EXHIBIT 10.45
MANAGEMENT AGREEMENT
BY AND BETWEEN
NATIONAL ENERGY GROUP, INC.
AND
TRANSTEXAS GAS CORPORATION
This Management Agreement (the "Agreement") is made this 28th day of
August, 2003 by and between National Energy Group, Inc., a Delaware corporation
("NEG") and TransTexas Gas Corporation. a Delaware corporation ("TransTexas"),
referred to herein individually as a "Party" or collectively as "Parties."
WITNESSETH:
WHEREAS, NEG and TransTexas are each engaged in the oil and natural gas
exploration, development and production business; and
WHEREAS, TransTexas has filed for protection under Chapter 11, Title 11
of the United States Code in the United States Bankruptcy Court for the Southern
District of Texas (the "Bankruptcy Court") designated as Case No. 02-21926; and
WHEREAS, subject to Bankruptcy Court approval, TransTexas desires to
engage NEG to provide management and administrative services with respect to
TransTexas's oil and gas operations and certain other matters as more fully
described herein.
NOW THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledge, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. The following terms, when used herein, shall have
the meanings set forth below:
"Administrative Services" means the services to be rendered by NEG as
described in Section 2.2 below.
"AEI" has the meaning provided in Section 4.1.B below.
"Affiliate" means, with respect to a person or entity, any person or
entity that directly or indirectly through one or more intermediaries controls,
is controlled by, or is under common control with such person, and the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management, activities or policies of any person
or entity.
"Affiliated Transactions" has the meaning provided in Section 4.2
below.
"Agreement" means this Agreement, as it may be amended from time to
time,
"Business" means TransTexas's business activities during the term of
this Agreement.
"Effective Date of this Agreement" means the "Effective Date" of the
Plan, as such term is defined in the Plan.
"Material Decisions" has the meaning set forth in Section 2.5 herein.
"NEG" has the meaning set forth in the above preamble.
"Non-Public Information" means all information and records furnished by
TransTexas with respect to its business and properties, together with any
reports, analyses, summaries, spreadsheets, evaluations, memoranda or other
documents prepared or generated by NEG or its consultants or agents on the basis
of such information, whether in written, graphic, electronic or any other
format, except to the extent such information (a) was already in NEG's
possession prior to the time of disclosure to NEG by TransTexas or its agents,
(b) was or becomes generally available to the public other than as a result of a
disclosure by NEG or NEG's representatives, (c) becomes available to NEG on a
non-confidential basis from a source other than TransTexas or its agents,
provided that such source is not known by NEG to be bound by a confidentiality
agreement with TransTexas or otherwise prohibited from disclosing the
information to NEG by a contractual, legal or fiduciary obligation. Such
information includes, but is not limited to, seismic data, reserve reports,
prospect analyses, and privileged attorney-client communications.
"Oil and Gas Operations" means the operations to be conducted by NEG on
behalf of TransTexas as described in Section 2.3 below.
"Plan" means the Creditor's Joint Plan Of Reorganization For Debtors
Under Chapter 11 of the Bankruptcy Code Submitted By High River Limited
Partnership ("High River")to the Bankruptcy Court on June 27, 2003 in Case No.
02-21926 , and all exhibits and schedules annexed thereto or referred to
therein, as such may be amended, modified or supplemented from time to time.
"Services" means (i) the Administrative Services described in Section
2.2 below and (ii) the Oil and Gas Operations functions described in Section 2.3
below.
"Term" has the meaning provided in Section 8.1 below.
"Termination Date" has the meaning provided in Section 8.1 below.
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"TransTexas" has the meaning set forth in the above preamble.
ARTICLE II
NEG SERVICES
2.1 NEG Services. On the Effective Date, NEG shall perform the
following Services on behalf of TransTexas:
A. Standard of Care. During the Term of this Agreement and on the
terms and conditions set forth herein, NEG shall perform the Services in Good
Faith and using that degree of care and skill which (i) with respect to the
Administrative Services, is not less than that usually and customarily observed
by publicly traded corporations; and (ii) with respect to the Oil and Gas
Operations, is not less than that usually and customarily observed in the oil
and gas industry (and with respect to NEG's operation of TransTexas's Operated
Properties, is consistent with that degree of care and skill which would be
employed by a reasonably prudent operator).
B. Compliance. NEG shall perform the Services (i) in compliance
with the Articles of Incorporation and Bylaws of TransTexas; and (ii) in
compliance in all material respects with applicable federal, state, provincial
and local laws. NEG shall comply with all contracts, leases, orders, security
instruments and other agreements to which TransTexas is a party or by which
TransTexas or any of its property is bound, whether now existing or hereafter
arising (as the same may be amended, modified or restated, the "TransTexas
Agreements") except to the extent otherwise approved by the Board of Directors
of TransTexas and authorized by the Bankruptcy Court. Notwithstanding the
foregoing, NEG shall perform the obligations and services required under such
governmental laws and requirements and/or TransTexas Agreements using its own
personnel and/or consultants as provided herein and not be required to incur any
liability to any third party to assure compliance with such governmental laws
and requirements and/or TransTexas Agreements; provided that NEG shall timely
notice TransTexas and the Bankruptcy Court of any payments or obligations under
any such laws, requirements or arrangements to enable TransTexas or the
Bankruptcy Court to satisfy any such obligation, file an appropriate Bankruptcy
Court motion, or seek a Bankruptcy Court protective order.
C. Performance of Obligations. NEG shall perform the Services
provided herein separate and apart from the administrative services and
operations undertaken on its own behalf or on behalf of third parties. Subject
to the approval of the TransTexas Board of Directors and to any applicable
requirements under the Plan, NEG shall administer the cash management system of
TransTexas as approved by the Bankruptcy Court, whereby the Business of
TransTexas may be conducted on a daily basis in the ordinary course.
Notwithstanding anything to the contrary contained herein, NEG shall not be
obligated to expend its own funds, or undertake any liability, future
obligations or guaranty for payment on behalf of TransTexas, except with respect
to payments made to NEG personnel.
D. Authority of NEG. Pursuant to and in accordance with, and
except as limited by, the terms of this Agreement, NEG shall be responsible for
and have authority with respect to the day to day management and operation of
TransTexas's Business, including, without limitation, organization and human
resources, marketing and sales, logistics, administration, production, drilling,
finance and accounting; provided, however that if
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TransTexas shall give notice of termination as provided in Section 8.1 of this
Agreement, such authorization shall cease upon the giving of such notice and all
further activities of NEG through the termination date shall be subject to the
approval by TransTexas's Board of Directors. To the extent the transfer of any
funds of TransTexas is necessary or appropriate in connection therewith, NEG
shall keep a record of same in writing together with backup detail (i)
indicating the purpose of the requested payment and (ii) sufficient to determine
that the requested payment is not in respect of a Material Decision or that such
Material Decision has been approved as provided in Section 2.5 hereof.
Notwithstanding anything to the contrary set forth in this Section, NEG shall
not function as a "Disbursing Agent" as such term is defined in the Plan.
2.2 Conduct of Administrative Services. NEG shall perform the following
administrative services and functions for and on behalf of TransTexas:
A. Administrative. All management and administrative services as
may be required for the reasonable conduct of TransTexas's Business as presently
or hereafter conducted (the "Administrative Services"). Throughout the Term, NEG
shall maintain, for the benefit of TransTexas and at TransTexas's expense (and
in the name of TransTexas as the owner of such policies), insurance coverages
that are usual and customary in the oil and gas industry and consistent with
past practices of TransTexas and the requirements of any TransTexas Agreements.
Such coverages shall include but not be limited to the following: Commercial
General Liability Insurance, Excess/Umbrella Liability Insurance, Control of
Well Insurance, "All Risk" Property Insurance, Operator's Extra Expense
Insurance, Directors and Officers Liability Insurance and other insurance
coverages as may be deemed necessary and appropriate;
B. Professionals, Consultants Etc. Subject to the approval of the
Board of Directors and the Bankruptcy Court, making such arrangements with and
employing, at the expense and for the benefit of TransTexas, such accountants,
attorneys, banks, transfer agents, custodians, underwriters, insurance companies
and other persons as may from time to time be reasonably necessary for the
conduct of TransTexas's business; excluding the selection and employment of
TransTexas's independent auditors, bankruptcy counsel, counsel to TransTexas's
Board of Directors and other professionals related thereto, which authority
shall be specifically retained by TransTexas; and
C. Other. Such other administrative functions as are routinely
and customarily conducted in the ordinary course of business by corporations
engaged in oil and gas exploration and production.
2.3 Conduct of Oil and Gas Operations. Subject to the provisions of
Section 2.5 respecting Material Decisions, NEG shall perform the following
functions or cause the following Oil and Gas Operations functions to be
performed on behalf of TransTexas:
A. Land. Maintenance of land records, including, but not limited
to, maintenance of records relating to lease and well names, numbers, status,
and locations, payment of lessor's royalties, shut-in and delay rentals and
other lease maintenance functions, preparation and maintenance of division
orders, payment of overriding royalties, net profits interests, production
payments, royalties and any other payments due out of production attributable to
TransTexas's properties;
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B. Well. Well performance reviews, including, but not limited to,
preparation and review of, and making of recommendations and elections with
respect to, proposals for drilling, completion, workovers, or other operations
with respect to the xxxxx, preparation and submission of regulatory
applications, compliance with plugging and abandoning requirements, making of
recommendations and decisions concerning equipment requirements, and, where
applicable, monitoring of the operator's performance of such activities with
respect to the xxxxx;
C. Engineering. Engineering and general oil field operations
including, but not limited to, evaluation of outside proposals for exploration
and exploitation of oil and gas properties, reserve evaluations and production
forecasting, AFE costs, joint interest xxxxxxxx, and invoices, preparation and
fling of regulatory reports, monitoring of allowables, monitoring of well
profitability, and pursuit of opportunities for enhancement of existing oil and
gas production;
D. Geological and Geophysical. Geological and seismic operations,
including, but not limited to, acquisition, processing and interpretation of
seismic data (whether internally or externally generate), and evaluation of
internally and externally developed proposals and review of logs, isopach maps,
and structure maps;
E. Acquisitions and Divestitures. Identification of, and, with
respect to Material Decisions, making of recommendations to Board of Directors
and the Bankruptcy Court with respect to acquisition or disposition of existing
or hereafter acquired properties of TransTexas, including, but not limited to,
lease purchases, acreage trades, farm out, and farmins, and other arrangements
relating to the acquisition or disposition of properties;
F. Marketing. Contracting for the gathering, treating,
processing, transportation and sale of oil, gas and other hydrocarbons produced
from or attributable to TransTexas's properties (including, but not limited to,
gas balancing with respect thereto) and collection of revenue from such sales;
G. Operations. Performance of TransTexas's duties as well or
lease operator, where applicable, including, but not limited to, all bonding and
escrow requirements as set out by the appropriate regulatory agencies or bonding
companies.
H. Contracts. Contract negotiation, administration, and review,
including, but not limited to, joint operating agreements, farm outs, farmins,
and production sale agreements;
I. Accounting. Payment and collection of operating expenses,
including, but not limited to, joint interest xxxxxxxx; revenue disbursements;
and budgeting and forecasting of capital and operating revenues and expenses;
J. Purchasing. Procurement in the ordinary course of business of
equipment, supplies and other goods and services reasonably necessary for the
efficient day to day operation of the Business;
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K. Compliance. Regulatory compliance, including, but not limited
to, (i) application for, or maintenance of, and compliance with all required
governmental permits and authorizations with respect to TransTexas's preparation
and filing of all applications, reports, notices, and other regulatory filings
or reports required by any federal, state, or local authority with respect to
TransTexas's properties or Business; provided, however, that all such regulatory
filings (other than ministerial filings and reports in the ordinary course of
business) shall be approved and, if necessary, executed by a member of the
TransTexas Board of Directors and, if applicable, approved by an order of the
Bankruptcy Court; and (ii) participation in hearings and other administrative
proceedings on behalf of TransTexas, subject to the advice and consent of the
Board of Directors, or a delegated officer thereof, and, if applicable, approved
by an order of the Bankruptcy Court; and
L. Other. Such other functions as are usually and customarily
performed by an oil and gas exploration and production company not heretofore
enumerated in this Section 2.3.
2.4 Duties Retained by TransTexas. Notwithstanding the retention of NEG
to perform the Services in connection with the oil and gas operations of
TransTexas, it is expressly understood and agreed that TransTexas, acting
through its Board of Directors or its designated officer, shall retain all
responsibility and authority for execution on behalf of TransTexas of all such
contracts, agreements, assignments, documents, TransTexas Agreements and other
instruments as may be useful or necessary in the conduct of TransTexas's
Business during the term hereof. Further, NEG shall not take title to any
properties owned by TransTexas as of the date hereof, and with respect to
properties subsequently acquired on behalf of TransTexas, NEG shall either take
title in TransTexas's name or assign, or cause to be assigned, record title to
TransTexas within a reasonable time thereafter.
2.5 Material Decisions. Except in the ordinary course of business, NEG
shall not make any commitment on behalf of TransTexas without the prior majority
approval of the three independent Members of the Board of Directors, as defined
and mandated by the TransTexas Certificate of Incorporation if the commitment (a
"Material Decision") would:
(i) obligate TransTexas to any expenditure or liability not provided
for in a budget previously adopted by the Board of Directors of TransTexas;
(ii) obligate TransTexas to sell or dispose of an asset or group of
assets;
(iii) obligate TransTexas to sell oil, gas or other hydrocarbons
produced from or attributable to TransTexas's properties under a contract having
a term longer than one (1) year, or any "hedging" or "swap" agreements relating
to the production or sale of TransTexas hydrocarbons;
(iv) place a lien, security interest, mortgage, pledge, production
payment, or other encumbrance upon any of TransTexas's properties (other than
such liens and security interests as arise in the ordinary course of
TransTexas's business, including liens arising by operation of law, under joint
operating agreements, or under mechanics and materialmen's lien laws);
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(v) initiate or compromise any litigation or threatened litigation
matter involving potential rights or liabilities of TransTexas;
(vi) determine the compensation of any TransTexas officers; or
(vii) change TransTexas' AEI, as set forth in Section 4.1.B of this
Agreement.
2.6 Record-Keeping and Reporting.
A. Reporting to the Board of Directors and the Bankruptcy Court.
NEG shall prepare or cause to be prepared and shall submit to the Board of
Directors of TransTexas the following information and reports:
1. Annually: Budget for operations and capital expenditures.
2. Monthly: Activity report for oil and gas operations and
cash flows.
3. At each meeting of the Board of Directors:
a. A report containing information relevant to any
Material Decision, together with NEG's recommendation with
respect thereto and reasons therefor, and a summary of actions
taken pursuant to Material Decisions since the preceding
meeting of the Board of Directors; and
b. Such other reports and information as the
TransTexas Board of Directors may reasonably request.
4. Drafts of all required federal, state and local tax
returns.
5. Monthly operating reports and other reports and filings
requested or required by the Bankruptcy Court.
B. Reporting to Third Parties. NEG shall prepare and submit to
the Board of Directors of TransTexas for approval, for review, comment and
execution, such reports and information to third parties (including regulatory
authority, joint interest owners and institutional investors) as may be required
by applicable law or TransTexas's contracts with such third parties.
C. Maintenance of Books and Records. NEG shall maintain the books
and records of TransTexas in accordance with applicable laws and with generally
accepted accounting principles applied on a basis consistent with the prior
practices of TransTexas, subject in all respects to the approval TransTexas'
Board of Directors, and the Bankruptcy Court.
2.7 Commingling of Assets. NEG shall separately maintain and not
commingle the assets of TransTexas with those of NEG.
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ARTICLE III
NEG COMPENSATION
3.1 Compensation. As consideration for the performance of the
obligations contained herein, TransTexas shall pay to NEG, as NEG's sole
compensation for providing the Services described herein, a monthly fee of
$312,500.
ARTICLE IV
CONFLICTS OF INTEREST
4.1 Corporate Opportunities. Each of NEG and TransTexas acknowledge
that certain of their respective shareholders and members of the Boards of
Directors include Affiliates. Therefore, in order to minimize the potential for
conflicts of interest and/or the appearance thereof, each of NEG and TransTexas
agree to cooperate with the other in fully disclosing corporate interlocks
pertaining to the Services provided by NEG or the Business of TransTexas as it
may relate to their Affiliates.
A. NEG Opportunities. TransTexas hereby acknowledges that NEG and
its Affiliates are actively and substantially engaged in the oil and gas
exploration business, and agrees that, subject to the provisions of Section
4.1.B, NEG and its Affiliates (including the officers of NEG who are engaged in
TransTexas Business in providing the Services described herein) shall be free to
continue to engage in such business.
B. Area of Exclusive Interest. Each of TransTexas and NEG agrees
that in order to minimize the potential for conflict with respect to a corporate
opportunity of TransTexas, an area of exclusive interest for TransTexas ("AEI")
is hereby established as follows:
Any and all corporate opportunities relating to the future
acquisition or operation of oil and gas properties from whatever
source derived, which are located within Xxxxxxx County, Xxxxxxx
County and the ninety (90) square miles defined as Trinity Bay
shall be the exclusive corporate opportunity of TransTexas.
C. Survival. The AEI provision set forth in Sections 4.1.B f this
Agreement shall survive the termination of this Agreement for a period of twelve
(12) months.
4.2 Affiliated Transactions. All transactions between NEG and its
Affiliates and TransTexas ("Affiliated Transactions") shall be on terms and
conditions at least as favorable to TransTexas as those prevailing in the oil
and gas industry for comparable transactions between unaffiliated parties.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of NEG. NEG represents and warrants
to TransTexas that the following are, and at all times during the term of this
Agreement shall remain, true and correct:
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A. Organization and Authority. NEG has all requisite power and
capacity, is under no legal restraint, and has all necessary authority to enter
into this Agreement and perform its obligations hereunder. NEG is a corporation
duly organized and constituted and existing under the laws of the State of
Delaware and is qualified to conduct business in each of the jurisdictions in
which such qualification is necessary to perform its obligations hereunder. The
Agreement has been duly executed and delivered by NEG, and the execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the compliance by NEG with the terms of this Agreement do not and
will not conflict with or result in a breach of any terms of, or constitute a
default under, the Articles of Incorporation or Bylaws of NEG or any other
material agreement, instrument, writ, order, judgment or decree to which NEG is
a party or is subject or by which it is bound. This Agreement constitutes a
valid obligation of NEG enforceable in accordance with its terms except as
limited by bankruptcy, insolvency, reorganization or other such laws concerning
the rights of creditors.
B. No Claims. To the knowledge of NEG, except with respect to
such matters that would not, if determined adversely to NEG, have a material
adverse effect on NEG or its ability to perform its obligations hereunder (i)
NEG is not in default under any applicable laws or under any order of any court
or governmental administrative body having jurisdiction, (ii) there are no
claims, actions, suits or proceedings, pending or threatened, against NEG at law
or in equity, or before or by any administrative body having jurisdiction, and
(iii) no notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received. To the knowledge of NEG, there is no claim,
litigation, action, suit or proceeding, administrative or judicial, pending or
threatened, which seeks to restrain or seeks damages in connection with the
consummation of the transactions contemplated herein.
C. Personnel. Except with respect to third-party legal,
accounting, consulting and other services contemplated herein, NEG has, and at
all times during the term of this Agreement shall have in its employ or
available to it, personnel sufficient to enable it to perform its obligations
hereunder.
5.2 Representations and Warranties of TransTexas. TransTexas represents
and warrants to NEG that the following are, and at all times during the term of
this Agreement shall remain, true and correct; provided it is specifically
understood and agreed that the representations and warranties contained herein
are subject to the jurisdiction, future orders and decrees of the Bankruptcy
Court.
A. Organization and Authority. TransTexas has all requisite power
and capacity, is under no legal restraint, and has all necessary authority to
enter into this Agreement and perform its obligations hereunder subject,
however, to Bankruptcy Court approval. TransTexas is a corporation duly
organized and constituted and existing under the laws of the State of Delaware
and is qualified to conduct business in each of the jurisdictions in which such
qualification is necessary to perform its obligations hereunder. The Agreement
has been duly executed and delivered by TransTexas, and the execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the compliance by TransTexas with the terms of this Agreement do not
and will not conflict with or result in a breach of any terms of, or constitute
a default under, the Articles of Incorporation or Bylaws of TransTexas or any
other material agreement, instrument, writ, order, judgment or decree to which
TransTexas is a
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party or is subject or by which it is bound. This Agreement constitutes a valid
obligation of TransTexas enforceable in accordance with its terms except as
limited by bankruptcy, insolvency, reorganization or other such laws concerning
the rights of creditors.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by NEG. NEG hereby agrees to defend, indemnify and
hold harmless TransTexas and its officers, directors, shareholders, employees,
agents and Affiliates (collectively, the "TransTexas Indemnitees") to the
fullest extent permitted under (i) the Certificate of Incorporation and Bylaws
of TransTexas and (ii) the laws of the State of Delaware, from any and all
threatened or actual claims, demands, causes of action, suits, proceedings,
losses, damages, fines, penalties, liabilities, costs and expenses of any
nature, including attorneys' fees and court costs (collectively, "Claims"),
sustained or incurred by or asserted against the TransTexas Indemnitees arising
from (i) the breach of this Agreement by NEG; and (ii) the gross negligence,
illegal conduct or willful misconduct of NEG in connection with the rendering of
the Services.
6.2 Indemnification by TransTexas. TransTexas hereby agrees to defend,
indemnify and hold harmless NEG and its officers, directors, shareholders,
employees, agents and Affiliates (collectively, the "NEG Indemnitees") to the
fullest extent permitted under (i) the Certificate of Incorporation and Bylaws
of TransTexas, (ii) the laws of the State of Delaware, and (iii) any order of
the Bankruptcy Court providing indemnification of persons engaged in the
bankruptcy proceeding from any and all threatened or actual Claims sustained or
incurred by or asserted against the NEG Indemnitees arising from (a) the breach
of this Agreement by TransTexas or (b) NEG's performance of the Services, except
to the extent TransTexas is entitled to indemnification with respect thereto
from NEG pursuant to Section 6.1 above.
6.3 Indemnification Procedures. A Party requesting indemnification
pursuant to this Article VI (the "Indemnified Party") shall promptly give notice
to the Party from whom indemnification is sought (the "Indemnifying Party");
provided that the failure to give such notice shall not affect the Indemnified
Party's right to indemnification, except to the extent that the Indemnifying
Party is prejudiced in its ability to defend the Claim for which indemnification
is sought, and in the event of any claim resulting from a claim or legal
proceeding by a third party, the Indemnifying Party shall defend such Claim by
counsel selected by the Indemnifying Party (provided that such counsel shall be
reasonably satisfactory to the Indemnified Party), and the Indemnifying Party
shall pay all expenses therefor. The Indemnified Party may, at its own expense,
employ separate counsel and participate in defense of such Claims.
6.4 Survival. The indemnification provisions of this Article VI shall
survive the termination of this Agreement for a period of the longer of four (4)
years or, in the case of any Claims involving securities laws, taxes or
environmental matters, the applicable statute of limitations or, in any case,
such other period as may be determined by the Bankruptcy Court.
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ARTICLE VII
CONFIDENTIALITY
NEG shall maintain the confidentiality of all Non-Public Information
with respect to TransTexas, its business or its assets; provided, however, that
NEG may disclose such Non-Public Information (i) in any judicial or alternative
dispute resolution proceeding to resolve disputes between TransTexas and NEG
arising hereunder; (ii) to the extent disclosure is legally required under
applicable laws or any agreement to which TransTexas is a party or by which it
is bound, provided, however, that prior to making any legally required
disclosures in any judicial, regulatory or dispute resolution proceeding, NEG
shall, if so advised by counsel, seek a protective order or other relief to
prevent or reduce the scope of such disclosure; and (iii) to TransTexas's
existing or potential lenders, investors, joint interest owners, purchasers, or
other parties with whom TransTexas may enter into contractual relationships, to
the extent deemed by NEG to be reasonably necessary or desirable to enable it to
perform the Services, provided that NEG shall require such third parties to
execute agreements to maintain the confidentiality of the Non-Public Information
so disclosed; and (iv) if authorized by the Board of Directors of TransTexas.
NEG acknowledges that the Non-Public Information is being furnished to NEG for
the sole and exclusive purpose of enabling it to perform the Services, and the
Non-Public Information may not be used by it for any other purpose. The
provisions of this Section shall survive the termination of this Agreement.
ARTICLE VIII
TERM AND TERMINATION
8.1 Term. The term of this Agreement (the "Term") shall commence at the
Effective Date and end (the "Termination Date"):
(i) upon thirty (30) days following a written notice of termination by
TransTexas;
(ii) upon ninety (90) days following a written notice of termination by
NEG;
(iii) as may be mutually agreed between the Parties;
(iv) thirty (30) days following any day where High River's designees no
longer constitute a majority of the TransTexas Board of Directors unless the
newly constituted Board agrees to waive application of this Section 8.1 (iv); or
(v) as otherwise determined by the Bankruptcy Court.
8.2 In the event this Agreement shall terminate pursuant to Section 8.1
or otherwise, NEG shall cooperate as TransTexas may reasonably request in order
to enable TransTexas to perform the Services provided by NEG hereunder; provided
that (i) NEG shall have been compensated as provided hereunder for all Services
rendered prior to such termination, and (ii) NEG shall be compensated for any
Services rendered following such termination in the same manner consistent with
the compensation described in Section 3.1 or as otherwise agreed.
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ARTICLE IX
AUDIT RIGHTS AND DISPUTE RESOLUTION
9.1 Audit Rights. TransTexas shall have the right, at its sole cost and
expense, at any time during the Term of this Agreement, and for a period of
twenty-four (24) months following termination of this Agreement, but not more
than once in any twelve-month period, to audit, examine and make copies of or
extracts from any of the books and records of TransTexas in the possession of
NEG and, to the extent necessary to verify the performance by NEG of its
obligations under this Agreement, the books and records of NEG (the "Audit
Right"). TransTexas may exercise the Audit Right through such auditors as the
Board of Directors of TransTexas may determine in its sole discretion.
TransTexas shall (i) exercise the Audit Right only upon reasonable notice to NEG
and (ii) use reasonable efforts to conduct the Audit Right in such a manner as
to minimize the inconvenience and disruption to NEG.
9.2 Resolution Committee. Either Party may request at any time a
finding by the resolution committee (the "Resolution Committee") to attempt to
resolve disputes arising hereunder. The Resolution Committee shall be comprised
of three members, consisting of two (2) members designated by the TransTexas
Board of Directors and one (1) member designated by the NEG Board of Directors;
provided that the designated representatives of the TransTexas Board of
Directors shall not be Affiliates of NEG and the designated representatives of
NEG shall not be Affiliates of TransTexas. The Resolution Committee shall
designate one member by majority vote who shall act as the Chairman. The Board
of Directors of either Party may submit any dispute to the Resolution Committee
by written request to the chairman of the Resolution Committee, who shall,
within twenty (20) days thereafter call a meeting of the Resolution Committee.
The Resolution Committee shall attempt to resolve the dispute, provided,
however, that the finding of the Resolution Committee shall not be binding upon
either Party unless unanimously agreed. If within thirty (30) days after the
Resolution Committee is convened, the Resolution Committee is unable to reach a
unanimous agreement on resolution of the dispute, then either Party may pursue
its legal and equitable remedies in the Bankruptcy Court. This Section 9.2 shall
survive the termination of this Agreement.
9.3 Attorneys' Fees and Expenses. In any action brought by either Party
hereto to enforce the obligations of any other Party hereto, the prevailing
Party shall be entitled to collect from the opposing Party to such action such
Party's reasonable litigation costs and attorneys fees and expenses (including
court costs, reasonable fees of accountants and experts, and other expenses
incidental to the litigation).
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Notices. All notices or advices required or permitted to be given
by or pursuant to this Agreement shall be given in writing. All such notices and
advices shall be (i) delivered personally, (ii) delivered by facsimile or
delivered by U.S. Registered or Certified Mail, Return Receipt Requested mail,
or (iii) delivered for overnight delivery by a nationally recognized overnight
courier service. Such notices and advices shall be deemed to have been given (i)
the first business day following the date of delivery if delivered personally or
by facsimile, (ii) on the third business day following the date of mailing if
mailed by U.S. Registered or Certified
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Mail, Return Receipt Requested, or (iii)
on the date of receipt if delivered for overnight delivery by a nationally
recognized overnight courier service. All such notices and advices and all other
communications related to this Agreement shall be given as follows:
If to TransTexas: To such person or persons as the Board of
Directors of TransTexas by resolution shall
designate and in the absence of such designation
to each member of the Board of Directors.
If to NEG: National Energy Group, Inc.
Attn: Legal Department
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
(000) 0000000 -Telephone
(000) 000-0000 -- Facsimile
or to such other address as the party may have furnished to the other parties in
accordance herewith, except that notice of change of addresses shall be
effective only upon receipt.
10.2 Xxxxxxx Xxxxxxx. TransTexas, through a public offering or
otherwise, may become or may be deemed a "publicly traded" company under the
United States securities laws, In such event, NEG acknowledges that it is aware
that the United States securities laws would prohibit any person who has
material, non-public information concerning TransTexas from purchasing or
selling any securities of TransTexas or from communicating any information to
any other person under circumstances in which it is reasonably foreseeable that
such person is likely to purchase or sell such securities, and NEG will prohibit
its employees, consultants and agents who are involved in the rendering of the
Services from engaging in any such practices.
10.3 Governing Law. This Agreement shall be subject to, and interpreted
by and in accordance with, the laws (excluding conflict of law provisions) of
the State of New York
10.4 Entire Agreement. This Agreement is the entire Agreement of the
parties respecting the subject matter hereof. There are no other agreements,
representations or warranties, whether oral or written, respecting the subject
matter hereof.
10.5 Construction. This Agreement, and all the provisions of this
Agreement, shall be deemed drafted by all of the Parties hereto.
10.6 Author. Each of the persons signing below on behalf of a Party
hereto represents and warrants that he or she has full requisite power and
authority to execute and deliver this Agreement on behalf of the Party for whom
he or she is signing and to bind such Party to the terms and conditions of this
Agreement.
10.7 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original. This Agreement shall become effective only
when all of the Parties hereto shall have executed the original or counterpart
hereof. This Agreement may be executed and delivered by a facsimile transmission
of a counterpart signature page hereof.
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10.8 Successors and Assigns. This Agreement may not be assigned
(including performance by subcontract) by either Party hereto. This Agreement
shall be binding upon and shall inure to the benefit of the Parties and their
respective successors.
10.9 No Third Party Beneficiaries. This is not a third party
beneficiary contract. No person or entity other than NEG, the NEG Indemnitees,
TransTexas, and the TransTexas Indemnitees shall have any rights under this
Agreement.
10.10 Amendments. This Agreement may be amended or modified only in a
writing which specifically references this Agreement.
10.11 No Waiver. Either Party to this Agreement may decide not to
require, or fail to require, full or timely performance of any obligation
arising under this Agreement. The decision not to require, or failure of a Party
to require, full or timely performance of any obligation arising under this
Agreement (whether on a single occasion or on multiple occasions) shall not be
deemed a waiver of any such obligation. No such decisions or failures shall give
rise to any claim of estoppel, laches, course of dealing, amendment of this
Agreement by course of dealing, or other defense of any nature to any obligation
arising hereunder.
10.12 Time of the Essence. Time is of the essence with respect to each
obligation arising under this Agreement.
10.13 Unenforceability. In the event any provision of this Agreement,
or the application of such provision to any person or set of circumstances,
shall be determined to be invalid, unlawful, or unenforceable to any extent for
any reason, the remainder of this Agreement, and the application of such
provision to persons or circumstances other than those as to which it is
determined to be invalid, unlawful, or unenforceable, shall not be affected and
shall continue to be enforceable to the fullest extent permitted by law.
10.14 Bankruptcy Court. Whenever in this Agreement reference is made to
a requirement for, approval of or authorization by the Bankruptcy Court, such
approval or authorization shall be required for so long as the Bankruptcy Court
shall retain jurisdiction with respect to TransTexas or its assets.
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Dated the date first set forth above.
NATIONAL ENERGY GROUP, INC.
By: /s/ XXXXXX X. XXXXXX
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XXXXXX X. XXXXXX
TRANSTEXAS GAS CORPORATION.
By: /s/ XXX X. XXXXXXXXX
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XXX X. XXXXXXXXX
