As filed with the Securities and Exchange Commission on December 5, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------------
NATIONAL ENERGY GROUP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 58-1922764
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
4925 GREENVILLE AVENUE 75206
SUITE 1400 (Zip Code)
DALLAS, TEXAS
(Address of principal
executive offices)
NATIONAL ENERGY GROUP, INC.
1996 INCENTIVE COMPENSATION PLAN
1996 INDIVIDUAL COMPENSATION ARRANGEMENT
(Full titles of the plan and individual compensation arrangement)
MILES D. BENDER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
4925 GREENVILLE AVENUE, SUITE 1400
DALLAS, TEXAS 75206
(214) 692-9211
(Name and address, including zip code, and
telephone number of agent for service)
Copies to:
DIANE B. MUSE
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P
1700 PACIFIC AVENUE, SUITE 4100
DALLAS, TEXAS 75201-4675
(214) 969 -2800
------------------------
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------
Proposed Proposed
Maximum Maximum
Title of Amount to be Offering Aggregate Amount of
Securities Registered Price Per Offering Registration
to be Registered (1) Share (3) Price Fee
- ---------------- ------------ ---------- ---------- ------------
Common Stock, 5,000,000 (2) $3.3125, $20,439,696 $6,030
$0.01 par value $3.375,
$3.75, $3.93,
$4.00,
$4.0625,
$5.75, $4.16
Common Stock, 50,000 $4.16 $208,000 $61
$0.01 par value
Total --- --- --- $6,091
- -----------------------------------------------------------------------
(1) Pursuant to Rule 416, this Registration Statement (as defined) also
includes an indeterminate number of additional shares that may become
issuable pursuant to the antidilution adjustment provisions of the
Plan.
(2) Issuable upon exercise of options available for grant under the Plan.
(3) Options for 55,000 shares of Common Stock have an exercise price of
$3.3125. Options for 16,000 shares of Common Stock have an exercise
price of $3.375. Options for 809,500 shares of Common Stock have an
exercise price of $3.75. Options for 500 shares of Common Stock have
an exercise price of $3.93. Options for 25,000 shares of Common Stock
have an exercise price of $4.00. Options for 25,500 shares of Common
Stock have an exercise price of $4.0625. Options for 23,500 shares of
Common Stock have an exercise price of $5.75. Pursuant to Rule 457(c)
and (h), and solely for the purpose of calculating the applicable
registration fee, the proposed maximum offering price per share for
the remaining Common Stock to be registered hereunder, including
the 50,000 shares of Common Stock granted under a written individual
compensation arrangement (listed separately in the table above), has
been estimated at $4.16, which amount represents the average of the
high and low sales prices of the Common Stock of National Energy
Group, Inc. on December 2, 1997, as reported by the Nasdaq National
Market.
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents constituting Part I of this Registration Statement (the
"Registration Statement") will be sent or given to directors, officers,
consultants, advisors and employees of National Energy Group, Inc. (the
"Company") as specified by Rule 428(b)(1) promulgated under the Securities
Act of 1933, as amended (the "Securities Act").
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by the Company with the Securities and
Exchange Commission (the "Commission") are incorporated by reference in
this Registration Statement:
(1) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997.
(3) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997.
(4) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.
(5) The description of the Company's Common Stock, $.01 par value per
share (the "Common Stock"), contained in Item 1 of the
Registration Statement on Form 8-A dated April 5, 1991
(Registration No. 0-19136) and the description of modifications
made to the Common Stock contained in Item 5 of the Current
Report on Form 8-K dated August 29, 1996 (Registration No.
0-19136).
In addition, all documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), prior to the filing of a post-
effective amendment to this Registration Statement which indicates that all
securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As authorized by Section 145 of the General Corporation Law of
Delaware (the "Delaware Corporation Law"), each director and officer of the
Company may be indemnified by the Company against expenses (including
attorney's fees, judgments, fines and amounts paid in settlement) actually
and reasonably incurred in connection with the defense or settlement of any
threatened, pending or completed legal proceedings in which he is involved
by reason of the fact that he is or was a director or officer of the
Company if he acted in good faith and in a manner that he reasonably
believed to be in or not opposed to the best interests of the Company, and,
with respect to any criminal action or proceeding, if he had no reasonable
cause to believe that his conduct was unlawful. In each case, such
indemnity shall be to the fullest extent authorized by the Delaware
Corporation Law, as amended, to the extent such amendment permits the
Company to provide broader indemnification rights. If the legal
proceeding, however, is by or in the right of the Company, the director or
officer may not be indemnified in respect of any claim, issue or matter as
to which he shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Company unless a court
determines otherwise.
Article Eighth of the Certificate of Incorporation of the Company
provides that no director of the Company shall be personally liable to the
Company or its stockholders for monetary damages for any breach of
fiduciary duty as a director except for liability: (1) for any breach of
duty of loyalty to the Company or its stockholders, (2) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) under Section 174 of the Delaware Corporation
Law, or (4) for any transaction from which the director derived an improper
personal benefit. In addition, Article Ninth of the Certificate of
Incorporation and Section 7.4 of the Bylaws of the Company require the
Company to indemnify to the fullest extent authorized by law any person
made or threatened to be made a party to any action, suit or proceeding,
whether criminal, civil, administrative, or investigative, by reason of the
fact that such person or such person's testator or intestate is or was a
director, officer, employee or agent of the Company or serves or served at
the request of the Company any other enterprise as a director, officer,
employee or agent.
The Company has agreed to indemnify the officers and directors of the
Company against any and all damages to which such indemnified individuals
may become subject, pursuant to any securities, corporate or other laws,
which damages arise in connection with this Registration Statement or any
amendment thereto, or from the inaccuracy or omission of any information in
connection with this Registration Statement. In the event that the
foregoing indemnity is unavailable or insufficient, then the indemnifying
party shall contribute to amounts paid or payable by the indemnified party
in respect to the damages of the indemnified party in such proportion as is
appropriate to reflect the relative fault of the indemnified and
indemnifying parties.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See Index to Exhibits, attached hereto.
ITEM 9. UNDERTAKINGS.
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The Company hereby undertakes that, for the purpose of
determining any liability under the Securities Act, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Company certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dallas, State of Texas, on
December 4, 1997.
NATIONAL ENERGY GROUP, INC.
By: /S/MILES D. BENDER December 4, 1997
------------------------
Miles D. Bender
President and Chief Executive
Officer
By: /S/MELISSA H. RUTLEDGE December 4, 1997
------------------------
Melissa H. Rutledge
Chief Financial Officer, Controller,
and Chief Accounting Officer
POWER OF ATTORNEY AND SIGNATURES
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and as
of the dates indicated. Each person whose signature to this Registration
Statement appears below hereby constitutes and appoints Miles D. Bender and
Melissa H. Rutledge, and each of them, as his true and lawful attorney-in-
fact and agent, with full power of substitution, to sign on his or her
behalf individually and in the capacity stated below and to perform any
acts necessary to be done in order to file all amendments and post-
effective amendments to this Registration Statement, and any and all
instruments or documents filed as part of or in connection with this
Registration Statement or the amendments thereto and each of the
undersigned does hereby ratify and confirm all that said attorney-in-fact
and agent, or his substitutes, shall do or cause to be done by virtue
hereof.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Miles D. Bender President, Chief Executive December 4, 1997
- ------------------------ Officer and Director
Miles D. Bender
/s/ George B. McCullough Chairman of the Board and December 4, 1997
- ------------------------ Director
George B. McCullough
/s/ Norman C. Miller Chairman, Executive December 4, 1997
- ------------------------ Committee and Director
Norman C. Miller
/s/ Robert H. Kite Director December 4, 1997
- ------------------------
Robert H. Kite
/s/ George M. McDonald Director December 4, 1997
- ------------------------
George M. McDonald
/s/ Robert V. Sinnot Director December 4, 1997
- ------------------------
Robert V. Sinnott
/s/ Elwood W. Schafer Director December 4, 1997
- ------------------------
Elwood W. Schafer
/s/ Bob G. Alexander Director December 4, 1997
- ------------------------
Bob G. Alexander
/s/ Jim L. David Director December 4, 1997
- ------------------------
Jim L. David
/s/ Robert J. Mitchell Director December 4, 1997
- ------------------------
Robert J. Mitchell
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- -------- ------------------------
4.1 Certificate of Incorporation of the Company, which
includes the Certificate of Incorporation of the
Company filed with the Secretary of State of
Delaware on November 20, 1990 (1), the Certificate of
Elimination of the Redeemable Convertible Preferred
Stock, Series A of the Company, filed with the office
of the Secretary of State of Delaware on June 2, 1994
(2), the Certificate of Amendment of Certificate of
Incorporation of the Company, filed with the office
of the Secretary of State of the State of Delaware on
August 29, 1996 (2), the Certificate of Designations
of the Company of 10% Cumulative Convertible
Preferred Stock, Series B (3), the Certificate of
Designations of the Company of 10-1/2% Cumulative
Convertible Preferred Stock, Series C (4), the
Certificate of Designations of the Company of
Convertible Preferred Stock, Series D (2), and the
Certificate of Designations of the Company of
Convertible Preferred Stock, Series E (2)
4.2 By-Laws of the Company (1)
4.3 Certificate of Designations of the Company of 10%
Cumulative Convertible Preferred Stock, Series B (3)
4.4 Certificate of Designations of the Company of 10-1/2%
Cumulative Convertible Preferred Stock, Series C (4)
4.5 Certificate of Designations of the Company of
Convertible Preferred Stock, Series D (2)
4.6 Certificate of Designations of the Company of
Convertible Preferred Stock, Series E (2)
4.7 Specimen Common Stock Certificate (5)
4.8 National Energy Group, Inc. 1996 Incentive
Compensation Plan (9)
4.9 Minutes of Meeting of the Board of Directors of
National Energy Group, Inc. dated March 20, 1997*
4.10 Note Agreement dated as of April 25, 1989, by and
among AEJH 1989 Limited Partnership, Alexander Energy
Corporation ("Alexander") and John Hancock Mutual
Life Insurance (6)
4.11 Letter dated August 29, 1996 between Alexander and
John Hancock Mutual Life Insurance Company relating
to the payment of the 1989 Notes (6)
4.12 Indenture dated as of November 1, 1996, among the
Company, National Energy Group of Oklahoma, Inc.,
formerly NEG-OK, Inc. ("NEG-OK"), and Bank One,
Columbus, N.A. (7)
4.13 Indenture dated August 21, 1997, among the Company
and Bank One, N.A. (8)
4.14 Registration Rights Agreement dated August 21, 1997,
by and among the Company, Guarantor and the Initial
Purchasers (9)
5.1 Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.*
23.1 Consent of Ernst & Young LLP, independent auditors*
23.2 Consent of Netherland, Sewell & Associates, Inc.*
23.3 Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
(included in Exhibit 5.1)*
24.1 Powers of Attorney (included in signature pages to
this Registration Statement)*
(1) Incorporated by reference to the Company's Registration Statement on
Form S-4 (No. 33-38331) dated April 23, 1991.
(2) Incorporated by reference to the Company's Current Report on Form 8-K
(No. 0-19136) dated August 29, 1996.
(3) Incorporated by reference to the Company's Current Report on Form 8-K
(No. 0-19136) dated June 17, 1994.
(4) Incorporated by reference to the Company's Current Report on Form 8-K
(No. 0-19136) dated July 18, 1995.
(5) Incorporated by reference to the Company's Current Report on Form 8-
K/A No. 1 dated August 29, 1996.
(6) Incorporated by reference to Alexander Energy Corporation's Form 10-K
for the fiscal year ended December 31, 1994.
(7) Incorporated by reference to the Company's Quarterly Report on Form
10-Q (No. 0-19136) for the nine months ended September 30, 1996.
(8) Incorporated by reference to the Company's Registration Statement on
Form S-4 (No. 333-38075) dated October 16, 1997.
(9) Incorporated by reference to the Company's Proxy Statement on Schedule
14A (No. 0-19136) dated April 24, 1997.
* Filed herewith
EXHIBIT 4.9
MINUTES OF MEETING
OF THE BOARD OF DIRECTORS OF
NATIONAL ENERGY GROUP, INC.
MARCH 20, 1997
Upon notice duly given pursuant to the General Corporation Law of the
State of Delaware, a regularly scheduled meeting of the Board of Directors
of National Energy Group, Inc., a Delaware Corporation (the "Corporation")
was held in the Corporation's principal offices of business located at 4925
Greenville Ave., Suite 1400, Dallas, Texas 75206 at 9:00 A.M. local time on
March 20, 1997.
The following Directors of the Corporation were present:
George B. McCullough, Chairman
Miles D. Bender Elwood W. Schafer
Norman C. Miller Robert G. Alexander
Robert H. Kite Robert A. West
George M. McDonald Robert J. Mitchell
Robert V. Sinnott James L. David
constituting all of the Board of Directors and a quorum thereof. Present
by invitation were R. Thomas Fetters, Jr., Robert A. Imel, William T. Jones
and Phillip D. Devlin, acting Secretary, who recorded the minutes of the
Meeting.
REPORT OF MR. BENDER:
Mr. McCullough, the Chairman, stated a quorum was present, called the
Meeting to Order and announced that the first order of business would be
the report of Miles D. Bender, President and CEO of the Corporation.
Mr. Bender's report consisted of a summary of the Corporation's recent
activities and plans and projections for 1997 and beyond, including:
(1) Office space, redesign and growth requirements. Mr. Bender
reported that construction and redesign of the office was substantially
completed. He also stated that he had met with the new owners of the
building regarding the Corporation's future expansion plans.
(2) Staffing compliment and personnel projections. Mr. Bender
reviewed the current staffing vacancies and needs for 1997. He was pleased
to announce that the management team had been substantially finalized with
new additions in March.
(3) 1997 budget projections. Mr. Bender noted that a later part of
the meeting had been reserved for Budget approval and asked that comments
be deferred until then.
(4) Prospect development. Mr. Bender reviewed recent activities in
the Bayou Sorrel area and GAU, and then discussed prospective activities in
Robertdale, West Bayou Sorrel, offshore Texas related areas.
(5) Review of 1996 financial results. Mr. Bender noted that 1996
expectations, except with respect to units of production associated with
drilling activities attributable to Alexander acquisition, had met or
executed the Corporation's goals. He also noted that 35 development wells
with a 97% success ratio had been drilled since the Alexander merger. Net
income for the three months ended December 31, 1996 totaled $1.2 million.
(6) The Netherland, Sewell & Associates, Inc. ("N&S") reserve report.
Mr. Bender reviewed the N&S report which indicated 8.8 million barrels of
oil and 138.8 Bcf of natural gas at December 31, 1996. A discussion
occurred with respect to N&S's reserve analysis philosophy and the
Corporation's drilling objectives. A number of factors impacting the
Corporation were considered with request to the N&S analysis, including
management's drilling recommendations, finding costs and the Corporation's
stock price. It was concluded that Mr. Bender should research alternative,
respected, reserve analysis engineering firms (including DeGoyer McNaughton
& Associates, whose proximity to the offices of the Corporation was
favorably noted) and report his findings at the next Meeting.
(7) Analyst relations. Mr. Bender stated that Gaines Berland and
Oppenheimer were the two most supportive firms in the Corporation's stock
during 1996, and that recently Prudential has shown increased awareness of
the Corporation's value and objectives. He emphasized the importance of
defining finding costs and developing relationships with the brokers as
well as the analysts. The Directors agreed to give Mr. Bender a list of
their respective analyst/broker contacts to enhance the Corporate objective
of attracting a greater number of institutional buyers in the Corporation's
stock.
(8) The Incentive Compensation Plan. Mr. Bender reviewed the various
comments an discussions regarding the Incentive Compensation Plan approved
by the Board in December and stated that the formalized plan would be
included in the 1997 Proxy to Shareholders.
APPROVAL OF MINUTES:
At the conclusion of Mr. Bender's report, the Chairman requested
approval of the amended Minutes of Meetings of August 29, 1996 and December
5, 1996 and to accept the report of the Personnel and Compensation
Committee Meeting December 5, 1996. Mr. Mitchell and Mr. Alexander noted
that cash statements and financial reports discussed at the August 29, 1996
Meeting had not been forthcoming as requested, and that the Audit Committee
has not received a cop of the 1996 Audit. Upon motion duly made and
seconded, the following resolutions were adopted by unanimous consent:
RESOLVED, that the attached minutes of a regularly scheduled
Meeting of the Board of Directors of National Energy Group, Inc.
held on August 29, 1996 and December 5, 1996, respectively, were
presented at the Meeting and are hereby approved and adopted as
presented; and
RESOLVED FURTHER, that the attached minutes of a Meeting of the
Personnel and Compensation Committee of the Board of Directors of
National Energy Group, Inc. held on December 5, 1996 were
presented at the Meeting and are hereby accepted and adopted as
presented.
MANAGEMENT EMPLOYMENT AND LEGAL REPRESENTATION:
The Chairman then requested Mr. Bender to put forth related business
items. Mr. Bender discussed development of the Corporation's management
team and requested the Board to approved the employment of Mr. Gene W.
Anderson, Vice President, Land and Mr. Philip D. Devlin, Vice President,
General Counsel and Secretary as officers of the Corporation. In
conjunction therewith, Mr. Bender requested the Board to retain the law
firm of Akin, Gump, Strauss, Hauer & Feld, L.L.P. as legal counsel. After
further discussion, upon motion dully made and seconded, the following
resolutions were adopted by unanimous consent.
RESOLVED, that each of Mr. Gene W. Anderson and Mr. Philip D.
Devlin be, and hereby are appointed, officers of the Corporation
with full power and authority to act on behalf of the
Corporation, respectively, in the capacity of Vice President,
Land and Vice President, General Counsel and Secretary, effective
as of their respective dates of employment until such time as
determined by the Board of Directors of the Corporation; and
RESOLVED FURTHER, that the firm of Akin, Gump, Strauss, Hauer &
Feld, L.L.P. be, and hereby is, retained as legal counsel to the
Corporation with full power to act as directed by the
Corporation, effective immediately until such time as determined
by the Board of Directors of the Corporation.
STOCK AWARDS AND OPTIONS:
In conjunction with the employment of Mr. Anderson, Mr. Devlin, Ms.
Patti Davis-Sebastian (Manager, Human Resources) and Mr. Bradley A. Cox
(Senior Reservoir Engineer), Mr. Bender requested the Board authorize
certain stock awards and stock options and noted that certain options
awarded to Mr. Devlin in December 1996 were given prior to his employment
with the Company and would not qualify under the Incentive Compensation
Plan approved by the Board at the meeting. Accordingly, he requested that
the Minutes reflect that Mr. Devlin's award be effective as of his
appointment as an officer of the Corporation. Upon discussion, there was
general agreement among the Board that future stock grants to new employees
should be subject to a minimum vesting period of two years. After further
discussion, upon motion duly made and seconded, the following resolutions
were adopted by unanimous consent.
RESOLVED, that Mr. Philip D. Devlin is hereby granted an award of
50,000 shares of unregistered Common Stock of the Corporation
effective as of March 20, 1996; and
RESOLVED FURTHER, that the 10,000 Incentive Options to be awarded
to Mr. Devlin by the Board of Directors of the Corporation
discussed at its regularly scheduled meeting on December 5, 1996
be, and hereby are, granted effective as of March 20, 1997; and
RESOLVED FURTHER, that each of Mr. Anderson, Ms. Sebastian and
Mr. Cox be, and hereby are, granted at a price equal to the
closing price per share of the Common Stock of the Corporation as
quoted on the NASDAQ Stock Exchange as of March 20, 1997, the
following Incentive Options:
Mr. Anderson 25,000 options
Ms. Sebastian 10,000 options
Mr. Cox 10,000 options;
PROVIDED that such Incentive Options shall be subject to approval of
the shareholders of the Corporation pursuant to shareholder approval
of the 1996 Incentive Compensation Plan.
RESOLVED FURTHER, that the CEO, any Vice President and/or other
officers of the Corporation designated by the CEO be, and they
hereby are, authorized and directed to take all such action,
prepare, execute and deliver all such documents and instruments
with any such changes which in their discretion are deemed
necessary and advisable, make such filings, certifications and
recordation, affix the corporate seal to any such thing that may
be necessary, proper and appropriate to effect or implement the
above-described stock award to Mr. Devlin and Incentive Options
to each of Mr. Anderson, Ms. Sebastian and Mr. Cox, respectively.
OPERATIONAL REPORTS:
The Chairman next requested reports of various offices of the
Corporation. Mr. Bender stated that Mr. Imel, Mr. Jones and Mr. Fetters
would have reports for the meeting. Mr. Robert A. Imel was requested to
review the presentation to be given analysts in promoting the Corporation's
activities. Mr. Imel's presentation included slides, maps and related
financial data about the Corporation and its current Prospects. Mr. Imel's
Financial Report included fourth quarter 1996 results and monthly financial
statements, dated December 31, 1996.
Mr. William T. Jones next reported on operations, current drilling
activities and 1997 budget projections. He cited plans for 3 work-overs in
Bayou Sorrel, increased production at South Lake Boeuf an drilling
activities at GAU and East Bayou Sorrel as current operational priorities.
He then discussed operational cash needs for 1997.
Mr. Thomas Fetters presented a report on exploration activities in
Bayou Sorrel, Northwest Bayou Sorrel and Bayou Berry with respect to a
projected 3-D seismic shoot of an area up to 100 sq. miles. He then
reviewed each of the Corporation's current Prospects and the status of
working interest ownership. He concluded by noting that a field trip of
analysts, working interest owners and the Corporation's management was
planned for an on-site visit of the Bayou Sorrel Facilities.
1997 BUDGET APPROVAL:
At the conclusion of the operational and financial reports, the
Chairman asked if there were any comments regarding the proposed 1997
budget. After further discussion and request that the daily cash reports
and monthly statements be sent to the Directors (including notation of
variances to budget where appropriate), upon motion duly made and seconded,
the following resolution was adopted by unanimous consent:
RESOLVED, that the 1997 Budget, attached hereto, be and hereby is
approved and adopted by the Board of Directors as presented at
the Meeting.
CEO INCENTIVE OPTIONS:
The Chairman next opened discussion regarding the 700,000 Incentive
Options to be granted to Mr. Bender which had been discussed at the
December 5, 1996 Board of Directors Meeting, but which had not been
resolved pending further inquiry. After discussion, upon motion duly made
and seconded, the following resolution was adopted by the Board of
Directors.
RESOLVED, that Mr. Miles D. Bender be, and hereby is, granted
effective as of March 20, 1997, at a price equal to $4.00 per
share, 700,000 Incentive Options of the Corporation's Common
Stock, which shall vest at any time within a five (5) year period
of the date of such grant, PROVIDED that the closing price of the
Corporation's Common Stock as quoted on the NASDAQ (or any other
exchange for which the Corporation has secured a listing) shall
have been at or above $8.00 per share for not less than thirty
(30) consecutive days prior to any such exercise of the Incentive
Option described above; and
RESOLVED FURTHER, that the CEO, any Vice President and/or other
officers of the Corporation designated by the CEO be, and they
hereby are, authorized and directed to take all such action,
prepare, execute and deliver all such documents and instruments
with any such changes in their discretion are deemed necessary
and advisable, make such filings, certifications and recordation,
affix the corporate seal to any such thing that may be necessary,
proper and appropriate to effect or implement the above-
referenced award of Incentive Options.
STOCK RE-PURCHASE PLAN:
The Chairman stated the next order of business was discussion
regarding the implementation of a stock repurchase plan of its Common Stock
by the Corporation. It was noted that many Corporations have such a
program to instill confidence in the market-at-large. It was suggested
that bank covenants and indentures be reviewed for prohibitions against
such a program and any necessary waivers be pursued. It was also suggested
that the Corporation's auditors be polled for any potential financial
implications prior to implementation. After further discussion, upon
motion duly made and seconded, the following resolutions were adopted by
unanimous consent:
RESOLVED, that the Corporation initiate a Common Stock repurchase
program which shall (i) not exceed 5% of the Corporation's
outstanding Common Stock in any calendar year, (ii) require any
purchase thereunder to be authorized by the Executive Committee
prior to such purchase and (iii) provide for a period of five (5)
business days to effect execution of any purchase by the
Corporation thereunder; and
RESOLVED FURTHER, that the CEO, any Vice President and/or other
officers of the Corporation designated by the CEO be, and they
hereby are, authorized and directed to take all such action,
prepare, execute and deliver all such documents and instruments
with any such changes which in their discretion are deemed
necessary and advisable, make such filings, certifications and
recordation, affix the corporate seal to any such thing that may
be necessary, proper and appropriate to effect or implement the
above-referenced Common Stock repurchase program.
Mr. Bender noted that with the resignation of Ms. Sue Barnard and Mr.
David Grose as officers of the Corporation, various bank accounts, medical
benefit accounts and the 401(k) Plan would require amendments to delete Ms.
Barnard and Mr. Grose and add other officers of the Corporation as
signatories.
He also requested the Board to approve a non-cash related amendments
to the Corporation's 401-K Plan to provide for appointment of new trustees
and bringing criteria in conformity with the Corporation's practices. Upon
motion duly made and seconded, the following resolutions were adopted
unanimously by the Board of Directors:
RESOLVED, that the Corporation's various bank accounts, medical
benefit plans and accounts, the 401(k) Plan and other
administrative plans and accounts be, and hereby are, amended to
delete Ms. Sue Barnard and Mr. David Grose as signatories and add
such other signatories from time to time as may be designated by
the CEO, and
RESOLVED FURTHER, that the Corporation's 401-K Plan be amended to
(i) appoint Philip D. Devlin, as an administrative trustee and
(ii) provide that there be no service eligibility requirements
for enrollment of full-time permanent employees of the
Corporation; and
RESOLVED FURTHER, that the CEO, any Vice President and/or other
officers of the Corporation designated by the CEO be, and hereby
are, authorized and directed to take all such action, prepare,
execute and deliver all such documents and instruments with any
such changes which in their discretion are deemed necessary and
advisable, make such filings, certifications and recordation,
affix the corporate seal to any such thing that may be necessary,
proper and appropriate to effect or implement the above-
referenced amendments to the Corporation's bank accounts,
administrative and benefit plans and the 401(k) Plan.
A discussion regarding the 1997 Shareholders Meeting and related Proxy
Statement ensued. Mr. Bender advised that he would complete the Incentive
Compensation Plan recommendations prior to the June meeting and would first
review them with the Executive Committee, which, would then make its
recommendation to the Board of Directors. He indicated that he was
studying various other plans and desired to create a balanced plan of
incentives and shareholder value. Upon motion duly made and seconded, the
following resolutions were adopted by unanimous consent:
RESOLVED, that the Annual Meeting of Shareholders be, and hereby
is, determined to be June 5, 1997 and that the Record Date for
the Annual Meeting of Shareholders be set at April 21, 1997; and
RESOLVED FURTHER, that the CEO, any Vice President and/or other
officers of the Corporation designated by the CEO be, and they
hereby are, authorized and directed to take all such action,
prepare, execute and deliver all such documents and instruments
with any such changes which in their discretion are deemed
necessary and advisable, make such filings, certifications and
recordation, affix the corporate seal to any such thing that may
be necessary, proper and appropriate to effect or implement the
above-referenced Annual Meeting of Shareholders and the Record
Date incident thereto.
There being no further business to come before the Board, upon motion
duly made and seconded, the Meeting was adjourned.
SIGNATURES
Respectfully submitted,
/S/ PHILIP D. DEVLIN
-------------------------------
Philip D. Devlin
Secretary
Approved:
/S/ GEORGE B. MCCULLOUGH
- ---------------------------
George B. McCullough
Chairman
EXHIBIT 5.1
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
ATTORNEYS AT LAW
a registered limited liability partnership
including professional corporations
1700 PACIFIC AVENUE
SUITE 4100
DALLAS, TEXAS 75201-4675
(214) 969-2800
FAX (214) 969-4343
WRITER'S DIRECT DIAL NUMBER (214) 969 - 2800
December 4, 1997
National Energy Group
4925 Greenville Avenue
Suite 1400
Dallas, Texas 75206
Ladies and Gentlemen:
We have acted as counsel for National Energy Group, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1993, as amended (the "Securities Act"), of (i) 5,000,000
shares of Common Stock, $.01 par value per share (the "Plan Shares"), of
the Company to be offered upon the terms and subject to the conditions set
forth in the Company's 1996 Stock Option Incentive Plan (the "Plan") and
(ii) 50,000 shares of Common Stock, $.01 par value per share (the "Grant
Shares"), of the Company offered pursuant to a written individual
compensation contract (the "Contract") (the Plan Shares and the Grant
Shares being collectively referred to as the "Shares" and the Plan and the
Contract being collectively referred to as the "Plans"). At your request,
this opinion is being furnished to the Company for filing as Exhibit 5.1 to
the Registration Statement referred to below.
In connection therewith, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the Certificate
of Incorporation of the Company, as amended, the Bylaws of the Company, as
amended, the Plans, records of relevant corporate proceedings with respect
to the offering of the Shares and such other documents and instruments as
we have deemed necessary or appropriate as a basis for the opinions
hereinafter expressed. We have also reviewed the Registration Statement on
Form S-8 to be filed by the Company with the Securities and Exchange
Commission with respect to the Shares (the "Registration Statement").
We have assumed the authenticity and completeness of all records,
certificates and other instruments submitted to us as originals, the
conformity to original documents of all records, certificates and other
instruments submitted to us as copies, the authenticity and completeness of
the originals of those records, certificates and other instruments
submitted to us as copies and the correctness of all statements of fact
contained in all records, certificates and other instruments that we have
examined.
Based solely on the foregoing and subject to the qualifications and
exceptions set forth below, we are of the opinion that when the
Registration Statement has become effective and upon issuance of the
Shares, against payment in full therefor in accordance with the terms of
the Plans, the Shares will be legally issued, fully paid and non-assessable
shares of Common Stock of the Company.
The opinion expressed herein assumes that the consideration paid upon
issuance of the Shares under the Plans will be in excess of the par value
of such Shares.
The opinion set forth above is limited exclusively to the General
Corporation Law of the State of Delaware. This firm is a registered
limited liability partnership organized under the laws of the State of
Texas.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to the firm in the Registration
Statement.
Sincerely,
/S/AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration
Statement on Form S-8 pertaining to the 1996 Incentive Compensation Plan of
our report dated March 18, 1997 with respect to the consolidated financial
statements of National Energy Group included in its Annual Report on Form
10-K for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
ERNST & YOUNG LLP
Dallas, Texas
December 3, 1997
EXHIBIT 23.2
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our reserve reports for the interest
of National Energy Group, Inc. dated March 6, 1997 and February 15, 1996,
relating to the estimated quantities of certain of the Company's proved
reserves of oil and gas and the related estimates of future net revenue and
present values thereof, included in the Company's Annual Report on Form 10K
for the year ended December 31, 1996, as well as to the references to our
estimates of the Company's proved reserves and future net revenue for the
year ending December 31, 1995 and December 31, 1996 in the Notes to the
Financial Statements of the Company in such Annual Report. We also consent
to the reference to us under the heading "Experts" in such Registration
Statement.
NETHERLAND, SEWELL & ASSOCIATES, INC.
By: /s/ Frederic Sewell
-------------------------------
Frederic D. Sewell
President
Dallas, Texas
December 4, 1997
