Document:

exv10w2

 

EXHIBIT 10.2

PRE-CLOSING MEMORANDUM

     The undersigned, being the signatories to a Declaration of Restrictions
and Covenants and to a Corn Storage and Delivery Agreement both of which are
attached hereto and made a part hereof, do by their execution hereof supplement
and/or modify the terms and conditions of the same as follows:

	1.	 	The parties agree that their obligations under the attached
Declaration of Restrictions and Covenants and attached Corn Storage
and Delivery Agreement and documents, agreements and/or instruments
referred to therein shall be subject to and conditioned upon final
approval by the lendors of the respective parties; and final
financial close of the public offering made in connection with the
project represented thereby and as determined solely by the Board of
Governors for the Granite Fall Community Ethanol Plant, LLC.

	2.	 	In addition, the parties agree that upon lender approval and
financial close, that they will also thereupon complete and append
to the Declaration of Restrictions and Covenants a completed form of
Exhibits A, B, C and D as referred to in said Declaration.

	3.	 	In addition, by its execution hereof, Farmers Cooperative
Elevator Company does agree that it shall execute a Subscription
Agreement in connection with the above referenced public offering
and that the minimum subscribed amount and contribution with respect
to the project represented thereby shall be no less than
$500,000.00.

	4.	 	Any dispute arising hereform, shall be subject to dispute
resolutions provided in Article 21 of the Declaration of
Restrictions and Covenants.

     IN WITNESS WHEREOF, the parties have executed this Pre-Closing Memorandum
to be effective on this 6th day of October, 2003.

	 	 	 	 	 	 	 
	 	 	GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Julie Oftedahl-Volstad
	 	 	 	 	

	 	 	 	 	Its:
	 	Secretary/Treasurer

	 	 	 	 	 	 	 
	 	 	FARMERS COOPERATIVE ELEVATOR COMPANY
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ James Hoepner
	 	 	 	 	

	 	 	 	 	Its:
	 	President

 

CORN STORAGE AND DELIVERY AGREEMENT

     This Corn Storage and Delivery Agreement (“Agreement”) is made this 6th
day of October, 2003 by and between Granite Falls Community Ethanol Plant,
LLC, a Minnesota limited liability company (“GFCEP”) and Farmers Cooperative
Elevator Co., a Minnesota cooperative association (“FCE”) and is as follows:

RECITALS

     1. GFCEP has contemporaneously recorded a Declaration of Restrictions and
Covenants as to property to be conveyed to FCE and upon which FCE will
construct and operate grain storage and handling facilities to service GFCEP’s
adjoining corn dry milling ethanol plant (“Mill”).

     2. In addition to the foregoing, the parties wish to enter into additional
agreements necessary to further define FCE’s obligations with respect to grain
storage and handling; and to make certain additional agreements with respect to
purchase of corn required for Mill operations.

     3. The parties have reached agreement and wish to reduce the same to
writing.

     NOW, THEREFORE, in consideration of the terms set forth herein, the
parties agree:

     1. CONDITIONS.

	a.	 	Conditions Precedent. Conditions precedent to
GFCEP’s obligations hereunder shall be:

	i.	 	Execution and recording of a
Declaration of Restrictions and Covenants
(“Declaration”) as to the property conveyed by GFCEP to
FCE, of even date herewith, containing terms and
conditions acceptable to GFCEP, and to which FCE
consents.

	ii.	 	Construction of the Improvements by
FCE, as defined in the Declaration, in accordance with
the specifications and timelines as set forth therein.

	iii.	 	That FCE shall be a member in good
standing of GFCEP. FCE shall perform all other
obligations as set forth in any written agreements,
existing now or in the future, between GFCEP and FCE,
which agreements presently include this Corn Storage and
Delivery Agreement, the Declaration, an Operating
Agreement dated    , and a Subscription Agreement
dated 9-5-03.

	b.	 	Conditions Subsequent. Conditions subsequent
required of FCE, in addition to the other terms and conditions
stated herein, shall be:

 

 

	i.	 	That at all times, FCE shall be in
material compliance with the Declaration as referred to
above.

	ii.	 	That at all times, FCE shall be in
compliance with matters described at Section 1(a)(iii)
above.

	iii.	 	That at all times, FCE’s performance
of this Agreement shall be consistent with the terms and
conditions hereof and with the requirements of GFCEP’s
with respect to its Mill.

     2. TERM.

	a.	 	Initial Term. The initial term of this Agreement
commences on    , 2003 (the “Commencement Date”) and,
unless sooner terminated by default, expires on    
(“Original Term”).

	b.	 	Extension. Provided FCE is not in default at
the expiration of the Original Term, or at the expiration of
any extension, or except as otherwise expressly provided
herein, this Agreement shall automatically extend for
additional terms of five (5) years each unless and until the
parties, by mutual agreement, terminate the Declaration
referred to above, or mutually agree to separately terminate
this Agreement.

	c.	 	Effective Date. This Agreement shall become
effective on the date determined by the GFCEP’s Board of
Governors, by resolution, as the date on which the Mill begins
operating and begins accepting corn for delivery (the
“Effective Date”). Until the Effective Date is set by the
GFCEP’s Board of Governors, in its sole discretion, the GFCEP
has no obligation to accept corn from the FCE. GFCEP shall
notify FCE in writing of the estimated Effective Date at least
twelve (12) months in advance. GFCEP shall notify FCE of the
Effective Date at least thirty (30) days in advance.

     3. STORAGE AND DELIVERY OBLIGATIONS. With respect to storage and delivery
obligations:

	a.	 	Storage Capacity. Upon the Effective Date, FCE
shall at all times make available no less than 470,000 bushels
of storage for corn to be stored on behalf of GFCEP and/or to
be purchased by GFCEP for operation of its Mill. Any proposed
increase in storage by FCE shall be subject to GFCEP’s advance
written consent. Irrespective of the amount of storage owned
by FCE pursuant to the Declaration, FCE shall at all times
make available the amount of storage as provided above, and
shall, at all times, maintain adequate facilities, either
adjoining the Mill or elsewhere, to meet all corn purchase
orders required by GFCEP (to include any increase necessitated
by any expansion of the Mill).

2

 

	b.	 	Delivery Estimates. GFCEP agrees to provide to
FCE an estimate on or before the first day of each calendar
quarter with respect to its required deliveries of corn for
the following calendar quarter. The parties expressly
understand that GFCEP’s notice shall be a good faith estimate
and that the parties anticipate reasonable variations between
delivery forecast and actual delivery requirements. To that
end, GFCEP shall also report to FCE on or before the first
business day of each month its estimated delivery requirement
of corn for the following month.

	c.	 	Delivery Systems. With respect to delivery of
corn stored at FCE to the Mill, FCE shall at all times
maintain all delivery systems necessary to deliver corn from
FCE’s storage facilities to the Mill in good working and
operating order and shall make all deliveries to the Mill at
the time and in the amount as required by GFCEP.

	d.	 	Security. Upon GFCEP’s request, FCE shall issue
warehouse receipts for corn owned by GFCEP and stored with
FCE. In addition, upon GFCEP’s request FCE shall obtain a
warehouseman’s or other form of surety bond which shall fully
insure GFCEP for the full value of all corn owned by GFCEP and
stored with FCE. At all times, FCE shall have in effect
insurance, in the amount of full insurance value, with respect
to loss of Corn due to fire, storm or other peril for which
GFCEP is unable to obtain insurance.

     4. CORN SPECIFICATIONS. All corn delivered by FCE to GFCEP hereunder
shall:

	a.	 	Corn. Be number 2 yellow corn;

	b.	 	Grading. Be graded in accordance with state and
federal laws and in accordance with any mutually agreed upon
standards set by the parties; and the purchase price for corn
shall be subject to discounts in purchase price as set forth
on Exhibit A attached hereto and made a part hereof;

	c.	 	Merchantable and Quality. Be merchantable and
not adulterated;

	d.	 	Title Upon Delivery to GFCEP. Be free and clear
of all liens and encumbrances.

     5. ADMINISTRATION OF AGREEMENT. With respect to carrying out the terms
and conditions hereof, the parties agree:

	a.	 	Office Space. GFCEP shall make available to FCE
reasonable office space in Mill offices such that FCE
personnel may carry out their duties and obligations
hereunder.

3

 

	b.	 	Non-exclusive Storage. GFCEP acknowledges that
the storage facilities owned by FCE may be used from time to
time for storage of grain delivered to FCE and unrelated to
operations of the Mill. GFCEP consents to such use provided,
however, that the same in no way materially impairs the
ability of FCE to store and/or deliver corn to the Mill in the
amount required by GFCEP at any time.

	c.	 	Purchases. The parties acknowledge and agree
that GFCEP shall purchase all of its corn requirements from
FCE and shall place all actual orders for purchase of corn to
be delivered to the Mill with FCE. At all times, FCE, either
through its own management or through lawful contracts entered
into with third parties, shall maintain or cause to be
maintained such licenses and/or authorities as may be required
to lawfully engage in the purchase and sale of corn.

	d.	 	Risk Management. Notwithstanding the foregoing,
GFCEP acknowledges that it shall separately retain appropriate
risk management services for evaluating corn pricing and
purchases and/or for making trades for price protection and
future delivery such as options, future contracts and the
like.

	e.	 	FCE Obligations. In consideration for the
payment, as set forth at Section 6(a), FCE shall perform all
work as required by GFCEP with respect to arranging for
purchase, transportation, accepting delivery, drying or
conditioning, security of, delivering to the Mill, and all
other work necessary to cause corn purchased by GFCEP to be
delivered to the Mill at the times and in the amounts required
by GFCEP.

     6. PAYMENT. With respect to payment:

	a.	 	Administrative Fee. GFCEP shall pay to FCE and
FCE shall accept from GFCEP the sum of 5.3¢ per bushel for
each bushel of corn purchased for use at the Mill and
delivered through FCE.

	b.	 	Excess Storage.

	i.	 	In the event that GFCEP requires
storage of corn at FCE, for which it has taken ownership
and actual delivery, in an amount in excess of ten (10)
days supply for the Mill (approximately 470,000 bushels)
then GFCEP shall pay to FCE an additional 2¢ per bushel
per month (or prorated portion thereof) for the use of
such additional storage.

	ii.	 	If such excess amount is stored for
the benefit of GFCEP, but if GFCEP has not yet paid for
such corn then GFCEP shall also pay to FCE a carrying
cost for such excess in an amount equal to the amount of
interest accrued by FCE (rounded up to the nearest half

4

 

	 	 	percentage point) and attributable to FCE’s loan
obligations for such bushels of corn based upon FCE’s
then existing operating loan for grain purchases.

	c.	 	Corn Purchase Price. With respect to corn
purchases, the price paid for all such purchases shall be as
determined from time to time by FCE. GFCEP shall make all
cash purchases of corn from FCE. The purchase price (subject
to the discounts provided for herein) shall be comparable to
that paid to other buyers of corn located within a 20 mile
radius of Granite Falls, Minnesota on the day of purchase.
Even though on any given day, the board price for corn at the
FCE, Granite Falls location may not be the same as the average
board price of other grain buyers nearby, it is the intent of
the parties that over time the board price at the FCE, Granite
Falls location will be equal to or slightly greater than the
average board price for other licensed grain buyers of corn
located within a 20 mile radius of Granite Falls, Minnesota
for the same time period. FCE and GFCEP shall independently
track the board price of other licensed corn buyers within a
20 mile radius of Granite Falls and shall, from time to time,
compare the data to the board price for corn at the FCE,
Granite Falls location to verify that its board price for corn
is consistent with the intent of this Agreement.
Additionally, FCE shall offer to sell to GFCEP forward
purchases of corn as FCE’s corn position allows.

	d.	 	Payment. All payments for purchase of corn
together with the administrative fee associated with such
purchase (and as set forth at Section 6(a) above) shall be
made by GFCEP no later than Tuesday of the week following date
of purchase. All other payments required hereunder shall be
made on or before the first business day of the month
following the month in which the obligations are incurred by
GFCEP.

     7. FORCE MAJEURE. In case of fire, explosions, interruption of power,
strikes or other labor disturbances, lack of transportation facilities,
shortage of labor or supplies, floods, action of the elements, riot,
interference of civil or military authorities, enactment of legislation or any
unavoidable casualty or cause beyond the control of a party and affecting the
conduct of its business to the extent of preventing or unreasonably restricting
the receiving, handling, production, marketing, or other operations, that party
shall be excused from performance during the period that its business or
operations are so affected. However, the party not subject to the force
majeure event may, during such period, accept performance from the other party
or a third party as it may reasonably determine under the circumstances.

     8. MODIFICATION. This Agreement may be amended on the written mutual
consent of the parties. Except as so amended, this Agreement and the
Declaration represent the entire agreement of the parties.

     9. BINDING EFFECT; ASSIGNMENT. This Agreement is binding upon and shall
inure to the benefit of GFCEP and FCE and their respective representatives,
successors and permitted assigns. Any transfer, assignment or delegation, in
whole or in part, of this Agreement

5

 

must be consistent with the terms and conditions of the Declaration of even
date herewith and any provisions for Assignment as set forth therein.

     10. WAIVERS. No waiver of a breach of any of the agreements or provisions
contained in this Agreement shall be construed to be a waiver of any subsequent
breach of the same or of any other provision of this Agreement.

     11. NOTICES. Notices required by this Agreement shall be given in
accordance with the notice requirements of the Declaration of even date
herewith.

     12. CONSTRUCTION OF TERMS OF AGREEMENT. In the event any term, covenant
or condition herein contained is held to be invalid or void by any court of
competent jurisdiction, the invalidity of any such term, covenant or condition
shall in no way affect any other term, covenant or condition herein contained.

     13. DEFAULT. Default shall be a material breach of a term or condition of
this Agreement and/or the Declaration of even date herewith. In the event the
default is not cured to the satisfaction of the defaulting party within twenty
(20) days notice (for non-payment of money) or within thirty (30) days notice
(for all other defaults), then subject to Section 14 below, the non-defaulting
party shall be entitled to any and all remedies that exist at law or in equity.

     14. CHOICE OF LAW/DISPUTE RESOLUTION. This Agreement shall be governed in
all respects by the laws of the State of Minnesota. A default hereof shall
entitle the non-defaulting party, in addition to the option of terminating this
Agreement, to any and all remedies that may exist at law or in equity.
Notwithstanding anything herein to the contrary, the Parties hereto agree to
submit any controversy or claim regarding or relating to the interpretation,
application, or any other dispute regarding this Agreement, including any
claims for fraud in the inducement, to binding arbitration to be conducted in
accordance with the National Grain and Feed Association Arbitration Rules,
except that any such arbitration shall proceed with a panel of three
arbitrators regardless of the amount in controversy. The arbitrators shall
have jurisdiction to award damages, issue a declaratory judgment, and/or grant
appropriate injunctive relief as the case may be.

     IN WITNESS WHEREOF, the parties have executed this Corn Storage and
Delivery Agreement as of the date and year first above written.

	 	 	 	 	 	 	 
	 	 	GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Julie Oftedahl-Volstad
	 	 	 	 	

	 	 	 	 	Its:
	 	Secretary/Treasurer

	 	 	 	 	 	 	 
	 	 	FARMERS COOPERATIVE ELEVATOR COMPANY
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ James Hoepner
	 	 	 	 	

	 	 	 	 	Its:
	 	President

6

 

EXHIBIT A

DISCOUNT SCHEDULE

Corn Discounts that will be charged to FCE from GFCEP:

Moisture

15.0% and under-no discount

15.1-15.5%-2 cents per bu.

15.6%-16.0%-4 cents per bu.

16.1%-16.5%-6 cents per bu.

16.6% to 17.0%-8 cents per bu.

Corn over 17.0% subject to rejection

Test Weight

54.0 lbs and over-no discount

53.0-53.9 lbs-2 cents per bu.

52.0-52.9 lbs-4 cents per bu.

Below 52.0 lbs.-additional 2 cents per lb. per bu.

Regular Damage

5.0% and under-no discount

5.1% and up-2 cents per bu. per each 1%

Over 10.0% subject to rejection

Heat Damage

.2% and under-no discount

..3% and up-1 cent per bu. per each .1%

Foreign Material

4.0% and under-no discount

4.1% and up-3 cents per bu. per each 1%

Musty/Sour-5 cents per bu.

This discount schedule is subject to change as market conditions dictate
providing both FCE and GFCEP mutually agree to any change in writing.

7<PAGE>
                                                                   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.

<PAGE>

         "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.

                                      -2-
<PAGE>

         "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

                                      -3-
<PAGE>

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;

                                      -4-
<PAGE>

               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 wells, 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 wells;

               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 billings, 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 billings; 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;

                                      -5-
<PAGE>

               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);

                                      -6-
<PAGE>

         (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.

                                      -7-
<PAGE>

                                  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 Wharton County, Jackson
               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:

                                      -8-
<PAGE>

               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

                                      -9-
<PAGE>

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.

                                      -10-
<PAGE>

                                  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.

                                      -11-
<PAGE>

                                   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

                                      -12-
<PAGE>

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
                                          4925 Greenville Avenue, Suite 1400
                                          Dallas, TX 75201
                                          (214) 6929211 -Telephone
                                          (214) 692-5055 -- 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 Insider Trading. 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.

                                      -13-
<PAGE>

         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.

                                      -14-
<PAGE>

Dated the date first set forth above.

                                          NATIONAL ENERGY GROUP, INC.

                                          By:       /s/ PHILIP D. DEVLIN
                                             ----------------------------------
                                                        PHILIP D. DEVLIN

                                          TRANSTEXAS GAS CORPORATION.

                                          By:       /s/ BOB G. ALEXANDER
                                             ----------------------------------
                                                        BOB G. ALEXANDER

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00058-of-00352.parquet"}]]