SETTLEMENT AGREEMENT
This
Settlement Agreement (“Settlement Agreement”) is entered into and effective as
of the 25th
day of
September 2006, by and between U.S. Energy Corp. and Crested Corp. (“USE/CC”),
on the one hand, and Xxxxxx Dodge Corporation, Mt. Xxxxxx Mining Company,
and
Cyprus AMAX Minerals Company, (collectively “Xxxxxx Dodge”), on the other. In
this Settlement Agreement, USE/CC and Xxxxxx Dodge may sometimes be referred
to
as “the Parties.”
RECITALS
WHEREAS,
the Parties have been engaged in a lawsuit captioned Xxxxxx
Dodge Corp, et al. v. U.S. Energy Corp., et al.,
Civil
Action No. 02-cv-00796-LTB-PAC (D. Colo.) (“Lawsuit”) concerning,
inter alia, the rights and duties of the Parties relating to the transfer(s)
of
mining properties near Crested Butte, Colorado, including duties pursuant
to
various agreements finalized in 1987 (collectively, the “Agreements”) entered
into between USE/CC and Xxxxxx Dodge’s predecessor(s); and
WHEREAS,
on February 10, 2005, judgment on the merits in favor of Xxxxxx Dodge was
entered, from which USE/CC filed a timely appeal, now pending in the Tenth
Circuit Court of Appeals as Case No. 06-1259 (the “Appeal”); and
WHEREAS,
on July 26, 2006, judgment awarding Xxxxxx Dodge attorneys’ fees and costs
was entered (“Attorneys’ Fees Judgment”), from which USE/CC filed a timely
appeal and which was consolidated with the Appeal; and
WHEREAS,
on September 6, 2006, Xxxxxx Dodge filed a cross-appeal of the Attorneys’
Fees Judgment (the “Cross-Appeal”); and
WHEREAS,
USE/CC and Xxxxxx Dodge desire to settle all outstanding matters relating
to the
Lawsuit, the Appeal, and the Cross-Appeal, and to waive their respective
appeal
rights;
THEREFORE,
the Parties, in consideration of the covenants and payments herein, have
agreed
to the terms set out below.
1. Incorporation
of Recitals:
The
foregoing recitals are material to this Settlement Agreement and are
incorporated herein by this reference.
2. Payment
by USE/CC to Xxxxxx Dodge:
It is
agreed between the Parties that, concurrent with the delivery by Xxxxxx Dodge
to
USE/CC of an executed copy of this Settlement Agreement, USE/CC shall pay
Xxxxxx\Dodge in immediately available funds Seven Million Dollars (US$7,000,000)
(“Settlement Payment”).
3. Dismissal
of the Appeal and Cross-Appeal:
Within
five business days of the receipt of the Settlement Payment in accordance
with
Paragraph 2 above, the Parties shall file the Motion to Dismiss the Appeal
and
Cross Appeal with Prejudice attached hereto as Exhibit A.
4. Attorneys’
Fees and Other Costs:
The
Settlement Payment is deemed to be in full satisfaction of any and all
attorneys’ fees, legal costs, operating costs, and any other costs or expenses
incurred by any party, including but not limited to fees and costs relating
to
the Attorneys’ Fees Judgment, the Appeal, and Cross-Appeal and this Settlement
Agreement.
5. Execution;
Authority:
The
Parties’ signatories to this Settlement Agreement expressly represent and
warrant that they have the authority to settle outstanding matters relating
to
Agreements, the Lawsuit, and the Appeal and Cross-Appeal, and the Parties’
signatories to this Settlement Agreement expressly represent and warrant
that
they have the authority to execute the Settlement Agreement on behalf of
the
signing parties they represent.
6. Warranty
of Non-Assignment:
The
Parties represent and warrant that none of them have assigned or transferred,
or
purported to assign or transfer, to any person or entity any claims, debts,
liabilities, demands, rights, obligations, damages, losses, causes of action,
costs, expenses, and attorneys’ fees subject to this Settlement Agreement.
7. Binding
Effect:
This
Settlement Agreement shall inure to the benefit of and be binding upon the
shareholders, successors, assigns, and legal representatives of the
Parties.
8. Multiple
Counterparts:
This
Settlement Agreement may be executed in multiple counterparts, each of which
shall be deemed to be and have the same force and effect of an original,
and all
of which, taken together, shall constitute and be construed as a single
agreement. A facsimile signature shall be treated as an original. The Parties
shall promptly exchange original signatures after execution.
9. Opportunity
to Read and Consult:
Each of
the Parties to this Settlement Agreement represents that it has read it,
has
consulted with counsel regarding its terms, fully understands the rights
and
obligations described herein, and is entering into the Settlement Agreement
freely and without duress.
10. Complete
and Final Agreement:
It is
agreed that this Settlement Agreement embodies the complete and final agreement
and release between the Parties as to the Lawsuit, the Appeal, and the
Cross-Appeal. All previous covenants, promises, agreements, conditions or
other
understandings, either oral or written, with respect to the Lawsuit, the
Appeal,
and the Cross-Appeal are deemed superseded by this Settlement Agreement.
This
Settlement Agreement may be amended only by an instrument in writing executed
jointly by the signing parties.
11. Construction:
The
language used in this Settlement Agreement will be deemed to be the language
chosen by the Parties to express their mutual intent, and the Settlement
Agreement
shall not be construed against any party because of such party’s involvement in
the preparation or drafting of this Settlement Agreement.
12. Severability:
If any
provision of this Settlement Agreement or any document executed in connection
with this Settlement Agreement is held to be illegal, invalid or unenforceable
under present or future laws effective during the term hereof, such provision
shall be fully severable and shall in no way affect the validity or
enforceability of this Settlement Agreement or any other provision herein.
Should any section, paragraph, subparagraph, or other portion of this Settlement
Agreement or any Exhibit incorporated herein be found invalid or be required
to
be modified as a matter of law in a fully authorized court or by a duly
authorized government agency, then only that portion of this Settlement
Agreement shall be invalid or modified. The remainder of this Settlement
Agreement, which is still valid and unaffected, shall remain in force. If
the
absence of the part that is held to be invalid, illegal, or unenforceable,
or
modification of the part required to be modified, substantially deprives
a party
of the economic benefit of this Settlement Agreement, the signing parties
shall
negotiate in good faith reasonable and valid provisions to restore the economic
benefit to the party deprived or to balance the signing parties’ obligations
consistent with the intent reflected in this Settlement Agreement.
13. No
Admission:
The
Parties agree that the settlement embodied in this Settlement Agreement,
and all
actions taken pursuant hereto, is made to compromise and settle the outstanding
matters relating to the Lawsuit, the Appeal, and the Cross-Appeal without
further litigation. It is not and shall not be interpreted as an admission
of
any liability or wrongdoing by any party. No statement appearing in this
Settlement Agreement or in any Exhibit to this Settlement Agreement or any
other
document to carry out the terms of this Settlement Agreement is, or should
be
interpreted as, an admission or statement against interest. This
Settlement
Agreement, its terms and all negotiations relating thereto shall not be used
by
any party in any other proceedings or otherwise for any purpose except to
the
extent necessary to enforce this Settlement Agreement.
14. Title
and Headings; Enforceability:
The
titles and headings to the paragraphs in this Settlement Agreement are inserted
for convenience and reference only, and are not intended to be a part of
or to
affect the meaning of or interpretation of this Settlement Agreement. The
provisions of this Settlement Agreement shall, where possible, be interpreted
in
a manner to sustain their legality and enforceability.
15. Effect
on Prior Agreements:
This
Settlement Agreement does not terminate, modify or amend the
Agreements.
16. Choice
of Law:
This
Agreement and all disputes arising hereunder shall be interpreted under and
governed by the laws of the State of Colorado.
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XXXXXX
DODGE CORPORATION
By:
/s/
S.
Xxxxx Xxxxxx
Title:
Sr. Vice President and General Counsel
Printed
Name: S. Xxxxx Xxxxxx
MT.
XXXXXX MINING COMPANY
By:
/s/
S.
Xxxxx Xxxxxx
Title:
Sr. Vice President and General Counsel
CYPRUS
AMAX MINERALS COMPANY
By:
/s/
S.
Xxxxx Xxxxxx
Title:
Sr. Vice President and General Counsel
U.S.
ENERGY CORP.
By:
/s/
Xxxx X. Xxxxxx
Title:
President
CRESTED
CORP.
By:
/s/
Xxxxx X. Xxxxxx
Title:
CEO
Settlement
Agreement Execution Page
