UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)
National Energy Group, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
163581 210
(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)
December 11, 1997
(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>
<PAGE>
SCHEDULE 13D
CUSIP No. 163581 210
1 NAME OF REPORTING PERSON
High River Limited Partnership
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) //
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC;AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7 SOLE VOTING POWER
8,547,044
8 SHARED VOTING POWER
0
9 SOLE DISPOSITIVE POWER
8,547,044
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
8,547,044
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.9%
14 TYPE OF REPORTING PERSON*
PN
<PAGE>
<PAGE>
SCHEDULE 13D
CUSIP No. 163581 210
1 NAME OF REPORTING PERSON
Riverdale LLC
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) //
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC;AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
8,547,044
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
8,547,044
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
8,547,044
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.9%
14 TYPE OF REPORTING PERSON*
CO
<PAGE>
<PAGE>
SCHEDULE 13D
CUSIP No. 163581 210
1 NAME OF REPORTING PERSON
Gascon Partners
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) //
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC;AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7 SOLE VOTING POWER
300,000
8 SHARED VOTING POWER
0
9 SOLE DISPOSITIVE POWER
300,000
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
300,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
14 TYPE OF REPORTING PERSON*
PN
<PAGE>
<PAGE>
SCHEDULE 13D
CUSIP No. 163581 210
1 NAME OF REPORTING PERSON
Cigas Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) //
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
300,000
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
300,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
300,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
14 TYPE OF REPORTING PERSON*
CO
<PAGE>
<PAGE>
SCHEDULE 13D
CUSIP No. 163581 210
1 NAME OF REPORTING PERSON
Astral Gas Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) //
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
300,000
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
300,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
300,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
14 TYPE OF REPORTING PERSON*
CO
<PAGE>
<PAGE>
SCHEDULE 13D
CUSIP No. 163581 210
1 NAME OF REPORTING PERSON
ACF Industries, Incorporated
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) //
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
300,000
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
300,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
300,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
14 TYPE OF REPORTING PERSON*
CO
<PAGE>
<PAGE>
SCHEDULE 13D
CUSIP No. 163581 210
1 NAME OF REPORTING PERSON
ACF Industries Holding Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) //
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
300,000
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
300,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
300,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
14 TYPE OF REPORTING PERSON*
CO
<PAGE>
<PAGE>
SCHEDULE 13D
CUSIP No. 163581 210
1 NAME OF REPORTING PERSON
Highcrest Investors Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) //
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
300,000
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
300,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
300,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
14 TYPE OF REPORTING PERSON*
CO
<PAGE>
<PAGE>
SCHEDULE 13D
CUSIP No. 163581 210
1 NAME OF REPORTING PERSON
Buffalo Investors Corp.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) //
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
300,000
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
300,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
300,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
14 TYPE OF REPORTING PERSON*
CO
<PAGE>
<PAGE>
SCHEDULE 13D
CUSIP No. 163581 210
1 NAME OF REPORTING PERSON
Starfire Holding Corporation
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) //
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
300,000
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
300,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
300,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
14 TYPE OF REPORTING PERSON*
CO
<PAGE>
<PAGE>
SCHEDULE 13D
CUSIP No. 163581 210 Page __ of __ Pages
1 NAME OF REPORTING PERSON
Carl C. Icahn
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /X/
(b) //
3 SEC USE ONLY
4 SOURCE OF FUNDS*
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) //
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH:
7 SOLE VOTING POWER
0
8 SHARED VOTING POWER
8,847,044
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
8,847,044
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
8,847,044
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
//
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.6%
14 TYPE OF REPORTING PERSON*
IN
<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"), Gascon Partners, a New York
general partnership ("Gascon Partners"),Cigas Corp., a
Delaware corporation("Cigas") Astral Gas Corp., a New York
corporation ("Astral"), ACF Industries, Incorporated, a New
Jersey corporation ("ACF"), ACF Industries Holding Corp., a
Delaware corporation ("ACF Holding"), Highcrest Investors
Corp., a Delaware corporation ("Highcrest"), Buffalo
Investors Corp., a New York corporation ("Buffalo") and
Starfire Holding Corporation, a Delaware corporation
("Starfire") (collectively, the "Registrants") amended on
July 22, 1996, August 9, 1996, September 4, 1996 and June
17, 1997 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 2. IDENTITY AND BACKGROUND
Item 2 is hereby amended by adding the following:
The persons filing this statement are Gascon
Partners, a New York general partnership ("Gascon
Partners"),Cigas Corp., a Delaware corporation("Cigas")
Astral Gas Corp., a New York corporation ("Astral"), ACF
Industries, Incorporated, a New Jersey corporation ("ACF"),
ACF Industries Holding Corp., a Delaware corporation ("ACF
Holding"), Highcrest Investors Corp., a Delaware corporation
("Highcrest"), Buffalo Investors Corp., a New York
corporation ("Buffalo") and Starfire Holding Corporation, a
Delaware corporation ("Starfire"). The principal business
address and the address of the principal office of the
Registrants is 100 South Bedford Road, Mount Kisco, New York
10549, with the exception of ACF, whose principal business
address and the address of its principal office is 3301
Rider trail South, Earth City, Missouri 63045.
Astral and Cigas are the general partners of
Gascon Partners. Cigas is wholly-owned by Carl C. Icahn.
Astral is a wholly-owned subsidiary of ACF. ACF is a wholly-owned subsidiary of
ACF Holding. ACF Holding is a wholly-owned subsidiary of Highcrest. Highcrest is
99.34% owned by Buffalo and the remainder is owned by Carl C. Icahn
Foundation. Buffalo is a wholly-owned subsidiary of
Starfire. Starfire is wholly-owned by Carl C. Icahn.
Registrants may be deemed to be a "group" within
the meaning of Rule 13d-5 promulgated under the Securities
Exchange Act of 1934, as amended (the "Act").
Item 5. INTEREST IN SECURITIES OF ISSUER
Item 5 is hereby amended by deleting the first
paragraph inserting the following in place thereof:
As of the close of business on December 11, 1997,
Registrants may be deemed to beneficially own in the
aggregate 8,847,044 shares of common stock, par value $.01
per share, of the Issuer (the "NEG Common Stock"),
representing approximately 19.6% (computed in accordance with
the rule 13d-3(d)(1) of the Issuer's outstanding
common stock as of November 10, 1997 in the Issuer's most
recent filing on Form 10-Q dated November 14, 1997 filed
with the Securities and Exchange Commission. Registrants
have direct beneficial ownership of the Common Stock as
follows:
Number of Shares Approximate Percentage
Name NEG Common Stock of Outstanding Shares
(computed in accordance with
the rue 13d-3(d)(1))
High River 8,547,044 18.9%
Gascon Partners 300,000 0.7 %
The following table sets forth all transactions with respect
to Shares effected during the past sixty days by the
Registrants. The transactions set forth below reflect High
River's purchase of Shares offered by the Issuer in a public
offering and Gascon Partners's receipt of a warrant to
purchase 300,000 shares of common stock.
TRADE DATE PRICE PER SHARE ($) SHARES PURCHASE
BY HIGH RIVER
12/11/97 3.626 290,000
3.5 29,500
3.53 15,000
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
07/11/97 * 300,000
* The registrants received the warrant in connection the
purchase of interests in oil and gas programs. The
transaction is described in the Letter Agreement Prospect
Participation NEG Exploration Prospects and the Warrant to
Purchase 300,000 of Common Stock of National Energy Group,
Inc., appended here as Exhibits 2 and 3 respectively and
incorporated by reference.
ITEM 6. CONTRACT, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Item 6 is hereby amended by adding the following:
Registrants are party to the revised Joint Filing
Agreement appended here as Exhibit 1, Letter Agreement Prospect Participation
NEG Exploration Prospects ("Letter Agreement") appended here as Exhibit 2 and
incorporated by reference, and the Warrant to Purchase 300,000 of Common Stock
of National Energy Group, Inc "(Warrant") appended here as Exhibit 3 and
incorporated by reference. The Letter Agreement expresses the mutual
understanding between the Issuer and Icahn Associates Corp. with respect to
participation in various oil and gas exploration prospects of the Issuer.
The Warrant isued to Gascon Partners is a warrant to purchase three hundred
thousand (300,000) shares of Common Stock, $0.01 par value
of the Isuer at a price of three dollars ($3.00) per share
(the "Exercise Prise"), subject to certain adjustment as set
out in the Warrant.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS
Item 7 is hereby amended by adding the following:
Exhibit 1. Joint Filing Agreement
Exhibit 2. Letter Agreement Prospect Participation NEG Exploration
Prospects
Exhibit 3. Warrant to Purchase 300,000 Shares of Common
Stock of National Energy Group, Inc.<PAGE>
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: December 12, 1997
RIVERDALE LLC
By: /s/ Carl C. Icahn
Carl C. Icahn
Its: Member
HIGH RIVER LIMITED PARTNERSHIP
By: RIVERDALE LLC
Its: General Partner
By: /s/ Carl C. Icahn
Carl C. Icahn
Its: Member
GASCON PARTNERS
By: CIGAS CORP.
Its: Managing General Partner
By: /s/ Edward e. Mattner
Edward E. Mattner
Its: President
CIGAS CORP.
By: /s/ Edward E. Mattner
Edward E. Mattner
Its: President
ASTRAL CORP.
By: /s/ Edward E. Mattner
Edward E. Mattner
Its: President
[Signature Page of 13D Amendment No. 5 with respect to
National Energy Group, Inc.]
ACF INDUSTRIES, INCORPORATED
By: /s/ James J. Unger
James J. Unger
Its: Vice Chairman of the
Board
ACF INDUSTRIES HOLDING CORP.
By: /s/ Richard T. Buonato
Richard T. Buonato
Its: Vice President and
Secretary
HIGHCREST INVESTORS CORP.
By: /s/ Richard T. Buonato
Richard T. Buonato
Its: Senior Vice President
and Treasurer
BUFFALO INVESTORS CORP.
By:/s/Edward E. Mattner
Edward E. Mattner
Its: President and Treasurer
STARFIRE HOLDING CORPORATION
By: /s/ Richard T. Buonato
Richard T. Buonato
Its: Vice President, Treasurer
and Controller
Carl C. Icahn
By: /s/Carl C. Icahn
Carl C. Icahn
[Signature Page of 13D Amendment No. 5 with respect to
National Energy Group, Inc.]
EXHIBIT 1
<PAGE>
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities
Exchange Act of 1934, as amended, the persons named below agree
to the joint filing on behalf of each of them of a statement on
Schedule 13D (including amendments thereto) with respect to the
common stock, par value $.01 per share of National Energy Corp.
and further agree that this Joint Filing Agreement be included as
an Exhibit to such joint filings. In evidence thereof, the
undersigned, being duly authorized, have executed this Joint
Filing Agreement this 12th day of December, 1997.
RIVERDALE LLC
By: /s/ Carl C. Icahn
Carl C. Icahn
Its: Member
HIGH RIVER LIMITED PARTNERSHIP
By: RIVERDALE LLC
Its: General Partner
By: /s/ Carl C. Icahn
Carl C. Icahn
Its: Member
GASCON PARTNERS
By: CIGAS CORP.
Its: Managing General Partner
By: /s/ Edward e. Mattner
Edward E. Mattner
Its: President
[Signature Page of Joint Filing Agreement for Schedule 13 D with
respect to National Energy Group, Inc.]
CIGAS CORP.
By: /s/ Edward E. Mattner
Edward E. Mattner
Its: President
ASTRAL CORP.
By: /s/ Edward E. Mattner
Edward E. Mattner
Its: President
ACF INDUSTRIES, INCORPORATED
By: /s/ James J. Unger
James J. Unger
Its: Vice Chairman of the
Board
ACF INDUSTRIES HOLDING CORP.
By: /s/ Richard T. Buonato
Richard T. Buonato
Its: Vice President and
Secretary
HIGHCREST INVESTORS CORP.
By: /s/ Richard T. Buonato
Richard T. Buonato
Its: Senior Vice President
and Treasurer
BUFFALO INVESTORS CORP.
By:/s/Edward E. Mattner
Edward E. Mattner
Its: President and Treasurer
[Signature Page of Joint Filing Agreement for Schedule 13 D with
respect to National Energy Group, Inc.]
<PAGE>
STARFIRE HOLDING CORPORATION
By: /s/ Richard T. Buonato
Richard T. Buonato
Its: Vice President, Treasurer
and Controller
Carl C. Icahn
By: /s/Carl C. Icahn
Carl C. Icahn
[Signature Page of Joint Filing Agreement for Schedule 13 D with
respect to National Energy Group, Inc.]
<PAGE>
EXHIBIT 2
RE: LETTER AGREEMENT
PROSPECT PARTICIPATION
NEG EXPLORATION PROSPECTS
Dear Mr. Icahn:
Pursuant to our discussions, this Letter Agreement shall act to express the
mutual understanding and agreement by and between National Energy Group, Inc.
("NEG") and Icahn Associates Corp. ("Icahn") with respect to participation in
various oil and gas exploration prospects of NEG (individually, "Prospect" and
collectively, "Prospects").
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. PROSPECTS. NEG and Icahn agree that Icahn shall participate as set forth
herein in certain Prospects to be drilled by NEG. Notwithstanding
anything to the contrary, it is the intention of the parties, unless
otherwise specifically agreed in writing, the term "Prospect" as used
herein shall include all exploration and all available development
Prospects generated or acquired by NEG, its agents, advisors or
consultants during the term hereof.
2. PARTICIPATION. The parties agree that Icahn's participation in any
Prospect shall be on a promoted basis of one-third (1/3) for one-fourth
(1/4) interest to the casing point of the initial well in each Prospect,
which shall include the actual prospect fees and land acquisition costs
of each Prospect. The interest acquired by Icahn hereunder shall not be
burdened by any back-in interest in favor of Sandefer Oil & Gas, Inc.,
its successors and assigns. It is further understood and agreed that
in the event NEG should sell any Prospect under more favorable terms to
another party purchaser other than Icahn, then in such event, Icahn
shall be entitled to participate in each Prospect under the more
favorable terms and conditions as any other such purchaser.
<PAGE>
Mr. Carl C. Icahn
c/o Icahn Associates Corp.
July 11, 1997
3. COMMITMENT. Through September 30, 1998, Icahn agrees to acquire, and NEG
agrees to offer participation to Icahn in each of NEG's Prospects for
an interest up to three-eighths (3/8) of one hundred percent (100%)
before casing point for any such Prospect and all development activity
deriving therefrom; if more is available, it shall be offered by NEG
and may be accepted by Icahn or rejected. The obligation and
commitment of Icahn described herein shall be an aggregate amount of
TEN MILLION DOLLARS ($10,000,000) during the term hereof. NEG agrees
that it will invest in and retain at least an amount equal to the
amount invested by Icahn in each well in which Icahn participates,
provided, however, that NEG may transfer all or a portion of its
interest if it first obtains a firm written bid for the interest from a
party whose identity it makes known to Icahn, which if accepted would
be a binding agreement to sell on the terms contained in such bid, and
if it then offers Icahn the right for a period of fifteen (15) days to
either (i) purchase the applicable portion of the interest at the same
price as contained in the firm bid or (ii) sell the same portion of
Icahn's entire interest in such well to the bidder at the same price
and on the same terms as contained in the bid. If Icahn chooses
alternative (i), then NEG shall sell to Icahn on the basis contained in
the firm bid and if Icahn chooses alternative (ii), then NEG shall sell
the applicable portion of its interest and shall sell, for Icahn, the
applicable portion of Icahn's interest to the firm bidder on the basis
set forth in the firm bid. If Icahn chooses neither alternative, then
NEG is free, for a period of ninety (90) days, to sell the applicable
portion of its interest to the firm bidder on a basis no more favorable
to it than contained in the firm bid.
4. PREFERENTIAL RIGHT. If at any time Icahn decides to sell a portion of its
interest in any Prospect to any party (other than to a subsidiary or
affiliate of Icahn, in which case there shall be an unrestricted right
to do so), it shall first notify NEG in writing that such interest is
for sale (the "Offered Interest"). NEG shall then have fifteen (15)
days from receipt of such notice in which to make an offer in writing
to purchase the Offered Interest. NEG's failure to timely respond in
writing within such fifteen (15) day period shall be deemed by Icahn to
be an election by NEG not to make an offer to purchase the Offered
Interest. Upon receipt of NEG's offer to purchase the Offered
Interest, Icahn shall then have fifteen (15) working days thereafter in
which to accept or reject in writing NEG's offer. Icahn's failure to
timely respond in writing within such ten (10) working day period shall
be deemed by NEG to be an election by Icahn to accept NEG's offer to
purchase the Offered Interest. In the event Icahn gives NEG timely
notice in writing of its rejection of NEG's offer to purchase the
Offered Interest, Icahn shall thereafter, for a period of ninety (90)
days, be free to offer the Offered Interest to any other party. In the
event that thereafter Icahn desires to transfer the Offered interest to
any other party, Icahn must first give NEG the right for a period of
ten (10) days to exceed the bid, in writing, for the Offered Interest.
The parties hereto agree that notwithstanding any other provision
contained herein, this Paragraph 4 shall apply to successors and
assigns of NEG. NEG covenants and agrees that no agreements relating
to the subject matter hereof shall diminish the rights granted in
Paragraphs 3 and 4 hereof.
Page 2 of 5
<PAGE>
Mr. Carl C. Icahn
c/o Icahn Associates Corp.
July 11, 1997
5. WARRANTS. In consideration of the Preferential Rights granted in Paragraph
4 and the commitment of the amount of TEN MILLION DOLLARS ($10,000,000)
contained herein, NEG agrees that it shall hereby grant to Icahn
certain warrants to purchase THREE HUNDRED THOUSAND (300,000) shares of
common stock of NEG (the "Warrants") as more fully described below:
5.1 NUMBER OF WARRANTS. The Warrants shall become exercisable on the
earlier of (i) December 31, 1997, or (ii) as to each block of ONE
HUNDRED FIFTY THOUSAND (150,000) warrants where FIVE MILLION DOLLARS
($5,000,000) has been invested by Icahn in the Prospects.
5.2 EXERCISE PRICE. The exercise price per share of each Warrant shall be
equal to THREE DOLLARS ($3.00) per share for each share of NEG Common
Stock.
5.3 EXPIRATION DATE; FORM. Warrants earned hereunder shall expire five
(5) years from the date hereof, and any Warrants not so exercised
by such date shall become null and void of all rights and shall
cease to exist. The Warrants shall be in the form of EXHIBIT "A"
attached hereto and incorporated herein. The Warrants and warrant
shares shall be subject to the Registration Rights Agreement as set
forth on EXHIBIT "A-1" attached hereto and incorporated herein.
6. RELATED AGREEMENTS. The parties hereto further agree that all operations
on the jointly owned acreage shall be conducted pursuant to the terms
of a Participation Agreement and AAPL Form 610 1982 Joint Operating
Agreement, as modified, which shall (i) be mutually agreed upon by all
working interest participants in the Prospect (ii) designate NEG as
operator and (iii) contain a mutually agreeable area of mutual interest
to include the Prospect. In the event that there is any conflict
between this Letter Agreement and any such other agreement, the terms
of this Letter Agreement shall govern.
7. OTHER COVENANTS.
7.1 NEG shall use its best efforts to sell Icahn's proportionate share of
the oil and gas produced from any well if Icahn so requests, but
only for such reasonable periods of time as are consistent with
the minimum needs of the industry under the particular
circumstances, but in no event for a period in excess of one (1)
year. Such request shall be made in writing, within thirty (30)
days of the commencement of oil or gas production from the
aforementioned well.
7.2 TITLE:
i. Upon the initial payment for participation in any Prospect,
Icahn's interest in the right, title and interest in the property
or leasehold underlying the Prospect acquired by NEG shall be
conveyed and assigned to Icahn in any name, as directed by Icahn.
ii. NEG shall provide Icahn with timely and appropriate title as
is usual and customary in the industry for drilling operations as
contemplated herein.
Page 3 of 5
<PAGE>
Mr. Carl C. Icahn
c/o Icahn Associates Corp.
July 11, 1997
7.3 Prior to committing to any single Prospect, NEG shall furnish to Icahn
all relevant reports or documents relating to that Prospect (including
the insurance coverage provided by NEG).
7.4 NEG represents and warrants that it is not an "integrated
oil company" as defined in Section 291(b) of the Internal Revenue
Code of 1986, as amended, and further covenants that NEG shall not
become an integrated oil company for the duration of this Agreement
(including any extensions thereof) and shall indemnify and hold
Icahn and its affiliates harmless against any loss of all benefits,
including tax benefits, in the event either the representation and
warranty or the covenant in this Paragraph 7.4 is breached.
8. CHOICE OF LAW. THIS LETTER AGREEMENT, THE LEGAL RELATIONSHIP OF
THE
PARTIES AND ALL RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE
GOVERNED
BY AND INTERPRETED, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO THE
LAWS OF ANY OTHER JURISDICTION.
9. NOTICES. Any notice required hereunder shall be in writing; delivered to
or sent by U.S. Mail, postage pre-paid, or nationally recognized
commercial carrier service, postage or delivery charges pre-paid, or by
facsimile with a copy delivered to the U.S. Mail, postage pre-paid,
addressed as follows (or such other address as may be specified by five
(5) days prior written notice to the other party hereto):
IF TO NEG: IF TO ICAHN:
National Energy Group, Inc. Icahn Associates Corp.
4925 Greenville Avenue 767 Fifth Avenue
Suite 1400 47th Floor
Dallas, Texas 75206- 4095 New York, New York 10153
Attn: Mr. William T. Jones Attn: Mr. Carl C. Icahn
Senior Vice President President
Phone: (214) 692-9211 Phone: (212) 702-4333
Fax: (214) 692-5055 Fax: (212) 750-5807
10. ASSIGNMENT. This Letter Agreement shall inure to the benefit of and be
binding upon NEG and Icahn and their respective successors and assigns.
11. COMPLETENESS. This Letter Agreement supersedes all prior written or oral
**********************************
agreements and understandings between the parties and constitutes the
complete agreement between the parties with respect to the subject
matter hereof. This Letter Agreement cannot be modified or amended
except by written instrument duly executed by NEG and Icahn.
Page 4 of 5
<PAGE>
Mr. Carl C. Icahn
c/o Icahn Associates Corp.
July 11, 1997
If the foregoing expresses our mutual understanding and agreement, please so
indicate by executing in the appropriate space below and returning one (1)
fully executed copy to the undersigned.
Sincerely,
National Energy Group, Inc.
/s/ Miles D. Bender
--------------------------------
Miles D. Bender
President
MDB:ljg
ACCEPTED AND AGREED THIS
11 DAY OF JULY, 1997.
ICAHN ASSOCIATES CORP.
- - ---------------------------------
By: Edward E. Mattner
--------------------------
Title: President
--------------------------
Page 5 of 5
<PAGE>
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.
EXHIBIT 3
NATIONAL ENERGY GROUP, INC.
WARRANT TO PURCHASE
300,000 SHARES OF
COMMON STOCK OF
NATIONAL ENERGY GROUP, INC.
This Warrant (the "Warrant") is issued to Gascon Partners, a New York
general partnership ("Holder") and Holder agrees by acceptance hereof that
this Warrant is subject to the terms and conditions contained herein and the
terms and conditions of that certain Letter Agreement dated July 11, 1997
between National Energy Group, Inc. (the "Company") and Holder (the "Letter
Agreement").
This Warrant is a warrant to purchase THREE HUNDRED THOUSAND (300,000)
shares of Common Stock, $0.01 par value (the "Common Stock") of the Company
at a price of THREE DOLLARS ($3.00) per share (the "Exercise Price"), subject
to adjustment as provided herein.
This Warrant shall expire on July 11, 2002 (the "Expiration Date") and
shall become exercisable on the earlier of (i) December 31, 1997, or (ii) as
to each block of ONE HUNDRED FIFTY THOUSAND (150,000) warrants where FIVE
MILLION DOLLARS ($5,000,000) has been invested by Gascon Partnership, a New
York partnership, as provided in the Letter Agreement. 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:
<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 five percent (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 five percent (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, Series C, Series D or
Series E Preferred Stock so long as the securities are additional shares of
Series B, Series C, Series D or
Page 2
<PAGE>
Series E Preferred Stock 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 (5%) 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
Page 3
<PAGE>
determined by (a) multiplying the number of purchasable shares 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
Page 4
<PAGE>
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 July 11, 1997, 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., Suite 1400,
Dallas, Texas, 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 (3) 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.
Page 5
<PAGE>
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: July 11, 1997.
NATIONAL ENERGY GROUP, INC.
By: /s/ Miles D. Bender
-----------------------------
Miles D. Bender, President and
Chief Executive Officer
Page 6
<PAGE>
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 July 11, 1997 (the "Warrant"), issued by
National Energy Group, Inc., a Delaware corporation whose address is 4925
Greenville Ave., Ste. 1400, Dallas, Texas, 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.
"HOLDER"
By:
----------------------------------
Title:
-------------------------------
Address:
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Social Security or
Taxpayer Identification Number:
Business Phone Number:
Home Phone Number:
