1
EXHIBIT 4.10
================================================================================
TRANSAMERICAN REFINING CORPORATION,
as Pledgor
and
FIRST UNION NATIONAL BANK
as Trustee
_________________________________________
PLEDGE AGREEMENT
Dated as of March 14, 1997
_________________________________________
$36,000,000 Senior Secured Notes due March 14, 1998
================================================================================
2
TABLE OF CONTENTS
Page
----
Section 1. Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Representations, Warranties and Covenants of the Pledgor . . . 2
Section 3. Administration of the Pledged Collateral . . . . . . . . . . . 4
Section 4. Release and Substitution of Pledged Collateral . . . . . . . . 4
Section 5. Voting Rights, Dividends, Etc . . . . . . . . . . . . . . . . . 4
Section 6. Default; Remedies . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7. Trustee Appointed Attorney-in-Fact . . . . . . . . . . . . . . 7
Section 8. Purchase of Pledged Collateral by Trustee or Holders . . . . . 7
Section 9. Disposition of Proceeds . . . . . . . . . . . . . . . . . . . . 7
Section 10. Waiver of Claims . . . . . . . . . . . . . . . . . . . . . . . 7
Section 11. Remedies Cumulative; No Waiver . . . . . . . . . . . . . . . . 8
Section 12. Additional Collateral . . . . . . . . . . . . . . . . . . . . 8
Section 13. Further Assurances . . . . . . . . . . . . . . . . . . . . . . 8
Section 14. Indemnification and Expenses . . . . . . . . . . . . . . . . . 9
Section 15. Registration Rights, etc . . . . . . . . . . . . . . . . . . . 9
Section 16. Pledgor's Indenture Obligations Absolute . . . . . . . . . . . 10
Section 17. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 18. Termination . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 19. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 20. Binding Agreement; Assignment . . . . . . . . . . . . . . . . 11
Section 21. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 22. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 23. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 24. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2
3
Page
----
Section 25. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 26. Cooperation of TransTexas . . . . . . . . . . . . . . . . . . 11
Section 27. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 11
3
4
PLEDGE AGREEMENT
This PLEDGE AGREEMENT, together with any amendments, replacements and
supplements hereafter entered into (the "Pledge Agreement"), dated as of March
14, 1997, between TransAmerican Refining Corporation (together with its
successors and assigns, the "Pledgor") and First Union National Bank, (together
with its successors and assigns, the "Trustee"), is made for the benefit of the
Holders. As used herein, all capitalized terms not otherwise defined herein
shall have the meanings set forth in the Indenture (the "Indenture"), dated the
date hereof, between the Pledgor and the Trustee, relating to the Pledgor's
Senior Secured Notes due March 14, 1998 (the "Notes"), as amended from time to
time in accordance with the terms thereof.
W I T N E S S E T H:
WHEREAS, the Pledgor will issue $36,000,000 aggregate principal amount
of Notes;
WHEREAS, the Pledgor is the legal and beneficial owner of the issued and
outstanding shares of capital stock of TransTexas Gas Corporation, a Texas
Corporation ("TransTexas") as more fully set forth on Schedule A attached
hereto (the "TransTexas Shares"); and
WHEREAS, in order to secure the payment and performance in full of the
Indenture obligations of the Pledgor, the parties hereto desire to set forth
their mutual understanding and certain agreements regarding the terms and
conditions of the pledge of the Pledged Collateral (as defined below) made by
the Pledgor to the Trustee for the benefit of the Holders of the Notes;
WHEREAS, the Pledgor has issued the Mortgage Notes and has pledged all
of the TransTexas Shares for the benefit of the holders of Mortgage Notes
pursuant to the Mortgage Notes Indenture;
WHEREAS, the holders of the Mortgage Notes have consented to release the
Lien of the Mortgage Notes Company Pledge Agreement on up to 5,000,000 shares
of the TransTexas Shares and the other Company Pledge Collateral (as such term
is defined in the Mortgage Notes Indenture) related thereto in order to permit
the Pledgor to obtain the financing contemplated by the Indenture; and
NOW, THEREFORE, in consideration of the premises and other benefits to
the Pledgor, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Pledge. As collateral security for the indefeasible
payment and performance in full of the Indenture obligations of the Pledgor,
the Pledgor hereby pledges, assigns, transfers, sets over and delivers unto the
Trustee, and hereby grants unto the Trustee for the benefit of FIRST, the
Holders and unto their respective successors and assigns, and SECOND the
holders of the Mortgage Notes and unto their respective successors and assigns,
a continuing security interest in all of the right, title and interest of the
Pledgor in, to and under any and all of the following described property,
rights and interests (collectively, the "Pledged Collateral"):
(a) 5,000,000 shares of the TransTexas Shares;
(b) all securities, certificates and instruments
representing or evidencing ownership of any of the property described in
Section 1(a) hereof (the property described in Section 1(a) and Section 1(b)
hereof being herein referred to collectively as the "Pledged Securities");
(c) any additional property of the kind or type described
in this Section 1 required to be supplied under the terms of this Pledge
Agreement; and
1
5
(d) all proceeds and products of the Pledged Securities,
including without limitation dividends, distributions, cash, instruments and
other property or securities, now or hereafter at any time or from time to time
received or receivable or otherwise distributed or distributable in respect of
or in exchange for any or all of the Pledged Securities;
TO HAVE AND TO HOLD the Pledged Collateral, together with all rights, titles,
interests, powers, privileges and preferences pertaining or incidental thereto,
unto the Trustee for the benefit of FIRST, the Holders and unto their
respective successors and assigns, and SECOND, the holders of the Mortgage
Notes and unto their respective successors and assigns.
Section 2. Representations, Warranties and Covenants of the
Pledgor. The Pledgor hereby represents and warrants (as of the date of
execution hereof as to the Pledged Collateral existing on such date and as of
the date of acquisition as to the Pledged Collateral acquired subsequently),
covenants and agrees that:
(a) The Pledgor is the legal and beneficial owner of the
Pledged Collateral, holds the Pledged Collateral free and clear of all Liens
(except for (i) the security interest granted hereunder to the Trustee for the
benefit of (A) first, the Holders of Notes, and (B) second, the holders of the
Mortgage Notes, and (iii) Liens for taxes not yet payable), and has not made
and will not make any other pledge, assignment, mortgage, hypothecation or
transfer of the Pledged Collateral. The Pledged Securities are not subject to
any put, call, option or other right in favor of any other person whatsoever.
(b) The Pledged Securities have been duly authorized and
validly issued and are fully paid and non-assessable.
(c) Upon delivery of physical certificates evidencing the
Pledged Securities to the Trustee, the Trustee will have a perfected first
priority security interest in the Pledged Securities, securing the indefeasible
payment and performance in full of the Indenture obligations of the Pledgor.
(d) The Pledgor has the requisite corporate power and
authority to pledge the Pledged Collateral in the manner hereby done or
contemplated and will defend its title thereto against the lawful claims of all
persons whomsoever and shall maintain and preserve the security interest
granted hereunder with respect to the Pledged Collateral as long as this Pledge
Agreement shall remain in full force and effect.
(e) Neither the execution and delivery of this Pledge
Agreement by the Pledgor, the performance by the Pledgor of its obligations
hereunder, nor the transactions herein contemplated will (i) violate the
Pledgor's charter or bylaws, (ii) violate the terms of any agreement,
indenture, mortgage, deed of trust, equipment lease, instrument or other
document to which the Pledgor is a party, including, without limitation, the
Mortgage Notes Indenture and the Mortgage Notes Company Pledge Agreement, (iii)
violate any law, order, rule or regulation applicable to the Pledgor or any
court or any government, regulatory body or administrative agency or other
governmental body having jurisdiction over the Pledgor or its properties, or
(iv) result in or require the creation or imposition of any Lien (other than
the Lien contemplated hereby), upon or with respect to any of the property now
owned or hereafter acquired by the Pledgor, which violation or conflict would
have a material adverse effect on the financial condition, business, assets or
liabilities of the Pledgor or on the value of the Pledged Collateral or a
material adverse effect on the security interests hereunder; provided, that a
foreclosure by the Trustee with respect to the Pledged Collateral may result in
a "Change of Control" under the indenture relating to the 11 1/2% Senior
Secured Notes due 2002 of TransTexas Gas Corporation.
(f) The Pledged Securities include 5,000,000 shares of the
issued and outstanding shares of Capital Stock of TransTexas as described in
Schedule A attached hereto, and as of the date of execution hereof, there are
no outstanding options, warrants or other rights to subscribe for or purchase
any property described in Section l(a).
2
6
(g) No consent or approval which has not been obtained
prior to the date hereof of any other person or entity and no authorization,
approval or other action (other than delivery of physical certificates
evidencing the Pledged Securities) by, and no notice to or filing with any
governmental body (other than UCC filings), regulatory authority or securities
exchange, was or is necessary as a condition to the validity of the pledge
hereunder of the Pledged Collateral, and such pledge is effective to vest in
the Trustee the rights of the Trustee in the Pledged Collateral as set forth
herein. There are no restrictions on the transferability of any of the Pledged
Collateral transferred or delivered by the Pledgor hereunder or, except for
restrictions related to federal and state securities laws governing the sale of
"restricted stock" or "control stock," with respect to the foreclosure,
transfer or disposition thereof by the Trustee.
(h) The Pledgor shall deliver to the Trustee concurrently
with the execution of this Pledge Agreement or, to the extent acquired
subsequent to the date of execution hereof, immediately upon the Pledgor's
acquisition thereof: (i) all certificates and instruments representing the
Pledged Securities, and (ii) each other item of Pledged Collateral (including
all certificates, instruments and notes representing any such Pledged
Collateral). Any and all Pledged Securities delivered to the Trustee shall be
accompanied by undated duly executed powers in blank and by such other
instruments of transfer or documents as the Trustee may reasonably request.
The Trustee shall hold the certificates representing the Pledged Securities
delivered to it in its own name or in the name of its nominee, all in form and
substance satisfactory to the Trustee. The Pledgor hereby acknowledges that
the Trustee may, in its discretion, appoint one or more financial institutions
to act as the Trustee's agent in holding in custodial accounts, instruments or
other financial assets in which the Trustee is granted a security interest
hereunder, including, without limitation, certificates of deposit and other
instruments evidencing short term obligations.
(i) The Trustee shall at all times have full and free
access during normal business hours to all of the books, correspondence and
records of the Pledgor relating to the Pledged Collateral (other than
information that is privileged and confidential), and the Trustee and its
representatives may examine the same, make abstracts therefrom and make
photocopies thereof, and the Pledgor agrees to render to the Trustee, at the
Pledgor's cost and expense, such clerical and other assistance as may be
reasonably requested by the Trustee with regard thereto.
(j) The Pledgor shall use its best efforts to prohibit
TransTexas from issuing any securities of the type required to be pledged
hereunder unless such securities are promptly pledged and delivered hereunder
to the Trustee in accordance with Section 2(h).
(k) If, while this Pledge Agreement is in effect, any
stock dividend, stock split, reclassification, readjustment, reorganization,
merger, consolidation, exchange offer, tender offer or other change in the
capital structure, including the creation of any subscription or other rights
relating to the Pledged Securities, is declared or made, or proposed to be
declared or made, by TransTexas or any other issuer of Pledged Collateral, all
substituted and additional securities or interest issued with respect to the
Pledged Collateral and evidenced by certificates shall be endorsed in blank by
the Pledgor promptly upon receipt thereof or otherwise appropriately
transferred to the Trustee in negotiable form, and all certificates or
instruments evidencing such securities shall be delivered to the Trustee to be
held under the terms of this Pledge Agreement in the same manner as, and as a
part of, the Pledged Collateral. All Pledged Securities shall be evidenced by
one or more certificates. Any securities that may be issued upon exercise of
any subscription or other rights relating to the Pledged Securities shall be
endorsed in blank and delivered to the Trustee with any necessary powers.
(l) The Pledgor shall pay and discharge all taxes,
assessments and governmental charges or levies against any Pledged Collateral
prior to delinquency thereof and shall keep all Pledged Collateral free of all
unpaid charges whatsoever, unless contested in good faith and appropriate
reserves have been set aside in accordance with GAAP.
3
7
(m) The Pledgor has, independently and without reliance on
the Trustee or any Holder and based on such documents and information as it
deemed appropriate, made its own credit analysis and decision to enter into
this Pledge Agreement.
(n) The Pledgor shall promptly notify the Trustee (i) of
any material changes in any fact or circumstance represented or warranted by
the Pledgor with respect to any material portion of the Pledged Collateral,
(ii) of any material impairment of the Pledged Collateral and (iii) of any
claim, action or proceeding affecting title to all or any of the Pledged
Collateral.
(o) The chief executive office and principal place of
business of the Pledgor is located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇. The Pledgor shall not relocate its principal place of business or chief
executive office to another county or state unless the Pledgor gives 30 days'
prior written notice to the Trustee, which notice shall specify the county and
state into which such relocation is to be made.
Section 3. Administration of the Pledged Collateral. The
Trustee shall administer the Pledged Collateral in accordance with the
provisions hereof and of the Indenture.
Section 4. Release and Substitution of Pledged Collateral. The
Pledged Collateral shall not be released from the security interest created
hereunder and no property shall be substituted for any of the Pledged
Collateral, except (a) in accordance with the provisions of Section 12.6 of the
Indenture and (b) in accordance with the provisions of Section 18 hereof. The
Trustee shall return the physical certificates and related stock powers
evidencing Pledged Collateral in its possession when so permitted by the
Indenture or this Pledge Agreement.
Section 5. Voting Rights, Dividends, Etc.
(a) Until an Event of Default (as defined below) shall
have occurred and be continuing:
(i) except as otherwise provided in this Pledge Agreement,
the Pledgor shall be entitled to exercise any and all voting or
consensual rights and powers, including subscription rights, accruing to
an owner of the Pledged Collateral or any part thereof for any purpose
not inconsistent with the terms of this Pledge Agreement or any
agreement giving rise to any of the Indenture obligations; and
(ii) the Trustee shall execute and deliver to the Pledgor
or cause to be executed and delivered to the Pledgor, all such proxies,
powers of attorney, dividend orders and other instruments as the Pledgor
may reasonably request for the purpose of enabling it to exercise the
voting or consensual rights and powers which the Pledgor is entitled to
exercise pursuant to the foregoing Section 5(a)(i).
(b) Upon the occurrence and during the continuance of an
Event of Default, all rights of the Pledgor to exercise the voting or
consensual rights and powers which the Pledgor would otherwise be entitled to
exercise pursuant to Section 5(a)(i) shall automatically cease, and all such
rights shall thereupon become vested in the Trustee, which shall then have the
sole and exclusive right and authority to exercise, in its sole discretion, all
such voting and consensual rights and powers.
(c) The Trustee shall have the sole and exclusive right
and authority to receive and retain as Pledged Collateral all dividends,
distributions and other payments which are paid on the Pledged Collateral in
cash or property. Any and all money and other property paid over to or
received by the Trustee pursuant to the provisions of this Section 5(c) shall
be retained by the Trustee as additional Pledged Collateral hereunder and shall
be administered and applied in accordance with the provisions of this Pledge
Agreement and the Indenture. All dividends and interest payments which are
received by the Pledgor contrary to the provisions of this Section 5(c) shall
be received in trust for the benefit of the Trustee, shall be segregated from
other funds of
4
8
the Pledgor and shall be forthwith paid over to the Trustee as Pledged
Collateral in the same form as so received (with any necessary endorsement).
Section 6. Default; Remedies.
(a) Defined. For purposes of this Pledge Agreement, the
terms "Default" and "Event of Default" shall have the respective meanings
provided in the Indenture.
(b) Exercise of Remedies Under the Pledge Agreement. If
an Event of Default shall have occurred and be continuing to the actual
knowledge of the Trustee, the Trustee shall commence the taking of such actions
(or refrain from taking actions) toward collection or enforcement of this
Pledge Agreement and the Pledged Collateral (or any portion thereof), including
without limitation action toward foreclosure upon any Pledged Collateral, as it
deems appropriate in its sole discretion or as instructed by the Requisite
Holders (as defined in Section 6(f) below) to the extent allowed by law. If
any Event of Default that was the basis for the commencement of such action
shall have been cured or waived, and, in the case where there has been an
acceleration, rescission of such acceleration shall have occurred, in each case
in accordance with the terms of the Indenture, any direction to the Trustee to
take any action in connection with the aforementioned notice shall be deemed
rescinded upon notification by that percentage of Holders necessary to effect
such waiver with respect to such Event of Default as provided for in the
Indenture. The Trustee shall have no obligation to take any collection or
enforcement action except upon satisfaction of the conditions set forth in
Section 6.7 and Section 6.11 of the Indenture applied to this Pledge Agreement.
(c) Remedies Generally. If an Event of Default shall have
occurred and be continuing, the Trustee itself or by its agents or attorneys
may (i) exercise any or all of its rights and remedies hereunder, under the
Indenture, the Security Agreement or any other instrument or agreement
securing, evidencing or relating to the Indenture obligations or under
applicable laws (including all of the rights and remedies of a secured creditor
under the Uniform Commercial Code then in effect in the State of New York; (the
"NYUCC"), (ii) retain possession of the Pledged Collateral or (iii) sell,
assign, transfer, or dispose of, endorse and deliver the whole or, from time to
time, any part of the Pledged Collateral at public or private sale or sales, at
any exchanges, brokers board or at any of the Trustee's offices or elsewhere,
for cash, upon credit or for other property, for immediate or future delivery,
and, to the extent permitted by applicable law, for such price or prices and on
such other terms as the Trustee may deem commercially reasonable. Upon
consummation of any such sale, the Trustee shall have the right to assign,
transfer, endorse and deliver to the purchaser or purchasers thereof the
Pledged Collateral so sold. Each such purchaser at any such sale shall hold
the property sold absolutely free from any claim or right on the part of the
Pledgor, and the Pledgor hereby waives (to the full extent permitted by law)
all rights of redemption, stay or appraisal which the Pledgor now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. The Trustee shall give the Pledgor ten (10) Business Days'
written notice (which the Pledgor agrees shall be deemed to be reasonable
notification within the meaning of Section 9-504(3) of the NYUCC) of the
Trustee's intention to make any such public or private sale. Any such sale
shall be held at such time or times and at such place or places as the Trustee
may fix. At any such sale, the Pledged Collateral, or portion thereof to be
sold, may be sold as an entirety or in separate portions, as the Trustee may,
in its sole discretion, determine. The Trustee shall not be obligated to make
any sale of the Pledged Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of the Pledged Collateral may have
been given. The Trustee may, without notice or publication, adjourn any public
or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case sale of all or any part of the Pledged Collateral is made
on credit for future delivery, the Pledged Collateral so sold may be retained
by the Trustee until the sale price is paid by the purchaser or purchasers
thereof, but the Trustee shall not incur any liability in case any such
purchaser or purchasers shall fail to take up and pay for the Pledged
Collateral so sold and, in case of any such failure, such Pledged Collateral
may be sold again upon like notice. As an alternative to exercising the power
of sale herein conferred upon it, the Trustee may proceed by suit or suits at
law or in equity to exercise its remedies regarding the Pledged Collateral and
sell the Pledged Collateral or any portion thereof
5
9
pursuant to judgment or decree of a court or courts having competent
jurisdiction. If under mandatory requirements of applicable law, the Trustee
shall be required to make disposition of the Pledged Collateral within a period
of time that does not permit the giving of notice to the Pledgor as
hereinbefore provided, the Trustee need give the Pledgor only such notice of
disposition as shall be reasonably practicable in view of such mandatory
requirements of law.
(d) Remedies; Obtaining the Collateral Upon Default. The
Pledgor agrees that if any Event of Default shall have occurred and be
continuing, then and in every such case, and in addition to the rights and
remedies available to a secured party under any applicable provision of the
NYUCC, or any other applicable law, the Trustee may:
(i) personally, or by agents or attorneys, immediately
take possession of the Pledged Collateral or any part thereof from the
Pledgor or any other person who then has possession of any part thereof,
with or without notice or process of law, and for that purpose may enter
upon the Pledgor's premises where any of the Pledged Collateral is
located and remove the same and use in connection with such removal any
and all services, supplies, aids and other facilities of the Pledgor;
(ii) instruct the obligor or obligors on any agreement,
instrument or other obligation constituting Pledged Collateral to make
any payment or render any performance required by the terms of such
agreement, instrument or obligation directly to the Trustee or its
designee;
(iii) sell or otherwise liquidate, or direct the Pledgor
to sell or otherwise liquidate, any or all investments made in whole or
in part with the Pledged Collateral or any part thereof, and take
possession of the proceeds of any such sale or liquidation; and
(iv) take possession of the Pledged Collateral or any part
thereof by directing the Pledgor in writing to deliver the same to the
Trustee at any place or places designated by the Trustee, in which event
the Pledgor shall at its own expense:
(A) forthwith cause the same to be moved to the place or
places so designated by the Trustee and there delivered to the
Trustee;
(B) store and keep any Pledged Collateral so delivered to
the Trustee at such place or places pending further action by the
Trustee as provided in this Section 6(d); and
(C) while any such Pledged Collateral shall be so stored
and kept, provide such guard and maintenance services as shall be
necessary to protect the same and to preserve and maintain such
Pledged Collateral in good condition;
it being understood that the Pledgor's obligation so to deliver the
Pledged Collateral is of the essence of this Pledge Agreement and that,
accordingly, upon application to a court of equity having jurisdiction,
the Trustee shall be entitled to a decree requiring specific performance
by the Pledgor of such obligation.
(e) Preventing Impairment of the Pledged Collateral.
Regardless of whether or not there shall have occurred any Default or Event of
Default, the Trustee may institute and maintain or cause in the name of the
Pledgor or of the Trustee, or any of them, to be instituted and maintained,
such suits and proceedings as the Trustee may be advised by counsel shall be
necessary or expedient to prevent any impairment of the security interest in or
perfection of the Pledged Collateral in contravention of the terms of the
Indenture. The Pledgor agrees not to knowingly take or permit to be taken any
action which would impair the Pledged Collateral or the Trustee's rights in the
Pledged Collateral.
6
10
(f) Requisite Holders. For purposes of this Section 6,
"Requisite Holders" means the Holder or Holders of a majority of the aggregate
principal amount of the outstanding Notes.
Section 7. Trustee Appointed Attorney-in-Fact. The Pledgor
hereby constitutes and appoints the Trustee its attorney-in-fact for the
purpose of carrying out the provisions, but subject to the terms and
conditions, of this Pledge Agreement and taking any action and executing any
instrument, including, without limitation, any financing statement or
continuation statement, and taking any other action to maintain the validity,
perfection, priority and enforcement of the security interest intended to be
created hereunder, that the Trustee may reasonably deem necessary or advisable
to accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest; provided, however, that nothing herein contained shall be
construed as requiring or obligating the Trustee to make any commitment or to
make any inquiry as to the nature or sufficiency of any payment received by it,
or to present or file any claim or notice, or to take any action with respect
to the Pledged Collateral or any part thereof or the monies due or to become
due in respect thereof or any property covered thereby, and no action taken or
omitted shall give rise to any defense, counterclaim or right of action against
the Trustee, unless the Trustee's actions are taken or omitted to be taken with
gross negligence or bad faith or constitute willful misconduct.
Section 8. Purchase of Pledged Collateral by Trustee or Holders.
At any sale of the Pledged Collateral, whether pursuant to power of sale or
otherwise hereunder, the Trustee or any Holder may, to the extent permitted by
applicable law, bid for and purchase, free from any right of redemption, stay
or appraisal (all such rights being hereby waived and released by the Pledgor
to the extent permitted by law), the Pledged Collateral or any part thereof or
an interest therein and upon compliance with the terms of such sale may hold,
retain, exploit, resell or otherwise dispose of such property without further
accountability to the Pledgor for the proceeds of such sale (except in the
event that there is a surplus of such proceeds in excess of the Indenture
obligations, in which case, the Trustee shall account to the Pledgor for such
surplus). The Pledgor will execute and deliver or cause to be executed and
delivered, such instruments, endorsements, assignments, waivers, certificates
and other documents and take such further action as the Trustee shall request
in connection with any such sale.
Section 9. Disposition of Proceeds. The proceeds of any sale of
the whole or any part of the Pledged Collateral, together with any other monies
held by the Trustee under the provisions of this Pledge Agreement, shall be
applied by the Trustee in accordance with the provisions of the Indenture.
Section 10. Waiver of Claims. Except as otherwise provided in
this Pledge Agreement, THE PLEDGOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, NOTICE OF JUDICIAL HEARING IN CONNECTION WITH THE TRUSTEE'S
TAKING POSSESSION OR THE TRUSTEE'S DISPOSITION OF ANY OF THE PLEDGED
COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICES AND
HEARINGS FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT THE
PLEDGOR WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE
UNITED STATES OR OF ANY STATE, and to the full extent permitted by applicable
law, the Pledgor hereby further waives:
(a) all damages occasioned by such taking of possession or
disposition except any damages which are the direct result of the Trustee's
gross negligence, bad faith or willful misconduct;
(b) all other requirements as to the time, place and terms
of sale or other requirements, with respect to the enforcement of the Trustee's
rights and powers hereunder; and
(c) except as provided in Section 6(c) hereof, all rights
of redemption, appraisement, valuation, stay, marshalling of assets, extension
or moratorium, existing at law or in equity, by statute or otherwise, now or
hereafter in force, in order to prevent or delay the enforcement of this Pledge
Agreement or the
7
11
sale or other disposition of the Pledged Collateral or any portion thereof, and
the Pledgor, for itself and all who may claim under it, insofar as it now or
hereafter lawfully may, hereby waives all such rights.
Any sale of, or the exercise of any options to purchase, or any other
realization upon, any Pledged Collateral shall operate to divest all right,
title, interest, claim and demand, at law or in equity, of the Pledgor therein
and thereto, and shall be a perpetual bar both at law and in equity against the
Pledgor and against any and all persons claiming or attempting to claim the
Pledged Collateral so sold, optioned or realized upon, or any part thereof,
through and under the Pledgor.
Section 11. Remedies Cumulative; No Waiver. Each right, power
and remedy of the Trustee provided for herein, in the Indenture, the Security
Agreement or in any other agreement pursuant to which a Lien is created in
favor of the Trustee for the benefit of any Holder, or now or hereafter
existing at law or in equity, by statute or otherwise, shall be cumulative and
concurrent and shall be in addition to every other right, power or remedy of
the Trustee or any Holder provided for herein, in the Indenture, the Security
Agreement or in any other agreement pursuant to which a Lien is created in
favor of the Trustee for the benefit of any Holder or now or hereafter existing
at law or in equity, by statute or otherwise. No failure on the part of the
Trustee or any Holder to exercise, and no delay in exercising, any right, power
or remedy hereunder, or under the Indenture, the Security Agreement or under
any other agreement pursuant to which a Lien is created in favor of the Trustee
for the benefit of any Holder or now or hereafter existing at law or in equity,
by statute or otherwise, shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. No notice to or demand on the Pledgor hereunder shall, of itself,
entitle the Pledgor to any other or further notice or demand in the same,
similar or other circumstances.
Section 12. Additional Collateral. Without notice or consent of
the Pledgor and without impairment of the security interests and rights created
by this Pledge Agreement, the Trustee may accept from any person or persons
additional collateral or other security for the Indenture obligations. Neither
the creation of the security interests created hereunder nor the acceptance of
any such additional collateral or security shall prevent the Trustee from
resorting to such additional collateral or security or to the Pledged
Collateral, in any order, without affecting the Trustee's rights hereunder.
Section 13. Further Assurances. The Pledgor agrees (a) that it
shall, at its own expense, promptly file or record such notices, financing
statements, continuation statements or other documents and take all further
action as may be necessary to perfect, maintain and protect the perfection of
the security interests of the Trustee hereunder or to enable the Trustee to
exercise and enforce its rights and remedies hereunder with respect to the
Pledged Collateral, and as the Trustee may reasonably request, such instruments
to be in form and substance satisfactory to the Trustee, and (b) that it shall,
at its own expense, do such further acts and things and execute and deliver to
the Trustee such additional conveyances, assignments, endorsements, agreements
and instruments as the Trustee may at any time reasonably request in connection
with the administration and enforcement of this Pledge Agreement or relative to
the Pledged Collateral or any part thereof or in order to assure and confirm
unto the Trustee its rights, powers and remedies hereunder.
Section 14. Indemnification and Expenses.
(a) The Pledgor agrees to indemnify the Trustee from and
against any and all claims, losses and liabilities growing out of or resulting
from this Pledge Agreement (including, without limitation, enforcement of this
Pledge Agreement), except (i) valid claims (as determined by a nonappealable
order of any court of competent jurisdiction) arising out of a breach by the
Trustee of this Agreement or (ii) claims, losses or liabilities resulting from
the Trustee's gross negligence, bad faith, recklessness or willful misconduct,
as determined by a final judgment of a court of competent jurisdiction. The
indemnification of the Trustee set forth in the immediately preceding sentence
is cumulative and not exclusive of any indemnity of the Trustee set forth in
the Indenture.
8
12
(b) The Pledgor will pay upon demand to the Trustee the
amount of any and all reasonable out-of-pocket expenses, including the
reasonable fees and charges of its counsel and of any experts and agents, that
the Trustee may incur in connection with (i) the negotiation, execution and
enforcement of this Pledge Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from or other realization upon, any of
the Pledged Collateral, (iii) the exercise or enforcement of any of the rights
of the Trustee or the Holders hereunder or (iv) the failure by the Pledgor to
perform or observe any of the provisions hereof, and all amounts so incurred by
the Trustee shall be entitled to the benefits of Section 7.7 of the Indenture.
Section 15. Registration Rights, etc.
(a) If the Trustee determines that the registration of any
of the securities included in the Pledged Collateral under, or other compliance
with, the Securities Act or any similar Federal or state law is desirable, upon
or at any time after an Event of Default and acceleration of the Notes in
accordance with Section 6.2 of the Indenture, the Pledgor will use its best
efforts to cause such registration or compliance to be effectively made, at no
expense to the Trustee or to the Holders, and to continue any such registration
effective for such time as may be reasonably necessary in the opinion of the
Trustee. The Pledgor will reimburse the Trustee upon demand for any expenses
incurred by the Trustee (including reasonable attorneys' fees) incurred in
connection therewith, which obligation to pay such expenses shall be secured
hereunder.
(b) If the Pledgor is unable to effect a public sale of
any or all of the Pledged Collateral or if the Trustee determines that it is
desirable to sell the Pledged Collateral in one or more private sales, the
Trustee may limit such sales to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to distribution or resale. The
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable to the seller than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner. The
Trustee shall be under no obligation to delay a sale of any of the Pledged
Collateral for the period of time necessary to permit the issuer of such
securities to register such securities for public sale under the Securities Act
or under applicable state securities laws even if such issuer would agree to do
so.
(c) The Pledgor further agrees to do or use all reasonable
efforts to cause to be done, to the extent the Pledgor may legally do so, all
such other acts and things as may be necessary to make such sale or sales of
all or any part of the Pledged Collateral valid and binding and in compliance
with any and all applicable laws, rules and regulations and orders and decrees
of any and all courts having jurisdiction over such sales, all at the Pledgor's
expense. The Pledgor further agrees that a breach of any of the covenants
contained in this Pledge Agreement will cause irreparable injury to the
Trustee, as secured party, for which the Trustee would have no adequate remedy
at law in respect of such breach and, as a consequence, agrees that each and
every covenant contained in this Section 15 shall be specifically enforceable
against the Pledgor and, to the full extent permitted by applicable law, the
Pledgor waives and agrees not to assert as a defense against an action for
specific performance of such covenants that (i) Pledgor's failure to perform
such covenants will not cause irreparable injury to the Trustee or the Holders
or (ii) the Trustee on behalf of the Holders has an adequate remedy at law in
respect of such breach.
Section 16. Pledgor's Indenture Obligations Absolute. The
liability of the Pledgor under this Pledge Agreement shall remain in full force
and effect without regard to, and shall not be released, suspended, discharged,
terminated or otherwise affected by: (a) any change in the time, place or
manner of payment of all or any of the Indenture obligations, or in any other
term of the Indenture, the Security Agreement or the Notes, any waiver,
indulgence, renewal, extension, amendment or modification of or addition,
consent or supplement to or deletion from or any other action or inaction under
or in respect of the Indenture, the Security Agreement or the Notes, or any
assignment or transfer thereof; (b) any lack of validity or enforceability, in
whole or in part, of the Indenture, the Security Agreement or the Notes, (c)
any furnishing of any additional security for the Indenture obligations or any
acceptance thereof or any release or non-perfection of any security interest in
property; (d) any
9
13
limitation on any party's liability or obligations under the Indenture, the
Security Agreement or the Notes; (e) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Pledgor or any Person other than the Pledgor, or any
action taken with respect to this Pledge Agreement by any trustee or receiver,
or by any court, in any such proceeding, whether or not the Pledgor shall have
notice or knowledge of any of the foregoing; or (f) any exchange, release or
amendment or waiver of or consent to departure from the Security Agreement any
other agreement pursuant to which a Lien is created in favor of the Trustee for
the benefit of the Holder, pursuant to which a person other than the Pledgor
has granted a security interest.
Section 17. Waiver. To the extent permitted by applicable law,
the Pledgor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Indenture obligations and this Pledge
Agreement and any requirement that the Trustee protect, secure, perfect or
insure any security interest or any property subject thereto or exhaust any
right or take any action against the Pledgor or any other person or entity;
provided, however, that the Trustee shall in any event take such care in the
handling of any Pledged Securities in its possession as it takes with respect
to its own property of a similar nature in its possession.
Section 18. Termination. Upon indefeasible payment and
performance in full and satisfaction of all of the Indenture obligations and
all other amounts payable under this Pledge Agreement, this Pledge Agreement
shall terminate and the Trustee shall continue to hold, or shall otherwise
deliver the Pledged Collateral, pursuant to the terms of the Mortgage Notes
Company Pledge Agreement. In the event that the Mortgage Notes Company Pledge
Agreement shall not then be in full force and effect and otherwise shall have
terminated, the Company shall assign and redeliver to the Pledgor all of the
Pledged Collateral hereunder that has not been sold, disposed of, retained or
applied by the Trustee in accordance with the terms hereof and the Indenture.
Such reassignment and redelivery shall be without warranty by or recourse to
the Trustee, and shall be at the expense of the Pledgor. At such time, this
Pledge Agreement shall no longer constitute a Lien upon or a grant of any
security interest in any of the Pledged Collateral, and the Trustee shall, at
the Pledgor's expense deliver to the Pledgor written acknowledgment thereof and
of cancellation of this Pledge Agreement in a form reasonably requested by the
Pledgor; provided, however, that this Pledge Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Indenture obligations is rescinded or must otherwise be returned
upon the insolvency, bankruptcy or reorganization of the Pledgor all as though
such payment had not been made.
Section 19. Notices. Any notices or 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
provided in Section 13.2 of the Indenture.
Section 20. Binding Agreement; Assignment. This Pledge
Agreement shall be binding upon and inure to the benefit of the Trustee, the
Pledgor and their respective successors and permitted assigns. Neither this
Pledge Agreement nor any interest herein or in the Pledged Collateral, or any
part thereof, may be assigned by the Pledgor without the prior written consent
of the Trustee (which consent shall not be unreasonably withheld), except as
expressly permitted herein or in the Indenture. This Pledge Agreement shall be
deemed to be automatically assigned by the Trustee to any person who succeeds
to the Trustee in accordance with Section 7.8 or Section 7.9 of the Indenture,
and its assignee shall have all rights and powers of, and act as, the Trustee
hereunder.
Section 21. Governing Law. This Pledge Agreement shall be
construed in accordance with, and this Pledge Agreement and the transactions
described herein shall be governed by, the laws of the State of New York as to
all issues, including (without limitation) issues of validity, interpretation,
effect, performance and remedies.
10
14
Section 22. Amendments. This Pledge Agreement may not be
amended or modified, except in accordance with Article IX of the Indenture.
Section 23. Severability. In the event that any provision
contained in this Pledge Agreement shall for any reason be held to be illegal
or invalid under the laws of any jurisdiction, such illegality or invalidity
shall in no way impair the effectiveness of any other provision hereof, or of
such provision under the laws of any other jurisdiction; provided, that in the
construction and enforcement of such provision under the laws of the
jurisdiction in which such holding of illegality or invalidity exists, and to
the extent only of such illegality or invalidity, this Pledge Agreement shall
be construed and enforced as though such illegal or invalid provision had not
been contained herein.
Section 24. Headings. Section headings used herein are inserted
for convenience only and shall not in any way affect the meaning or
construction of any provision of this Pledge Agreement.
Section 25. Counterparts. This Pledge Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be an original, and all of which shall together constitute but one and
the same instrument. A complete set of counterparts shall be lodged with the
Trustee.
Section 26. Cooperation of TransTexas. The Pledgor shall use
reasonable efforts to cause TransTexas to take all actions necessary to
facilitate the Pledgor's compliance with the terms hereof.
Section 27. 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 Pledge Agreement or acquired or developed in any
manner from the other 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 other party 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 the valid
order of a court of competent jurisdiction, in which event the disclosing party
shall so notify the other party as promptly as practicable (and, if possible,
prior to making any disclosure) and shall seek confidential treatment of such
information, or in connection with any arbitration proceeding; (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 and their representatives and agents.
11
15
IN WITNESS WHEREOF, the Pledgor and the Trustee have caused this
Pledge Agreement to be duly executed and delivered by its officer thereunto
duly authorized as of the date first above written.
TRANSAMERICAN REFINING CORPORATION
By: /s/ ▇▇ ▇▇▇▇▇▇▇
-------------------------------
Authorized Signatory
FIRST UNION NATIONAL BANK, as
Trustee
By: /s/ W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Authorized Signatory
12
16
SCHEDULE A
Pledged Securities
Class of Stock Certificate Par
Stock Issue Stock No.(s) Value Number of Shares
------------------------ ----------- ----------------- ---------- -----------------
TransTexas Gas Common TTXG-0037 $0.01 5,000,000
Corporation Stock
A-1