EXHIBIT 10.51
Stock Purchase Agreement
This Stock Purchase Agreement ("Agreement") is entered into
on March __, 1998 at Riverton, Wyoming by (i) U.S. Energy Corp.,
877 North 8th West, Riverton, Wyoming 82501, a Wyoming
corporation (the "Company"); and (ii) BPI Canadian Opportunities
II Fund, 161 Bay Street, Suite 3900, Toronto, Ontario, Canada
M5J, 2S1 (the "Purchaser").
Recitals
A. The Company owns, directly and through subsidiaries and
joint ventures, uranium, gold and other mineral properties and
uranium processing facilities in the United States. Certain of
these properties are being developed for future mining and
processing of gold and uranium.
B. In May 1997, the Purchaser purchased 171,075 Special
Purchase Warrants (the "Special Warrants") issued by Sutter Gold
Mining Company, a Wyoming corporation ("SGMC") which is a
subsidiary of the Company, for a cash investment of
Cdn$940,912.50. Each Special Warrant entitled the holder to
acquire from SGMC, at no further cost, one share of Common Stock
of SGMC, and one Purchase Warrant; each Purchase Warrant would
have entitled the holder to purchase one share of Common Stock of
SGMC, at a price of Cdn$6.00 per whole share (the "Purchase
Warrants"), during the 18 months following closing of the
offering of the SGMC Special Purchase Warrants. The offering was
conducted pursuant to SGMC's Confidential Offering Memorandum
("Memorandum") dated May 5, 1997.
C. Pursuant to SGMC's Memorandum and the terms and
conditions of the Special Warrants, if SGMC were to fail to
obtain Prospectus Qualification before the Qualification Deadline
(as such terms were defined in the Memorandum) from the
securities commissions of the Canadian Provinces wherein
purchasers of the Special Warrants reside, the holders of the
Special Warrants would be entitled to receive a Dilution Penalty
in the amount of 1.1 shares of Common Stock of SGMC and 1.1
Purchase Warrants, for each Special Warrant exercised after the
Qualification Deadline if Prospectus Qualification were not
obtained by the Qualification Deadline.
D. The Qualification Deadline has passed as of the date of
this Agreement, and the Prospectus Qualification has not been
obtained by SGMC. The Purchaser has not received a Dilution
Penalty with respect to the Special Warrants and their
constituent securities.
E. The Purchaser desires to diversify and increase its
original investment by the acquisition of shares of the Common
Stock of the Company, and the Purchaser has made an offer to the
Company to purchase shares of Common Stock of the Company. The
Purchaser and the Company have negotiated the terms of acceptance
of the offer by the Company. As a result of the offer and
subsequent negotiations with the Purchaser, the Company has
determined to sell shares of Common Stock of the Company to the
Purchaser, for the consideration and on the terms set forth in
this Agreement.
Agreement
Now Therefore, in consideration of the mutual promises and
covenants contained herein, and subject to the terms and
conditions of this Agreement, the parties agree as follows:
1. Purchase and Sale of Company Shares; Closing Time.
(a) At the closing of this Agreement, the Company will
sell to the Purchaser and the Purchaser will purchase from the
Company 125,341 shares of Common Stock of the Company, for
US$218,750 in cash and delivery to the Company of all of the
171,075 Special Warrants held by the Purchaser. As further
consideration for the purchase of the shares from the Company, at
and as of the closing, the Purchaser shall relinquish and forever
give up the Dilution Penalty, and no further document or
certificate concerning this relinquishment and give up shall be
necessary.
(b) The Company is represented in this transaction by
Dominick & Dominick Securities, Inc. (the "Placement Agent")
pursuant to the terms of the Agency Agreement between the Company
and the Placement Agent. The closing of the purchase and sale of
the shares of the Company will be completed at the offices of the
Placement Agent on or before March 31, 1998, or on such other
date to which the Company and the Placement Agent agree (the
"Closing Time"), with the delivery of (i) the cash and Special
Warrants to the Company, duly endorsed to the Company or
accompanied by a stock power with signature guaranteed, (ii) the
certificates for the shares of the Company to the Placement Agent
for transmittal to the Purchaser, and (iii) a certificate to the
Placement Agent for transmittal to the Purchaser, which
certificate shall be signed by two officers of the Company, dated
as of the Closing Time, certifying on behalf of the Company that
as of the Closing Time, (x) all of the Company's representations
and warranties set forth in paragraph 2.1 of this Agreement are
true and correct in all material respects; and (y) with respect
to 2.1(i), except as disclosed in the public record of the
Company as filed with the United States Securities and Exchange
Commission, there has been no material adverse change in the
consolidated financial condition of the Company. Certificates
for the shares of the Company purchased by the Purchaser shall be
delivered in the name of the Purchaser, or in such other name as
instructed by the Purchaser prior to the Closing Time.
2 Representations and Warranties. Each party represents
and warrants to the other party as follows:
2.1 By the Company. The Company represents and warrants to
the Purchaser as follows:
(a) (i) Except as disclosed in subparagraph
2.1(a)(i)(x) below, the documents comprising the Company's public
record as filed with the United States Securities and Exchange
Commission pursuant to the United States Securities Exchange Act
of 1934 contain an accurate and complete record of the business
of the Company. There has been no material adverse change in the
business, financial affairs or other condition of the Company
that has not been
publicly disclosed. The public record does not omit to disclose
any facts relating to the Company which would be material to a
prospective purchaser of its Common Shares.
(x) The Company's Form 10-Q Report for the
fiscal quarter ended November 30, 1997 disclosed (in Item 2
"Management's Discussion and Analysis of Financial Condition and
Results of Operations") that the $4,000,000 line item on the
balance sheet was classified as deferred income, as such amount
was forfeitable back to Kennecott Uranium Company until certain
conditions were fulfilled. The Company further disclosed that
the forfeitable terms were satisfied in the third quarter, which
would allow such $4,000,000 to be recognized as income during the
Company's third fiscal quarter (ended February 28, 1998).
Pending further evaluation of the proper accounting treatment of
the Company's receipt of such $4,000,000, the Company has
determined that it may amend the Form 10-Q Report for the fiscal
quarter ended November 30, 1997 to delete reference to the
Company recognizing such $4,000,000 as income. If the Form 10-Q
Report is to be amended, such amendment may not be filed with the
United States Securities and Exchange Commission until after the
Closing Time. However, for purposes of this Agreement, the
disclosures in this subparagraph 2.1(a)(i)(x) shall be deemed to
be part of the public record of the Company as of the date
hereof.
(ii) The public record (with respect to
information therein which concerns SGMC) filed with the United
States Securities and Exchange Commission pursuant to the United
States Securities Exchange Act of 1934 does not omit to disclose
any non-adverse facts which could be material to a seller of
securities of SGMC.
(b) Each of the Company and its material subsidiaries
is, and will be at the Closing Time, duly incorporated and
organized and validly subsists under the laws of its jurisdiction
of incorporation (or other form of organization), with full
corporate (or other entity power) and capacity to carry on its
business as presently conducted.
(c) Except as disclosed in the audited financial
statements for the year ended May 31, 1997 or disclosed in
writing to the Purchaser, there are no actions, suits, proceeding
or enquiries threatened or, to the best of its knowledge, pending
against or affecting the Company or any of its subsidiaries at
law or in equity or before or by any federal, provincial,
municipal or other governmental department, commission, board,
bureau or agency which may in any way materially adversely affect
the business, operations or condition (financial or otherwise) of
the Company or any of its subsidiaries, taken as a whole, or
which affects or may affect the sale of Common Stock, and the
Company is not aware of any existing grounds on which such
action, suit, proceeding or enquiry might be commenced with any
reasonable likelihood of success.
(d) The authorized capital of the Company consists of
(i) 20,000,000 shares of Common Stock, $.01 par value, of which,
as at the date hereof, there were issued and outstanding
6,696,474 shares of Common Stock as fully paid and nonassessable,
not including (a) 4,092 shares to be issued to employees for the
1997 Christmas bonus, (b) 2,500 shares to be issued to outside
director Simpson and 2,500 shares to be issued to Advisory Board
Member Fraser, and (c) 229,606 shares which are forfeitable; and
(ii) 100,000 preferred shares, none issued or outstanding.
(e) American Securities Transfer & Trust, Inc., 938
Quail Street, Suite 101, Lakewood, Colorado USA 80215-5513,
telephone 1-800-962-4284, is the duly appointed registrar and
transfer agent for the shares of Common Stock of the Company.
(f) No regulatory authority of any other jurisdiction
has issued any order preventing or suspending trading in any
securities of the Company which at the Closing Time will be
outstanding, and the Company is not in default of any requirement
of the securities laws of any province of Canada or any laws of
the United States which would reasonably be expected to affect
trading in the Company's securities.
(g) The issued and outstanding shares of Common Stock
of the Company are quoted on NASDAQ.
(h) The Common Stock class of the Company is
registered with the United States Securities and Exchange
Commission pursuant to Section 12(g) of the Securities Exchange
Act of 1934, the Company has timely filed all reports and other
documents required to be filed thereunder, and the public record
as filed with such Commission as of the date hereof is materially
complete and accurate.
(i) The Company and its subsidiaries are the
beneficial owners of the properties, businesses and assets
described in the documents comprising the public record as filed
with the United States Securities and Exchange Commission and
referred to in the Financial Statements (as hereinafter defined)
and any and all agreements pursuant to which the Company or its
subsidiaries hold such properties are in good standing in all
material respects under the applicable statutes and regulations
of the jurisdictions in which they are situated. As used herein,
"Financial Statements" mean the consolidated audited financial
statements of the Company for the year ended May 31, 1997 and the
consolidated unaudited interim financial statements for the
periods ended August 31, 1997 and November 30, 1997, as contained
in the public record of the Company as filed with the Commission.
The Financial Statements are true and correct in all material
respects and have been prepared in accordance with United States
generally accepted accounting principles consistently applied
throughout the periods indicated and present fairly the financial
condition of the Company for the periods then ended.
2.2 By the Purchaser. The Purchaser represents and
warrants to the Company that:
(a) The Purchaser owes no commission or finder's or
similar fee which has been or will be incurred in connection with
this Agreement.
(b) The Purchaser or its client A/C 317 is the sole
beneficial owner of the Special Warrants. The Purchaser has full
and complete authority to execute this Agreement, deliver the
cash and the Special Warrants to the Company at the Closing Time,
and relinquish the Dilution Penalty, and receive therefor, the
certificates for the number of shares of the Company stated in
this Agreement, all for the account of the Purchaser or for the
account of its client. The Purchaser, for itself or for its
client, owns the Special Warrants free and clear of any
encumbrance or lien.
(c) It understands that the shares of Common Stock of
the Company to be purchased by the Purchaser will be restricted
from transfer pursuant to United States securities laws, that
certificates for the shares will bear a restrictive legend, and
that the Company's transfer agent will be issued "stop transfer"
instructions with respect to the shares.
(d) It has received copies, as filed with the United
States Securities and Exchange Commission, of the Company's (i)
Annual Report on Form 10-K for fiscal year ended May 31, 1997,
(ii) Quarterly Reports on Form 10-Q for the fiscal quarter
periods ended August 31, 1997 and November 30, 1997, and (iii)
Current Reports on Form 8-K since May 31, 1997 (the Company has
represented that the only such Form 8-K Reports were those
Reports dated June 23, 1997, June 27, 1997, September 27, 1997
and November 25, 1997).
2.3 Survival of Representations and Warranties. The
representations and warranties of each party which are stated in
this Agreement shall be deemed to be restated and affirmed as of
the Closing Time, and paragraphs 3(a) and 3(d) shall survive the
Closing Time.
3. Covenants of the Company. The Company covenants and
agrees to and with the Purchaser that the Company will
(a) Use its reasonable best efforts to maintain the
registration of its Common Stock with the United States
Securities and Exchange Commission under Section 12(g) of the
Securities Exchange Act of 1934.
(b) Use its reasonable best efforts to maintain its
quotation on NASDAQ.
(c) Use the net proceeds from the sale and issue of
the Common Shares for general corporate purposes, which may
include assisting SGMC from time to time as may be appropriate.
(d) The Company shall take all actions, at its sole
expense, as required (i) immediately after the Closing Time to
file a registration statement with the United States Securities
and Exchange Commission, and have such statement declared
effective as soon as is practicable, so as to permit the public
sale in the United States of the shares of the Company purchased
hereby; and (ii) to keep the registration statement effective for
a period of 24 months after the initial effective date.
4. Entire Agreement and Modification. This Agreement
supersedes all prior agreements between the parties with respect
to its subject matter and constitutes a complete and exclusive
statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged
with the amendment.
5. No Assignment. No party may assign any of its rights
under this Agreement without the prior consent of the other
party. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the
benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred
to in this Agreement will be construed to give any person other
than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any
provision of this Agreement.
6. Notice. Any notice or communication hereunder or in
any agreement entered into in connection with the transactions
contemplated hereby must be in writing and given by depositing
the same in the United States mail, addressed to the party to be
notified, postage prepaid. Such notice shall be deemed received
five days after it is postmarked, provided, that notice by fax
transmission shall be deemed made when sent, if subsequently
confirmed in writing sent U.S. Mail.
7. Expenses. The Company shall bear the fees and expenses
of the Company and of the Placement Agent (subject to a limit on
the Placement Agent's fees of counsel) which are
incurred in connection with the sale and purchase of the shares
of Common Stock of the Company pursuant to this Agreement.
8. Prevailing Party Clause; Governing Law. In the event
of any arbitration, litigation or other proceeding arising as a
result of the breach of this Agreement, including without
limitation the material falsity of any representation or
warranty, the party or parties prevailing in such arbitration,
litigation or proceeding shall be entitled to collect the costs
and expenses of bringing or defending such arbitration,
litigation or proceeding, including reasonable attorney's fees,
from the party or parties not prevailing. The preceding shall be
interpreted so as to entitle the party prevailing in any
arbitration to collect the costs and expenses of litigation or
other proceeding incurred by such party, which litigation or
other proceeding occurred prior to the dispute being heard in
arbitration.
IN WITNESS WHEREOF the parties have executed this Agreement
to be effective as of the date first stated above.
U.S. Energy Corp.
_____________________________ _______________________________
By Keith G. Larsen, President By Max T. Evans, Secretary
BPI Canadian Opportunities II Fund
_____________________________
By __________________________
Print name of signatory
_____________________________