construction Supervisor approve
the disbursement of, and the Disbursement Agent disburse, funds from the
Account specified below in an aggregate amount equal to $__________, on
________ __, ____ (the "Date of Disbursement"). Such funds will be used as
follows (with specific reference to each line item in the Budget, the amount
requested to be disbursed for such line item, the amount previously disbursed
in respect of the same line item and whether such funds will be expended in
connection with Phase I or Phase II):
[Insert specification of use of funds]
C-1
32
The undersigned hereby certifies that the following statements
are true on the date hereof and will be true on the Date of Disbursement:
(a) No event has occurred and is continuing that
constitutes an Event of Default under the TARC Loan Agreement and no
Event of Default under the TARC Loan Agreement would result from such
disbursement or from the application of the proceeds thereof.
(b) All work and materials for which disbursement is
requested hereunder conform in all material respects with the Plans.
(c) The amount of the requested disbursement has been
incurred for costs of the Project. This disbursement is requested
expressly for the purpose of reimbursing TARC for actual expenditures
on the Project. TARC has provided to the Construction Supervisor
access to supporting invoices, receipts and other documentation for
all costs relating to the Project for which this disbursement is
requested.
(d) All amounts due and payable to any of our contractors
or suppliers in connection with the Project have been paid in full or
are not overdue or are being contested in good faith in appropriate
proceedings. We have used commercially reasonable efforts to cause
each such contractor and supplier that has completed work in
connection with the Project to provide lien waivers and releases and
subordination agreements to the Disbursement Agent, the Construction
Supervisor and TEC. Attached hereto are true, correct and complete
copies of all such lien waivers and releases provided to us by such
contractors and suppliers not heretofore delivered to the Disbursement
Agent, the Construction Supervisor and TEC.
(e) Attached hereto is an endorsement to TARC's title
policy for the Project site indicating that, as of a date not more
than three months prior hereto, there has been no change in the state
of title with respect to the Project site except for changes that are
permitted by the Indenture and the Mortgage.
(f) Attached hereto is evidence of the insurance coverage
required by the Indenture, the TARC Security Agreement and the
Mortgage (if different from the coverage reflected in evidence of
insurance previously provided in connection with a Disbursement
Certificate).
(g) TARC has received all authorizations, approvals,
permits and licenses from governmental authorities that are required,
as of the date hereof, for the Project; all work on the Project as of
the date hereof has been performed substantially in accordance with
applicable laws; and set forth below is a summary of each governmental
authorization, approval, permit and license related to the Project
that has been applied for, obtained, amended, challenged, revoked or
terminated since the date of the last Disbursement Certificate.
(h) Phase I is proceeding in such a manner that it is
estimated to be completed by ______________, and Phase II is
proceeding in such a manner that it is estimated to be completed by
______________.
(i) A copy of this Disbursement Certificate and the
attached documentation have been delivered to TEC and the Construction
Supervisor at their respective addresses for notices as set forth in
the Disbursement Agreement.
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33
(j) All conditions to this disbursement have been met in
accordance with the terms of the Disbursement Agreement.
TRANSAMERICAN REFINING CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
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34
Exhibit D
[Form of Construction Supervisor Certificate]
[Date]
Firstar Bank of Minnesota, N.A.,
as Disbursement Agent under the Disbursement
Agreement referenced below
Corporate Trust Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
TransAmerican Energy Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇
TransAmerican Refining Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇
Re: Disbursement Certificate No. [____].
Ladies and Gentlemen:
We refer to (i) the Disbursement Agreement dated as of June
13, 1997 (as amended, supplemented or otherwise modified from time to time, the
"Disbursement Agreement") among TransAmerican Refining Corporation, a Texas
corporation ("TARC"), TransAmerican Energy Corporation, a Delaware corporation
("TEC"), Firstar Bank of Minnesota, N.A., as Disbursement Agent, Firstar Bank
of Minnesota, N.A., as Trustee, and ▇▇▇▇▇ & O'Brien, Inc., as Construction
Supervisor, and (ii) the Loan Agreement dated as of June 13, 1997 (as amended,
supplemented or otherwise modified from time to time, the "TARC Loan
Agreement") between TEC and TARC. Capitalized terms used but not defined
herein have the respective meanings given to such terms in the Disbursement
Agreement and the TARC Loan Agreement.
The Construction Supervisor has reviewed (i) from time to
time, and within the last calendar week, the progress of construction of the
Project and (ii) Disbursement Certificate No. ____.
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35
Our review and observations were performed in accordance with generally
accepted technical consulting practice and included such investigations,
observations and review as we in our professional capacity deemed necessary
under the circumstances within the scope of our service. Except as required by
Section 3.2 of the Disbursement Agreement, we have relied upon statements and
representations of TARC set forth in Disbursement Certificate No. ___ and have
not independently verified the accuracy or completeness of such statements and
representations. With respect to TARC's request for disbursement of funds
pursuant to Disbursement Certificate No. ___, the Construction Supervisor
hereby (i) approves such request to the extent of $_____________ and (ii)
rejects such request to the extent of $_____________ for the following reasons:
[insert reasons for rejection of request]
▇▇▇▇▇ & ▇'▇▇▇▇▇, INC.,
as Construction Supervisor under the
Disbursement Agreement
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
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