STOCK PURCHASE AGREEMENT
This
STOCK
PURCHASE AGREEMENT, dated September 21, 2006 (this “Agreement”),
is by
and among U.S. Energy Corporation, a Wyoming corporation (“USE”)
and
Crested Corp. a Colorado corporation (together with USE, “Sellers”),
and
DLJ MB Partners III GmbH & Co. KG, a limited company organized under the
laws of Germany, DLJ Offshore Partners III, C.V., a partnership organized under
the laws of the Netherland Antilles, DLJ Offshore Partners III-1, C.V., a
partnership organized under the laws of the Netherland Antilles, DLJ Offshore
Partners III-2, C.V., a partnership organized under the laws of the Netherland
Antilles, Millennium Partners II, L.P., a Delaware limited partnership, DLJ
Merchant Banking Partners III, L.P., a Delaware limited partnership, and MBP
III
Plan Investors, L.P., a Delaware limited partnership (collectively,
“Purchasers”).
WHEREAS,
Sellers desire to sell to Purchasers shares of the common stock, par value
$.01
per share (“Common
Stock”),
of
Pinnacle Gas Resources, Inc., a Delaware corporation (the “Company”),
and
Purchasers desire to purchase shares of Common Stock from Sellers, upon and
subject to the terms of this Agreement;
ARTICLE
I
Section
1.1 Purchase
and Sale of Shares.
Upon the
terms and subject to the conditions set forth in this Agreement, and in reliance
upon the representations and warranties herein made by each party to the other,
Sellers agree jointly to sell, and Purchasers agree jointly to purchase from
Sellers, at the Closing (as hereinafter defined), an aggregate of 2,459,102
shares of Common Stock (the “Shares”);
and
each Purchaser severally agrees to purchaser that number of Shares of set forth
opposite such Purchaser’s name on Schedule
I.
Section
1.2 Purchase
Price.
As
consideration for the purchase and sale of the Shares, Purchasers jointly will
pay, or cause to be paid, to Sellers on the Closing Date, by wire transfer
of
immediately available funds to the account identified on Schedule
II,
the sum
of $13,800,000, which amount shall be allocated between Sellers as set forth
on
Schedule
II.
Section
1.3 Closing.
The
closing of the purchase and sale of the Shares (the “Closing”)
shall
be at such date and time as shall be mutually agreed to by the parties hereto
(such date, the Closing
Date”).
The
Closing shall take place at the offices of Akin Gump Xxxxxxx Xxxxx & Xxxx,
LLP, 0000 Xxxxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxxxxxx, Xxxxx or such other place as shall be mutually agreed to by the parties
hereto. Sellers will deliver to Purchasers at the Closing a certificate or
certificates representing all of the Shares with duly executed stock powers
attached thereto.
ARTICLE
II
Section
2.1 Representations
and Warranties of Sellers.
Sellers
hereby represent and warrant to each Purchaser as follows:
(a) Each
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation.
(b) Each
Seller has all requisite power and authority to execute and deliver into this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by each Seller and the consummation by each
Seller of the transactions contemplated hereby have been duly authorized by
all
necessary action on the part of Seller.
(c) This
Agreement has been duly executed and delivered by each Seller and (assuming
that
this Agreement is a legal, valid, and binding obligation of each other parties
hereto) constitutes a valid and binding obligation of each Seller, enforceable
against each Seller in accordance with its terms, except as enforceability
may
be subject to the effects of bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting the rights of creditors or general
principles of equity.
(d) The
execution and delivery of this Agreement by each Seller and the consummation
by
each Seller of the transactions contemplated hereby will not (A) violate any
provision of any existing law, statute, rule, regulation or ordinance applicable
to either Seller or (B) conflict with, result in any breach of or constitute
a
default under (1) the Certificate of Incorporation or By-laws of either Seller,
(2) any order, writ, judgment, award or decree of any court, governmental
authority, bureau or agency to which either Seller is a party or by which either
Seller may be bound or (3) any contract or other agreement or undertaking to
which either Seller is a party or by which either Seller may be
bound.
(e) No
consent, approval, order or authorization of, or registration, declaration
or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality, is required by or with respect to
either Seller in connection with the execution and delivery of this Agreement
or
the consummation by either Seller of the transactions contemplated hereby except
for (i) such as have been obtained prior to the date hereof and (ii) consent
of
Xxxxxxxx Xxxxxxxx Xxxxxx & Co., Inc. to the transfer of the Shares pursuant
to that certain lock-up agreement dated March 31, 2006.
(f) Each
Seller has, and upon transfer by Sellers of the Shares hereunder, Purchasers
will have, good and marketable title to the Shares, free and clear of any
claims, liens, encumbrances, security interests, restrictions and adverse claims
of any kind or nature whatsoever. There are no outstanding subscriptions,
options, warrants, rights, contracts, understandings or agreements to purchase
or otherwise acquire the Shares.
2
Section
2.2 Representations
and Warranties of Purchasers.
Purchasers hereby represent and warrant to Sellers as follows:
(a) Each
Purchasers is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization.
(b) Each
Purchaser has all requisite power and authority to enter into this Agreement
and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by each Purchaser and the consummation by each Purchaser
of
the transactions contemplated hereby have been duly authorized by all necessary
action on the part of each Purchaser.
(c) This
Agreement has been duly executed and delivered by each Purchaser and (assuming
that this Agreement is a legal, valid, and binding obligation of each other
parties hereto) constitutes a valid and binding obligation of each Purchaser,
enforceable against each Purchaser in accordance with its terms, except as
enforceability may be subject to the effects of bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the rights
of
creditors or general principles of equity.
(d) The
execution and delivery of this Agreement by each Purchaser and the consummation
by each Purchaser of the transactions contemplated hereby will not (A) violate
any provision of any existing law, statute, rule, regulation or ordinance
applicable to any
Purchaser or
(B)
conflict with, result in any breach of or constitute a default under (1) the
Certificate of Incorporation or By-laws of any Purchaser, (2) any order, writ,
judgment, award or decree of any court, governmental authority, bureau or agency
to which any Purchaser is a party or by which any Purchaser may be bound or
(3)
any contract or other agreement or undertaking to which any Purchaser is a
party
or by which any Purchaser may be bound.
(e) No
consent, approval, order or authorization of, or registration, declaration
or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality, is required by or with respect to
any
Purchaser in connection with the execution and delivery of this Agreement or
the
consummation by any Purchaser of the transactions contemplated hereby except
for
(i) such as have been obtained prior to the date hereof and (ii) consent of
Xxxxxxxx Xxxxxxxx Xxxxxx & Co., Inc. to the transfer of the Shares pursuant
to that certain lock-up agreement dated March 31, 2006.
ARTICLE
III
Section
3.1 Conditions
to Each Party’s Obligations.
The
obligation of Purchasers to purchase the Shares at the Closing, and the
obligation of Sellers to sell the Shares at the Closing, are subject to the
satisfaction or mutual waiver at or prior to the Closing of the following
conditions:
(a) No
preliminary or permanent injunction or other order shall have been issued by
any
court of competent jurisdiction or by any governmental or regulatory body,
nor
shall any statute, rule, regulation or executive order have been promulgated
or
3
enacted
by any governmental authority which prevents the consummation of the
transactions contemplated by this Agreement.
(b) No
action
or proceeding before any court or any governmental or regulatory authority
shall
have been commenced by any governmental or regulatory body and shall be pending
against any of the parties hereto or any of their respective affiliates,
associates, officers or directors seeking to prevent or delay the transactions
contemplated by this Agreement.
(c) (i)
Friedman, Billings, Xxxxxx & Co., Inc. shall have provided a waiver of the
applicable lock-up provisions under that certain letter agreement, dated March
31, 2006, to the purchase and sale of the Shares hereunder (and Purchasers
shall
have received a true and correct copy of such waiver) or (ii) the lock-up period
under such letter agreement shall have expired.
(d) The
representations and warranties of each of the parties hereto contained in this
Agreement shall have been true and complete when made and shall be true and
complete at and as of the Closing Date with the same force and effect as though
such representations and warranties were made at and as of the Closing
Date.
(e) Each
of
the parties hereto shall have performed and complied with all agreements,
obligations and conditions required by this Agreement to be performed or
complied with by such party at or prior to the Closing.
ARTICLE
IV
Section
4.1 Confidentiality;
Non Disclosure.
Each of
the parties hereto shall, and shall cause their respective officers, directors,
employees, affiliates and other agents and representatives (collectively,
“Representatives”),
to
hold confidential all information with respect to this Agreement, including
the
identity of the parties hereto and the terms and provisions of the transactions
contemplated hereunder. None of the parties hereto will, and each of the parties
will direct their Representatives not to, directly or indirectly, make any
public comment, statement or communication with respect to, or otherwise
disclose or permit the disclosure of the existence of, this Agreement, any
of
the terms, conditions or other aspects of this Agreement or the transactions
contemplated hereunder. The foregoing notwithstanding, any party hereto may
disclosure any such information to the extent, and only to the extent, (a)
required to be so disclosed pursuant to the terms of that certain
Securityholders Agreement, dated June 23, 2003, as amended, and (b) upon the
advice of counsel, such information is required to be disclosed by a party
hereto or any of its Representatives as a result of any applicable law
(including public reporting requirements under federal and state securities
laws);
provided,
however,
that
only such information that is required to be disclosed may be disclosed and,
in
the event any information is required to be disclosed pursuant to this clause
(b), the party proposing such disclosure shall provide the other parties hereto
an opportunity, reasonably in advance of any such disclosure, to review and
comment on the form and content of such proposed disclosure.
4
Section
4.2 Exclusivity.
In
consideration of the covenants and agreements of Purchasers set forth herein,
Sellers further agree that prior to December 31, 2006, Sellers will not¸ and
will not permit any of their respective Representatives to, enter into any
agreement, discussion, or negotiation with (and shall terminate any existing
discussions or negotiations with), or provide information to, or solicit,
encourage, entertain or consider any inquiries or proposals from, any other
person with respect to any purchase and sale of Common Stock held by Sellers
and/or any of their respective affiliates. During such period Sellers will
promptly notify Purchasers of any inquiries (including the identity of the
party
making such inquiry) regarding any such proposed purchase and sale of Common
Stock.
Section
4.3 No
Brokers.
Sellers
and Purchasers hereby represent to each other that neither it nor any of its
respective affiliates have employed any broker or finder or incurred any
liability for any brokerage or finder’s fees or commissions or expenses related
thereto in connection with the negotiation, execution or consummation of this
Agreement or any of the transactions contemplated hereby and respectively agree
to indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any such fees, commissions or
expenses asserted by any person on the basis of any act or statement alleged
to
have been made by such party or any of its affiliates.
Section
4.4 Entire
Agreement.
This
Agreement constitutes the entire agreement and understanding of the parties
in
respect of the subject matter hereof and supersedes all prior understandings,
agreements or representations by or between the parties, written or oral, to
the
extent they relate in any way to the subject matter hereof.
Section
4.5 Binding
Effect; Third Party Beneficiaries.
All of
the terms, agreements, covenants, representations, warranties and conditions
of
this Agreement are binding upon and inure to the benefit of and are enforceable
by, the parties and their respective successors and permitted assigns. There
are
no third party beneficiaries having rights under or with respect to this
Agreement.
Section
4.6 Further
Assurances.
If any
further action is necessary or reasonably desirable to carry out this
Agreement’s purposes, each party will take such further action (including
executing and delivering any further instruments and documents and providing
any
reasonably requested information) as the other party reasonably may
request.
Section
4.7 Survival
of Representations, Warranties and Covenants.
Each
representation, warranty, covenant and obligation in this Agreement will survive
the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement, and will not be affected by any
investigation by or on behalf of the other party to this Agreement.
Section
4.8 Indemnification.
Sellers
will indemnify and hold harmless each Purchaser and Purchasers will indemnify
and hold harmless Sellers, from and against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, legal fees and
expenses) suffered or incurred by any such indemnified party to the extent
arising from any breach of any representation or warranty of the indemnifying
party contained in this Agreement or any breach
5
by
the
indemnifying party, or failure by the indemnifying party to fulfill, any
covenant or agreement contained herein.
Section
4.9 Notices.
All
notices, requests and other communications provided for or permitted to be
given
under this Agreement must be in writing and given by personal delivery, by
certified or registered United States mail (postage prepaid, return receipt
requested), by a nationally recognized overnight delivery service for next
day
delivery, or by facsimile transmission, as follows (or to such other address
as
any party may give in a notice given in accordance with the provisions
hereof):
If
to
Sellers, to:
U.S.
Energy Corporation
000
Xxxxx
0xx Xxxx
Xxxxxxxx,
XX 00000
Attention:
Xxxx X. Xxxxxx, President
Facsimile:
(000) 000-0000
and
to:
000
Xxxxx
0xx Xxxx
Xxxxxxxx,
XX 00000
Attention:
Xxxxx X. Xxxxxx, Co-Chariman
Facsimile:
(000) 000-0000
with
a
copy (which will not constitute notice) to:
U.S.
Energy Corporation
000
Xxxxx
0xx Xxxx
Xxxxxxxx,
XX 00000
Attention:
Xxxxxx X. Xxxxxxxxxx,
Associate
General Counsel
Facsimile:
(000) 000-0000
If
to
Purchasers, to:
c/o
Credit Suisse
Eleven
Madison Avenue, 16th
Floor
New
York,
New York 10010
Attention:
Xxxxxx Xxxxxxx
Facsimile:
(000) 000-0000
6
with
a
copy to (which does not constitute notice) to:
Avista
Capital Partners, LP
0000
Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
Attention:
Xxxxxx X. Xxxxx
Facsimile:
(000) 000-0000
with
a
copy (which will not constitute notice) to:
Akin
Gump
Xxxxxxx Xxxxx & Xxxx LLP
0000
Xxxxxxxxx, 00xx
Xxxxx
Xxxxxxx,
Xxxxx 00000
Attention:
J. Xxxxxxx Xxxxxxxx
Facsimile:
(000) 000-0000
Section
4.10 Specific
Performance; Remedies.
Each
party acknowledges and agrees that the other party would be damaged irreparably
if any provision of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. Accordingly, the parties will be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and its provisions
in addition to any other remedy to which they may be entitled, at law or in
equity. Except as expressly provided herein, the rights, obligations and
remedies created by this Agreement are cumulative and in addition to any other
rights, obligations or remedies otherwise available at law or in equity. Except
as expressly provided herein, nothing herein will be considered an election
of
remedies.
Section
4.11 Headings.
The
article and section headings contained in this Agreement are inserted for
convenience only and will not affect in any way the meaning or interpretation
of
this Agreement.
Section
4.12 Governing
Law.
This
Agreement will be governed by and construed in accordance with the laws of
the
State of Delaware, without giving effect to any choice of law
principles.
Section
4.13 Amendment.
This
Agreement may not be amended or modified except by a writing signed by all
of
the parties hereto.
Section
4.14 Extensions;
Waivers.
Any
party may, for itself only, (a) extend the time for the performance of any
of
the obligations of any other party under this Agreement, (b) waive any
inaccuracies in the representations and warranties of any other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any such extension or waiver will be valid only if set forth in a
writing signed by the party to be bound thereby. No waiver by any party of
any
default, misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, may be deemed to extent to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder or affect in
any
way any rights arising because of any prior or subsequent such occurrence.
Neither the failure nor any delay on the party of any
7
Section
4.15 party
to
exercise any right or remedy under this Agreement will operate as a waiver
thereof, nor will any single or partial exercise of any right or remedy preclude
any other or further exercise of the same or of any other right or
remedy.
Section
4.16 Expenses.
Sellers
shall be responsible for, and shall promptly pay, costs and expenses incurred
by
Purchasers in connection with the preparation, execution and performance of
this
Agreement and the transactions contemplated hereby including, without
limitation, the reasonable fees and expenses of Akin Gump Xxxxxxx Xxxxx &
Xxxx, LLP, counsel to Purchasers.
Section
4.17 Counterparts;
Effectiveness.
This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original but all of which together will constitute one and the same
instrument. This Agreement will become effective when one or more counterparts
have been signed by each of the parties and delivered to the other party, which
delivery may be made by exchange of copies of the signature page by facsimile
transmission.
[Signature
Page to Follow]
8
DLJ
MERCHANT BANKING PARTNERS III, L.P.
|
By: DLJ
Merchant Banking III, Inc.,
as Managing General Partner
|
By:
/s/ Xxxxxxx X. Xxxxxx
|
Name:
Xxxxxxx X. Xxxxxx
|
Title:
Vice President
|
DLJ
MERCHANT BANKING III, INC.,
as Advisory General Partner on behalf of DLJ Offshore Partners III,
C.V.
|
By:
/s/ Xxxxxxx X. Xxxxxx
|
Name:
Xxxxxxx X. Xxxxxx
|
Title:
Vice President
|
DLJ
MERCHANT BANKING III, INC.,
as Advisory General Partner on behalf of DLJ Offshore Partners III-1,
C.V.
and as attorney-in-fact for DLJ Merchant Banking III, L.P., as Associate
General Partner of DLJ Offshore Partners III-1, C.V.
|
By:
/s/ Xxxxxxx X. Xxxxxx
|
Name:
Xxxxxxx X. Xxxxxx
|
Title:
Vice President
|
DLJ
MERCHANT BANKING III, INC.,
as Advisory General Partner on behalf of DLJ Offshore Partners III-2,
C.V.
and as attorney-in-fact for DLJ Merchant Banking III, L.P., as Associate
General Partner of DLJ Offshore Partners III-2, C.V.
|
By:
/s/ Xxxxxxx X. Xxxxxx
|
Name:
Xxxxxxx X. Xxxxxx
|
Title:
Vice President
|
MILLENNIUM
PARTNERS II, L.P.
|
By: DLJ
Merchant Banking III, Inc.,
as Managing General Partner
|
By:
/s/ Xxxxxxx X. Xxxxxx
|
Name:
Xxxxxxx X. Xxxxxx
|
Title:
Vice President
|
DLJ
MB PARTNERS III GMBH & CO.
KG
|
By: DLJ
Merchant Banking III, L.P.,
as Managing Limited Partner
|
By: DLJ
Merchant Banking III, LLC,
as General Partner
|
By: DLJ
Merchant Banking III, Inc., as Managing Member
|
By:
/s/ Xxxxxxx X. Xxxxxx
|
Name:
Xxxxxxx X. Xxxxxx
|
Title:
Vice President
|
MBP
III PLAN INVESTORS, L.P.
|
By: DLJ
Merchant Banking III, Inc.,
as Managing General Partner
|
By:
/s/ Xxxxxxx X. Xxxxxx
|
Name:
Xxxxxxx X. Xxxxxx
|
Title:
Vice President
|
U.S.
ENERGY CORPORATION
|
By:
/s/ Xxxxx X. Xxxxxx
|
Name:
Xxxxx X. Xxxxxx
|
Title:
Chief Executive Officer
|
|
By:
/s/ Xxxxxx X. Xxxxxx
|
Name:
Xxxxxx X. Xxxxxx
|
Title:
President
|
SCHEDULE
I
SHARE
ALLOCATIONS
Purchaser:
|
Number
of Shares:
|
DLJ
Merchant Banking Partners III, L.P.
|
1,870,117
|
DLJ
Merchant Banking III, Inc., as Advisory General Partner on behalf
of DLJ
Offshore Partners III, C.V.
|
100,615
|
DLJ
Merchant Banking III, Inc., as Advisory General Partner on behalf
of DLJ
Offshore Partners III-1, C.V. and as attorney-in-fact for DLJ Merchant
Banking III, L.P., as Associate General Partner of DLJ Offshore Partners
III-1, C.V.
|
33,374
|
DLJ
Merchant Banking III, Inc., as Advisory General Partner on behalf
of DLJ
Offshore Partners III-2, C.V. and as attorney-in-fact for DLJ Merchant
Banking III, L.P., as Associate General Partner of DLJ Offshore Partners
III-2, C.V.
|
23,772
|
Millennium
Partners II, L.P.
|
15,772
|
DLJ
MB Partners III GmbH & Co., KG
|
10,721
|
MBP
III Plan Investors, L.P.
|
404,731
|
Total:
|
2,459,102
|
Schedule
I
SCHEDULE
II
WIRING
INSTRUCTIONS AND PURCHASE PRICE ALLOCATION
For
the account of US Energy:
|
Purchase
Price Allocation:
|
First
Interstate Bank of Commerce
Casper
Xxxxxx
000
Xxxxx Xxxxxxx
X.X.
Xxx 00
Xxxxxx,
XX 00000
(307)
235-4207
ABA
Number 000000000
Account
of : U.S. Energy Corp.
Money
Market Account Number: 836888750
Federal
Identification Number 00-0000000
|
$8,970,003.93
|
For
the account of Crested Corp.
|
Purchase
Price Allocation:
|
First
Interstate Bank of Commerce
Casper
Xxxxxx
000
Xxxxx Xxxxxxx
X.X.
Xxx 00
Xxxxxx,
XX 00000
(307)
235-4207
ABA
Number 000000000
Account
of : Crested Corp.
Money
Market Account Number: 836888784
Federal
Identification Number 00-0000000
|
$4,829,996.07
|