U.S. ENERGY CORP.
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CONSULTING AGREEMENT
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(INCLUDING WARRANT)
This Consulting Agreement is made and entered into at Riverton, Wyoming this
17th day of March 2003, by and between C.C.R.I. Corporation, a Colorado
corporation of 3104 E. Camelback Road, #539, Phoenix, AZ 85016 ("Consultant")
and U.S. ENERGY CORP., a Wyoming Corporation of 877 N. 8th W., Riverton, WY
82501 ("USEG' or the "Company").
It is agreed as follows:
1. Consultant Services. Consultant hereby agrees to perform and
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provide investor relations and development services for the Company. Consultant
will perform the Services with the assistance and full participation of Mr.
Malcolm McGuire and his associates. The services will include, but not be
limited to, the following:
(a) Preparation of the Corporate Profile, suitable for use with
brokers and investors (research, write, design, print and distribute).
(b) Design and implement a Plan for both the short and long term
encouragement of investor interest in the Company.
(c) Interface with the investment community on behalf of the Company,
and work to generate investor interest in the Company in this setting.
(d) Assist the Company in preparing press releases, upon request, and
introduce the Company to appropriate financial writers and media persons.
(e) Prepare and distribute FAX pieces designed specifically to
encourage interest in the Company (utilizing C.C.R.I.'s broker and investor
FAX NETWORK). A similar e-mail distribution is sent to our International
network.
(f) Enlist additional quality brokerage houses to follow the Company's
stock and to be market makers. Assist the Company in securing a more senior
exchange listing.
(g) Introduce Company personnel to key persons in the investment
community and to C.C.R.I.'s network of brokers, financial planners, money
managers, analysts, and investors. This will include due diligence meeting
in select cities.
(h) Include information about the Company in a national distribution
that will target selected appropriate institutions, brokers, investment
firms, analysts and individual investors.
(i) Develop a list of key brokers that can be educated on behalf of
the Company and its stock, and seek to enhance the interest of these
brokers in the Company.
(j) Assist, when requested, in the preparation of presentations to
broker and investor groups, as well as the arranging of said presentations.
(k) Provide quality Internet exposure via C.C.R.I's Web Site.
(l) Work with Company's officers to develop an ongoing in-house
program for investor relations.
(m) Interact with the market makers on behalf of the Company.
(n) Give such strength and liquidity to the stock at to facilitate
Company objectives.
(o) Consultant will provide names, addresses and phone numbers of all
contacts made on behalf of the company within 10 days after the end of each
month this contract is in effect.
2. Payment. Subject to the provisions of the Agreement, the Company
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shall pay Consultant the following as full compensation for the Services for the
term hereof:
(a) Monthly Fee. The Company shall pay Consultant a monthly fee in the
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amount of $2,000. Said fee shall compensate Consultants for general
overseeing of market activity of the stock and the activities detailed
under Consultant Services. The first $2,000 is due at the signing of this
Contract. Fee will also cover Consultants normal monthly expense. The
$2,500 profile design fee will also be due upon the inception of this
Contract.
(b) Monthly Expenses. Normal monthly expenses will be covered in
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monthly retainer. These costs will normally be fax, telephone, e-mail,
secretarial, fed-x, etc.
(c) Financial Activities. If and when appropriate, this will be
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covered in a separate agreement. All introductions which bring new capital
will be subject to a 2% Finders Fee.
(d) Stock Compensation. Consultant shall receive 24,000 shares of USEG
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restricted stock, vested as follows: 4,000 shares upon inception of
Contract which will be issued within a reasonable time after the date of
the agreement in the name of C.C.R.I. Corporation with the remaining 20,000
shares vested over the remaining 5 months at the rate of 4,000 shares per
month. The remaining 5 certificates for 4,000 shares each, will be
delivered to consultant on the 2nd month 3rd month, 4th month 5th month and
6th month anniversary of the contract and each certificate will be issued
in the name of C.C.R.I. Corporation. The company agrees to make reasonable
efforts to register these shares as follows: 12,000 shares of company stock
after the 6 month anniversary of this contract, 12,000 shares of company
stock after the one year anniversary of this agreement or the stock will be
salable under rule 144 after 1 year from exercise of the warrant. In the
event of death of Malcolm McGuire prior to the complete exercise of the
warrant, any remaining portion of the warrant shall terminate.
(e) Warrant Compensation. Warrant compensation shall be as follows:
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25,000 warrants to purchase USEG common stock at a price of $3.75 per share
to be vested when the stock trades at a closing price above $4.00 per share
for a period of 10 consecutive business days. 25,000 warrants to purchase
USEG common stock at a price of $4.50 per share to be vested when USEG
trades at a closing price above $5.00 per share for a period of 10
consecutive business days. 25,000 warrants to purchase USEG common stock at
a price of $5.50 per share to be exercised when the stock trades at a
closing price above $6.00 per share for a period of 10 consecutive business
days. Note: All warrants not exercised shall expire three years from the
date of this agreement. These warrants will be exercisable only for cash.
3. Project Expenses. The Company shall pay for special promotional
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events and materials, such fees to be approved in advance by the Company, and to
be payable upon submission by Consultant to the Company of itemized statements
accounting for such expenses. In certain circumstances, the Company will prepay
the Consultant's airfare or hotels costs directly as agreed to in advance by the
parties. All such projects will have to have the prior approval in writing by
the company. Such projects will include but not be limited to the following:
(a) Corporate Profile. Consultant agrees to research, write, design,
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and print a full color, magazine quality, corporate profile suitable for
use by both brokers and investors. Cost shall be $5,000, with $2,500
payable at inception of contract and $2,500 payable upon Company's approval
to print.
(b) Promotional Events. The Company agrees to reimburse Consultant
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for travel, meal and lodging expenses incurred in co-hosting with the
Company promotional meetings for prospective investors, such meetings to be
approved in advance and at the discretion of the Company. The Company also
agrees to pay all room rental and catering expenses incurred in hosting any
such meetings. The Company will also cover costs of broker conference
calls.
(c) Mailing. The Consultant shall cause to be mailed certain
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pre-printed materials over the course of the Contract.
4. Prior Approval of Published Materials. Consultant shall provide the
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Company for its review and comment (AND PRE-APPROVAL) copies of any tangible
communications, whether written or recorded on audio, video or film media, which
Consultant may give to any person in providing the Services. Consultant shall
provide such copies to the Company a minimum of two (2) business days prior to
Consultant's first proposed use of such material, or more than five (5) business
days prior if necessary, to provide the Company the opportunity to make any
revisions it deems appropriate and necessary to such materials. Consultant
shall not use materials in performing the Services which contain any statement
which is false or misleading, and it shall include in all such materials all
information necessary to make the statements contained therein not misleading;
provided that Consultant shall not be responsible for the accuracy or
completeness of information furnished to it in writing by the Company.
Consultant will include the terms of this contract with any communications that
it provides to potential investors, broker or any other entity.
5. Nondisclosure of Confidential or Insider Information.
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(a) In the course of performance of Consultant's duties, Consultant
may receive information which is considered material inside information
within the meaning and intent of the United States federal securities law,
rules and regulations. Consultant will not disclose this information to
others, except as expressly authorized in writing by the Company and will
not use this information directly or indirectly for the benefit of
Consultant or as a basis for advice to any other party concerning any
decision to buy, sell, or otherwise deal in the Company's securities or
those of any of its affiliated companies. The Consultant acknowledges the
Company's continuing obligation to comply with the SEC's Regulation FD.
Therefore, the Consultant agrees not to disclose to any person, for any
reason, any material inside (not public) information about the Company
which the Consultant may receive.
(b) The provisions of this Section 6 shall survive the termination or
expiration of this agreement.
6. Scope of Engagement. Consultant shall retain the legal status of an
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independent contractor. In no event shall Consultant be or be deemed to be an
employee or agent of the Company, or to qualify for benefits afforded such
persons as Company employees. Consultant has no power or authority to act for,
represent or bind the Company.
7. Term. This agreement shall commence on the date first written
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above, and shall terminate on September 17, 2003, unless earlier terminated by
either party pursuant to the terms hereof. This Agreement may be extended by
the Company on a month to month basis if it notifies the consultant in writing
30 days prior to September 17, 2003..
8. Termination. After September 17, 2003, either party may terminate
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this Agreement at any time upon thirty (30) days notice. In the event that this
Agreement is terminated by either party, the Consultant shall be entitled to
reimbursement of expenses of unpaid expenses. Termination of the Agreement
shall not affect the rights of the Consultant under the Warrants.
9. Assignment. This Agreement shall be binding upon the parties'
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respective successors and permitted assigns. Neither party may assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of the other party.
10. Notices. All notices and other official communications under this
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Agreement shall be in writing and deemed sufficiently given if delivered
personally or mailed by first class mail, postage prepaid, to (if to the
Company) U.S. ENERGY CORP., Keith Larsen, President, 877 North 8th West,
Riverton, Wyoming, 82501, (if to Consultant) CCRI Corporation, 3104 East
Camelback Road, #539, Phoenix, Arizona 85016, Attention: Malcolm McGuire.
Notices shall be effective upon delivery if delivered personally, and on the
third business day after mailing if mailed.
11. Severability. In the event any one or more of the provisions of
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this Agreement is determined to be invalid, illegal or unenforceable, the
remaining provisions of the Agreement shall remain in full force and effect,
unless the removal of the provisions of the Agreement so nullified would render
meaningless either party's performance hereunder.
12. Headings. The headings used in the Agreement are for the
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convenience of the parties only and shall not in any way limit or affect the
meaning or interpretation of any of the terms hereof.
13. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties with respect to the subject matter embraced hereunder and
except as expressly incorporated herein, supersedes all prior agreements,
promises, proposals, representation, understanding and negotiations, whether
written or oral, between the parties. No modifications, amendments, supplements
to or waivers of this Agreement or any of the terms or conditions hereof shall
be binding upon the parties or of any effect unless made in writing and duly
sighed by both parties. In the event of any conflict between this Agreement and
any Warrant Agreement entered into by and between the parties, this Agreement
shall control.
14. Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of Wyoming and the parties agree that any legal
action initiated under this agreement shall be filed only in the Ninth Judicial
District Court, Fremont County, Wyoming.
15. Disclosure of Consultant Compensation. All materials prepared by
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the Consultant shall clearly state on the front cover the cash and equity
compensation paid by the Company. The Consultant represents and warrants to the
Company now, and throughout the term of this Agreement, that the Consultant:
(a) Is not, and no person employed by or providing consulting services
to the Consultant, and no person controlling the Consultant, is associated
with any securities broker-dealer, or is a representative of any securities
broker-dealer; and
(b) Will not be compensated (directly or indirectly) by any securities
broker-dealer for, or in connection with, the Services provided by the
Consultant under this Agreement.
Accepted by:
C.C.R.I. Corporation U.S. ENERGY CORP.
By: By:
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Malcolm McGuire Keith Larsen, President
Date: March 17, 2003 Date: March 17, 2003