UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
National Energy Group, Inc.
(Name of Issuer)
Class A Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
163581 21 0
(CUSIP Number)
Marc Weitzen, Esq.
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street, 20th Floor
New York, New York 10036
(212) 626-0800
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
August 7, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject
of this Schedule 13D, and is filing this schedule because of
Rule 13d-1(b)(3) or (4), check the following box //.
Check the following box if a fee is being paid with the
statement. (A fee is not required only if the reporting
person: (1) has a previous statement on file reporting
beneficial ownership of more than five percent of the class
of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership
of five percent or less of such class.) (See Rule 13d-7).
NOTE: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect
to the subject class of securities, and for any subsequent
amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section
18 of the Securities Exchange Act of 1934 ("Act") or
otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE>
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER
This Schedule 13D filed with the U.S. Securities
and Exchange Commission ("SEC") on July 27, 1995, by High
River Limited Partnership, a Delaware limited partnership
("High River"), Riverdale Investors Corp., Inc., a Delaware
corporation ("Riverdale") and Carl C. Icahn, a citizen of
the United States of America (collectively, the
"Registrants") and amended on July 22, 1996, is further
amended to furnish the additional information set forth
herein. All capitalized terms contained herein but not
otherwise defined shall have the meanings ascribed to such
terms in the original Schedule 13D previously filed by the
Registrants.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 is hereby amended by adding the following:
Under the Certificate of Designations of National
Energy Group, Inc. of Convertible Preferred Stock, Series D
(the "Certificate of Designations"), a holder of Convertible
Preferred Stock, Series D, par value $1.00 per share
("Preferred Stock") has the right to elect a member of the
board of directors of National Energy Group, Inc., a
Delaware corporation (the "Company") and under certain
circumstances to elect up to one more than one-half the
total number of directors of the Company.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE
ISSUER.
Item 6 is hereby amended by adding the following:
On August 7, 1996, High River and the Company
executed a stock purchase agreement (the "Stock Purchase
Agreement"), pursuant to which High River agrees to acquire
for $10 million, subject to certain conditions, (i) shares
of the Company's Preferred Stock, which shall be convertible
into shares of Common Stock, par value $.01 per share, of
the Company (the "Common Stock") and (ii) warrants to
purchase the Common Stock at $2.50 per share.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 is hereby amended by adding the following:
Exhibit 3. Stock Purchase Agreement.
Exhibit 4. Form of Certificate of Designations.
Exhibit 5. Form of Warrant.
SIGNATURES
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
Dated: August 9, 1996
HIGH RIVER LIMITED PARTNERSHIP
By: RIVERDALE INVESTORS CORP., INC.
Its: General Partner
By: /s/ EDWARD E. MATTNER
Edward E. Mattner
Its: Vice President and Treasurer
RIVERDALE INVESTORS CORP., INC.
By: /s/ EDWARD E. MATTNER
Edward E. Mattner
Its: Vice President and Treasurer
By: /s/ CARL C. ICAHN
Carl C. Icahn
[Signature Page of Schedule 13D Amendment No. 2 with respect
to National Energy Group, Inc.]
STOCK PURCHASE AGREEMENT
Dated as of August 7, 1996
By and Between
National Energy Group, Inc.
and
High River Limited Partnership
TABLE OF CONTENTS
Article Page
1 - DEFINITIONS 1
1.1 Certain Defined Terms 1
1.2 Accounting Terms. 5
1.3 References to Instruments
5
1.4 Singular and Plural 5
2 - PURCHASE AND SALE OF STOCK 5
2.1 Issuance, Sale and Purchase 5
2.2 Right of First Refusal With Respect to the Merger with
Alexander and any Equity Offering Before September 30,
1996 6
2.3 Termination and Payment of Fee 6
2.4 Right of First Refusal with Respect to Later Business
Combination with Alexander 7
2.5 Right of First Refusal Relating to Private Equity
Offerings 7
2.6 Legend 7
3 - REPRESENTATIONS AND WARRANTIES OF THE COMPANY 8
3.1 Organization 8
3.2 Authority 8
3.3 Authorization 8
3.4 Binding Agreement 8
3.5 No Conflicts 8
3.6 Capitalization 9
3.7 Valid Issuance 9
3.8 Absence of Bankruptcy Proceedings 10
3.9 Brokers 10
3.10 Financial Statements 10
3.11 No Material Adverse Change 10
3.12 Commission Documents 10
3.13 Properties 11
3.14 Registration Rights 11
3.15 Offering 11
3.16 No Defaults 11
3.17 Litigation 11
3.18 Compliance with Laws 12
3.19 Taxes 12
3.20 ERISA 12
3.21 Compliance with Environmental Laws 12
4 - REPRESENTATIONS AND WARRANTIES 13
4.1 Organization 13
4.2 Authority 13
4.3 Authorization 13
4.4 Binding Agreement 13
4.5 No Conflicts 13
4.6 Absence of Bankruptcy Proceedings 14
4.7 No Brokers 14
4.8 Accredited Investor, Etc. 14
4.9 Information Available 14
5 - AGREEMENTS PENDING CLOSING 14
5.1 Investigations; Operation of Business of the Company 14
5.2 Taking of Necessary Action 16
5.3 Antitrust Laws 16
6 - CONDITIONS TO CLOSING 16
6.1 The Company's Conditions 16
6.2 Purchaser's Conditions 17
7 - DELIVERIES AT THE CLOSING 18
7.1 Deliveries of the Company 18
7.2 Deliveries of Purchaser 19
8 - POST-CLOSING AGREEMENTS 19
8.1 Survival of Representations and Warranties 19
8.2 Indemnification 19
8.3 Brokers 19
9 - REGISTRATION RIGHTS 19
9.1 Shelf Registration 19
9.2 Piggy-Back Registration 20
9.3 Registration Procedures 21
9.4 Registration Expenses 23
9.5 Indemnification; Contribution 24
9.6 Participation in Underwritten Registrations 27
9.7 Rule 144 27
9.8 Grant of Registration Rights to Others 27
10 - MISCELLANEOUS 27
10.1 Public Announcements 27
10.2 Notices 27
10.3 Expenses 28
10.4 Entire Agreement 28
10.5 Governing Law 28
10.6 Counterparts 29
10.7 Waiver 29
10.8 Binding Effect; Assignment 29
10.9 Construction 29
Schedule A Purchased Shares and Warrants
Exhibit A Certificate of Designation
Exhibit B Warrant Certificate
Exhibit C Opinion of Strasburger & Price, L.L.P.
STOCK PURCHASE AGREEMENT
THIS AGREEMENT (this "Agreement"), dated as of the 7th day of
August, 1996, is by and between National Energy Group, Inc., a
Delaware corporation (the "Company"), and High River Limited
Partnership, a Delaware limited partnership ("Purchaser").
W I T N E S S E T H:
WHEREAS, the Company desires to issue and sell to Purchaser,
and Purchaser desires to purchase from the Company, in the amount
indicated opposite the Purchaser's name on Schedule A hereto, (i)
shares of the Company's authorized but unissued Convertible
Preferred Stock, Series D, par value $1.00 per share (the
"Preferred Stock"), which shares shall have such rights,
preferences, privileges and restrictions as set forth in the
Certificate of Designation of Convertible Preferred Stock, Series
D of the Company attached hereto as Exhibit A (the "Certificate of
Designation"), which rights include, subject to certain conditions,
the right to convert the Preferred Stock into shares of Common
Stock, par value $.01 per share, of the Company (the "Common
Stock") and (ii) warrants to purchase the Common Stock of the
Company, which warrants shall have the terms set forth in the
Warrant certificate attached hereto as Exhibit B (the "Warrant
Certificate"); and
NOW, THEREFORE, in consideration of the mutual covenants,
agreements, representations and warranties set forth in this
Agreement, the parties to this Agreement hereby agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 Certain Defined Terms. The following terms, as used in
this Agreement, shall have the following meanings:
"Alexander" shall mean Alexander Energy Corporation, an
Oklahoma corporation.
"Alternative Closing" shall be as defined in Section
2.1(b).
"Alternative Closing Fee" shall be as defined in Section
2.1(b).
"BankOne Agreement" shall mean, with respect to all
periods prior to the closing of the Merger and the funding of the
loan described in the Commitment, that certain credit agreement
dated as of June 30, 1995 between BankOne Texas, N.A. and the
Company, as amended, and thereafter, shall mean the credit
agreement to be entered into by the Company with BankOne Texas,
N.A. and Credit Lyonnais New York Branch pursuant to the
Commitment.
"Business Combination" shall mean a merger, consolidation
or other business combination of the Company with or into another
corporation or other entity or a purchase, lease or exchange of
assets of a person by the Company in exchange for cash, securities
of the Company or other property of the Company.
"Closing" shall be as defined in Section 2.1.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder as in effect on
the date hereof.
"Commission Documents" shall have the meaning assigned to
that term in Section 3.12.
"Commitment" shall mean that certain letter dated June 6,
1996 between the Company and BankOne Texas, N.A. and Credit
Lyonnais New York Branch relating to the funding of a $65 million
loan upon completion of the Merger.
"Company Confidential Material" shall be as defined in
Section 5.1(a).
"Effective Time of the Merger" shall have the meaning
assigned to that term in the Merger Agreement.
"Environmental Laws" shall be as defined in Section 3.21.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of
1934, or any successor statute, as at the time in effect.
Reference to a particular section of such Act shall include a
reference to the comparable section, if any, of such successor
statute.
"Fee" shall be as defined in Section 2.3.
"Financial Statements" shall mean the financial
statements of the Company and its consolidated subsidiaries,
including the notes thereto, as of and for the year ended December
31, 1995 and as of and for the three months ended March 31, 1996.
"Form 10-K" shall mean the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1995, including all
amendments thereto.
"GAAP" shall mean generally accepted accounting
principles, as set forth in the opinions of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements of the Financial Accounting Standards
Board or in such opinions and statements of such other entities as
shall be approved by a significant segment of the accounting
profession in the United States of America.
"Governmental Authority" shall mean (i) the United States
of America or any state within the United States of America and
(ii) any court or any governmental department, commission, board,
bureau, agency or other instrumentality of the United States of
America or of any state within the United States of America.
"Holder" means the Purchaser and any other holder from
time to time of Preferred Stock (other than the Company or any
Subsidiary).
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Inspectors" shall be as defined in Section 9.3(g).
"KAIM Stock Purchase Agreement" shall mean that certain
Stock Purchase Agreement to be entered into by and among the
Company and certain investment partnerships and accounts managed by
Kayne Anderson Investment Management, Inc., an investment adviser,
pursuant to which the Series E Preferred Stock will be issued and
sold to the investment partnerships and accounts named therein.
"Later Alexander Business Combination" shall be as
defined in Section 2.1(c).
"Later Alexander Business Combination Closing" shall be
as defined in Section 2.1(c).
"Law" shall mean any applicable statute, law, ordinance,
regulation, rule, ruling, order, restriction, requirement, writ,
injunction, decree or other official act of or by any Governmental
Authority.
"Legal Opinion" shall be as defined in Section 6.2(c).
"Material Adverse Effect" with respect to a Person shall
mean a material and adverse effect on the financial condition,
results of operations, business or properties of such Person and
its consolidated subsidiaries, taken as a whole.
"Merger" means a merger between Alexander and NEG-OK,
Inc., a wholly-owned subsidiary of the Company, pursuant to the
Merger Agreement.
"Merger Agreement" means that certain Agreement and Plan
of Merger among the Company, Alexander, NEG-OK, Inc., dated June 6,
1996, as amended.
"Merger Closing" shall be as defined in Section 2.1(a).
"Person" shall mean an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, a
limited liability company, a government or any department or agency
of a government.
"Pollutants" shall be as defined in Section 3.21.
"Proxy Statement" shall mean the Joint Proxy and
Prospectus of the Company filed with the SEC with respect to the
Merger and other related transactions.
"Purchase Price" shall be as defined in Section 2.1.
"Purchaser Representatives" shall be as defined in
Section 5.1(a).
"Records" shall be as defined in Section 9.3(g).
"Registrable Securities" means (i) any Common Stock
issued or issuable upon the conversion of the Preferred Stock, (ii)
any Common Stock issued as, or issuable upon the conversion or
exercise of any warrant, option, right or other security that is
issued or issuable as, a dividend or other distribution with
respect to, or in exchange for, or in replacement of, the Preferred
Stock, (iii) any Common Stock issued or issuable upon the exercise
of the Warrants and (iv) any other Common Stock owned by Purchaser.
"Registration Expenses" shall be as defined in Section
9.4.
"Registration Statement" shall be as defined in Section
9.3(a).
"Releases" shall be as defined in Section 3.21.
"SEC" shall mean the United States Securities and
Exchange Commission or any successor agency.
"Securities Act" shall mean the Securities Act of 1933,
or any successor statute, as at the time in effect. Reference to
a particular section of such Act shall include a reference to the
comparable section, if any, of such successor statute.
"Selling Holder" shall mean a holder of Registrable
Securities who is selling such Registrable Securities pursuant to
a registration statement.
"Series E Preferred Stock" shall mean the Preferred
Stock, Series E of the Company to be issued pursuant to the KAIM
Stock Purchase Agreement.
"Shares" shall be as defined in Section 2.1.
"Shelf Registration Statement" shall be as defined in
Section 9.1(a).
"Subsidiary" means (a) a corporation a majority of whose
voting stock is at the time, directly or indirectly, owned by the
Company, by one or more subsidiaries of the Company or by the
Company and one or more subsidiaries of the Company or (b) any
other Person (other than a corporation) in which the Company, a
subsidiary of the Company or the Company and one or more
subsidiaries of the Company, directly or indirectly, at the date of
determination thereof, has (i) at least a majority ownership or
(ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.
"Warrants" shall be as defined in Section 2.1.
1.2 Accounting Terms. For the purposes of this Agreement,
all accounting terms not otherwise defined in this Agreement shall
have the meanings assigned to such terms in accordance with GAAP.
1.3 References to Instruments. Unless the context otherwise
indicates, references in this Agreement to a particular section,
exhibit or schedule are to the corresponding section of, or the
corresponding exhibit or schedule to, this Agreement.
1.4 Singular and Plural. The definitions contained in
Section 1.1 are equally applicable to both the singular and plural
form of the terms defined in such Section.
ARTICLE 2 - PURCHASE AND SALE OF STOCK
2.1 Issuance, Sale and Purchase. At the closing of the
transactions contemplated herein (the "Closing"), which Closing may
occur as either a Merger Closing, an Alternative Closing or a Later
Alexander Business Combination Closing (as hereinafter defined),
the Company agrees to issue, sell and deliver to Purchaser, and
Purchaser agrees to purchase from the Company, the number of shares
of Series D Preferred Stock, $1.00 par value, of NEG (the "Shares")
listed on Schedule A for the Closing at a purchase price of $100.00
per Share and the number of Warrants listed on Schedule A to
purchase the Common Stock at $2.50 per share (the "Warrants") for
the Closing. The aggregate purchase price that shall be payable by
Purchaser to the Company for the Shares and the Warrants is listed
on Schedule A for the Closing (the "Purchase Price").
(a) The Merger Closing. If the Merger closes before
September 30, 1996, Purchaser shall be obligated to purchase, and
the Company shall be obligated to issue, sell and deliver, the
Shares and the Warrants shown on Schedule A for a Merger Closing
for the Purchase Price shown on Schedule A for a Merger Closing,
and the closing of such purchase in connection with the Merger (the
"Merger Closing"), shall take place immediately after the Effective
Time of the Merger, which the Company anticipates will occur on or
about August 29, 1996 or August 30, 1996.
(b) The Alternative Closing. If the Effective Time of
the Merger shall not have occurred by September 30, 1996, Purchaser
shall have the right, upon written notification to the Company on
or before October 30, 1996, to purchase the Shares and the Warrants
shown on Schedule A for an Alternative Closing for the Purchase
Price shown on Schedule A for an Alternative Closing, and to
receive a fee of $150,000 (the "Alternative Closing Fee") from the
Company on October 31, 1996. The closing of such purchase (the
"Alternative Closing") shall take place on such date on or after
October 30, 1996 but before December 31, 1996, as the parties shall
mutually agree upon.
(c) The Later Alexander Business Combination Closing.
If the Merger does not occur before the Merger Agreement
terminates, but a Business Combination between the Company
and Alexander is consummated within five (5) years after July
19, 1996 (the "Later Alexander Business Combination"), and
Purchaser exercises its right of first refusal with respect
thereto contained in Section 2.4, Purchaser shall be
obligated (i) if an Alternative Closing has not occurred, to
purchase the Shares and the Warrants shown on Schedule A for
a Merger Closing for the Purchase Price shown on Schedule A
for a Merger Closing or (ii) if an Alternative Closing
previously occurred, Purchaser shall be obligated to purchase
the Shares and the Warrants shown on Schedule A for the
Alternative Closing for the Purchase Price shown on Schedule
A for an Alternative Closing. Any closing in connection with
a Later Alexander Business Combination (the "Later Alexander
Business Combination Closing") shall take place in connection
with the effectiveness of the Later Alexander Business
Combination, at such time as the parties shall mutually agree
upon.
2.2 Right of First Refusal With Respect to the Merger with
Alexander and any Equity Offering Before September 30, 1996. The
Company agrees (i) not to seek to replace Purchaser to raise
additional equity on or before September 30, 1996, (ii) not to
close the Merger with Alexander without selling the Shares and the
Warrants to Purchaser so long as Purchaser is willing to purchase
such securities on the terms set forth in this Agreement and
(iii) not to seek equity on or before September 30, 1996, (in
addition to the equity placed with Purchaser and the investors
under the KAIM Stock Purchase Agreement) without first offering to
Purchaser the right to acquire such additional equity on the same
terms being offered by the Company to such other potential
investors. The Company shall notify the Purchaser of its intent to
raise additional equity on or before September 30, 1996, and the
terms thereof, and Purchaser shall have 15 days from receipt of
such notice to notify the Company if it intends to purchase such
additional equity in connection with the Merger. If Purchaser does
not accept the offer to purchase such additional equity within such
15 day period, the Company may sell equity on such terms and
conditions as have been offered to Purchaser during a period not to
exceed 90 days after the receipt of such offer.
2.3 Termination and Payment of Fee. If neither the Merger
Closing nor the Alternative Closing shall have occurred on or
before October 30, 1996, or if the NEG Certificate of Incorporation
Amendment Proposal as described in the Proxy Statement is not
adopted by the holders of the capital stock of the Company on or
before October 30, 1996 and Purchaser elects not to close in a
Merger Closing, the Company shall pay to Purchaser a fee of
$300,000 (the "Fee") on October 31, 1996; provided, however, that
Purchaser shall not be entitled to the Fee in the event the Company
has refused to close under this Agreement as a result of
substantial changes in the transaction required by Purchaser from
those reflected in this Agreement. If the Fee is due and paid,
this Agreement shall terminate, except for the provisions of
Sections 2.2 and 2.4, and if a Later Alexander Business Combination
Closing shall occur, thereafter, the provisions of Section 2.5
shall continue to apply for the period specified therein.
2.4 Right of First Refusal with Respect to Later Business
Combination with Alexander. If the Alternative Closing occurs, or
if the Company is obligated to pay the Fee under Section 2.3, and
the Merger Agreement has terminated, and if the Company and
Alexander thereafter resume discussions with respect to a Later
Alexander Business Combination on or before July 19, 2001,
Purchaser shall have the right to purchase the Shares and Warrants
on the terms set forth in this Agreement in connection with such
Later Alexander Business Combination, and the Company may not close
a Later Alexander Business Combination without selling the Shares
and the Warrants to Purchaser (or any remaining portion thereof not
previously purchased by Purchaser in an Alternative Closing) so
long as Purchaser is willing to purchase such securities on the
terms set forth in this Agreement. The Company shall notify the
Purchaser of the resumption of any discussions between the Company
and Alexander regarding a Later Alexander Business Combination, and
Purchaser shall have 15 days from receipt of notice of the
resumption of such discussions to notify the Company if it intends
to purchase securities in the Later Alexander Business Combination
Closing. If Purchaser does not accept the offer to purchase
securities in connection with the Later Alexander Business
Combination, the Company may sell equity in connection therewith on
the terms set forth in this Agreement or on such other terms and
conditions as the Company shall determine.
2.5 Right of First Refusal Relating to Private Equity
Offerings. After a Closing under this Agreement has occurred, if
the Company should propose at any time on or before July 19, 2001
to issue any equity securities for cash (other than pursuant to an
offering registered under the Securities Act, to employees as an
adjunct of the Company's employee compensation program, as
consideration in a Business Combination transaction or as part of
debt financing for a Business Combination transaction, or in an
offering of shares solely to existing shareholders of the Company
PRO RATA to their existing holdings), the Company shall notify
Purchaser of such proposal, shall offer Purchaser the opportunity
to purchase the full amount of such issuance and shall sell to
Purchaser such securities on terms and conditions no less favorable
than the most favorable terms to be offered by the Company to
others. The Company may sell to others securities offered to
Purchaser, but not subscribed by Purchaser, within ten days after
the receipt of such offer, during a period not to exceed 90 days
after the receipt of such offer. Thereafter, any issuance by the
Company on or before July 19, 2001 must again be preceded by an
offer to Purchaser.
2.6 Legend. Each Purchaser agrees that each certificate, if
any, evidencing Shares and Warrants to be issued to the Purchaser
by the Company at the Closing shall bear a legend concerning the
restrictions on transfer of such Shares and Warrants in
substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933 AS AMENDED OR ANY
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED OR QUALIFIED UNDER SAID ACT AND ALL
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH
REGISTRATION OR QUALIFICATION IS AVAILABLE AND SUCH OFFER,
SALE, TRANSFER, PLEDGE OR HYPOTHECATION DOES NOT VIOLATE THE
PROVISIONS OF THE ACT OR APPLICABLE LAWS.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser as of the
date of this Agreement as follows:
3.1 Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware. The Company is duly qualified or licensed
to do business as a foreign corporation, and in good standing, in
every jurisdiction in which its ownership of property or the
conduct of its business requires such qualification or licensing,
except where the failure to be so qualified or licensed would not
have a Material Adverse Effect upon the Company. Attached hereto
as Exhibit A is a true and complete copy of the Certificate of
Designation. True and complete copies of the Certificate of
Incorporation and Bylaws of the Company, each as amended to date,
have been provided to Purchaser. The Company has no Subsidiaries
other than NEG-OK, Inc. and, after the Merger, Boomer Marketing
Corporation, AEJH 1985 Limited Partnership, AEJH 1987 Limited
Partnership, AEJH 1989 Limited Partnership and Energy and
Environmental Services Limited Partnership, of which all but Energy
and Environmental Services Limited Partnership are in liquidation
and will be dissolved.
3.2 Authority. The Company has all requisite corporate power
and authority to carry on its business as presently conducted and
to enter into this Agreement and to perform its obligations
contemplated by this Agreement.
3.3 Authorization. The execution, delivery and performance
of this Agreement and the transactions contemplated by this
Agreement have been duly and validly authorized by all requisite
corporate action on the part of the Company.
3.4 Binding Agreement. This Agreement has been duly executed
and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company enforceable against it in
accordance with its terms, subject to applicable bankruptcy and
other similar laws of general application with respect to creditors
and subject to principles of equity and public policy that affect
enforceability of agreements generally.
3.5 No Conflicts. Neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will result in a breach or violation of, or constitute a
default under, the certificate of incorporation, bylaws or other
governing documents of the Company, or any material agreement,
indenture or other instrument to which the Company is a party or by
which it is bound or to which any of its properties are subject,
nor will the performance by the Company of its obligations
hereunder violate any law or result in the creation or imposition
of any material lien, charge, claim or encumbrance upon any
property or assets of the Company. No permit, consent, approval,
authorization or order of any Governmental Authority or other
Person is required in connection with the consummation by the
Company of the transactions contemplated by this Agreement, except
such as have been obtained and as otherwise contemplated by this
Agreement.
3.6 Capitalization. As of the date of this Agreement, the
authorized capital stock of the Company consists of (i) 50,200,000
shares of common stock, par value $.01 per share, of which
50,000,000 have been designated as Class A Common Stock, 12,160,307
of which are issued and outstanding, and 200,000 of which have been
designated as Class B Common Stock, none of which are issued and
outstanding, (ii) 1,000,000 shares of preferred stock, par value
$1.00 per share, of which 100,000 have been authorized as 10%
Cumulative Convertible Preferred Stock, Series B, 52,500 of which
are issued and outstanding, and of which 80,000 have been
authorized as 10 1/2% Cumulative Convertible Preferred Stock,
Series C, 40,000 of which are issued and outstanding. As of the
date of the Merger Closing, assuming approval by the shareholders
of NEG of the amendment to the certificate of incorporation
proposed for adoption by the shareholders in the Proxy Statement,
the authorized capital stock of the Company will consist of (i)
100,000,000 shares of common stock, par value $.01 per share,
approximately 33,457,650 of which will be issued and outstanding
after the Merger, and (ii) 1,000,000 shares of preferred stock, par
value $1.00 per share, of which 100,000 have been authorized as 10%
Cumulative Convertible Preferred Stock, Series B, 52,500 of which
are issued and outstanding, 80,000 have been authorized as 10 1/2%
Cumulative Convertible Preferred Stock, Series C, 40,000 of which
are issued and outstanding, 100,000 will have been authorized as
Convertible Preferred Stock, Series D, 100,000 of which the Company
expects to be outstanding following the completion of the sale
contemplated in connection with this Agreement and 50,000 of which
have been authorized as Convertible Preferred Stock, Series E,
50,000 of which the Company expects to be outstanding following the
completion of the sale in connection with the KAIM Stock Purchase
Agreement. All of the outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights, except as set forth in
this Agreement. As of the date of this Agreement, the Company has
a total of 890,000 shares of Common Stock issuable upon exercise of
outstanding options issued to officers, directors or employees of
the Company. In addition, as of the date of this Agreement,
500,000 shares of Common Stock will be issuable upon exercise of
various outstanding warrants and, after the Merger and related
transactions described in the Proxy Statement have occurred,
3,046,015 shares of Common Stock will be issuable upon exercise of
various outstanding warrants including the Warrants. Except for
the foregoing and as described on Schedule 3.14, there are no
outstanding subscriptions, options, warrants, rights, convertible
securities or other agreements or commitments of any character
obligating the Company to purchase, redeem, issue, transfer or
deliver any shares of Common Stock, preferred stock or other equity
security.
3.7 Valid Issuance.
(a) The issuance, sale and delivery of the Shares and
the Warrants in accordance with this Agreement have been duly
authorized by all necessary corporate action on the part of the
Company, and the Shares and the Warrants when so issued, sold and
delivered against payment therefor in accordance with this
Agreement will be duly and validly issued, fully paid and
nonassessable.
(b) The issuance, sale and delivery of the shares of
Common Stock issuable upon conversion of the Preferred Stock and
exercise of the Warrants have been duly authorized by all necessary
corporate action on the part of the Company, and such shares of
Common Stock have been duly reserved for issuance and, when issued
upon such conversion or exercise, will be duly and validly issued,
fully paid and nonassessable.
3.8 Absence of Bankruptcy Proceedings. There are no
bankruptcy or reorganization proceedings pending against, being
contemplated by, or to the knowledge of the Company, threatened
against, the Company.
3.9 Brokers. Except for Gaines Berland, Inc., whose fee will
be paid by the Company, no broker or finder has acted for or on
behalf of the Company in connection with this Agreement or the
transactions contemplated by this Agreement, and no broker or
finder is entitled to any brokerage or finder's fee or commission
in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of the Company.
3.10 Financial Statements. The Financial Statements (i)
present fairly the financial position of the Company and its
consolidated subsidiaries as of December 31, 1995, and March 31,
1996, (ii) present fairly the results of operations, cash flows and
changes in stockholders' equity of the Company and its consolidated
subsidiaries for the year ended December 31, 1995 and the three
months ended March 31, 1996, and (iii) were prepared in accordance
with GAAP consistently followed throughout the periods involved,
except as otherwise noted therein. The Company has no material
liabilities, contingent or otherwise, not reflected in the balance
sheet as of December 31, 1995 (or the notes thereto) or the balance
sheet as of March 31, 1996 (or the notes thereto) included in the
Financial Statements, other than any such liabilities incurred in
the ordinary course of business since March 31, 1996 and other than
as described in the Proxy Statement.
3.11 No Material Adverse Change. Except as described in the
Proxy Statement, since December 31, 1995, there has not been any
material adverse change in the financial condition, results of
operations, business or properties of the Company.
3.12 Commission Documents. Since January 1, 1993, the Company
has filed all registration statements, proxy statements, reports
and, other documents required to be filed by it under the
Securities Act or the Exchange Act, and all amendments thereto
(collectively, the "Commission Documents"). Each Commission
Document complied as to form when filed in all material respects
with the rules and regulations of the SEC. Each Commission
Document did not, on the date of filing, contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
3.13 Properties.
(a) The Company has good and defensible title to all of
its respective interests in all of its respective oil and gas
leases, free and clear of any encumbrances, except as described in
the Commission Documents and except for liens under the BankOne
Agreement, subject only to liens for taxes or charges of mechanics
or materialmen not yet due and to encumbrances under gas sales
contracts, operating agreements, unitization and pooling agreements
and other similar agreements as are customarily found in connection
with comparable drilling and producing operations and to title
defects and other encumbrances that are, singularly and in the
aggregate, not material in amount and do not interfere with its use
or enjoyment of its oil and gas properties. The Company has
complied in all material respects with the terms of the oil and gas
leases in which it purports to own an interest, and all of such
leases are in full force and effect (except where the failure so to
comply or to be in full force and effect will not have a Material
Adverse Effect upon the Company).
(b) The Company does not own any material properties or
other assets that are not described in the Commission Documents.
The Company has good and marketable title in fee simple to all
properties and assets described in the Commission Documents as
owned by it, and valid, subsisting and enforceable leases for the
properties described in the Commission Documents as leased by it,
in each case free and clear of all liens, charges, encumbrances or
restrictions, except for (i) such as are described in the
Commission Documents, (ii) liens under the BankOne Agreement or
(iii) liens, charges, encumbrances or restrictions as do not have
a Material Adverse Effect on the Company.
3.14 Registration Rights. Except as set forth on Schedule
3.14, there are no contracts, agreements or understandings between
the Company and any person granting such person the right to
require the Company to include such securities in any SEC
registration statement.
3.15 Offering. Subject to the accuracy of the Purchaser's
representations in Article 4 hereof, the offer, sale and issuance
of the Shares and the Warrants as contemplated by this Agreement
are exempt from the registration requirements of the Securities Act
and the securities laws of any state having jurisdiction with
respect to the transactions contemplated by this Agreement, and
neither the Company nor anyone acting on its behalf has or will
take any action that would cause the loss of such exemption.
3.16 No Defaults. The Company is not (i) in violation of any
provision of its charter or bylaws, (ii) in breach, violation or
default, in any material respect, of or under any material
contract, lease, commitment or instrument to which it is a party or
by which it is bound or to which any of its properties or assets
are subject, and no event has occurred which (whether with or
without notice, lapse of time or the happening or occurrence of any
other event) would constitute such a material breach, violation or
default or (iii) in material violation of any Law.
3.17 Litigation. There is no action, suit, proceeding or
investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company or any properties or
rights of it by or before any Governmental Authority that (i)
relates to or challenges the legality of this Agreement, the
Preferred Stock, the Warrants or the Common Stock, (ii) would
reasonably be expected to have a Material Adverse Effect upon the
Company (except as disclosed in the Commission Documents) or (iii)
would reasonably be expected to impair the ability of the Company
to perform fully on a timely basis any obligations that it has
under this Agreement or any documents related hereto.
3.18 Compliance with Laws. The Company is in compliance in
all material respects with all laws and regulations in all
jurisdictions where the failure to effect such compliance would
reasonably be expected to have a Material Adverse Effect upon the
Company.
3.19 Taxes. Except as set forth on Schedule 3.19, all tax
returns required to be filed by the Company in any jurisdiction
have been so filed, and all taxes, assessments, fees and other
charges shown thereon to be due and payable have been paid, other
than those being contested in good faith. The Company does not
know of any actual or proposed material additional tax assessments
for any fiscal period against it. None of the Company's tax
returns are under audit, and no waivers of the statute of
limitations or extensions of time with respect to any tax returns
have been granted to the Company, except such audits, waivers or
extensions as would not reasonably be expected to have a Material
Adverse Effect upon the Company.
3.20 ERISA. Neither the execution and delivery of this
Agreement nor the sale of the Shares and Warrants to be purchased
by the Purchaser is a prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) on the part of
the Company that is not exempt by statute, regulation or class
exemption. The Company is in compliance in all material respects
with all presently applicable provisions of ERISA; no "reportable
event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company would
have any material liability; the Company has not incurred and does
not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan"
or (ii) Sections 412 (whether or not waived) or 4971 of the Code;
and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of
the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, that would cause
the loss of such qualification.
3.21 Compliance with Environmental Laws. The business and
properties of the Company have been operated in compliance with all
applicable federal, state or local laws, rules, regulations or
orders (collectively, "Environmental Laws") relating to pollution
or protection of the environment including, without limitation, any
law, rule, regulation or order relating to emissions, discharges,
releases or threatened releases ("Releases") of chemicals,
pollutants, contaminants, wastes, petroleum or petroleum products,
toxic substances or hazardous substances ("Pollutants") for which
noncompliance would have a Material Adverse Effect upon the
Company. The Company has not received any written communication,
whether from a Governmental Authority, citizens' group, landowner,
or employee, nor, to the best knowledge of the executive officers
of the Company, has the Company received any oral communication
from a Governmental Authority, alleging that (i) the Company is not
in compliance with any Environmental Law applicable to it and its
business and properties, or (ii) any employee or third party has
suffered bodily injury or property damage as a result of one or
more Releases of Pollutants arising out of or resulting from the
operations of the Company, or prior owners and operators of its
business or property, which allegation, if true, would have a
Material Adverse Effect upon the Company. Except as disclosed in
the Commission Documents, the Company has no material obligation to
remediate, repair or replace any property, whether real or
personal, owned by the Company or any third party, as a result of
one or more Releases of Pollutants arising out of or resulting from
the operations of the Company or prior owners and operators of
their business or properties.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser represents and warrants with respect to itself to
the Company as of the date hereof as follows:
4.1 Organization. Purchaser is a limited partnership duly
organized, validly existing and in good standing under the laws of
the state of Delaware.
4.2 Authority. Purchaser has all requisite power and
authority to enter this Agreement and the other documents and
agreements contemplated hereby, to purchase the Shares and the
Warrants on the terms described in this Agreement and to perform
its other obligations contemplated by this Agreement.
4.3 Authorization. The execution, delivery and performance
of this Agreement and the transactions contemplated hereunder have
been duly and validly authorized by all requisite partnership
action on the part of Purchaser.
4.4 Binding Agreement. This Agreement has been duly executed
and delivered by Purchaser and constitutes a legal, valid and
binding obligation of Purchaser enforceable against Purchaser in
accordance with its terms, subject to bankruptcy and other similar
laws of general application with respect to creditors and subject
to principles of equity and public policy that affect
enforceability of agreements generally.
4.5 No Conflicts. Neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will result in a breach or violation of, or constitute a
default under, the governing documents of the Purchaser, or any
agreement, indenture or other instrument to which the Purchaser is
a party or by which it is bound or to which its properties are
subject, nor will the performance by the Purchaser of its
obligations hereunder violate any Law or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any
property or assets of the Purchaser. No permit, consent, approval,
authorization or order of any Governmental Authority or other
Person is required in connection with the consummation by the
Purchaser of the transactions contemplated by this Agreement,
except such as have been obtained and as otherwise contemplated by
this Agreement.
4.6 Absence of Bankruptcy Proceedings. There are no
bankruptcy or reorganization proceedings pending against, being
contemplated by, or to Purchaser's knowledge, threatened against,
Purchaser.
4.7 No Brokers. No broker or finder has acted for or on
behalf of Purchaser in connection with this Agreement or the
transactions contemplated by this Agreement, and no broker or
finder is entitled to any brokerage or finder's fee or commission
in respect thereof based in any way on agreements, arrangements or
understandings made by or on behalf of Purchaser.
4.8 Accredited Investor, Etc. Purchaser is an "accredited
investor" within the meaning of Rule 501 under the Securities Act.
Purchaser is acquiring the Shares and the Warrants for its own
account and not for distribution or resale, with no present
intention of distributing or reselling said Shares or Warrants or
any part thereof; provided that the disposition of Purchaser's
property shall at all times remain within its control. Purchaser
agrees: (a) that Purchaser will not sell, assign, pledge, give,
transfer or otherwise dispose of the Shares or the Warrants or any
interest therein, or make any offer or attempt to do any of the
foregoing, except pursuant to a registration of the Shares under
the Securities Act and all applicable state securities laws or in
a transaction which, in the written opinion of counsel for
Purchaser satisfactory to the Company (which requirement may be
waived by the Company upon advice of counsel), is exempt from the
registration provisions of the Securities Act and all applicable
state securities laws; (b) that the certificate(s) for the Shares
and the Warrants will bear a legend making reference to the
foregoing restrictions for so long as such legend may be required
pursuant to applicable federal securities laws; and (c) that the
Company and any transfer agent for the Shares and Warrants shall
not be required to give effect to any purported transfer of any of
the Shares or the Warrants except upon compliance with the
foregoing restrictions.
4.9 Information Available. Purchaser has been given the
opportunity to ask questions of and receive answers from the
officers of the Company or their designated representatives
concerning the terms and conditions of the offering of the Shares
and the Warrants and the Company, and to obtain any additional
information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to verify the
accuracy of information furnished in the Commission Documents.
ARTICLE 5 - AGREEMENTS PENDING CLOSING
5.1 Investigations; Operation of Business of the Company.
Between the date of this Agreement and the earlier of a Closing,
October 31, 1996 or termination of this Agreement:
(a) (i) The Company shall give Purchaser, its agents and
representatives, full access to all of the premises of the Company,
including well sites, and books and records, and shall cause its
officers to furnish Purchaser, its agents and representatives with
such financial and operating data and other information with
respect to the business and properties of the Company, as
Purchaser, its agents and representatives shall from time to time
reasonably request; provided, however, that any such investigation
shall not affect any of the representations and warranties of the
Company hereunder, and provided further, that any such
investigation shall be conducted in such manner as not to interfere
unreasonably with the operation of the business of the Company. In
the event of termination of this Agreement, except as prevented by
law, Purchaser will, and shall cause its agents and representatives
to, return to the Company all documents, work papers and other
materials obtained from the Company in connection with the
transactions contemplated hereby, and all copies, extracts or other
reproductions thereof in whole or in part (the "Company
Confidential Material"). The Company Confidential Material does
not include information which (i) is public information, (ii) was
already known to Purchaser, (iii) is developed by Purchaser
independently from the information supplied to Purchaser pursuant
to this Agreement, or (iv) is furnished to Purchaser by a third
party who is not an employee, agent, representative, or advisor of
the Company or any entity in which the Company has an interest
independently from Purchaser's investigation pursuant to the
transactions contemplated by this Agreement. Purchaser agrees, and
shall cause its affiliates and their respective officers,
directors, employees, financial advisors and agents (collectively,
"Purchaser Representatives") to keep confidential any information
obtained pursuant to this Agreement which is stamped confidential
or otherwise transmitted to Purchaser in a manner that indicates
such material is Company Confidential Material unless such
information is readily ascertainable from public or published
information or trade sources. Purchaser will be responsible for
any actions by the Purchaser Representatives which are not in
accordance with the provisions hereof. If this Agreement is
terminated, Purchaser shall not use, and shall cause each Purchaser
Representative not to use, any of the Company Confidential
Information to Purchaser's or any other person's or entity's
financial advantage or to the detriment of the Company. The
confidentiality provisions of this Section 5.1 shall survive the
termination of this Agreement.
(ii) Subject to Subsection 5.1(a)(iii) below or
except as required by law, the Company Confidential Material will
be kept confidential and will not, without the prior written
consent of the Company, be disclosed by Purchaser or the Purchaser
Representatives, in whole or in part, and will not be used by
Purchaser or the Purchaser Representatives, directly or indirectly,
for any purpose other than in connection with this Agreement or
that is to the detriment of the Company.
(iii) In the event that Purchaser, the Purchaser
Representatives or anyone to whom Purchaser or the Purchaser
Representatives supply the Company Confidential Material are
requested or required (by oral questions, interrogatories, requests
for information or documents, subpoena, civil investigative demand,
any informal or formal investigation by any Governmental Body or
otherwise in connection with legal processes) to disclose any of
the Company Confidential Material, Purchaser agrees (i) to
immediately notify the Company of the existence, terms and
circumstances of such a request, (ii) to consult with the Company
on the advisability of taking legally available steps to resist or
narrow such request and (iii) if disclosure of such information is
required, to furnish only that portion of the Company Confidential
Material which, in the opinion of Purchaser's counsel, Purchaser is
legally compelled to disclose and to cooperate with any action by
the Company to obtain an appropriate protective order or other
reliable assurance that confidential treatment will be accorded the
Company Confidential Material (it being agreed that the Company
shall reimburse Purchaser for all reasonable out-of-pocket expenses
incurred by Purchaser in connection with such cooperation).
(b) The Company will, to the extent required for
continued operation of its business without impairment, use its
reasonable efforts to preserve substantially intact the books and
records and the business organization of the Company, to keep
available the services of its present officers and employees, and
to preserve the present relationships of the Company with persons
having significant business relations therewith such as suppliers,
customers, brokers, agents or otherwise and to promptly notify
Purchaser of an emergency or other change which would have a
Material Adverse Effect on the Company, any governmental
complaints, investigations, hearings (or communications indicating
that the same may be contemplated) or the breach in any material
respect of any representation, warranty, covenant or agreement
contained herein.
(c) The Company will conduct its business only in the
ordinary course and, by way of amplification and not limitation,
the Company will not, without the prior written consent of
Purchaser, take any of the actions prohibited of the Company
pursuant to Section 4.02(c) of the Merger Agreement.
(d) The Company shall furnish Purchaser a copy of any
report filed with the SEC under the Exchange Act.
5.2 Taking of Necessary Action. Subject to the terms and
conditions of this Agreement and to applicable law, each of the
parties to this Agreement shall use all reasonable efforts promptly
to take or cause to be taken all action and promptly to do or cause
to be done all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement.
5.3 Antitrust Laws. Purchaser and the Company agree to use
their best efforts to make such filings with and provide such
information to the Federal Trade Commission or the Department of
Justice with respect to the transactions contemplated by this
Agreement as may be required under the HSR Act, sufficiently in
advance of any transaction which may require such filings so as to
permit the lapse of the normal waiting period as described in the
HSR Act in advance of such transaction and to join in a request for
early termination. Purchaser and the Company agree to use such
best efforts to obtain all such governmental approvals required to
consummate the transactions contemplated by this Agreement and to
cause early termination of the waiting period under the HSR Act.
ARTICLE 6 - CONDITIONS TO CLOSING
6.1 The Company's Conditions. The obligations of the Company
to close under this Agreement are subject, at the option of the
Company, to the satisfaction at or prior to the Closing of the
following conditions:
(a) All representations of Purchaser contained in this
Agreement shall be true at and as of the delivery date as if such
representations were made at and as of date of delivery, and
Purchaser shall have performed and satisfied all agreements
required by this Agreement to be performed and satisfied by
Purchaser at or prior to the delivery date;
(b) The Company shall have received a certificate dated
as of the delivery date, executed by the general partner of
Purchaser, to the effect that to such general partner's knowledge
the conditions set forth in Section 6.1(a) above are satisfied at
and as of the date of the Closing; and
(c) As of the Closing, no suit, action or other
proceeding (excluding any such matter initiated by the Company)
shall be pending or threatened before any Governmental Authority
seeking to restrain the Company or prohibit the transactions
contemplated hereby or seeking damages against the Company as a
result of the consummation of this Agreement.
6.2 Purchaser's Conditions. The obligations of Purchaser to
close under this Agreement are subject, at the option of Purchaser,
to the satisfaction at or prior to the date of the Closing of the
following conditions:
(a) All representations of the Company contained in this
Agreement shall be true at and as of the date of Closing as if such
representations were made at and as of the date of delivery, and
the Company shall have performed and satisfied all agreements
required by this Agreement to be performed and satisfied by the
Company at or prior to the date of Closing;
(b) Purchaser shall have received certificates dated as
of the date of the Closing, executed by duly authorized officers of
the Company, to the effect that to such officer's knowledge the
conditions set forth in Section 6.2(a) above are satisfied at and
as of the date of the Closing;
(c) With respect to a Merger Closing or an Alternative
Closing, Purchaser shall have received a legal opinion dated as of
the date of Closing from Strasburger & Price, L.L.P. in
substantially the form of Exhibit C hereto and, with respect to a
Later Alexander Business Combination Closing, Purchaser shall have
a legal opinion in form and from counsel to the Company
satisfactory to Purchaser with respect to the substantive matters
contained in the opinion attached as Exhibit C (the "Legal
Opinion");
(d) Purchaser shall have received evidence satisfactory
to it that the transactions contemplated hereby do not violate the
BankOne Agreement;
(e) No suit, action or other proceeding (excluding any
such matter initiated by Purchaser) shall be pending or threatened
before any Governmental Authority seeking to restrain Purchaser or
prohibit the transactions contemplated by this Agreement or seeking
damages against Purchaser as a result of the consummation of this
Agreement;
(f) The Certificate of Designation shall have been duly
filed by the Company with the Secretary of State of the State of
Delaware;
(g) Except for the amendments to the certificate of
incorporation of the Company described in the Proxy Statement, the
certificate of designation with respect to the Series E Preferred
Stock, and the Certificate of Designation, no amendments to the
Certificate of Incorporation or Bylaws of the Company as in effect
on July 19, 1996 shall have been effected;
(h) Any applicable waiting period under the HSR Act
shall have expired or been terminated; and
(i) The holders of the capital stock of the Company
shall have approved the NEG Certificate of Incorporation Amendment
Proposal as described in the Proxy Statement.
ARTICLE 7 - DELIVERIES AT THE CLOSING
7.1 Deliveries of the Company. At the Closing the Company
shall deliver the following:
(a) Certificates representing the Shares and the
Warrants, each such certificate executed by the Company's President
and Secretary or Assistant Secretary and appropriately registered
in the name of Purchaser;
(b) A certificate of the Secretary or the Assistant
Secretary of the Company certifying, among other things, as to the
due authorization of the transactions contemplated hereby;
(c) The Legal Opinion;
(d) Certificates of existence and good standing for the
Company in the jurisdiction of its incorporation and each
jurisdiction in which it is qualified or licensed to do business
and own material assets;
(e) A copy of any required written consent and waiver to
the transactions contemplated hereby executed by the third party or
appropriate Governmental Authority; and
(f) Evidence satisfactory to Purchaser of the filing of
the Certificate of Designation with the Secretary of State of the
State of Delaware.
7.2 Deliveries of Purchaser. At the Closing, Purchaser shall
deliver to the Company the Purchase Price in immediately available
funds to the Company.
ARTICLE 8 - POST-CLOSING AGREEMENTS
8.1 Survival of Representations and Warranties. All
representations, warranties, covenants and agreements of the
Company contained in this Agreement or made in writing by the
Company in connection herewith, and all representations and
warranties of Purchaser contained in this Agreement or made in
writing by Purchaser in connection herewith, shall survive the
Closing, regardless of any investigation made by such party or on
such party's behalf and without any other document being delivered
at the date hereof.
8.2 Indemnification. After the Closing, the Company shall
indemnify and hold harmless Purchaser, and Purchaser shall
indemnify and hold harmless the Company, from and against any and
all claims, losses, damages and liabilities (and actions in respect
thereof) and any and all costs and expenses (including reasonable
attorneys' fees and expenses) that such person may sustain or incur
as a result of any misrepresentation or breach of warranty or the
nonperformance of any obligation on the part of the other under
this Agreement.
8.3 Brokers. Without limiting the parties' respective
representations in Sections 3.9 and 4.7, after the Closing each
party agrees to indemnify and hold the other harmless from and
against any claim for a brokerage or finder's fee or commission in
connection with this Agreement or the transactions contemplated by
this Agreement to the extent such claim arises from or is
attributable to the actions of such indemnifying party.
ARTICLE 9 - REGISTRATION RIGHTS
9.1 Shelf Registration.
(a) At any time commencing nine months after the
Closing, the Company shall, upon demand by Purchaser or any holder
of Registrable Securities (except for holders only of Registrable
Securities) described in (iv) of the definition of Registrable
Securities and provided Purchaser or any holder of Registrable
Securities (except for holders only of Registrable Securities
described in (iv) of the definition of Registrable Securities)
represents to the Company that it has a present intention to sell,
prepare and file with the SEC a shelf registration statement (the
"Shelf Registration Statement") on an appropriate form pursuant to
Rule 415 (or any similar provision that may be adopted by the SEC)
under the Securities Act with respect to the Registrable
Securities.
(b) The Company agrees to use its best efforts to have
the Shelf Registration Statement declared effective, and to keep
the Shelf Registration Statement continuously effective, at the
option of Purchaser or any holder of Registrable Securities (except
for holders only of Registrable Securities described in (iv) of the
definition of Registrable Securities), until all of the Shares
covered thereby have been sold or such time as all of the
Registrable Securities can be resold pursuant to Rule 144(k) under
the Securities Act (or any successor provision). Further, the
Company shall use its best efforts to maintain the quotation of the
Common Stock on the Nasdaq National Market or a listing with a
national securities exchange.
(c) Notwithstanding any other provisions of this
Agreement to the contrary, the Company shall cause the Shelf
Registration Statement and the related prospectus and any amendment
or supplement thereto, as of the effective date of the Shelf
Registration Statement, amendment or supplement, as the case may be
(i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of
the SEC and (ii) not to contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading other
than statements or omissions made in reliance upon and in
conformity with information furnished to the Company in writing by
the holders of Registrable Securities expressly for use in such
Shelf Registration Statement and the related prospectus or any
amendment or supplement thereto.
9.2 Piggy-Back Registration.
(a) If at any time after the Closing the Company
proposes to file a registration statement under the Securities Act
with respect to a firm commitment underwritten offering by the
Company whether or not for sale for its own account (other than a
registration statement on Form S-4 or S-8 (or any substitute form
for comparable purposes that may be adopted by the SEC) or a
registration statement filed in connection with an exchange offer
or an offering of securities solely to the Company's existing
security holders), then the Company shall in each such case give
written notice of such proposed filing to the holders of
Registrable Securities as soon as practicable (but in no event less
than 10 days before the anticipated filing date), and such notice
shall offer such holders of Registrable Securities (provided such
holders represent to the Company that they have a present intention
to sell) the opportunity to register such Registrable Securities
and such number of shares of Registrable Securities as each such
holder may request.
(b) The Company shall use its best efforts to cause the
managing underwriter or underwriters of a proposed underwritten
offering to permit the Registrable Securities requested to be
included in the registration statement for such offering to be
included on the same terms and conditions as any similar securities
of the Company or of any selling stockholder included therein.
Notwithstanding the foregoing, if the managing underwriter or
underwriters of such offering deliver a written notice to the
holders of such Registrable Securities that either because of (i)
the kind of securities which such holders, the Company and any
other persons or entities intend to include in such offering or
(ii) the size of the offering which the holders of Registrable
Securities, the Company and such other persons intend to make, the
success of the offering would be materially and adversely affected
by inclusion of the Registrable Securities requested to be
included, then (a) in the event that the size of the offering is
the basis of such managing underwriter's opinion, the amount of
securities to be offered for the accounts of holders of Registrable
Securities shall be reduced pro rata to the extent necessary to
reduce the total amount of securities to be included in such
offering to the amount recommended by such managing underwriter or
underwriters; provided that if securities are being offered for the
account of other persons or entities as well as the Company, the
proportion by which the amount of such class of securities intended
to be offered by holders of Registrable Securities is reduced shall
not exceed the proportion by which the amount of such class of
securities intended to be offered by such other persons or entities
is reduced; and (b) in the event that the combination of securities
to be offered is the basis of such managing underwriter's opinion,
(x) the Registrable Securities to be included in such offering
shall be reduced as described in clause (a) above (subject to the
proviso in clause (a)) or, (y) if the actions described in clause
(x) would, in the judgment of the managing underwriter, be
insufficient to substantially eliminate the adverse effect that
inclusion of the Registrable Securities requested to be included
would have on such offering, such Registrable Securities will be
excluded from such offering.
9.3 Registration Procedures. In connection with any
registration pursuant to Section 9.1 or Section 9.2 hereof, the
following provisions shall apply:
(a) The Company shall (i) prior to filing the Shelf
Registration Statement or any other registration statement
registering Registrable Securities (a "Registration Statement") or
prospectus or any amendments or supplements thereto, furnish to one
counsel selected by the holders of a majority in aggregate
principal amount or number of shares, as the case may be, of the
Registrable Securities covered by such Registration Statement
copies of all such documents proposed to be filed, which documents
will be subject to the reasonable review of such counsel and (ii)
as soon as reasonably possible, furnish to each Selling Holder,
prior to filing a Registration Statement, copies of such
Registration Statement as proposed to be filed, and thereafter
furnish to such Selling Holder such number of copies of such
Registration Statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the prospectus included
in such Registration Statement (including each preliminary
prospectus) and such other documents as such Selling Holder may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Selling Holder;
(b) The Company shall notify the holders of Registrable
Securities in writing:
(i) when the Registration Statement and any
amendment thereto has been filed with the SEC
and when the Registration Statement or any
post-effective amendment thereto has become
effective;
(ii) of any request by the SEC for amendments or
supplements to the Registration Statement or
the prospectus included therein or for
additional information relating to such
registration;
(iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the
Registration Statement or the initiation of any
proceedings for that purpose; and
(iv) of the receipt by the Company of any
notification with respect to the suspension of
the qualification of the Registrable Securities
for sale in any jurisdiction or the initiation
or threatening of any proceeding for such
purpose.
(c) The Company shall use its best efforts to register
or qualify such Registrable Securities under such other securities
or blue sky laws of such jurisdictions as any Selling Holder
reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such Selling
Holder to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such Selling Holder; provided that
the Company will not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (c), (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction.
(d) The Company shall use reasonable efforts to prevent
the issuance or obtain the withdrawal of any order suspending the
effectiveness of the Registration Statement at the earliest
possible time.
(e) The Company shall notify each Selling Holder of such
Registrable Securities, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of
the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and
promptly file with the SEC and make available to each Selling
Holder any such supplement or amendment.
(f) At any time commencing nine months after the
Closing, if requested in writing by the holders beneficially owning
at least 25% collectively, of the Registrable Securities (including
holders of Preferred Stock), the Company shall enter into customary
agreements (including an underwriting agreement in customary form
with customary terms with underwriters reasonably approved by the
Company) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of such Registrable
Securities; provided that the Company shall not be required to
participate in more than [two] underwritten offerings under the
Shelf Registration Statement.
(g) The Company shall make available for inspection by
any Selling Holder of such Registrable Securities, any underwriter
participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other professional
retained by any such Selling Holder or underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company and its
Subsidiaries (collectively, the "Records") as shall be reasonably
necessary to enable them to exercise their due diligence
responsibility, and cause the Company's and its Subsidiaries'
officers, directors and employees to supply all information
reasonably requested by any such Inspector in connection with such
Registration Statement. Each Selling Holder of such Registrable
Securities agrees that information obtained by it as a result of
such inspections which is deemed confidential shall not be used by
it as the basis for any market transactions in securities of the
Company unless and until such is made generally available to the
public. Each Selling Holder of such Registrable Securities further
agrees that it will, upon learning that disclosure of such Records
is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company, at the Company's expense, to
undertake appropriate action to prevent disclosure of the Records
deemed confidential.
(h) The Company will use its best efforts to comply with
all the rules and regulations of the SEC to the extent and so long
as they are applicable to the Registration Statement and will make
generally available to its security holders after the effective
date of the applicable Registration Statement an annual earnings
statement satisfying the provisions of Section 11(a) of the
Securities Act.
The Company may require each Selling Holder of
Registrable Securities as to which any registration is being
effected to furnish to the Company such information regarding the
distribution of such Registrable Securities as the Company may from
time to time reasonably request in writing and such other
information as may be legally required in connection with such
registration.
Each Selling Holder agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind
described in Section 9.3(e) hereof, such Selling Holder will
forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable
Securities until such Selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 9.3(e)
hereof, and, if so directed by the Company, such Selling Holder
will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Selling Holder's
possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
9.4 Registration Expenses. All expenses incident to the
Company's performance of or compliance with this Article 9,
including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable
Securities), printing expenses, messenger and delivery expenses,
internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or
accounting duties), the fees and expenses incurred in connection
with the listing of the securities to be registered on each
securities exchange on which similar securities issued by the
Company are then listed, and fees and disbursements of counsel for
the Company and its independent certified public accountants, the
reasonable fees and expenses of any special experts retained by the
Company in connection with such registration, fees and expenses of
other persons retained by the Company, and reasonable fees and
expenses (limited to $35,000 per registration) of one counsel (who
shall be reasonably acceptable to the Company) for the holders of
Registrable Securities incurred in connection with each
registration hereunder (but not including any underwriting
discounts or commissions attributable to the sale of Registrable
Securities) will be borne by the Company (all such expenses being
herein called "Registration Expenses").
9.5 Indemnification; Contribution.
(a) Indemnification by the Company. The Company agrees
to indemnify and hold harmless each Selling Holder of Registrable
Securities, its officers, directors, partners and agents and each
person, if any, who controls such Selling Holder within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages (whether
in contract, tort or otherwise), liabilities and expenses
(including reasonable costs of investigation) whatsoever (as
incurred or suffered) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained
in any registration statement or prospectus relating to the
Registrable Securities or in any amendment or supplement thereto or
in any preliminary prospectus, or arising out of or based upon any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of, or are based upon,
any such untrue statement or omission or allegation thereof based
upon information furnished in writing to the Company by such
Selling Holder or on such Selling Holder's behalf expressly for use
therein. The Company also agrees to indemnify any underwriters of
the Registrable Securities, their officers, partners and directors
and each person who controls such underwriters on substantially the
same basis as that of the indemnification of the Selling Holders
provided in this Section 9.5(a) or such other indemnification
customarily obtained by underwriters at the time of offering.
(b) Conduct of Indemnification Proceedings. If any
action or proceeding (including any governmental investigation)
shall be brought or asserted against any Selling Holder (or its
officers, directors, partners or agents) or any person controlling
any such Selling Holder in respect of which indemnity may be sought
from the Company, the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such
Selling Holder, and shall assume the payment of all expenses. Such
Selling Holder or any controlling person of such Selling Holder
shall have the right to employ separate counsel in any such action
and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Selling
Holder or such controlling person unless (i) the Company has agreed
to pay such fees and expenses or (ii) the named parties to any such
action or proceeding (including any impleaded parties) include both
such Selling Holder or such controlling person and the Company, and
such Selling Holder or such controlling person shall have been
advised by counsel that there may be one or more legal defenses
available to such Selling Holder or such controlling person which
differ from those available to the Company (in which case, if such
Selling Holder or such controlling person notifies the Company in
writing that it elects to employ separate counsel at the expense of
the Company, the Company shall not have the right to assume the
defense of such action or proceeding on behalf of such Selling
Holder or such controlling person; it being understood, however,
that the Company shall not, in connection with any one such action
or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the fees
and expenses of more than one separate firm of attorneys (together
with appropriate local counsel) at any time for such Selling Holder
and such controlling persons, which firm shall be designated in
writing by such Selling Holder). The Company shall not be liable
for any settlement of any such action or proceeding effected
without the Company's written consent, but if settled with its
written consent, or if there be a final judgment for the plaintiff
in any such action or proceeding, the Company agrees to indemnify
and hold harmless such Selling Holder and such controlling person
from and against any loss or liability (to the extent stated above)
by reason of such settlement or judgment.
(c) Indemnification by Selling Holders. Each Selling
Holder agrees, severally but not jointly, to indemnify and hold
harmless the Company, its directors, officers and agents and each
person, if any, who controls the Company within the meaning of
either Section 15 of the Securities Act or Section 20 of the
Exchange Act, as amended, to the same extent as the indemnity
contained in Section 9.5(a) from the Company to such Selling
Holder, but only with respect to information furnished in writing
by such Selling Holder or on such Selling Holder's behalf expressly
for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or
any preliminary prospectus. In case any action or proceeding shall
be brought against the Company or its directors, officers or
agents, or any such controlling person, in respect of which
indemnity may be sought against such Selling Holder, such Selling
Holder shall have the rights and duties given to the Company, and
the Company or its directors, officers or agents or such
controlling person shall have the rights and duties given to such
Selling Holder by the preceding Section 9.5(b). Each Selling Holder
also agrees to indemnify and hold harmless underwriters of the
Registrable Securities, their officers and directors and each
person who controls such underwriters on substantially the same
basis as that of the indemnification of the Company provided in
this Section 9.5(c).
(d) Contribution. If the indemnification provided for
in this Section 9.5 is unavailable to the Company, the Selling
Holders or the underwriters in respect of any losses, claims,
damages, liabilities or judgments referred to herein, then each
such indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities and judgments (i) as between the Company and the
Selling Holders on the one hand and the underwriters on the other,
in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Holders on the one
hand and the underwriters on the other from the offering of the
Registrable Securities, or if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the
Company and the Selling Holders on the one hand and of the
underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations and (ii) as between the Company, on the one hand,
and each Selling Holder on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of
each Selling Holder in connection with such statements or
omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling
Holders on the one hand and the underwriters on the other shall be
deemed to be in the same proportion as the total proceeds from the
offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company and the Selling Holders
bear to the total underwriting discounts and commissions received
by the underwriters, in each case as set forth in the table on the
cover page of the prospectus. The relative fault of the Company
and the Selling Holders on the one hand and of the underwriters on
the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact
relates to information supplied by the Company and the Selling
Holders or by the underwriters. The relative fault of the Company
on the one hand and of each Selling Holder on the other shall be
determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Selling Holders agree that it would
not be just and equitable if contribution pursuant to this Section
9.5 were determined by pro rata allocation (even if the
underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal
or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 9.5(d), no
underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission,
and no Selling Holder shall be required to contribute any amount in
excess of the amount by which the total price at which the
Registrable Securities of such Selling Holder were offered to the
public exceeds the amount of any damages which such Selling Holder
has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
9.6 Participation in Underwritten Registrations. No person
may participate in any underwritten registration hereunder unless
such person (a) agrees to sell such person's securities on the
basis provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (b)
completes and execute all questionnaires, powers of attorneys,
indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and this
Agreement.
9.7 Rule 144. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the
Exchange Act, and that it will take such further action as any
holder of Registrable Securities may reasonably request, all to the
extent required from time to time to enable holders of Registrable
Securities to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a
written statement as to whether it has complied with such
requirements.
9.8 Grant of Registration Rights to Others. When negotiating
the grant of registration rights to other parties with respect to
its Common Stock, the Company will not agree to any provision that
prohibits Purchaser from exercising its piggyback rights on any
registration statement that may be filed if such other party
exercises such registration rights.
ARTICLE 10 - MISCELLANEOUS
10.1 Public Announcements. Except as set forth in the
following sentence, the parties to this Agreement agree that prior
to making any public announcement or statement with respect to the
transactions contemplated by this Agreement, the party desiring to
make such public announcement or statement shall consult with the
other party and exercise reasonable efforts to (i) agree upon the
text of a joint public announcement or statement to be made by both
of such parties or (ii) obtain approval of the other party to the
text of a public announcement or statement to be made solely by the
Company or Purchaser, as the case may be. Nothing contained in
this Section 10.1 shall be construed to require either party to
obtain approval of the other party to disclose information with
respect to any disclosure (i) required by applicable law or by any
applicable rules, regulations or orders of any Governmental
Authority having jurisdiction or (ii) necessary to comply with
disclosure requirements of any applicable stock exchange.
10.2 Notices. Except as otherwise expressly provided in this
Agreement, all communications required or permitted under this
Agreement shall be in writing and any such communication or
delivery shall be deemed to have been duly given and received when
actually delivered to the address set forth below of the party to
be notified personally (by a recognized commercial courier or
delivery service that provides a receipt) or by telecopier
(confirmed in writing by a personal delivery as set forth above),
addressed as follows:
If to the Company:
National Energy Group, Inc.
4925 Greenville Ave., Suite 1400
Dallas, Texas 75206
Attention: Mr. Miles Bender
Telecopy No.: (214) 692-9310
If to Purchaser:
High River Limited Partnership
c/o Icahn Associates Corp.
114 West 47th Street
Suite 1925
New York, NY 10036
Attention: Mr. Carl C. Icahn
Telecopy No.: (212) 921-3359
With Copy to:
Marc Weitzen, Esq.
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
Telecopy No.: (212) 626-0799
Any party may, by written notice so delivered to the other, change
the address to which delivery shall thereafter be made.
10.3 Expenses. The Company shall promptly pay after receipt
of an invoice all accrued fees and expenses of Purchaser, including
fees and expenses of Gordon Altman Butowsky Weitzen Shalov & Wein,
counsel to Purchaser, in connection with the negotiation,
preparation, execution and delivery of the Agreement and related
documents and the consummation of the transactions contemplated
hereby up to the aggregate amount of $45,000.
10.4 Entire Agreement. This Agreement embodies the entire
agreement between the parties with respect to the subject matter of
this Agreement (superseding all prior agreements, arrangements,
understandings and solicitations of interest or offers related to
the subject matter of this Agreement including the related Term
Sheet executed by the parties hereto dated July 19, 1996), and this
Agreement may be supplemented, altered, amended, modified or
revoked by writing only, signed by all of the parties to this
Agreement. The headings in this Agreement are for convenience only
and shall have no significance in the interpretation of any term or
provision of this Agreement.
10.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO RULES CONCERNING CONFLICTS OF LAWS.
10.6 Counterparts. This Agreement may be executed in any
number of counterparts, and each and every counterpart shall be
deemed for all purposes one agreement.
10.7 Waiver. Any of the terms, provisions, covenants,
representations, warranties or conditions contained in this
Agreement may be waived only by a written instrument executed by
the party waiving compliance. No waiver by any party of any
condition, or of the breach of any term, provision, covenant,
representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed
to be or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or of the
breach of any other term, provision, covenant, representation or
warranty.
10.8 Binding Effect; Assignment. All the terms, provisions,
covenants, representations, warranties and conditions of this
Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties to this Agreement and their respective
successors and assigns; but this Agreement and the rights and
obligations hereunder shall not be assignable or delegable by any
party without the express written consent of the non assigning or
non delegating parties.
10.9 Construction. Each party hereby acknowledges and agrees
that such party has consulted legal counsel in connection with the
negotiation of this Agreement and that such party has bargaining
power equal to that of the other party in connection with the
negotiation and execution of this Agreement. Accordingly, the
parties agree that the rule of contract construction that an
agreement shall be construed against the draftsman shall have no
application in the construction or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized officers as of the date first
above written.
NATIONAL ENERGY GROUP, INC.
By:
Name:/s/ MILES D. BENDER
Title: PRESIDENT & CEO
HIGH RIVER LIMITED PARTNERSHIP
By: RIVERDALE INVESTORS CORP., INC.,
its general partner
By:
Name:
Title:
[Signature Page to National Energy
Purchase Agreement]
SCHEDULE 3.14
1. Purchase Agreement, dated as of March 12, 1993 by and
among the Company, OilSearch Leasing Partners, Ltd., OilSearch
Acquisition Group One, Ltd. and certain limited partners.
2. Asset Purchase and Sale Agreement, dated as of December
30, 1993, between Bligh Petroleum, Inc. and the Company.
3. Agency Agreement, dated June 3, 1994, by and between the
Company and San Jacinto Securities, Inc, and the related Stock
Purchase Warrants, dated June 2, 1994, from the Company to Bruce
Lazier, Kenneth Etheredge and Gloria Berry.
4. Stock Purchase Agreement, dated as of June 2, 1994, among
the Company, Arbco Associates, L.P., Offense Group Associates,
L.P., Kayne Anderson Nontraditional Investments L.P. and
Opportunity Associates L.P.
5. Agreement for Purchase and Sale (Mustang Island) dated as
of April 20, 1995, between Sierra Mineral Development, L.C. and the
Company.
6. Agreement for Purchase and Sale (Oak Hill), dated as of
April 12, 1995, between the Company and Sierra 1994 I Limited
Partnership.
7. Stock Purchase Agreement, dated as of June 14, 1995,
among the Company, Arbco Associates L.P., Offense Group Associates
L.P., Kayne, Anderson Nontraditional Investments L.P., and
Opportunity Associates L.P.
8. KAIM Stock Purchase Agreement.
9. Warrant, dated as of the Effective Time of the Merger to
purchase 100,000 shares of Common Stock granted by the Company to
Prudential Securities Incorporated in connection with the Merger.
10. Warrant, dated as of the Effective Time of the Merger to
purchase 700,000 shares of Common Stock granted by the Company to
Gaines Berland, Inc. in connection with the Merger.
11. Warrant, dated as of the date of the Closing hereunder to
purchase 300,000 shares of Common Stock granted by the Company to
Gaines Berland, Inc. in connection with the transactions
contemplated by the Agreement.
SCHEDULE A
PURCHASED SHARES AND WARRANTS
Number of Purchase Price for
Purchaser Shares and Warrants Shares and Warrants
- --------- ------------------- -------------------
The Merger Closing
High River Limited 100,000 Shares $10,000,000
Partnership
700,000 Warrants
The Alternative Closing
High River Limited 50,000 Shares $ 5,000,000
Partnership
350,000 Warrants
EXHIBIT A
CERTIFICATE OF DESIGNATION
EXHIBIT B
WARRANT CERTIFICATE
EXHIBIT C
LEGAL OPINION
CERTIFICATE OF DESIGNATIONS
OF NATIONAL ENERGY GROUP, INC.
OF CONVERTIBLE PREFERRED STOCK, SERIES D
Pursuant to the provisions of the General Corporation Law of
Delaware, the undersigned, Miles D. Bender and Randall A. Carter,
being respectively President and Secretary of National Energy
Group, Inc., a Delaware corporation (the "Company"), hereby certify
that:
1. The name of the Company is National Energy Group, Inc.
2. The following resolutions establishing and designating
the Convertible Preferred Stock, Series D, of the Company, were
duly adopted by the Board of Directors at a meeting of the Board of
Directors on __________, 199__.
RESOLVED, that pursuant to authority expressly granted to the
Board of Directors by the provisions of the Certificate of
Incorporation of the Company, as amended, the Board of Directors
hereby creates a class of Convertible Preferred Stock, Series D,
having a par value of $1.00 per share, and hereby fixes the
designations, powers, conversion privileges, preferences and other
special rights, qualifications, limitations and restrictions
applicable to such Preferred Stock as follows:
(i) Serial Designation. The distinctive serial
designation of this series shall be Convertible Preferred Stock,
Series D (hereinafter called "Series D"). Shares of Series D shall
have a stated value of $100.00 per share.
(ii) Authorized Shares. The number of authorized shares
in Series D shall be 100,000. Shares of Series D purchased by the
Company or converted into Common Stock shall be canceled and shall
revert to authorized but unissued Preferred Stock undesignated as
to Series, and such shares shall not be deemed to be outstanding
for purposes hereof.
(iii) Dividends. Holders of the Series D shall not
be entitled to receive dividends except in the event the Company
shall declare a distribution, whether in cash, in kind or
otherwise, with respect to the Common Stock, $.01 par value, of the
Company (the "Common Stock"), and then, in each such case, the
holders of the Series D shall be entitled to a proportionate share
of any such distribution as though the holders of the Series D were
the holders of the number of shares of Common Stock of the Company
into which their shares of Series D are convertible as of the
record date fixed for the determination of the holders of Common
Stock of the Company entitled to receive such distribution.
(iv) Ranking.
(a) Ranking as to Dividends. The Series D, with
respect to dividends, ranks (1) junior to the 10% Cumulative
Convertible Preferred Stock, Series B (the "Series B"), the 10.5%
Cumulative Convertible Preferred Stock, Series C (the "Series C")
and any series of Preferred Stock of the Company, the terms of
which specifically provide that such series ranks senior to the
Series D (the "Senior Stock"); (2) pari passu with the Convertible
Preferred Stock, Series E (the "Series E") and with any other
series of Preferred Stock of the Company, the terms of which
specifically provide that such series ranks pari passu with the
Series D (the "Parity Stock"); (3) senior to any series of
Preferred Stock of the Company, the terms of which specifically
provide that such series ranks junior and subordinate to the Series
D or the terms of which do not specify its rank with respect to the
Series D; and (4) participates as if the Series D had been fully
converted into Common Stock, pari passu with the Common Stock, the
Series E and with any other series or class of capital stock of the
Company that provides such series ranks pari passu with the Common
Stock with respect to dividends.
(b) Ranking Upon Liquidation, Dissolution, or
Winding Up. The Series D, upon liquidation, dissolution, or
winding up of the Company, ranks (1) junior to the Series B, Series
C and to any other series of Preferred Stock of the Company, the
terms of which specifically provide that such series is Senior
Stock upon liquidation, dissolution or winding up of the Company;
(2) pari passu with the Series E and any other series of Preferred
Stock of the Company, the terms of which specifically provide that
such series is Parity Stock with the Series D upon liquidation,
dissolution or winding up of the Company; (3) senior to any series
of Preferred Stock of the Company, the terms of which specifically
provide that such series ranks junior and subordinate to the Series
D or the terms of which do not specify its rank with respect to the
Series D; and (4) senior to the Common Stock.
(v) Liquidation Rights. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the
Company, holders of Series D are entitled to receive out of the
assets of the Company available for distribution to shareholders
the liquidation preference of $100.00 per share, plus an amount
equal to any accrued and unpaid dividends, and no more, before any
payment or distribution is made to the holders of Common Stock, or
any series or class of the Company's stock hereafter issued that
ranks junior as to liquidation rights to the Series D. The holders
of Series D, the Series E and any Parity Stock hereafter issued
that ranks on a parity as to liquidation rights with the Series D,
will be entitled to share ratably, in accordance with the
respective preferential amounts payable on such stock, in any
distribution which is not sufficient to pay in full the aggregate
of the amounts payable thereon. After payment in full of the
liquidation preference of the shares of the Series D, the holders
of such shares will not be entitled to any further participation in
any distribution of assets by the Company. Neither a
consolidation, merger or other business combination of the Company
with or into another corporation or other entity nor a sale, lease,
or exchange or transfer of all or part of the Company's assets for
cash, securities or other property will be considered a
liquidation, dissolution or winding up of the Company so long as
such sale, lease, exchange or transfer is not in connection with a
plan of liquidation or in contemplation of a plan of liquidation,
it being assumed that any such sale, lease, exchange or transfer
that occurs within 90 days of the adoption of a plan of liquidation
is in contemplation of a plan of liquidation.
In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company which will involve the
distribution of assets other than cash, the Company shall promptly
engage competent independent appraisers to determine the value of
the assets to be distributed to the holders of shares of Preferred
Stock and the holders of shares of Common Stock and any other
capital stock of the Company. The Company shall, upon receipt of
such appraiser's valuation, give prompt written notice to each
holder of shares of Series D of the appraiser's valuation.
(vi) Redemption Rights. Neither the Company nor the
holders of the Series D shall have any right to require the
redemption of the Series D.
(vii) Conversion Rights. The holders of shares of Series
D shall have the rights, at their option, to convert such shares
into Common Stock of the Company at any time as provided below,
subject to the following terms and conditions:
(a) The shares of Series D shall be convertible at
the principal office of the Company, and at such other office or
offices, if any, as the Board of Directors may designate in writing
in accordance with the notice provisions of subparagraph 2(xii)
hereof, into fully paid and non-assessable shares (calculated as to
each conversion to the nearest 1/100th of a share) of Common Stock
of the Company, at the conversion price of $2.25 per share of
Common Stock subject to adjustment as described below (the
"Conversion Price"), with each share of Series D being taken at
$100.00 for the purposes of such conversion.
(b) In order to convert shares of Series D into
Common Stock the holder thereof shall surrender at the office
hereinabove mentioned the certificate or certificates therefor,
duly endorsed or assigned to the Company or in blank, accompanied
by written notice to the Company at said office that it elects to
convert such shares.
Conversion shall be deemed to have been effected on the
date when such delivery is made (herein called the "Conversion
Date"), and the person entitled to receive the shares of Common
Stock issuable upon such conversions shall be treated for all
purposes as the record holder of such Common Stock on the
applicable Conversion Date. As promptly as practicable on or after
the applicable Conversion Date, the Company shall issue and shall
deliver at said office (or by mail if so requested by the person
converting), a certificate or certificates for the number of full
shares of Common Stock issuable upon such conversion, together with
a check for cash in lieu of any fraction of a share, as hereinafter
provided, to the person entitled to receive the same. Upon
conversion of only a portion of the number of shares of Series D
represented by a certificate surrendered for conversion, the
Company shall issue and deliver to or upon the written order of the
holder of the certificate so surrendered for conversion, a new
certificate covering the number of shares of Common Stock
representing the unconverted portion of the certificate so
surrendered.
(c) No fractional shares of Common Stock shall be
issued upon conversion of shares of Series D, but, instead of any
fraction which would otherwise be issuable in respect of the
aggregate number of shares of Series D surrendered for conversion
at one time by the same holder, the Company shall pay a cash
adjustment in an amount equal to the same fraction of the Closing
Price (as hereinafter defined) on the applicable Conversion Date,
or, if such date is not a Trading Day (as hereinafter defined), on
the next Trading Day.
(d) The holder of the shares of Series D shall pay
any and all issue and similar (e.g., documentary stamp) taxes that
may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of Series D pursuant hereto.
(e) The number of shares of Common Stock into which
the Series D may be converted and the Conversion Price from time to
time in effect shall be adjusted from time to time as follows:
(A) In case the Company shall (i) subdivide
its shares of outstanding Common Stock into a larger number of
shares of Common Stock, or (ii) combine shares of its outstanding
Common Stock into a smaller number of shares of Common Stock; then
the holder of any shares of Series D after the close of business on
the effective date of such subdivision or combination, as the case
may be (the close of business time being hereinafter in this clause
(A) referred to as "such record date"), shall be entitled to
receive, upon actual conversion of the shares of Series D, the
aggregate number and kind of shares of capital stock of the Company
which, if such shares of Series D had been converted immediately
prior to such record date at the Conversion Price then in effect,
it would have been entitled to receive by virtue of such
subdivision or combination and the Conversion Price shall be deemed
to have been adjusted after such record date to apply to such
aggregate number and kind of shares. Such adjustment shall be made
whenever any of the events listed above shall occur.
(B) No notification to the holders of any
adjustment in the conversion price otherwise required by this
subparagraph (vii) to be made must be made, if such adjustment
(plus any other adjustments not heretofore made) would not require
any increase or decrease of 5% or more in the Conversion Price;
provided, however, that upon presentment of shares of Series D for
conversion, all adjustments shall be made in calculating the
conversion rights of such holder. Whenever the Conversion Price is
adjusted by 5% or more since the time of the last notice to holders
of an adjustment, if any, as herein provided, the Company shall
promptly mail to each registered holder of shares of Series D a
notice setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such
adjustment.
(C) In the event that at any time, as a result
of an adjustment, the holder of any shares of Series D thereafter
surrendered for conversion shall become entitled to receive any
shares of capital stock of the Company other than shares of Common
Stock, the number of such other shares so receivable upon
conversion of such shares of Series D shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
shares of Common Stock contained in clauses (A) and (B), above, and
the other provisions of this subparagraph (e) with respect to the
shares of Common Stock shall apply on like terms to any such other
shares.
(D) In case of any reclassification of the
Common Stock (other than a change in par value, or from par value
to no par value, or from no par value to par value), any
consolidation of the Company with, or merger of the Company into,
any other person, any merger of any person into the Company (other
than a merger that does not result in any reclassification of, or
change in the outstanding shares of Common Stock), any sale or
transfer of all or substantially all of the assets of the Company
(other than a sale-lease back, collateral assignment, mortgage or
other similar financing transaction), or any compulsory share
exchange whereby the Common Stock is converted into other
securities, cash or other properties, then the holder of each share
of Series D then outstanding shall have the right thereafter,
during the period such share of Series D shall be convertible, to
convert such share into the kind and amount of securities, cash or
other property receivable upon such reclassification,
consolidation, merger, sale, transfer or share exchange by a holder
of the number of shares of Common Stock into which such share of
Series D might have been converted immediately prior to such
reclassification, consolidation, merger, sale, transfer or share
exchange.
(E) In case the Company, at any time while any
shares of Series D are outstanding, shall issue shares of Common
Stock, warrants or rights to acquire Common Stock or securities
convertible into Common Stock (excluding (i) those issued as a
dividend or distribution with respect to the Common Stock or the
Series E as to which the Series D participates pursuant to
subparagraph (iii) above, (ii) those issued as a dividend or
distribution with respect to the Series B or Series C so long as
the securities are additional shares of Series B or Series C, and
(iii) and options or shares of Common Stock or other common stock
issued to officers, employees or directors so long as the number
issued to officers, employees and directors in any one year does
not exceed five percent of the number of shares of Common Stock
outstanding on January 1st of such year) at a price per Common
Stock share purchased, purchasable, or issuable upon conversion
that is less than the Conversion Price, then the Conversion Price
at which each share of Series D shall thereafter be convertible
shall be reduced by multiplying the Conversion Price in effect on
the date of issuance of such shares, warrants, rights or
convertible securities by a fraction, of which the denominator
shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding on the date of issuance of such shares,
warrants, rights or convertible securities plus the number of
additional shares of Common Stock, issued, offered for subscription
or purchase or issuable upon conversion, and of which the numerator
shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding on the date of issuance of such shares,
warrants, rights or convertible securities plus the number of
shares of Common Stock that the aggregate offering price of the
total number of shares so offered, issued, or issuable, or, with
respect to convertible securities, the aggregate consideration
received by the Company for the convertible securities, would
purchase at the prior Conversion Price. Such adjustment shall be
made whenever shares, warrants, rights or convertible securities
are issued, and shall become effective immediately after such
issuance date. However, upon the expiration of any warrant, right
or conversion right to purchase Common Stock, the issuance of which
resulted in an adjustment in the Conversion Price of the shares of
Series D pursuant to this clause (E), if any such warrant, right or
convertible rights shall expire and shall not have been exercised,
the Conversion Price per share of Common Stock at which each share
of Series D shall thereafter be convertible shall immediately upon
such expiration be recomputed and effective immediately upon such
expiration be increased to the price which it would have been (but
reflecting any other adjustments in the Conversion Price made
pursuant to the provisions of this Section (vii)(e) after the
issuance of such warrants, rights or convertible securities) had
the adjustment of the Conversion Price made upon the issuance of
such warrants, rights or convertible securities been made on the
basis of offering for subscription or purchase only that number of
shares of Common Stock actually purchased upon the exercise of the
warrants or rights actually exercised or the conversion of the
convertible securities actually converted. For purposes of this
subsection (e), the term Common Stock shall include (i) any common
equity security into which the Common Stock is reclassified or for
which it is exchanged, or (ii) any common equity security of the
Company that has equal or superior voting rights with the Common
Stock.
(F) In case:
1. the Company shall declare a redemption of its Common
Stock; or
2. the Company shall authorize the granting to the
holders of the Common Stock of rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any
other rights; or
3. the approval of any stockholders of the Company
shall be required in connection with any reclassification of the
Common Stock of the Company (other than a subdivision or
combination of the outstanding shares of Common Stock), any
consolidation or merger to which the Company is party or any sale
or transfer of all or substantially all of the assets of the
Company, or
4. of the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company;
then the Company shall, at least 10 days prior to the applicable
record date hereinafter specified, contact by telephone and cause
to be mailed to the holders of record of the shares of Series D at
their last addresses as they shall appear upon the stock books of
the Company, a notice stating (x) the date on which a record is to
be taken for the purpose of such redemption, rights or warrants,
or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such
redemption, rights or warrants are to be determined, or (y) the
date on which such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up.
(G) In case at any time conditions shall arise
by reason of action taken by the Company, which, in the opinion of
the Board of Directors of the Company, are not adequately covered
by the other provisions hereof and which might materially and
adversely affect the rights of the holders of shares of Series D,
or in case at any time any such conditions are expected to arise by
reason of any action contemplated by the Company, the Board of
Directors of the Company shall appoint a firm of independent
certified public accountants of recognized standing (which may be
the firm that regularly examines the financial statements of the
Company), who shall give their opinion as to the adjustment, if any
(not inconsistent with the standards established in this section
(vii)), of the Conversion Price (including, if necessary, any
adjustment as to the securities into which shares of Series D may
thereafter be convertible) which is or would be required to
preserve without dilution the rights of the holders of shares of
Series D. The Board of Directors of the Company may, in its
judgment, make the adjustment recommended upon the receipt of such
opinion; provided, however, that no adjustment pursuant to this
subsection (G) of the Conversion Price shall be made which in the
opinion of the accountant or firm of accountants giving the
aforesaid opinion would result in an increase of the Conversion
Price to more than the Conversion Price then in effect.
(f) The Company shall at all times after
__________, 1996, reserve and keep available, free from preemptive
rights, out of its authorized but unissued shares of Common Stock
solely for the purpose of issuance upon conversion of the shares of
Series D, the full number of shares of Common Stock then
deliverable upon the conversion of all shares of Series D then
outstanding. The Company covenants and agrees that all shares
which may be issued upon the exercise of the rights represented by
the Series D will, upon issuance, be legally and validly issued,
fully paid and nonassessable and free from all taxes, liens and
charges of any nature whatsoever.
(g) As used in this subparagraph (vii), the term
"Closing Price" on any day shall mean the reported closing sales
price per share of Common Stock on the principal national
securities exchange or the Nasdaq National Market on which the
shares of Common Stock are at the time listed or traded on such
day. In case no such sale takes place on a day, the Closing Price
shall be the average of the reported closing bid and asked prices,
or, if the shares of Common Stock shall not be so listed, the
average of the high bid and low ask prices in the over-the-counter
market as reported by the National Association of Securities
Dealers' Automated Quotation System, or, if not so reported, as
reported by the National Quotation Bureau, Incorporated, or any
successor thereof, or, if not so reported, the average of the
closing bid and asked prices as furnished by any member of the
National Association of Securities Dealers, Inc. selected from time
to time by the Company for that purpose. The term "Trading Day"
shall mean a day on which the principal national securities
exchange or the Nasdaq National Market on which the shares of
Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange
or the Nasdaq National Market, a Monday, Tuesday, Wednesday,
Thursday, or Friday on which banking institutions in the City of
Dallas, State of Texas, are not authorized or obligated by law or
executive order to close.
(h) Upon conversion of Series D, the rights of
holders of shares so converted will be limited to the right to
receive shares of Common Stock at the Conversion Price then in
effect, plus an amount equal to any accrued and unpaid dividends.
(viii) Mandatory Conversion. The Series D shall be
automatically converted into Common Stock in the event that High
River Limited Partnership, a Delaware limited partnership, and any
other person or entity controlled by, under common control with or
controlling High River (collectively, the "High River Affiliates"),
own less than 7.5% of the Common Stock on a fully diluted basis.
To determine the percentage that the High River Affiliates own as
of any day, the number of shares of Common Stock owned by the High
River Affiliates on a fully diluted basis (assuming conversion of
all preferred stock of the Company owned by the High River
Affiliates and exercise of all outstanding options and warrants
exercisable for Common Stock owned by the High River Affiliates) as
of such day shall be divided by ______________________ (the
"Denominator") <FN1>; provided, however, that prior to making such
calculations, the Denominator shall be adjusted in accordance with
the applicable adjustment provisions of all the preferred stock
(including, in the case of the Series D, the applicable provisions
of section (vii)(e)), options and warrants, if any events
triggering the application of such antidilution provisions have
occurred since such date that resulted in an adjustment to the
number of shares of Common Stock on a fully diluted basis owned by
the High River Affiliates.
(ix) Voting Rights.
1. The holders of Series D shall not be entitled
to vote except as required by applicable law or as provided herein.
2. Holders of a majority of the outstanding shares
of Series D (voting together as one class) shall be entitled to
appoint one member to the Company's Board of Directors.
3. The Company may not, without the affirmative
vote or consent of the director designated by the holders of Series
D, file a voluntary petition under federal or state bankruptcy
laws.
<FN1> The number of shares of the Common Stock on a fully diluted
basis (assuming conversion of all preferred stock of the Company
and exercise of all outstanding options and warrants exercisable
for Common Stock owned by all holders) on the day after the
purchase of the Shares; provided, however, if an Alternative
Closing occurs under the terms of the Stock Purchase Agreement
pursuant to which the Series D is issued, Section (viii), Mandatory
Conversion, shall be modified in the Certificate of Designations
executed by the Company to provide an adjustment mechanism to the
denominator in case a second Alternative Closing occurs under the
terms of the Stock Purchase Agreement. That adjustment shall
specify that the denominator established at the time of the first
Closing shall be adjusted for the second Alternative Closing by
adding to the Denominator only the number of shares received by
High River Affiliates in the Alternative Closing on a fully diluted
basis (assuming conversion of all preferred stock of the Company
owned by the High River Affiliates and the exercise of all
outstanding options and warrants exercisable for Common Stock owned
by the High River Affiliates).
(d) Holders of a majority of the outstanding shares
of Series D (voting together as one class) shall have the right,
upon written notice to the Company sent in accordance with Section
(xii), to choose to appoint up to that number of directors that
would equal one-half (.5) of the directors, plus one member, of the
Company's Board of Directors (including the director previously
appointed by such holders pursuant to subsection (b) above) and to
fill any vacancies that may later occur in such positions by reason
of the death, disability, resignation or removal of such directors;
(A) If an involuntary case under federal
bankruptcy laws or any other applicable federal or state insolvency
or similar law is commenced against the Company (including a case
for the appointment of a receiver, liquidator, custodian, trustee
or similar official for the Company or its assets) which does not
seek emergency or expedited relief and such case is not dismissed
or stayed within fifteen (15) days of the commencement thereof, or
if a petition is filed under such laws seeking emergency or
expedited relief against the Company, provided, however, that a
filing shall be deemed not to have occurred with respect to any
emergency or expedited relief petition for purposes of this clause:
(i) if the Company prevails on such petition, or (ii) if temporary
relief is granted with respect to such petition but no permanent
relief is granted, in the event the Company provides to holders
within ten (10) business days of the grant of such temporary
relief, an opinion of counsel (being a firm of substantial size and
of good repute) which, without reservation, states that the Company
will prevail on the petition for permanent relief. In the event
that Company counsel should withdraw its opinion or should the
Company thereafter not prevail on the petition for permanent
relief, the filing will be deemed to have taken place for purposes
of this clause; or
(B) If a default shall have occurred under any
note or other evidence of indebtedness of the Company with a
principal amount outstanding in any one case of at least
$10,000,000 or if defaults shall have occurred under more than one
note or other evidences of indebtedness of the Company with
outstanding principal amounts aggregating at least $10,000,000, and
one of the following events shall have occurred: (i) such
indebtedness is already due and payable in full by reason of
failure to pay the indebtedness and such default shall not have
been cured for a period of thirty (30) days after occurrence of the
default; (ii) the Company has received notice of the acceleration
of the maturity of such indebtedness and such acceleration notice
has not been rescinded within fifteen (15) days of the receipt by
the Company of such notice of acceleration; or (iii) the Company
has received a notice of foreclosure on the collateral granted as
security to the creditor of such indebtedness, and such notice of
foreclosure has not been rescinded within five (5) days of the
receipt by the Company of such notice or the scheduled date of sale
in such notice is less than five (5) days after the date of receipt
of such notice of foreclosure.
The Company shall promptly give written notice to the holders
of Series D of the occurrence of any events that trigger the rights
of the holders to elect one-half of the directors, plus one member,
of the Company's Board of Directors, although the failure to give
such notice shall not be determinative of whether any such event
has occurred.
(e) So long as any shares of Series D are
outstanding, the Company shall not, without first obtaining the
approval by vote or written consent, in the manner provided by law,
of the holders of a majority of the shares of Series D outstanding,
voting separately as a class, to (i) amend, alter or repeal any
provision of the Certificate of Incorporation or the Bylaws of the
Company so as to adversely affect the relative rights, preferences,
qualifications, limitations or restrictions of the Series D,
including but not limited to amending the Certificate of
Incorporation or Bylaws to provide that actions by the Board of
Directors require more than the vote of a majority of the members
of the Board of Directors, (ii) authorize or issue, or increase the
authorized number of shares of, the Series D, any additional class
or series of stock, or any security convertible into stock of such
class or series, ranking senior or equal to the Series D upon
liquidation or winding up of the Company except as is permitted by
the Certificate of Designations of the Series B Preferred Stock and
Series C Preferred Stock of the Company, or (iii) effect any
reclassification of the Series D; provided, however, that no such
consent of the holders of Series D shall be required if, at or
prior to the time when such amendment, alteration, or
reclassification is to take effect, provision is made for the
redemption of all shares of Series D at the time outstanding.
Subject to these limitations, additional classes of preferred stock
may be designated and issued from time to time in one or more
series with such designations, voting powers, or other preferences
and relative rights or qualifications as are determined by the
Board of Directors.
(x) No Preemptive Rights. The holders of shares of
Series D shall have no preemptive rights with respect to any
securities of the Company.
(xi) Other Rights. The shares of Series D shall not have
any relative, participating, optional or other special rights and
powers other than as set forth herein.
(xii) Notices. Except as otherwise provided in the event
of conversion of shares of Series D under subparagraph (vii)(b)
hereof, all notices or other communications required hereby shall
be in writing and shall be sent either (a) by courier, or (b) by
telecopy as well as by registered or certified mail, and shall be
regarded as properly given in the case of a courier upon actual
delivery to the proper place of address; in the case of telecopy,
on the day following the date of transmission if properly addressed
and sent without transmission error to the correct number and
receipt is confirmed by telephone within 48 hours of the
transmission; in the case of a letter for which a telecopy could
not be successfully transmitted or receipt of which could not be
confirmed as herein provided, three (3) days after the registered
or certified mailing date if the letter is properly addressed and
postage prepaid; and shall be regarded as properly addressed if
sent to the parties or their representatives at the addresses given
below:
To the Company: 4925 Greenville Ave., Ste. 1400
Dallas, TX 75206
Attn: Miles D. Bender
Phone: (214) 692-9211
Facsimile: (214) 692-9310
To the Holder: High River Limited Partnership
c/o Icahn Associates Corp.
114 West 47th Street
Suite 1925
New York, NY 10036
Attention: Mr. Carl C. Icahn
Facsimile: (212) 921-3359
With Copy to: Mr. Marc Weitzen
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
or such other address as any of the above may have furnished to the
other parties in writing by registered mail, return receipt
requested.
IN WITNESS WHEREOF, we have signed this certificate on the
_____ day of ________________, 199_, and we acknowledge and affirm
that the instrument is the act and deed of the Company, and that
the facts contained herein are true.
NATIONAL ENERGY GROUP, INC.,
a Delaware corporation
Attest:_________________ By:____________________
Randall A. Carter Miles D. Bender
Secretary President and Chief Executive
Officer
NEITHER THIS WARRANT NOR THE SECURITIES RECEIVED UPON EXERCISE
OF THIS WARRANT HAS BEEN REGISTERED OR QUALIFIED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES
LAWS AND, ACCORDINGLY, THIS WARRANT AND THE SECURITIES RECEIVED
UPON EXERCISE OF THIS WARRANT MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED OR
QUALIFIED UNDER SAID ACT AND ALL APPLICABLE STATE SECURITIES LAWS
OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER OF THESE WARRANTS AND THE SECURITIES RECEIVED UPON
EXERCISE OF THIS WARRANT, AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION IS AVAILABLE AND SUCH OFFER, SALE, TRANSFER, PLEDGE
OR HYPOTHECATION DOES NOT VIOLATE THE PROVISIONS OF THE ACT OR
APPLICABLE LAWS.
NATIONAL ENERGY GROUP, INC.
Warrant to Purchase
[700,000] Shares of
National Energy Group, Inc.
Common Stock
This Warrant (the "Warrant") is issued to High River Limited
Partnership ("Holder") and Holder agrees by acceptance of this
Warrant that this Warrant is subject to the terms and conditions of
this Warrant and that certain Stock Purchase Agreement dated August
7, 1996 between National Energy Group, Inc. (the "Company") and
Holder.
This Warrant is a warrant to purchase [700,000] shares of
Common Stock, $0.01 par value (the "Common Stock") of the Company
at a price of $2.50 per share (the "Exercise Price"), subject to
adjustment as provided herein.
This Warrant shall expire on ________________<F1> (the
"Expiration Date"). This Warrant shall be void and all rights of
Holder under this Warrant shall cease if this Warrant shall not
have been duly exercised on or prior to the Expiration Date.
This Warrant shall not entitle Holder to any rights other than
as set forth herein, and Holder will not have any of the rights,
privileges or liabilities of a stockholder of the Company prior to
the exercise of this Warrant.
The number of shares of Common Stock as to which this Warrant
may be exercised and the Exercise Price from time to time in effect
shall be adjusted from time to time as follows:
<F1> Insert date that is five years from the date the warrants are
issued.<PAGE>
(A) In case the Company shall (i) subdivide its shares of
outstanding Common Stock into a larger number of shares of Common
Stock, (ii) combine shares of its outstanding Common Stock into a
smaller number of shares of Common Stock or (iii) issue stock as a
dividend on its Common Stock; then Holder, after the close of
business on the effective date of such subdivision, combination or
stock dividend, as the case may be (the close of business time
being hereinafter in this subparagraph (A) referred to as "such
record date"), shall be entitled to receive, upon actual exercise
of this Warrant, the aggregate number and kind of shares of capital
stock of the Company which, if this Warrant had been exercised
immediately prior to such record date at the Exercise Price then in
effect, it would have been entitled to receive by virtue of such
subdivision, combination or stock dividend; and the Exercise Price
shall be deemed to have been adjusted after such record date to
apply to such aggregate number and kind of shares. Such adjustment
shall be made whenever any of the events listed above shall occur.
(B) No notification to Holder of any adjustment in the
exercise price otherwise required by this subparagraph (B) to be
made must be made, if such adjustment (plus any other adjustments
not heretofore made since the time of the last notice to Holder of
an adjustment, if any) would not require any increase or decrease
of 5% or more in the Exercise Price; provided, however, that upon
exercise of this Warrant, all adjustments shall be made in
calculating the exercise rights of Holder. Whenever the Exercise
Price is adjusted by 5% or more since the time of the last notice
to Holder of an adjustment, if any, as herein provided, the Company
shall promptly mail to Holder a notice setting forth the Exercise
Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment.
(C) In the event that at any time, as a result of an
adjustment, Holder shall become entitled to receive any shares of
capital stock of the Company other than shares of Common Stock, the
number of such other shares so receivable upon exercise of this
Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Common Stock contained in
subparagraphs (A) and (B), above, and the other provisions of this
subparagraph (C) with respect to the shares of Common Stock shall
apply on like terms to any such other shares.
(D) In case of any reclassification of the Common Stock
(other than a change in par value, or from par value to no par
value, or from no par value to par value), any consolidation of the
Company with, or merger of the Company into, any other person, any
merger of any person into the Company (other than a merger that
does not result in any reclassification of, or change in the
outstanding shares of Common Stock), any sale or transfer of all or
substantially all of the assets of the Company (other than a sale-
lease back, collateral assignment, mortgage or other similar
financing transaction), or any compulsory share exchange whereby
the Common Stock is converted into other securities, cash or other
properties, then Holder shall have the right thereafter, during the
period this Warrant shall be exercisable, to exercise this Warrant
for the kind and amount of securities, cash or other property
receivable upon such reclassification, consolidation, merger, sale,
transfer or share exchange by a holder of the number of shares of
Common Stock into which this Warrant might have been exercised
immediately prior to such reclassification, consolidation, merger,
sale, transfer or share exchange.
(E) In case the Company, at any time while this Warrant is
outstanding, shall issue shares of Common Stock, warrants or rights
to acquire Common Stock or securities convertible into Common Stock
(excluding (i) those issued as a dividend or distribution with
respect to Series B or Series C Preferred Stock so long as the
securities are additional shares of Series B or Series C and (ii)
options or shares of Common Stock or other common stock issued to
officers, employees or directors so long as the number issued to
officers, employees and directors in any one year does not exceed
five percent of the number of shares of Common Stock outstanding on
January 1st of such year) at a price per Common Stock share
purchased, purchasable, or issuable upon conversion that is less
than the Exercise Price, then the Exercise Price at which each
share of Common Stock at which this Warrant shall thereafter be
exercisable shall be reduced by multiplying the Exercise Price in
effect on the date of issuance of such shares, warrants, rights or
convertible securities by a fraction, of which the denominator
shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding on the date of issuance of such shares,
warrants, rights or convertible securities plus the number of
additional shares of Common Stock issued, offered for subscription
or purchase or issuable upon conversion, and of which the numerator
shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding on the date of issuance of such shares,
warrants, rights or convertible securities plus the number of
shares of Common Stock that the aggregate offering price of the
total number of shares so offered, issued, or issuable, or, with
respect to convertible securities, the aggregate consideration
received by the Company for the convertible securities, would
purchase at the prior Exercise Price. Such adjustment shall be
made whenever shares, warrants, rights or convertible securities
are issued, and shall become effective immediately after such
issuance date. However, upon the expiration of any warrant, right
or conversion right to purchase Common Stock, the issuance of which
resulted in an adjustment in the Exercise Price of this Warrant
pursuant to this subparagraph (E), if any such warrant, right or
convertible rights shall expire and shall not have been exercised,
the Exercise Price per share of Common Stock at which this Warrant
shall thereafter be exercisable shall immediately upon such
expiration be recomputed and effective immediately upon such
expiration be increased to the price which it would have been (but
reflecting any other adjustments in the Exercise Price made
pursuant to the provisions of this subparagraph (E) after the
issuance of such warrants, rights or convertible securities) had
the adjustment of the Exercise Price made upon the issuance of such
warrants, rights or convertible securities been made on the basis
of offering for subscription or purchase only that number of shares
of Common Stock actually purchased upon the exercise of the
warrants or rights actually exercised or the conversion of the
convertible securities actually converted. For purposes of this
subparagraph (E), the term Common Stock shall include (i) any
common equity security into which the Common Stock is reclassified
or for which it is exchanged, or (ii) any common equity security of
the Company that has equal or superior voting rights with the
Common Stock.
(F) In case the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock
evidences of its indebtedness or assets (excluding cash dividends
or cash distributions paid out of earned surplus) or rights to
subscribe (excluding those referred to in subparagraph (E) above)
then in each such case the Exercise Price per share of Common Stock
at which this Warrant shall thereafter be exercisable shall be
determined by multiplying the Exercise Price in effect prior to the
record date fixed for determination for stockholders entitled to
receive such distribution by a fraction, of which the denominator
shall be the Closing Price of a share of Common Stock determined as
of the record date mentioned above, and (of which the numerator
shall be such Closing Price of a share of Common Stock, less the
then fair market value per share (as determined by the Board of
Directors of the Company in good faith, whose determination shall
be conclusive if made in good faith and shall be described in a
statement provided to Holder) of the portion of assets or evidences
of indebtedness so distributed or of such subscription rights.
Such adjustment shall be made whenever any such distribution is
made and shall become effective immediately after the record date
mentioned above.
(G) Upon each adjustment of the Exercise Price as provided
for herein, the Holder of this Warrant shall thereafter (until
another such adjustment) be entitled to purchase, at the adjusted
Exercise Price on the date purchase rights under this Warrant are
exercised, the number of shares of Common Stock determined by (a)
multiplying the number of shares purchasable hereunder immediately
prior to the adjustment of the Exercise Price by the Exercise Price
in effect immediately prior to such adjustment, and (b) dividing
the product so obtained by the adjusted Exercise Price in effect on
the date of such exercise.
(H) In case:
1. the Company shall declare a dividend (or any other
distribution) on the Common Stock payable otherwise
than in cash out of its earned surplus; or
2. the Company shall declare a special nonrecurring
cash dividend on or a redemption of its Common
Stock; or
3. the Company shall authorize the granting to the
holders of the Common Stock of rights or warrants to
subscribe for or purchase any shares of capital
stock of any class or of any other rights; or
4. the approval of any stockholders of the Company
shall be required in connection with any
reclassification of the Common Stock of the Company
(other than a subdivision or combination of the
outstanding shares of Common Stock), any
consolidation or merger to which the Company is
party or any sale or transfer of all or
substantially all of the assets of the Company; or
5. of the voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the
Company;
then the Company shall, at least 10 days prior to the applicable
record date hereinafter specified, contact by telephone and cause
to be mailed to Holder at its last address as it shall appear upon
the stock books of the Company, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or, if a record is
not to be taken, the date as of which the holders of Common Stock
of record to be entitled to such dividend, distribution,
redemption, rights or warrants are to be determined, or (y) the
date on which such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up.
(I) In case at any time conditions shall arise by reason of
action taken by the Company, which, in the opinion of the Board of
Directors of the Company, are not adequately covered by the other
provisions hereof and which might materially and adversely affect
the rights of Holder, or in case at any time any such conditions
are expected to arise by reason of any action contemplated by the
Company, the Board of Directors of the Company shall appoint a firm
of independent certified public accountants of recognized standing
(which may be the firm that regularly examines the financial
statements of the Company), who shall give their opinion as to the
adjustment, if any (not inconsistent with the standards herein), of
the Exercise Price (including, if necessary, any adjustment as to
the securities to be received thereafter upon exercise of this
Warrant) which is or would be required to preserve without dilution
the rights of Holder. The Board of Directors of the Company may,
in its judgment, make the adjustment recommended upon the receipt
of such opinion; provided, however, that no adjustment pursuant to
this subparagraph (I) of the Exercise Price shall be made which in
the opinion of the accountant or firm of accountants giving the
aforesaid opinion would result in an increase of the Exercise Price
to more than the Exercise Price then in effect.
As used above, the term "Closing Price" on any day shall mean
the higher of (i) the reported closing sales price per share of
Common Stock on the principal national securities exchange or the
Nasdaq National Market on which the shares of Common Stock are at
the time listed or traded on such day or (ii) the average of the
closing sales prices for the twenty Trading Days prior to such day.
In case no such sale takes place on a day, the Closing Price shall
be the average of the reported closing bid and asked prices, or, if
the shares of Common Stock shall not be so listed, the average of
the high bid and low ask prices in the over-the-counter market as
reported by the National Association of Securities Dealers'
Automated Quotation System, or, if not so reported, as reported by
the National Quotation Bureau, Incorporated, or any successor
thereof, or, if not so reported, the average of the closing bid and
asked prices as furnished by any member of the National Association
of Securities Dealers, Inc. selected from time to time by the
Company for that purpose. The term "Trading Day" shall mean a day
on which the principal national securities exchange or the Nasdaq
National Market on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if
the shares of Common Stock are not listed or admitted to, trading
on any national securities exchange or the Nasdaq National Market,
a Monday, Tuesday, Wednesday, Thursday, or Friday on which banking
institutions in the City of Dallas, State of Texas, are not
authorized or obligated by law or executive order to close.
The Company shall at all times after ______________, 199__,
reserve and keep available, free from preemptive rights, out of its
authorized but unissued shares of Common Stock solely for the
purpose of issuance upon the exercise of this Warrant the full
number of shares of Common Stock then deliverable upon the exercise
of this Warrant. The Company covenants and agrees that all shares
which may be issued upon the exercise of this Warrant will, upon
issuance, be legally and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges of any
nature whatsoever.
This Warrant may be exercised by filling out and signing the
Warrant Exercise Notice and mailing or delivering the Warrant
Exercise Notice to the Company in time to reach the Company by the
Expiration Date, accompanied by payment of the full applicable
Exercise Price. Payment of the Exercise Price must be made in
United States funds (by certified check) payable to the order of
the Company. Common Stock certificates will be issued as soon as
practicable after exercise and payment of the Exercise Price for
the shares of Common Stock so purchased. If the Warrant Exercise
Notice is mailed by first class mail, registered or certified,
postage prepaid, and properly addressed to National Energy Group,
Inc., 4925 Greenville Ave., Ste. 1400, Dallas, TX 75206, or, to
such other address as the Company may have specified in a notice
duly given to Holder, then the Warrant Exercise Notice will be
presumed to be received by the Company three business days after
the date so mailed.
Subject to the provisions of the legend on the first page of
this Warrant, this Warrant is transferable by Holder, in whole or
in part (provided that any partial transfer shall be for a whole
number of shares of Common Stock), and upon delivery of this
Warrant to the Company with evidence of such transfer by Holder
reasonably satisfactory to the Company, the Company shall issue a
replacement Warrant in a form similar to this Warrant, in the name
of such transferee (and in the case of such partial transfer, the
Company shall issue a new Warrant to Holder to purchase the balance
of the shares of Common Stock that is not the subject of transfer).
Holder shall indemnify the Company against any loss, claim or
damages arising from or related to such transfer and shall sign a
written instrument of indemnity in a form acceptable to the
Company.
This Warrant shall be deemed to be a contract made under the
laws of the State of Texas and shall for all purposes be governed
by and construed in accordance with the laws of such State.
Dated: _____________, 199__
NATIONAL ENERGY GROUP, INC.
By: _______________
Miles D. Bender
President and
Chief Executive Officer
EXHIBIT 1
WARRANT EXERCISE NOTICE
INSTRUCTIONS
IN ORDER FOR WARRANTS TO BE EXERCISED THIS NOTICE MUST BE
RECEIVED BY THE COMPANY ON OR PRIOR TO THE
EXPIRATION DATE SPECIFIED IN THE WARRANT.
This Warrant Exercise Notice, dated _______________ (the
"Notice"), relates to this Warrant, dated __________________,
______ (the "Warrant"), issued by National Energy Group, Inc., a
Delaware corporation whose address is 4925 Greenville Ave., Ste.
1400, Dallas, TX 75206 (the "Company"), to the undersigned. This
Warrant initially represented the right to purchase the aggregate
number of shares as indicated in this Warrant, which number will be
reduced by this Warrant Exercise Notice and by any prior or future
Warrant Exercise Notices.
The undersigned hereby exercises the portion of this Warrant
to purchase, and hereby purchases, ________ shares of the Company's
Common Stock, at the current exercise price of $_______ per share,
which is the price, as adjusted, indicated in this Warrant. The
undersigned acknowledges that the number of shares of Common Stock
must be divisible by 100 for an effective exercise of any portion
or all of this Warrant. The full amount of $__________ in United
States funds, by certified check payable to the order of the
Company is attached hereto.
The undersigned acknowledges that a certificate for the shares
of Common Stock purchased by the undersigned through the exercise
of this Warrant pursuant to this Notice will be delivered to the
undersigned, at the address indicated below (unless the Company has
received written notice of a different address) as soon as
practicable after receipt of this notice and the full payment of
the applicable purchase price.
Dated: _________________
Holder:______________________
By:__________________________
Title:_______________________
Address:_____________________
_____________________________
_____________________________
Social Security or
Taxpayer Identification Number:_________________________________
Business Phone Number:__________________________________________
Home Phone Number:______________________________________________
