PLACEMENT AGENT AGREEMENT
U.S.
ENERGY CORP.
Dated
as
of: April
__,
2006
Newbridge
Securities Corporation
0000
Xxxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Ladies
and Gentlemen:
The
undersigned, U.S. Energy Corp., a Wyoming corporation (the “Company”),
hereby agrees with
Newbridge Securities Corporation (the “Placement
Agent”)
as
follows:
1. Offering.
The
Company hereby engages the Placement Agent to act as its exclusive placement
agent in connection with the Standby Equity Distribution Agreement dated
the
date hereof between the Company and Cornell Capital Partners, LP (the
“Investor”)
(the
“Standby
Equity Distribution Agreement”),
pursuant to which the Company shall issue and sell to the Investor, from
time to
time, and the Investor shall purchase from the Company (the “Offering”)
up to
Fifty Million Dollars ($50,000,000) (the “Commitment
Amount”)
of the
Company’s common stock, par value $0.01 per share (the “Common
Stock”),
at
price per share equal to the Purchase Price, as that term is defined in the
Standby Equity Distribution Agreement. The
Placement Agent services
shall
consist of reviewing
the
terms
of
the
Standby Equity Distribution Agreement and advising
the
Company with
respect to those
terms.
The
Placement Agent shall provide its advice in writing to the Company.
All
capitalized terms used herein and not otherwise defined herein shall have
the
same meaning ascribed to them as in the Standby Equity Distribution Agreement.
The Investor will be granted certain registration rights with respect to
the
Common Stock as more fully set forth in the Registration Rights Agreement
between the Company and the Investor dated the date hereof (the “Registration
Rights Agreement”).
The
documents to be executed and delivered in connection with the Offering,
including, but not limited, to the
Company’s latest Quarterly Report on Form 10-Q as filed with the United States
Securities and Exchange Commission, this
Agreement, the Standby Equity Distribution Agreement, and the Registration
Rights Agreement are referred to sometimes hereinafter collectively as the
“Offering
Materials.”
The
Company’s Common Stock
purchased by the Investor under
the
Standby Equity Distribution Agreement is sometimes referred to hereinafter
as
the “Securities.”
The
Placement Agent shall not be obligated to sell any Securities.
2. Compensation.
A. Upon
the
execution of this Agreement, the Company shall issue to the Placement Agent
or
its designee one thousand three hundred thirty nine (1,399) shares of the
Company’s Common Stock (the “Placement
Agent’s Shares”).
The
Placement Agent shall be
1
entitled
to “piggy-back” registration rights with respect to the Placement Agent’s
Shares, which shall be triggered upon registration of any shares of Common
Stock
by the Company pursuant to the Registration Rights Agreement dated the date
hereof.
3. Representations,
Warranties and Covenants of the Placement Agent.
A. The
Placement Agent represents, warrants and covenants as follows:
(i) The
Placement Agent has the necessary power to enter into this Agreement and
to
consummate the transactions contemplated hereby.
(ii) The
execution and delivery by the Placement Agent of this Agreement and the
consummation of the transactions contemplated herein will not result in any
violation of, or be in conflict with, or constitute a default under, any
agreement or instrument to which the Placement Agent is a party or by which
the
Placement Agent or its properties are bound, or any judgment, decree, order
or,
to the Placement Agent’s knowledge, any statute, rule or regulation applicable
to the Placement Agent. This Agreement when executed and delivered by the
Placement Agent, will constitute the legal, valid and binding obligations
of the
Placement Agent, enforceable in accordance with their respective terms, except
to the extent that (a) the enforceability hereof or thereof may be limited
by
bankruptcy, insolvency, reorganization, moratorium or similar laws from time
to
time in effect and affecting the rights of creditors generally, (b) the
enforceability hereof or thereof is subject to general principles of equity,
or
(c) the indemnification provisions hereof or thereof may be held to be in
violation of public policy.
(iii) Upon
receipt and execution of this Agreement, the Placement Agent will promptly
forward copies of this Agreement to the Company or its counsel and the Investor
or its counsel.
(iv) The
Placement Agent will not intentionally take any action that it reasonably
believes would cause the Offering to violate the provisions of the Securities
Act of 1933, as amended (the “1933
Act”),
the
Securities Exchange Act of 1934 (the “1934
Act”),
the
respective rules and regulations promulgated thereunder
(the
“Rules
and Regulations”)
or
applicable “Blue Sky” laws of any state or jurisdiction.
(v) The
Placement Agent is a member of the National Association of Securities Dealers,
Inc., and is a broker-dealer registered as such under the 1934 Act and under
the
securities laws of the states in which the Securities will be offered or
sold by
the Placement Agent unless an exemption for such state registration is available
to the Placement Agent. The Placement Agent is in material
compliance
with the
rules
and regulations applicable to the Placement Agent generally and applicable
to
the Placement Agent’s participation in the Offering.
2
4. Representations
and Warranties of the Company.
B. The
Company represents and warrants as follows:
The
representations and warranties made by the Company in Sections 4.1 through
4.20
of the Standby Equity Distribution Agreement incorporated by reference herein.
(i) Subject
to the performance by the Placement Agent of its obligations
hereunder
the
offer and sale of the Securities complies,
and
will continue to comply,
in all
material respects with the requirements of Rule 506 of Regulation D promulgated
by the SEC pursuant to the 1933 Act and any other applicable federal and
state
laws, rules, regulations and executive orders. Neither the Offering Materials
nor any amendment or supplement thereto nor any documents prepared by the
Company in connection with the Offering will contain any untrue statement
of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under
which they were made, not misleading. All statements of material facts in
the
Offering Materials are true and correct as of the date of the Offering
Materials.
5. Certain
Covenants and Agreements of the Company.
The
Company covenants and agrees at its expense and without any expense to the
Placement Agent as follows:
A. To
advise
the Placement Agent of
any
material adverse change in the Company’s financial condition, prospects or
business or of any development materially affecting the Company or rendering
untrue or misleading any material statement in the Offering Materials occurring
at any time as soon as the Company is either informed or becomes aware
thereof.
B. To
comply
with the terms of the Offering Materials.
C. Upon
the
effectiveness of a registration statement covering the Securities, the Company
shall promptly provide the Placement Agent with an opinion of Counsel to
the
Company, which opinion shall be in form and substance reasonably satisfactory
to
and the Placement Agent.
D. At
or
prior to the Closing, the Company shall have been furnished such documents,
certificates and opinions as it may reasonably require for the purpose of
enabling the Placement Agent to review or pass upon the matters referred
to in
this Agreement and the Offering Materials, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained.
6. Indemnification
and
Limitation of Liability.
A. The
Company hereby agrees that it will indemnify and hold the Placement Agent
and
each officer, director, shareholder, employee or representative of the Placement
Agent
3
and
each
person controlling, controlled by or under common control with the Placement
Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934
Act or the SEC’s Rules and Regulations promulgated thereunder (the “Rules
and Regulations”),
harmless from and against any and all loss, claim, damage, liability, cost
or
expense whatsoever (including, but not limited to, any and all reasonable
legal
fees and other expenses and disbursements incurred in connection with
investigating, preparing to defend or defending any action, suit or proceeding,
including any inquiry or investigation, commenced or threatened, or any claim
whatsoever or in appearing or preparing for appearance as a witness in any
action, suit or proceeding, including any inquiry, investigation or pretrial
proceeding such as a deposition) to which the Placement Agent or such
indemnified person of the Placement Agent may become subject under the 1933
Act,
the 1934 Act, the Rules and Regulations, or any other federal or state law
or
regulation, common law or otherwise, arising out of or based upon (i) any
untrue
statement or alleged untrue statement of a material fact contained in (a)
Section 4 of this Agreement, (b) the Offering Materials (except those written
statements relating to the Placement Agent given by the
Placement Agent
for
inclusion therein), (c) any application or other document or written
communication executed by the Company or based upon written information
furnished by the Company filed in any jurisdiction in order to qualify the
Common Stock under the securities laws thereof, or any state securities
commission or agency; (ii) the omission or alleged omission from documents
described in clauses (a), (b) or (c) above of a material fact required to
be
stated therein or necessary to make the statements therein not misleading;
or
(iii) the breach of any representation, warranty, covenant or agreement made
by
the Company in this Agreement. The Company further agrees that upon demand
by an
indemnified person, at any time or from time to time, it will promptly reimburse
such indemnified person for any loss, claim, damage, liability, cost or expense
actually and reasonably paid by the indemnified person as to which the Company
has indemnified such person pursuant hereto. Notwithstanding the foregoing
provisions of this Paragraph 7(A), any such payment or reimbursement by the
Company of fees, expenses or disbursements incurred by an indemnified person
in
any proceeding in which a final judgment by a court of competent jurisdiction
(after all appeals or the expiration of time to appeal) is entered against
the
Placement Agent or such indemnified person based upon specific finding of
fact
that the Placement Agent or such indemnified person’s gross negligence or
willful misfeasance will be promptly repaid to the Company.
B. The
Placement Agent hereby agrees that it will indemnify and hold the Company
and
each officer, director, shareholder, employee or representative of the Company,
and each person controlling, controlled by or under common control with the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of
the
1934 Act or the Rules and Regulations, harmless from and against any and
all
loss, claim, damage, liability, cost or expense whatsoever (including, but
not
limited to, any and all reasonable legal fees and other expenses and
disbursements incurred in connection with investigating, preparing to defend
or
defending any action, suit or proceeding, including any inquiry or
investigation, commenced or threatened, or any claim whatsoever or in appearing
or preparing for appearance as a witness in any action, suit or proceeding,
including any inquiry, investigation or pretrial proceeding such as a
deposition) to which the Company or such indemnified person of the Company
may
become subject under the 1933 Act, the 1934 Act, the Rules and Regulations,
or
any other federal or state law or regulation, common law or otherwise, arising
out of or based upon (i) the material
breach of any representation, warranty, covenant or agreement made by the
Placement Agent in this Agreement, or (ii)
any
false or misleading information provided to the Company in
writing by
4
one
of
the Placement Agent’s indemnified persons
specifically for inclusion in the Offering Materials.
C. Promptly
after receipt by an indemnified party of notice of commencement of any action
covered by Section 7(A) or (B), the party to be indemnified shall, within
five
(5) business days, notify the indemnifying party of the commencement thereof;
the omission by one (1) indemnified party to so notify the indemnifying
party shall not relieve the indemnifying party of its obligation to indemnify
any other indemnified party that has given such notice and shall not relieve
the
indemnifying party of any liability outside of this indemnification if not
materially prejudiced thereby. In the event that any action is brought against
the indemnified party, the indemnifying party will be entitled to participate
therein and, to the extent it may desire, to assume and control the defense
thereof with counsel chosen by it which is reasonably acceptable to the
indemnified party. After notice from the indemnifying party to such indemnified
party of its election to so assume the defense thereof, the indemnifying
party
will not be liable to such indemnified party under such Section 7(A) or (B),
for
any legal or other expenses subsequently incurred by such indemnified party
in
connection with the defense thereof, but the indemnified party may, at its
own
expense, participate in such defense by counsel chosen by it, without, however,
impairing the indemnifying party’s control of the defense. Subject to the
proviso of this sentence and notwithstanding any other statement to the contrary
contained herein, the indemnified party or parties shall have the right to
choose its or their own counsel and control the defense of any action, all
at
the expense of the indemnifying party if (i) the employment of such counsel
shall have been authorized in writing by the indemnifying party in connection
with the defense of such action at the expense of the indemnifying party,
or
(ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to such indemnified party to have charge of the defense of such
action within a reasonable time after notice of commencement of the action,
or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in
any of
which events such fees and expenses of one additional counsel shall be borne
by
the indemnifying party; provided, however, that the indemnifying party shall
not, in connection with any one action or separate but substantially similar
or
related actions in the same jurisdiction arising out of the same general
allegations or circumstance, be liable for the reasonable fees and expenses
of
more than one separate firm of attorneys at any time for all such indemnified
parties. No settlement of any action or proceeding against an indemnified
party
shall be made without the consent of the indemnifying party.
D. In
order
to provide for just and equitable contribution in circumstances in which
the
indemnification provided for in Section 7(A) or 7(B) is due in accordance
with
its terms but is for any reason held by a court to be unavailable on grounds
of
policy or otherwise, the Company and the Placement Agent shall contribute
to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with the investigation or defense
of
same) which the other may incur in such proportion so that the Placement
Agent
shall be responsible for such percent of the aggregate of such losses, claims,
damages and liabilities as shall equal the percentage of the gross proceeds
paid
to the Placement Agent and the Company shall be responsible for the balance;
provided, however, that no person guilty of fraudulent misrepresentation
within
the meaning of Section 11(f) of the 1933 Act shall
5
be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7(D), any person controlling,
controlled by or under common control with the Placement Agent, or any partner,
director, officer, employee, representative or any agent of any thereof,
shall
have the same rights to contribution as the Placement Agent and each person
controlling, controlled by or under common control with the Company within
the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each
officer of the Company and each director of the Company shall have the same
rights to contribution as the Company. Any party entitled to contribution
will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution
may
be made against the other party under this Section 7(D), notify such party
from
whom contribution may be sought, but the omission to so notify such party
shall
not relieve the party from whom contribution may be sought from any obligation
they may have hereunder or otherwise if the party from whom contribution
may be
sought is not materially prejudiced thereby.
E. The
indemnity and contribution agreements contained in this Section 7 shall remain
operative and in full force and effect regardless of any investigation made
by
or on behalf of any indemnified person or any termination of this
Agreement.
F. The
Company hereby waives, to the fullest extent permitted by law, any right
to or
claim of any punitive, exemplary, incidental, indirect, special, consequential
or other damages (including, without limitation, loss of profits) against
the
Placement Agent and each officer, director, shareholder, employee or
representative of the placement agent and each person controlling, controlled
by
or under common control with the Placement Agent within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act or the Rules and Regulations
arising out of any cause whatsoever (whether such cause be based in contract,
negligence, strict liability, other tort or otherwise). Notwithstanding anything
to the contrary contained herein, the aggregate liability of the Placement
Agent
and each officer, director, shareholder, employee or representative of the
Placement Agent and each person controlling, controlled by or under common
control with the Placement Agent within the meaning of Section 15 of the
1933
Act or Section 20 of the 1934 Act or the Rules and Regulations shall not
exceed
the compensation received by the Placement Agent pursuant to Section 2 hereof.
This limitation of liability shall apply regardless of the cause of action,
whether contract, tort (including, without limitation, negligence) or breach
of
statute or any other legal or equitable obligation.
7. Payment
of Expenses.
The
Company hereby agrees to bear all of the expenses in connection with the
Offering, including, but not limited to the following: filing fees, printing
and
duplicating costs, advertisements, postage and mailing expenses with respect
to
the transmission of Offering Materials, registrar and transfer agent fees,
escrow agent fees and expenses, fees of the Company’s counsel and accountants,
issue and transfer taxes, if any.
8. Termination.
This
Agreement shall be co-terminus with, and terminate upon the same terms and
conditions as those set forth in the Standby Equity Distribution Agreement.
6
9. Miscellaneous.
A. This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original, but all which shall be deemed to be one and the
same
instrument.
B. Any
notice required or permitted to be given hereunder shall be given in writing
and
shall be deemed effective when deposited in the United States mail, postage
prepaid, or when received if personally delivered or faxed (upon confirmation
of
receipt received by the sending party), addressed as follows
to such
other address of which written notice is given to the others):
|
If
to Placement Agent, to:
|
Newbridge
Securities Corporation
|
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0000
Xxxxxxx Xxxxx Xxxx, Xxxxx 000
|
|
|
Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
|
|
|
Attention: Xxxx
Xxxxxxxxx
|
|
|
Telephone: (000)
000-0000
|
|
|
Facsimile: (000)
000-0000
|
|
|
If
to the Company, to:
|
U.S.
Energy Corp.
|
|
000
Xxxxx 0xx
Xxxx
|
|
|
Xxxx
X. Xxxxxx Building
|
|
|
Riverton,
WY 82501
|
|
|
Attention:
Xxxx X. Xxxxxx
|
|
|
Telephone:
(000)
000-0000
|
|
|
Facsimile:
(000)
000-0000
|
|
|
With
a copy to:
|
The
Law Office of Xxxxxxx X. Xxxxxx
|
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0000
Xxxx Xxxxxx, Xxxxx 000
|
|
|
Xxxxxx,
XX 00000
|
|
|
Attention
: Xxxxxxx X. Xxxxxx
|
|
|
Telephone:
(000) 000-0000
|
|
|
Facsimile:
(000) 000-0000
|
|
C. This
Agreement shall be governed by and construed in all respects under the laws
of
the State of New Jersey, without reference to its conflict of laws rules
or
principles. Any suit, action, proceeding or litigation arising out of or
relating to this Agreement shall be brought and prosecuted in such federal
or
state court or courts located within the State of New Jersey as provided
by law.
The parties hereby irrevocably and unconditionally consent to the jurisdiction
of each such court or courts located within the State of New Jersey and to
service of process by registered or certified mail, return receipt requested,
or
by any other manner provided by applicable law, and hereby irrevocably and
unconditionally waive any right to claim that any suit, action, proceeding
or
litigation so commenced has been commenced in an inconvenient
forum.
7
D. This
Agreement and the other agreements referenced herein contain the entire
understanding between the parties hereto and may not be modified or amended
except by a writing duly signed by the party against whom enforcement of
the
modification or amendment is sought.
E. If
any
provision of this Agreement shall be held to be invalid or unenforceable,
such
invalidity or unenforceability shall not affect any other provision of this
Agreement.
[REMAINDER
OF PAGE INTENTIALLY LEFT BLANK]
8
IN
WITNESS WHEREOF,
the
parties hereto have executed this Placement Agent Agreement as of the date
first
written above.
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U.S.
Energy Corp.
|
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By: /s/
Xxxx X. Xxxxxx
|
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Name:
Xxxx X. Xxxxxx
|
|
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Title:
President
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Newbridge
Securities Corporation
|
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By: /s/
Xxx X. Xxxxx
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Name: Xxx
X. Xxxxx
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Title: President
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9
