Common use of Material Decisions Clause in Contracts

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); (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.