Contract
X
X X X X
X X
000
Xxxxxx Xxxxxx
CAPITAL
PARTNERS Suite
3700
Xxxxxx
Xxxx, XX
00000
June
5,
2006
VIA
FEDERAL EXPRESS
AND
FAX (000) 000-0000
|
U.S.
Energy Corp.
|
|
000
Xxxxx 0xx
Xxxx
|
|
Xxxx
X. Xxxxxx Building
|
|
Riverton,
WY 82501
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Attention:
Xxxx X. Xxxxxx
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|
Re:
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Second
Amendment to Standby Equity Distribution
Agreement
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Dear
Xx.
Xxxxxx:
This
letter will memorialize the agreement by and between U.S. Energy Corp. (the
“Company”)
and
Cornell Capital Partners, LP (the “Investor”),
to
make this second amendment to the Standby Equity Distribution Agreement dated
May 5, 2006 (the “SEDA”)
between the Company and the Investor. All capitalized terms herein, unless
otherwise indicated, shall have the meaning ascribed to them in the SEDA.
The
parties hereby amend the SEDA as follows:
| 1. |
Section
1.7. of the SEDA shall be deleted in its entirety and replaced with
the
following:
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Section
1.7. “Commitment
Amount”
shall
mean the aggregate amount of up to Fifty Million Dollars ($50,000,000) which
the
Investor has agreed to provide to the Company in order to purchase the Company’s
Common Stock pursuant to the terms and conditions of this Agreement,
provided
that,
the Company shall not effect any sale under this Agreement and the Investor
shall not have the right or the obligation to purchase shares of Common Stock
under this Agreement to the extent that the Total Transaction Shares shall
be
greater than 3,726,400 shares, unless or until the Company obtains any necessary
shareholder approval or consent in accordance with Nasdaq MarketPlace Rule
4350(i)(1)(D) prior to such issuance (without the vote of any shares acquired
in
this Agreement and in all related transactions). The “Total
Transaction Shares”
(3,726,400) means the sum of (i) 3,556,470 shares issuable under this Agreement;
(ii) the shares issuable under the May 5, 2006 Warrant issued to the Investor;
(iii) the 68,531 shares issued to the Investor under this Agreement (the
“Investor’s
Shares”);
(iv)
the 1,399 shares issued to Newbridge Securities Corporation under the Placement
Agent Agreement of May 5, 2006 (the “Placement
Agent’s Shares”);
and
(v) all shares issuable under any Milestone Warrants (defined in Section
12.4(c)(iii) of this Agreement), which 3,726,400 shares is less than 20%
more
than the 18,632,022 shares of Common Stock outstanding as of April 11, 2006
(after subtracting the 888,408
U.S.
Energy Corp.
Jue 6, 2006
Page 2 of 2
shares
held by subsidiaries of the Company, from the
19,520,430 shares issued and outstanding at that date).
This
letter agreement shall solely have the effect specifically described above
and
shall have no effect on any other terms or conditions of the SEDA or related
documents.
Cornell
Capital Partners, LP
By:
Yorkville Advisors, LLC
Its:
General Partner
By:
/s/
Xxxx Xxxxxx
Name: Xxxx
Xxxxxx
Title:
Portfolio
Manager
Agreed
and acknowledged by:
U.S.
Energy Corp.
By:
/s/
Xxxxx X. Xxxxxx
Name:
Xxxxx X. Xxxxxx
Title: CEO
Date: June
6,
2006
