NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS (I)
PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR (II) IN COMPLIANCE WITH AN
EXEMPTION THEREFROM AND ACCOMPANIED, IF REQUESTED BY U.S. ENERGY CORP, WITH AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER IS
IN COMPLIANCE WITH AN EXEMPTION THEREFROM.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON
ITS
EXERCISE ARE SUBJECT TO THE RESTRICTIONS ON
TRANSFER SET FORTH IN ARTICLE II OF THIS WARRANT
--------------------------------------------------------------------------------
Warrant No. - Number of Shares: 50,000
-- ---- (subject to adjustment)
Date of Issuance: June 30, 2003
U.S. ENERGY CORP.
COMMON STOCK PURCHASE WARRANT
THIS IS TO CERTIFY THAT, for value received, XXXXXXX XXXXXX XXXXXX INC., a
Texas corporation (the "Registered Holder"), or its permitted assigns, is
------------------
entitled to purchase from U.S. ENERGY CORP., a Wyoming corporation (the
"Company"), at the place where the Warrant Office designated pursuant to Section
2.1 is located, at a purchase price per share of $5.00 (as adjusted pursuant to
the terms of this Warrant, the "Exercise Price"), 50,000 shares of duly
---------------
authorized, validly issued, fully paid and nonassessable shares of Common Stock,
$0.01 par value per share, of the Company, and is entitled also to exercise the
other appurtenant rights, powers and privileges hereinafter set forth. The
number of shares of the Common Stock purchasable hereunder and the Exercise
Price are subject to adjustment in accordance with Article III hereof. This
Warrant shall expire at 5:00 p.m., C.S.T., on June 30, 2006.
Certain Terms used in this Warrant are defined in Article IV.
ARTICLE I
Exercise of Warrant
-------------------
1.1 Method of Exercise. This Warrant may be exercised by the
--------------------
Registered Holder as a whole or in part from time to time until June 30, 2006,
at which time this Warrant shall expire and be of no further force or effect;
provided, however, that the minimum number of Warrant Shares that may be
-------- -------
purchased on a single exercise shall be 10,000 or the entire number of shares
remaining available for exercise hereunder, whichever is less. To exercise this
Warrant, the Registered Holder or permitted assignees of all rights of the
Registered Holder shall deliver to the Company, at the Warrant Office designated
in Section 2.1(a), a written notice in the form of the Purchase Form attached as
Exhibit A hereto, stating therein the election of the Registered Holder or such
permitted assignees of the Registered Holder to exercise this Warrant in the
manner provided in the Purchase Form, (b) payment in full of the Exercise Price
(in the manner described below) for all Warrant Shares purchased hereunder, and
(c) this Warrant. Subject to compliance with Section 3.1(a)(vi), this Warrant
shall be deemed to be exercised on the date of receipt by the Company of the
Purchase Form, accompanied by payment for the Warrant Shares to be purchased and
surrender of this Warrant, as aforesaid, and such date is referred to herein as
the "Exercise Date." Upon such exercise (subject as aforesaid), the Company
--------------
shall issue and deliver to the Registered Holder a certificate for the full
number of the Warrant Shares purchasable by the Registered Holder hereunder,
against the receipt by the Company of the total Exercise Price payable hereunder
for all such Warrant Shares in cash or by certified or cashier's check. The
Person in whose name the certificate(s) for Common Stock is to be issued shall
be deemed to have become a holder of record of such Common Stock on the Exercise
Date.
1.2 Fractional Shares. No fractional shares of Common Stock shall be
------------------
issued upon exercise of this Warrant. Instead of any fractional shares of Common
Stock that would otherwise be issuable upon exercise of this Warrant, the
Company shall pay a cash adjustment in respect of such fractional interest equal
to the fair market value of such fractional interest as determined in good faith
by the Board of Directors.
ARTICLE II
Warrant Office; Transfer
------------------------
2.1 Warrant Office. The Company shall maintain an office for certain
---------------
purposes specified herein (the "Warrant Office"), which office shall initially
--------------
be the Company's office at 000 Xxxxx 0xx Xxxx, Xxxxxxxx, Xxxxxxx 00000, and may
subsequently be such other office of the Company or of any transfer agent of the
Common Stock in the continental United States of which written notice has
previously been given to the Registered Holder. The Company shall maintain, at
the Warrant Office, a register for the Warrant in which the Company shall record
the name and address of the Registered Holder, as well as the name and address
of each permitted assignee of the rights of the Registered Holder.
2.2 Ownership of Warrant. The Company may deem and treat the
----------------------
Registered Holder as the holder and owner hereof (notwithstanding any notations
of ownership or writing hereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer as provided in this
Article II.
2.3 Transfer of Warrants. The Company agrees to maintain at the
----------------------
Warrant Office books for the registration and transfer of this Warrant. This
Warrant may be transferred in whole or in part only in compliance with the
applicable law and only to shareholders, officers, and employees of Xxxxxxx
Xxxxxx Xxxxxx Inc. or to any person who succeeds to all of the assets of Xxxxxxx
Xxxxxx Xxxxxx Inc. The Company, from time to time, shall register the transfer
of this Warrant in such books upon surrender of this Warrant at the Warrant
Office, properly endorsed, together with a written assignment of this Warrant,
substantially in the form of the Assignment attached as Exhibit B hereto. Upon
any such transfer, a new Warrant shall be issued to the transferee, and the
Company shall cancel the surrendered Warrant. The Registered Holder shall pay
all taxes and all other expenses and charges payable in connection with the
transfer of Warrants pursuant to this Section 2.3.
2.4 Registration Rights. The Company agrees (a) that the Warrant
--------------------
Shares shall be "Registrable Securities" under the Registration Rights Agreement
dated of even date herewith (the "Registration Rights Agreement") between the
Company and the Registered Holder and (b) that the Registered Holder shall have
the rights and obligations of a Holder set forth on the Registration Rights
Agreement.
2.5 No Rights as Shareholder Until Exercise. This Warrant does not
-------------------------------------------
entitle the Registered Holder to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof. Upon the surrender of
this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares
so purchased shall be and be deemed to be issued to the Registered Holder as the
record owner of such shares as of the close of business on the later of the date
of such surrender or payment.
2.6 Expenses of Delivery of Warrants. Except as provided in Section
-----------------------------------
2.3 above, the Company shall pay all reasonable expenses, taxes (other than
transfer taxes) and other charges payable in connection with the preparation,
issuance and delivery of Warrants and related Warrant Shares hereunder.
2.7 Compliance with Securities Laws. The Registered Holder (and its
----------------------------------
transferees and assigns), by acceptance of this Warrant, covenants and agrees
that such Registered Holder is acquiring the Warrants evidenced hereby, and,
upon exercise hereof, the Warrant Shares, for its own account as an investment
and not with a view to distribution thereof. Neither this Warrant nor the
Warrant Shares issuable hereunder have been registered under the Securities Act
or any state securities laws and no transfer of this Warrant or any Warrant
Shares shall be permitted unless the Company has received notice of such
transfer in the form of the assignment attached hereto as Exhibit B, accompanied
---------
by an opinion of counsel reasonably satisfactory to the Company that an
exemption from registration of such Warrant or Warrant Shares under the
Securities Act is available for such transfer, except that no such opinion shall
be required after the registration for resale of the Warrant Shares has become
effective. Upon any exercise of the Warrants prior to effective registration
for resale or except as in accordance with Rule 144 under the Securities Act,
certificates representing the Warrant Shares shall bear a restrictive legend
substantially identical to that set forth as follows:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or the securities laws of any
state (collectively, the "Acts"). Neither the shares nor any interest
therein may be offered, sold, transferred, pledged, or otherwise disposed
of in the absence of an effective registration statement with respect to
the shares under all of the applicable Acts, or an opinion of counsel
satisfactory to U.S. Energy Corp. to the effect that such registrations are
not required."
(c) Any purported transfer of the Warrant or Warrant Shares not in
compliance with the provisions of this section shall be null and void. Stop
transfer instructions have been or will be imposed with respect to the Warrant
Shares so as to restrict resale or other transfer thereof, subject to this
Section 2.7.
ARTICLE III
Anti-Dilution Provisions
------------------------
3.1 Adjustment of Exercise Price and Number of Warrant Shares. The
-------------------------------------------------------------
Exercise Price and number of Warrant Shares shall be subject to adjustment from
time to time as hereinafter provided in this Article III. No other adjustments
to the Exercise Price or the number of Warrant Shares shall be made, for any
reason.
(a) Exercise Price Adjustments. The Exercise Price shall be subject to
--------------------------
adjustment from time to time as follows:
(i) Adjustment for Stock Splits and Combinations. If the Company
-------------------------------------------------
shall, at any time or from time to time after the date hereof (the
"Original Issue Date") while this Warrant remains outstanding, effect a
---------------------
subdivision of the outstanding Common Stock, the Exercise Price in effect
immediately before such subdivision shall be proportionately decreased.
Conversely, if the Company shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately before
such combination shall be proportionately increased. Any adjustment under
this Section 3.1(a)(i) shall become effective at the close of business on
the date the subdivision or combination becomes effective.
(ii) Adjustment for Reclassification, Exchange, and Substitution. If
------------------------------------------------------------
at any time or from time to time after the Original Issue Date while this
Warrant remains outstanding, the Common Stock is changed into the same or a
different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise, the Registered Holder
shall have the right thereafter to convert such stock into the kind and
amount of stock and other securities receivable upon such recapitalization,
reclassification or other change by holders of the maximum number of shares
of Common Stock into which such shares of Common Stock could have been
converted immediately prior to such recapitalization, reclassification or
change.
(iii) Reorganizations, Mergers, Consolidations, or Sales of Assets.
-------------------------------------------------------------
If at any time or from time to time after the Original Issue Date while
this Warrant remains outstanding, there is a capital reorganization of the
Common Stock, provision shall be made so that the Registered Holder shall
thereafter be entitled to receive upon exercise hereof the number of shares
of stock or other securities or property of the Company to which a holder
of the number of shares of Common Stock deliverable upon exercise
immediately prior to such event would have been entitled as a result of
such capital reorganization.
(iv) Rounding of Calculations; Minimum Adjustment. All calculations
---------------------------------------------
under this Section 3.1(a) shall be made to the nearest cent. Any provision
of this Section 3.1 to the contrary notwithstanding, no adjustment in the
Exercise Price shall be made if the amount of such adjustment would be less
than one percent.
(v) Timing of Issuance of Additional Common Stock Upon Certain
------------------------------------------------------------------
Adjustments. In any case in which the provisions of this Section 3.1(a)
-----------
shall require that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of
such event issuing to the Registered Holder after such record date and
before the occurrence of such event the additional shares of Common Stock
or other property issuable or deliverable upon exercise by reason of the
adjustment required by such event over and above the shares of Common Stock
or other property issuable or deliverable upon such exercise before giving
effect to such adjustment; provided, however, that the Company upon request
-------- -------
shall deliver to such Registered Holder a due xxxx or other appropriate
instrument evidencing such Registered Holder's right to receive such
additional shares or other property, and such cash, upon the occurrence of
the event requiring such adjustment.
(b) Statement Regarding Adjustments. Whenever the Exercise Price
-------------------------------
shall be adjusted as provided in Section 3.1(a), and upon each change in the
number of shares of the Common Stock issuable upon exercise of this Warrant, the
Company shall thereafter give notice thereof to the Registered holder, with a
statement showing in detail the facts requiring such adjustment and the Exercise
Price and new number of shares issuable that shall be in effect after such
adjustment'.
3.2 Costs. The Registered Holder shall pay all documentary, stamp,
-----
transfer or other transactional taxes attributable to the issuance or delivery
of the Warrant Shares upon exercise of this Warrant. Additionally, the Company
shall not be required to pay any taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any certificate for such
Warrant Shares. The Registered Holder shall reimburse the Company for any such
taxes assessed against the Company.
3.3 Reservation of Shares. The Company shall reserve at all times so
-----------------------
long as this Warrant remains outstanding, free from preemptive rights, out of
its treasury Common Stock or its authorized but unissued shares of Common Stock,
or both, solely for the purpose of effecting the exercise of this Warrant,
sufficient shares of Common Stock to provide for the exercise hereof.
3.4 Valid Issuance. All shares of Common Stock which may be issued
---------------
upon exercise of this Warrant will upon issuance by the Company be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof attributable to any act or omission
by the Company, and the Company shall take no action which will cause a contrary
result (including without limitation, any action which would cause the Exercise
Price to be less than the par value, if any, of the Common Stock).
'ARTICLE IV
Covenant of the Company
-----------------------
The Company covenants and agrees that this Warrant shall be binding upon
any corporation succeeding to the Company by merger or consolidation'.
ARTICLE V
Miscellaneous
-------------
5.1 Entire Agreement. This Warrant and the Registration Rights
-----------------
Agreement contain the entire agreement between the Registered Holder and the
Company with respect to the Warrant Shares that it can purchase upon exercise
hereof and the related transactions and supersedes all prior arrangements or
understanding with respect thereto.
5.2 Governing Law. This Warrant shall be governed by and construed in
--------------
accordance with the internal laws of the State of Wyoming, without regard to its
conflict of law provisions. Any litigation shall be conducted in the courts of
the State of Wyoming, or the United States District Court for Wyoming or
Colorado.
5.3 Waiver and Amendment. Any term or provision of this Warrant may be
--------------------
waived at any time by the party which is entitled to the benefits thereof, and
any term or provision of this Warrant may be amended or supplemented at any time
by the written consent of the parties (it being agreed that an amendment to or
waiver under any of the provisions of Article III of this Warrant shall not be
considered an amendment of the number of Warrant Shares or the Exercise Price).
No waiver by any party of any default, misrepresentation, or breach of warranty
or covenant hereunder, whether intentional or not, shall be deemed to extend 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.
5.4 Illegality. In the event that any one or more of the provisions
----------
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.
5.5 Copy of Warrant. A copy of this Warrant shall be filed among the
-----------------
records of the Company.
5.6 Notice. Any notice or other document required or permitted to be
------
given or delivered to the Registered Holder shall be delivered at, or sent by
certified or registered mail to such Registered Holder at, the last address
shown on the books of the Company maintained at the Warrant Office for the
registration of this Warrant or at any more recent address of which the
Registered Holder shall have notified the Company in writing. Any notice or
other document required or permitted to be given or delivered to the Company,
other than such notice or documents required to be delivered to the Warrant
Office, shall be delivered at, or sent by certified or registered mail to, the
office of the Company at 000 Xxxxx 0xx Xxxx, Xxxxxxxx, Xxxxxxx 00000 or any
other address within the continental United States of America as shall have been
designated in writing by the Company delivered to the Registered Holder.
5.7 Limitation of Liability; Not Stockholders. Subject to the
---------------------------------------------
provisions of Article III, until the exercise of this Warrant, the Registered
Holder shall not have or exercise any rights by virtue hereof as a stockholder
of the Company, including, without limitation, the right to vote, to receive
dividends and other distributions, or to receive notice of, or attend meetings
of stockholders or any other proceedings of the Company. Until the exercise of
this Warrant, no provision hereof, and no mere enumeration herein of the rights
or privileges of the Registered Holder, shall give rise to any liability of such
Registered Holder for the purchase price of any shares of Common Stock or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
5.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of
-------------------------------------------------
evidence satisfactory to the Company (an affidavit of the Registered Holder
shall be satisfactory evidence) of the loss, theft, mutilation or destruction of
this Warrant, and, in the case of any such loss, theft or destruction, upon
delivery of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or, in the event of such mutilation upon surrender
and cancellation of this Warrant, the Company will make and deliver a new
Warrant of like tenor, in lieu of such lost, stolen, destroyed or mutilated
Warrant; provided, however, that the original Registered Holder of this Warrant
-------- -------
shall not be required to provide any such bond of indemnity and may in lieu
thereof provide his agreement of indemnity. Any Warrant issued under the
provisions of this Section 6.8 in lieu of any Warrant alleged to be lost,
destroyed or stolen, or in lieu of any mutilated Warrant, shall constitute an
original contractual obligation on the part of the Company. This Warrant shall
be promptly canceled by the Company upon the surrender hereof in connection with
any exchange or replacement. The Registered Holder of this Warrant shall pay
all taxes (including securities transfer taxes) and all other expenses and
charges payable in connection with the preparation, execution and delivery of
replacement Warrant(s) pursuant to this Section 6.8.
5.9 Headings. The Article and Section and other headings herein are
--------
for convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.
5.10 Successors and Assigns. Subject to applicable securities laws,
------------------------
this Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of Registered Holder. The provisions of this Warrant are
intended to be for the benefit of all Registered Holders from time to time of
this Warrant and shall be enforceable by any such Registered Holder or holder of
Warrant Shares.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its
name.
Dated: June 30, 2003
U.S. ENERGY CORP.
By
---------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Exhibit A
PURCHASE FORM
To: U.S. Energy Corp. Dated:
--------------
The undersigned, pursuant to the provisions set forth in the attached
Warrant (No. ), hereby irrevocably elects to purchase shares of the
----- ---------
Common Stock covered by such Warrant. The undersigned herewith makes payment of
the full exercise price for such shares at the price per share provided for in
such Warrant, which is $ per share in lawful money of the United States.
-----
[ ]
------------------------------
-------------------------------
Name:
--------------------------
Title:
-------------------------
Exhibit B
ASSIGNMENT
For value received, , hereby sells, assigns
------------------------------
and transfers unto the within Warrant, together
--------------------------------
with all right, title and interest therein and does hereby irrevocably
constitute and appoint attorney, to transfer said Warrant on the books of the
Company, with full power of substitution.
------------------------------------
Dated: , 200
------------------------ --
