SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 and 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported):February 16, 1996
U.S. ENERGY CORP.
- -------------------------------------------------------------------------------
Exact Name of Registrant as Specified in its Charter)
Wyoming 0-6814 83-0205516
- ------------------------------ --------------- ---------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of incorporation File No.) Identification No.)
Glen L. Larsen Building
877 North 8th West
Riverton, wY 82501
- ----------------------------------------- ----------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (307) 856-9271
----------------
Not Applicable
---------------------------------------------------
(Former Name, Former Address or Former Fiscal Year,
if Changed From Last Report)
<PAGE>
Item 2 - Sale of The Brunton Company
On February 16, 1996 Registrant completed the sale (for
$4,300,000) of 8,267,450 shares of common stock, $0.01 par value,
(the "Stock") of The Brunton Company, a Wyoming corporation
("Brunton"), to Silva Production AB, a closely held Swedish
corporation ("Silva"), pursuant to the terms of a Stock Purchase
Agreement dated January 30, 1996 (the "Agreement") by and between
Registrant and Silva. The Stock constitutes all of the issued
and outstanding shares of Brunton owned by Registrant as of the
date of the sale including 90,750 shares held in Brunton's
treasury. Brunton has been a wholly owned subsidiary of the
Registrant since June 1, 1994. There was no relationship between
Silva and the Registrant or any of Registrant's affiliates,
directors or officers (or any associate of any director or
officer of Registrant) prior to the sale. Following the sale the
only relationships between Silva and the Registrant or any of
Registrant's affiliates, directors or officers (or any associate
of such director or officer) will be (i) Silva will remain
obligated to Registrant for the payment of the deferred portion
of the purchase price and payment of 45% of the net profits
before taxes of Brunton's current product lines for the next four
years and three months, as described below; (ii) Harold F.
Herron, an officer and director of Registrant, will remain the
President of Brunton for at least one year; (iii) Mr. Herron and
John L. Larsen, the Chairman, President and Chief Executive
officer of the Registrant, will remain on the board of directors
of Brunton until replaced and (iv) R. Scott Lorimer, the
Registrant's CFO and Treasurer, was appointed to serve as a
director, secretary/treasurer and CFO of Brunton.
The purchase price for the Stock was $4,300,000, which was a
negotiated price based on an Adjusted Shareholder's Equity in
Brunton (as defined in the Agreement) as of January 31, 1996 of
$2,399,103. Registrant received $300,000 upon execution and
delivery of the Agreement, approximately $3,000,000 by wire
transfer from Silva at closing and an agreement by Silva to pay
Registrant $1,000,000 in three annual installments of $333,333
together with interest at the rate of 7% per annum, such
installments to be paid on February 15, 1997, February 15, 1998
and February 15, 1999. In addition, Silva agreed that, in the
operation of Brunton, Silva will cause the existing Brunton
products and operations (including lasers and other new products
being developed by Brunton at the time of the sale) to be a
separate profit center and to pay Registrant 45% of the net
profits before taxes derived from that profit center for a period
of four years and three months commencing February 1, 1996. The
first such net profits payment will be made on or before July 15,
1997 for the period from February 1, 1996 through April 30, 1997,
if net profits are earned for such period. Additional net
profits payments will be made, on July 15, 1998, July 15, 1999
and July 15, 2000, if net profits are earned for the
corresponding twelve month period. There can be no assurance
that Brunton will earn net profits for any such period and
therefore there can be no assurance that any such net profits
payment will be received by Registrant.
The assets of Brunton that were acquired by Silva through
the purchase of the Stock consist of certain real estate housing
Brunton's headquarters and manufacturing operations in the City
of Riverton, Wyoming; Brunton's working capital; equipment,
inventory, machinery, personal property and all of Brunton's
intellectual property rights.
Certain items of equipment and personal property were
withheld by the Registrant from the Agreement and transferred
from Brunton to Registrant, by mutual agreement with Silva, for
Registrant's assumption of the indebtedness thereon. Such items
include off-book inventory and depreciated mining equipment, real
estate not used in Brunton operations, and miscellaneous other
equipment, as well as 225,556 shares of Registrant's common
stock, par value $0.01 per share, and options to purchase 150,000
shares of Registrant's common stock for $3.50 per share; 160,000
shares of Crested Corp. common stock, par value $0.001, and
options to purchase (from Crested Corp.) 300,000 shares of
Crested Corp. common stock for $0.40 per share, all of which were
previously owned by Brunton.
Also at closing, the Registrant paid Brunton $171,685 for
accrued rentals on mining equipment owned by Brunton and
transferred to Registrant at closing, and the Registrant paid off
$273,000 in bank debt previously incurred by Brunton in
connection with a loan to the Registrant.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired. Not applicable.
(b) Pro Forma Financial Information. Registrant's unaudited pro
forma condensed consolidated balance sheet giving effect to the
disposition of The Brunton Company as of November 30,1995 (end of
Registrant's second fiscal quarter); and Registrant's unaudited
pro forma condensed consolidated statements of income for the
fiscal year ended May 31, 1995, and for the six months ended
November 30, 1995, in each instance giving effect to the
disposition of The Brunton Company as if effected at the
beginning of the income period.
(c) Exhibits. The following documents are filed as exhibits to
the report on Form 8-K.
10.1 Stock Purchase Agreement including amendments with Silva
Production AB, without exhibits.
<PAGE>
U.S. ENERGY CORP. AND AFFILIATES
UNAUDITED PRO FORMA FINANCIAL INFORMATION
INTRODUCTORY HEADNOTE TO UNAUDITED
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On January 30, 1996, The Brunton Company (a Wyoming corporation,
"Brunton"), a wholly owned subsidiary of U.S. Energy Corp.
("USE") and Silva Production AB ("Silva"), a Swedish corporation,
executed a Stock Purchase Agreement (the "Agreement") whereby USE
sold all of the issued and outstanding capital stock of Brunton
to Silva for $4,300,000. In addition, USE will receive as
additional consideration 45% of the net profits before taxes,
derived from Brunton's operations for a period of four years and
three months, commencing on February 1, 1996.
The unaudited pro forma condensed consolidated balance sheet is
presented as of November 30, 1995. This presentation sets forth
the financial position of USE as if the sale of Brunton's capital
stock had occurred on November 30, 1995. The unaudited pro forma
condensed consolidated statements of operations are presented for
the year ended May 31, 1995 and the six months ended November 30,
1995. This presentation sets forth the results of operations of
USE as if the sale of Brunton's capital stock had occurred on
June 1, 1994.
The following unaudited pro forma condensed consolidated
financial statements should be read in conjunction with the
appropriate footnotes thereto and the historical financial
statements of U.S. Energy Corp. and Affiliates included in its
May 31, 1995 Form 10-K.
ALL OF THE FOLLOWING UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION IS BASED ON ESTIMATES AND ASSUMPTIONS THAT
ARE OUTLINED IN THE NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS. THE ACTUAL RESULTS REPORTED WOULD HAVE
VARIED FROM SUCH UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION HAD BRUNTON'S STOCK BEEN SOLD AT AN EARLIER
OR LATER DATE.
<PAGE>
Page 1 of 2
<TABLE>
U.S. ENERGY CORP. AND AFFILIATES
UNAUDIITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 1995
<CAPTION>
Historical Pro Forma Adjustments
U.S. Energy ---------------------------- Pro Forma
ASSETS Corp. Debit Credit Total
------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash $ 952,400 $ 3,300,000(B) $ 205,500(A) $ 4,046,900
Accounts receivable
Trade 1,627,000 178,900(C) 947,600(A) 858,300
Related parties 231,500 55,800(C) 287,300
Inventory 1,502,000 1,423,900(A) 78,100
Current portion
long-term notes
receivable 38,300 38,300
Other 206,200 69,700(A) 136,500
----------- ----------- ----------- -----------
Total Current Assets 4,557,400 3,534,700 2,646,700 5,445,400
----------- ----------- ----------- -----------
INVESTMENTS AND ADVANCES:
Affiliates 3,243,400 3,243,400
Restricted 7,983,000 7,983,000
----------- ----------- ----------- -----------
11,226,400 11,226,400
----------- ----------- ----------- -----------
PROPERTIES AND EQUIPMENT, net 17,802,000 279,100(D) 90,900(A) 17,990,200
----------- ----------- ----------- -----------
OTHER ASSETS:
Accounts and notes receivable-
Real estate and other 891,600 1,000,000(B) 33,800(A) 1,857,800
Employees, affiliates
and related parties 577,500 577,500
Deposits and other 124,700 124,700
----------- ----------- ----------- -----------
1,593,800 1,000,000 33,800 2,560,000
----------- ----------- ----------- -----------
$35,179,600 $ 4,813,800 $ 2,771,400 $37,222,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See Accompanying notes to unaudited pro forma
condensed consolidated balance sheet.
<PAGE>
Page 2 of 2
<TABLE>
U.S. ENERGY CORP. AND AFFILIATES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 1995
<CAPTION>
Historical Pro Forma Adjustments
LIABILIITES AND U.S. Energy --------------------------- Pro Forma
STOCKHOLDERS' EQUITY Corp. Debit Credit Total
-------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable and
accrued expenses $ 1,452,400 $ 231,500(A) $ 205,400(E) $ 1,426,300
Lines of credit 843,000 193,700(A) 649,300
Current portion of
long-term debt 502,000 38,300(D) 540,300
----------- ----------- ----------- -----------
Total current liabilities 2,797,400 425,200 243,700 2,615,900
----------- ----------- ----------- -----------
LONG-TERM DEBT 1,146,100 612,700(A) 240,800(D) 774,200
RECLAMATION LIABILITY 3,951,800 3,951,800
OTHER ACCURED LIABILITY 10,605,800 10,605,800
DEFERRED TAX LIABILITY 214,100 53,000(A) 267,100
MINORITY INTEREST 479,600 479,600
FORFEITABLE COMMON STOCK 1,370,100 1,370,100
STOCKHOLDERS' EQUITY:
Preferred stock -- --
Common stock 61,900 61,900
Additional paid-in capital 21,438,700 21,438,700
Accumulated deficit (3,629,200) 2,542,800(A) (1,086,400)
Treasury stock at cost (2,242,400) (2,242,400)
Unallocated ESOP contribution (1,014,300) (1,014,300)
------------ ----------- ----------- -----------
14,614,700 -- 2,542,800 17,157,500
------------ ----------- ----------- -----------
$35,179,,600 $ 1,037,900 $ 3,080,300 $37,222,000
------------ ----------- ----------- -----------
------------ ----------- ----------- -----------
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated balance sheet.
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
(A) This entry eliminates Brunton from the consolidated balance
sheet of USE as of November 30, 1995 and records the
proceeds from the sale. Brunton was sold for $4,300,000,
plus additional consideration of 45% of the net profits
before taxes, for the four years and three months commencing
February 1, 1996. The $4,300,000 includes cash of
$3,300,000 and a note for $1,000,000 due annually in amounts
of $333,333 beginning February 15, 1997.
USE recognized a gain on the sale of Brunton of $2,542,800,
which is net of estimated alternative minimum taxes of
$50,000. In addition, approximately $440,000 of the
proceeds were subsequently used to pay certain liabilities
and debt either assumed from or owed to Brunton by USE.
(B) This entry represents the gross purchase price to Silva
which was $4,300,000, $3,300,000 in cash and a $1,000,000
long-term note.
(C) This entry reflects various accounts receivable which were
retained by U.S. Energy at the time of the sale.
(D) At the time of the sale U.S. Energy retained $38,300 in
current debt and $240,800 in long-term debt for a total of
$279,100 which represents equipment which was retained by
U.S. Energy and not transferred in the Brunton sale.
(E) Accounts payable and accrued expenses increased by $50,000
as a result of the accrual of alternative minimum tax on the
sale and $155,400 as a result of inter company accounts
payable/receivable between Brunton and U.S. Energy.
<PAGE>
Page 1 of 2
<TABLE>
U.S. ENERGY CORP. AND AFFILIATES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995
Historical Pro Forma Adjustments(A)
U.S. Energy ---------------------------- Pro Forma
Corp. Debit Credit Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Mineral sales and option $ 2,174,300 $ $ $ 2,174,300
Construction contract
revenues 2,817,100 2,817,100
Oil sales 82,000 82,000
Recreational product sales 2,575,000 2,575,000(A) --
Commercial revenues 560,900 37,800(A) 523,100
Interest and other 314,200 4,300(A) 309,900
Management and other fees 371,300 1,600(A) 369,700
----------- ----------- ----------- -----------
8,894,800 2,618,700 6,276,100
----------- ----------- ----------- -----------
COST AND EXPENSES:
Cost of mineral sales 1,824,300 1,824,300
Cost of recreational
products 1,381,700 1,381,700(A) --
Mineral operations 411,500 411,500
Construction costs 2,095,300 2,095,300
Abandoned gas leases 328,700 328,700
General and administrative 1,882,100 875,600(A) 1,006,500
Commercial operations 1,068,300 1,068,300
Oil production 31,400 31,400
Interest 145,000 43,300(A) 101,700
----------- ----------- ----------- -----------
9,168,300 2,300,600 6,867,700
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated statement of operations.
<PAGE>
Page 2 of 2
<TABLE>
U.S. ENERGY CORP. AND AFFILIATES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995
Historical Pro Forma Adjustments(A)
U.S. Energy -------------------------- Pro Forma
Corp. Debit Credit Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
LOSS BEFORE EQUITY, LOSS OF
AFFILIATES, PROVISION FOR
INCOME TAXES $ (273,500) $ 2,618,700 $ 2,300,600 $ (591,600)
MINORITY INTEREST IN LOSS OF
CONSOLIDATED SUBSIDIARIES 66,500 66,500
EQUITY IN LOSS OF
AFFILIATES, net (165,900) (165,900)
----------- ----------- ----------- -----------
LOSS BEFORE PROVISION FOR
INCOME TAXES (372,900) 2,618,700 2,300,600 (691,000)
PROVISION FOR INCOME TAXES -- -- -- --
----------- ----------- ----------- -----------
NET LOSS $ (372,900) $ 2,618,700 $ 2,300,600 $ (691,000)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET LOSS PER SHARE $ (.06) $ (.11)
----------- -----------
----------- -----------
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 6,034,445 6,034,445
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated statements of operations.
<PAGE>
Page 1 of 2
<TABLE>
U.S. ENERGY CORP. AND AFFILIATES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1995
Historical Pro Forma Adjustments(B)
U.S. Energy -------------------------- Pro Forma
Corp. Debit Credit Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Construction contract
revenues $ 1,303,400 $ $ $ 1,303,400
Commercial operations 1,253,200 75,600(B) 1,177,600
Recreational product sales 4,452,300 4,452,300(B) --
Oil sales 194,500 194,500
Gain on sales of assets 1,282,400 1,282,400
Gain from restructuring
mineral properties
agreements 85,500 85,500
Interest 479,900 10,000(B) 469,900
Management fees and other 96,800 9,500 87,300
----------- ----------- ----------- -----------
9,148,000 4,547,400 -- 4,600,600
----------- ----------- ----------- -----------
COST AND EXPENSES:
Mineral operations 1,654,300 1,654,300
Construction costs 1,038,300 1,038,300
Commercial operations 2,070,100 2,070,100
Cost of recreational
products sold 2,407,000 2,407,000(B) --
Oil production 78,100 78,100
General and administrative 3,606,100 1,745,500(B) 1,860,600
Gas operations 206,600 206,600
Loss on sale of investments 90,000 90,000
Interest 279,000 98,700(B) 180,300
----------- ----------- ----------- -----------
11,429,500 4,251,200 7,178,300
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated statement of operations.
<PAGE>
Page 2 of 2
<TABLE>
U.S. ENERGY CORP. AND AFFILIATES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1995
Historical Pro Forma Adjustments(A)
U.S. Energy --------------------------- Pro Forma
Corp. Debit Credit Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
LOSS ON MINORITY INTEREST
IN LOSS, EQUITY IN LOSS OF
AFFILIATES AND INCOME TAXES $(2,281,500) $ 4,547,400 $ 4,251,200 $(2,577,700)
MINORITY INTEREST IN LOSS OF
CONSOLIDATED SUBSIDIARIES 653,200 653,200
EQUITY IN LOSS OF
AFFILIATES (442,300) (442,300)
----------- ----------- ----------- -----------
LOSS BEFORE INCOME TAXES (2,070,600) 4,547,400 4,251,200 (2,366,800)
INCOME TAXES -- -- -- --
----------- ----------- ----------- -----------
NET LOSS $(2,070,600) $ 4,547,400 $ 4,251,200 $(2,366,800)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET LOSS PER SHARE $ (.42) $ (.48)
----------- -----------
----------- -----------
WEIGHTED AVERAGE
SHARES OUTSTANDING 4,977,050 4,977,050
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated statements of operations.
<PAGE>
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(A) This entry eliminates the historical operations of The
Brunton Company for the six months ended November 30, 1995.
(B) This entry eliminates the historical operations of The
Brunton Company for the year ended May 31, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
U. S. ENERGY CORP.
February 21, 1996 By: s/ Max T. Evans
-----------------------------------
Max T. Evans, Secretary
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") made and
entered into the 30th day of January, 1996, by and between U.S.
ENERGY CORP., a Wyoming Corporation of 877 North 8th West,
Riverton, Wyoming, the Seller, hereinafter referred to as
("USE"); THE BRUNTON COMPANY, a Wyoming Corporation and wholly
owned subsidiary of USE hereinafter referred to as ("Brunton")
and SILVA PRODUCTION AB a Swedish corporation of Kuskvagen 4 S-
19162 Sollentuna, Sweden, the Purchaser, hereinafter referred to
as ("Silva").
WITNESSETH:
WHEREAS, USE is the owner of 8,267,450 shares, of common
stock, $0.01 par value (the "Stock") being all of the issued and
outstanding common shares of THE BRUNTON COMPANY, a Wyoming
corporation of 620 E. Monroe Street, Riverton, Wyoming
hereinafter referred to as ("Brunton"), which is authorized to
issue up to 20,000,000 shares of common stock; and
WHEREAS, Brunton is engaged in the manufacturing and/or
marketing of high quality precision products which includes
pocket transits, optics, cutlery and recreational compasses and
Silva intends to maintain the Brunton operations at Riverton,
Wyoming as provided herein, where the business will be expanded
to include Silva Marine and other Silva products to be marketed
with Brunton products domestically and internationally, and
WHEREAS, it is the intention of the parties hereto that, upon
consummation of the purchase and sale of the Stock pursuant to
this Agreement, Silva shall own all of the outstanding capital
stock of Brunton.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants contained herein, the Parties hereto agree as
follows:
ARTICLE I
SALE AND PURCHASE OF STOCK AND CLOSING
SECTION 1.1 Sale of Stock. Subject to the terms and conditions
of this Agreement , USE agrees to sell to Silva and Silva agrees
to purchase from USE, the Stock, which USE represents to be all
of the issued and outstanding capital stock of Brunton,
consisting of 8,267,450 shares of the common Stock, $0.01 per
share of Brunton, which includes 90,750 shares held in Brunton's
treasury.
SECTION 1.2. Purchase Price. In full consideration for the
sale by USE of the Stock to Silva, Silva shall pay USE an
aggregate amount of US $4,300,000 subject to adjustment pursuant
to Section 1.4 below (the "Purchase Price"). The Purchase Price
shall be paid as follows:
(a) A non-refundable earnest money payment of US $300,000
upon the execution and delivery of this Agreement by
Silva;
(b) US $3,000,000 (subject to the adjustment pursuant to
Section 1.4 below) shall be paid at Closing.
(c) US $1,000,000 shall be paid in three annual
installments of US $333, 333 each, the first payment of US
$333,333 together with interest at the rate of 7% per
annum on the US $1,000,000 from the date of Closing, shall
be made on or before February 15, 1997 and SIMILAR
US$333,333 payments with interest of 7% per annum on the
unpaid balance of the Purchase Price, shall be made on or
before February 15, 1998 and February 15, 1999 until the
Purchase Price is paid in full.
SECTION 1.3. Method of Payment. Silva shall pay the Purchase
Price by wire transfer of the earnest money payment of US
$300,000 to USE's account at The First Interstate Bank of
Commerce - Gillette, WY, ABA Number 102300129, Account No.
362165771, and all payments and net profits interest thereafter
due hereunder, shall be paid by wire transfer to the same USE
account at the First Interstate Bank of Commerce of Gillette or
to such other bank account as USE shall direct by notice given
pursuant to Section 7.4 of this Agreement.
SECTION 1.4 Purchase Price Adjustment . The Purchase Price
shall be adjusted as follows:
(a) USE and Silva have agreed that the shares of common
stock of USE held by Brunton, and other identified assets
Brunton acquired from USE ("USE assets") together with the
obligation to pay the balance of US$276,352 (as of
1/23/96), owing on the Promissory Note of $324,349.82
dated 8/2/94, shall remain with and be the obligation of
USE.
(b) USE and Silva have engaged Arthur Andersen LLP and
Grant Thornton LLP, respectively (collectively the
Independent Accountant's) to represent them in assisting
the parties in determining what the Adjusted Shareholder's
Equity (as hereinafter defined) in Brunton would be as of
January 31, 1996 after removing the USE assets referenced
in paragraph (a) above. Attached to this Agreement as
Exhibit "A" is the November 30, 1995 Balance Sheet of
Brunton, which will be used to arrive at Adjusted
Shareholder's Equity in Brunton as of January 31, 1996
(hereinafter referred to as the "Adjusted Shareholder's
Equity" or "ASE"). The adjustment of the shares of USE
assets are included in adjustment #1 and #3 in Exhibit
"A". Representatives of the Independent Accountants will
travel to Brunton operations in Riverton, Wyoming on or
before February 1, 1996 to observe a physical count of
inventories of the raw materials, finished goods, and work
in process. USE and Brunton agree to provide Silva and
its representatives access to the offices of Brunton to
inspect the premises, inventory, books, accounts, records,
contracts and documents and to confer with Brunton's
employees and consultants for the purpose of determining
that USE's and Brunton's representations and warranties
regarding Brunton are true. Additionally, the Independent
Accountants representatives will review, as directed by
USE and Silva, the Brunton accounts receivable, accounts
payable, notes payable and the property, plant and
equipment listings of Brunton. The audit firms will
further review and discuss with management's of USE and
Silva, any assets or liabilities that may be of concern to
USE or Silva. The Independent Accountants have not been
engaged to reach any business decisions regarding the
adjusted assets and liabilities of Brunton, but are to
bring to the attention of USE and Silva any areas of
concern that they may have. Management of USE and Silva
shall utilize the recommendations of their respective
Independent Accountants to determine what the ASE of
Brunton is as of January 31, 1996. Any negative
adjustments to accounts receivable, inventory, or
property, plant and equipment will become the property of
USE and USE is free to dispose of any such accounts
receivable, inventory, property, plant and equipment, and
collect any delinquent accounts receivable and retain all
proceeds generated therefrom.
(c) If the physical count of the inventory and
adjustments result in an overall increase in the ASE, the
ASE will remain at US $2,400,000 and as such will accrue
to the benefit of Silva. If there is a reduction of the
Adjusted Shareholder's Equity from the US $2,400,000
reflected on November 30, 1995, then the Purchase Price
shall be computed based on the following formula:
Purchase Price = 4.3 x ASE
2.4
SECTION 1.5 Closing. The closing of the purchase of the Stock
(the "Closing") shall be on Thursday, February 15, 1996 and shall
take place at 10:00 a.m. local time in the offices of USE at 877
North 8th West, Riverton, Wyoming, unless otherwise agreed to in
writing by USE and Silva.
ARTICLE II
REPRESENTATIONS OF USE
USE hereby represents and warrants to Silva as follows:
SECTION 2.1 Existence and Good Standing. USE and Brunton are
corporations duly organized, validly existing and in good
standing under the laws of the state of Wyoming. USE and Brunton
have the requisite corporate power and authority to own, lease
and operate their properties and to carry on their business as
now being conducted.
SECTION 2.2 Capital Stock. USE owns all of the issued and
outstanding capital stock of Brunton, consisting of 8,267,450
shares of common stock, par value $0.01 per share, which includes
the 90,750, held in Brunton's treasury. All outstanding shares
of capital stock of Brunton have been duly authorized and validly
issued and are fully paid and non-assessable. There are no
outstanding subscriptions, options, warrants, writes, calls,
commitments, conversion rights, plans or other agreements of any
character providing for the purchase, issuance or sale of any
additional shares of the capital stock of Brunton.
SECTION 2.3 Authorization and Validity of this Agreement. USE
has the requisite corporate power and authority to execute and
deliver this Agreement and perform its obligations hereunder.
The execution and delivery of this Agreement by USE, and the
performance of its obligations hereunder, have been duly
authorized and approved by its Board of Directors and no other
corporate action on the part of USE or action by the stockholders
of USE is necessary to authorize the execution, delivery and
performance of this Agreement by USE. This Agreement constitutes
a valid and binding obligation of USE, enforceable against USE in
accordance with the terms."
SECTION 2.4 Financial Statements: No Material Changes.
(a) USE has heretofore furnished Silva with audited
balance sheets of Brunton as of May 31, 1995, 1994, 1993,
1992 and 1991 and unaudited financial statements as of
November 30, 1995 together with related consolidated
statements of income and retained earnings and cash flows
for the fiscal years then ended, together with a report of
Arthur Andersen LLP with respect to audited financial
statements. All such financial statements, including the
footnotes thereto, have been prepared in accordance with
Generally Accepted Accounting Principles (GAAP) applied in
the U. S. consistently by Brunton throughout the periods
indicated and to the best of USE management's knowledge,
fairly presented in all material respects the financial
position of Brunton at the respective dates thereof, and
the results of operations and cash flows of Brunton for
the respective periods indicated.
(b) Since November 30, 1995, there have been no (i)
material adverse change in the business, operations,
financial conditions, prospects or results of operations
of Brunton or (ii) material damage, destruction or loss of
any asset or property, tangible or intangible of Brunton
which would adversely affect the ability of Brunton to
conduct its businesses.
SECTION 2.5 Books and Records. At closing, all of the minute
books and records of Brunton then in the possession of USE will
be delivered to Silva and that the minute books and records of
Brunton are true and correct and that there have been no
transactions which have not been accurately set forth. The
minute books of Brunton contain all existing records of all
proceedings, consents, actions and meetings of the shareholders
and board of directors of Brunton.
SECTION 2.6 Title to Properties; Encumbrances. Brunton has good
and marketable title to its material properties and assets,
including, without limitation, the material properties and assets
reflected in the November 30, 1995 Balance Sheet of Brunton and
said assets are free and clear of mortgages, liens, pledges,
charges or other encumbrances with the exception of the
encumbrances, liens and charges listed. Thus, said "assets" are
free and clear, subject to: (i) encumbrances, liens, charges or
other restrictions reflected in the Balance Sheet or the
Promissory Notes with schedules attached hereto as Exhibit "B",
(ii) encumbrances for current taxes, assessments or governmental
charges or levies on property not yet due or delinquent. To the
best of USE's and Brunton's knowledge, in relation to the real
property, there has been no activity on the real property which
might have any environmental consequences.
SECTION 2.7 Real Property. Brunton owns its real property in fee
as shown by the Balance Sheets with the encumbrances reflected in
the Promissory Notes attached hereto and as described or listed
on Exhibit "C".
SECTION 2.8 Intellectual Property. Brunton possesses all
licenses, patents, trade names, trademarks, and collectively, the
"Intellectual Property", necessary from the ownership of its
properties and conduct of its business as presently conducted.
All intellectual property of Brunton is as set forth on Exhibit
"D" attached hereto and such property is in full force and effect
and Brunton has not received any written notice of any event,
inquiry, investigation, or proceedings threatening the validity
of any such intellectual property.
SECTION 2.9 Leases and Material Contracts. Brunton has no
material leases and all material contracts to which Brunton is a
party requiring an annual aggregate payment of at least $50,000
are listed on Exhibit D.
SECTION 2.10 Consents and Approvals. The execution and
delivery of this Agreement by USE and the consummation of the
transactions contemplated hereby (a) will not violate or
contravene any provisions of the Certificate of Incorporation or
the By-laws of USE (b) will not violate or contravene any
statute, rule, regulation order or the decree of any public body
or authority by which USE and Brunton or any of their respective
properties or assets are bound, (c) will not require any filing
with, permit, consent or approval of or the giving of any notice
to any governmental or regulatory body, including the U.S.
Federal Trade Commission under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976 as amended and related Federal Trade
Commission rules implementing said Act.
SECTION 2.11 Litigation. There is no action, suit, proceeding
of law or in equity, arbitration or administrative or other
proceeding by or before (or to the knowledge of USE or Brunton
contemplated by ) any government instrumentality or agency,
pending, or to the knowledge of USE threatened, against or
affecting USE or Brunton or their properties or rights, and USE
knows of no valid basis for any such action, proceeding or
investigation. To the best of its knowledge, Brunton is not in
default with respect to any order, writ, injunction, or decree of
any federal, state, local or foreign court, department or agency.
SECTION 2.12 Taxes.
(a) Any federal income taxes due through January 31,
1996, on net income generated by Brunton, will be the
liability of USE. Thereafter, such taxes shall be the
liability of Silva. All property taxes will be prorated
to the date of possession on February 15, 1996.
(b) Tax Returns. Brunton shall have timely filed (or
caused to be timely filed) with the appropriate taxing
authorities all returns, statements, forms and reports for
taxes that are required to be filed with respect to USE
and Brunton on or prior to the closing date.
(c) Payment of Taxes. All taxes of USE and Brunton for
all taxable years ended on or prior to May 31, 1995 have
been timely paid. With respect to taxable year beginning
on June 1, 1995, all taxes on net income earned prior to
the Balance Sheet date have been timely paid or accrued
and adequately disclosed and fully provided for as a
liability on the Balance Sheet. As of the date of this
Agreement's signing, Brunton has received no notice of and
Brunton is not aware of any pending or planned examination
of the local or federal income tax returns of Brunton.
SECTION 2.13 Liabilities. Brunton has no material outstanding
claims, liabilities or indebtedness, contingent or otherwise,
except as set forth in the Balance Sheet, other than liabilities
incurred subsequent to the Balance Sheet date of January 31, 1996
in the ordinary course of business.
SECTION 2.14 Insurance. Brunton has policies of insurance or
coverage on property, fire and casualty, product liability and
workers' compensation in full force and effect. Brunton has not
received any notice of cancellation of any policy described in
such policies or refusal of coverage thereunder. In the event
Silva decides not to maintain the liability, fire, extended
coverage or other such insurance and the same is canceled, any
return premium will be the property of USE.
SECTION 2.15 Employee Benefit Plans. Brunton has a 401K that
is in full force and effect.
SECTION 2.16 Contributions. Full payment has been timely made
on all amounts the Company is required to make under applicable
law to the 401K plan.
SECTION 2.17 Compliance with Laws. To the best of its
knowledge, Brunton has complied with all existing laws, rules,
regulations, orders, judgments and decrees now or hereafter
applicable to its business, properties or operations as presently
conducted. And, to the best of USE's and Brunton knowledge,
neither the ownership nor use of Brunton's properties nor the
conduct of it's business conflicts with the rights of any other
person, firm or corporation.
SECTION 2.18 Disclosure. No representation or warranty by USE
contained in this Agreement nor any written statement furnished
by USE or Brunton to Silva or its representatives in connection
herewith or pursuant thereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any
material fact required to make the statements herein or therein
contained not misleading or necessary in order to provide a
prospective purchaser of the Stock information requested by Silva
as to Brunton and its respective conditions (financial and
otherwise), properties, assets, liabilities, business and
prospects, and USE have disclosed to Silva in writing all facts
known to USE relating to the same.
SECTION 2.19 Brokers or Finders Fee. No agent, broker, person
or firm acting on behalf of Silva is or will be entitled to any
commission, broker or finder's fees from USE and no agent,
broker, person or firming acting on behalf of USE is or will be
entitled to any commission, broker or finder's fee from Silva in
connection with any of the transactions contemplated by this
Agreement.
ARTICLE III
REPRESENTATIONS OF SILVA
Silva represents and warrants to USE as follows:
SECTION 3.1 Existence and Good Standing; Power and Authority.
Silva is a corporation duly incorporated in Sweden, validly
existing and in good standing under the laws of that nation.
Silva may organize a new USA corporation as a holding company for
Brunton or for other purposes and the representations made herein
shall apply to the new corporation. Silva agrees to co-sign
and/or to be obligated with that subsidiary during the term of
this Agreement. Silva has the requisite corporate power and
authority to enter into, execute and deliver this Agreement and
perform its obligations hereunder and thereunder. This Agreement
has been duly authorized and approved by Silva and is a valid and
binding obligation of Silva enforceable against Silva in
accordance with the terms.
SECTION 3.2 Purchase for Investment. Silva will acquire the
stock for its own account for investment and not with the view
toward any resale or distribution thereof; provided however,
that the disposition of Silva's property shall at all times
remain within the sole control of Silva.
SECTION 3.3 Excluded Assets. Silva acknowledges and the agrees
that in arriving at the Adjusted Shareholders Equity, certain
assets were retained by USE assets as noted in Section 1.4 above
and not accepted by Silva, and consequently title to those assets
are by these presents conveyed to USE and will be retained by USE
subsequent to the Closing.
ARTICLE IV
TRANSACTIONS PRIOR TO THE CLOSING DATE
SECTION 4.1 Conduct of Business of Brunton. During the period
from the date of this Agreement to the Closing Date, except as
otherwise provided by this Agreement, Brunton shall conduct its
operations in the ordinary course of business consistent with the
past practice; use its reasonable efforts to preserve intact its
business organization, keep available the services of its
officers and employees and maintain its relationship and good
will with licensers, vendors, suppliers, distributors, customers,
employees and agents and others having business relationships
with Brunton; confer with Silva concerning operational matters of
a material nature and report to Silva concerning the business,
operations and finances of Brunton. Notwithstanding the
immediately preceding sentence, prior to the Closing Date, except
as may be first approved in writing by Silva or as is otherwise
permitted or required by this Agreement, Brunton shall, (a)
refrain from amending or modifying its Certificate of
Incorporation or By-Laws from those in effect on the date of this
Agreement, (b) refrain from paying or increasing any bonuses,
salaries, or other compensation to any director, officer,
employee or stockholder or entering into any employment,
severance or similar agreement with any director, officer, or
employee other than, in each case, in the ordinary course of
business consistent with past practice, (c) refrain from adopting
or increasing any profit sharing, bonus, deferred compensation,
savings, insurance, pension, retirement or other employee benefit
plan for or with any of its employees, (d) refrain from entering
into any commitments involving the expenditure of more than US
$50,000 except in the ordinary course of business consistent with
past practice, (e) refrain from increasing its indebtedness for
borrowed money, except current borrowings in the ordinary course
of business, (f) refrain from canceling or waiving any claim or
right of substantial value which individually or in the aggregate
is material, (g) refrain from declaring or paying any dividends
in respect of its capital stock or redeeming, purchasing or
otherwise acquiring any of its capital stock, (h) refrain from
making any material change in accounting methods or practices,
except as required by law or generally accepted accounting
principles, (i) refrain from selling, leasing or otherwise
disposing of any material asset or property, except as described
in Section 1.4(a) of this Agreement, (j) refrain from making any
capital expenditure or commitment therefore, except in the
ordinary course of business consistent with past practice, (k)
refrain from writing off as uncollectible any notes or accounts
receivable, except as may be agreed upon by the parties or except
write-offs in the ordinary course of business charged to
applicable reserves, none of which individually or in the
aggregate is material, and (l) refrain from agreeing in writing
to do any of the foregoing.
SECTION 4.2 Exclusive Dealing. During the period from the date
of this Agreement to the Closing Date, neither USE nor Brunton
shall take any action, to directly or indirectly, encourage,
initiate or engage in discussions or negotiations with, or
provide any information to, any person, other than Silva
concerning any purchase of any capital stock of Brunton or any
merger, sale of substantial assets or similar transaction
involving Brunton.
ARTICLE V
NET PROFITS AFTER CLOSING
SECTION 5.1 Net Profits. As additional consideration to USE for
the sale of the Stock, USE and Silva have agreed that in the
operations of Brunton, Silva shall cause three separate profit
centers to be formed, namely, (a) the existing Brunton products
and operations including lasers and other new products being
developed by Brunton; (b) various Silva products, and (c) Silva
Marine. Silva agrees to pay USE 45% of the net profits before
taxes derived from the Brunton profit center for a period of four
years and three months commencing on February 1, 1996, with the
first payment due on or before July 15, 1997 covering the period
from February 1, 1996 through April 30, 1997 (the "Brunton fiscal
year") and 45% of the net profits before taxes derived from
Brunton profit center for each of the Brunton fiscal years ended
April 30, 1998, 1999 and 2000 such payment to be made on or
before July 15, 1998, 1999 and 2000.
SECTION 5.2 Cost Basis. For purposes of determining the amount
of payment to be made to USE pursuant to Section 5.1 hereof, net
profits shall be determined in accordance with United States
generally accepted accounting principles except in such a manner
that general, administrative and other expenses will be allocated
among the three profit centers that the cost basis to compute the
net profits for Brunton will be based on the general,
administrative and other expenses and costs incurred in the
Brunton profit center only.
ARTICLE VI
TERMINATION
SECTION 6.1 Termination. This Agreement may be terminated at any
time prior to Closing:
(a) by the mutual written consent of USE and Silva,
(b) by Silva if there has been a material violation or
breach by Brunton or USE of any material representation or
covenant of Brunton or USE contained in this Agreement and
such violation or breach has not been waived by Silva.
(c) by USE, if there has been a material violation or
breach by Silva or any material representation or covenant
contained in this Agreement, or if the transactions
contemplated hereby have not been consummated by February
15, 1996, provided however, that such date may be extended
by mutual consent of the parties.
SECTION 6.2 Effect of Termination. In the event this Agreement
is terminated pursuant to Section 6.1, all further obligations of
the Parties hereto under this Agreement shall terminate without
further liability or obligation of either party to the other
party hereunder and the earnest money payment to USE shall be
retained by USE unless termination is by Silva pursuant to
paragraph (b) of Section 6.1 hereof.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Indemnification by USE. USE shall indemnify, defend
and hold harmless Silva from and against any and all claims,
demands, losses, costs, expenses, obligations, liabilities,
damages and deficiencies, including interest, penalties, and
reasonable attorneys' fees, that Silva shall incur or suffer,
which arise, result from or relate to any civil or criminal
actions, proceedings or investigations involving Brunton which
are based upon personal injury, property damage or non-compliance
with any law or regulation affecting the business of Brunton
which USE had knowledge of prior to the Closing Date.
The above indemnification is given under the provision that:
(a)USE shall not have any liability in respect of any claim
for any breach of the representations and warranties
unless the liability arising from such claim together
with the aggregate of all other sums accepted or
determined as being recoverable from USE by reason of
any breach of the representations and warranties or
failure to perform any of the covenants or agreements
amounts to or exceeds USD one hundred thousand
($100,000), in which case USE shall be liable for the
full amount.
(b)Any claims under the indemnification herein shall be
made by Silva without reasonable delay and not later
than two (2) years from the Closing Date. Should,
however, any damage or loss not be appraisable on or
before such date, Silva shall be entitled to make claims
even after the expiry of said period, provided a
provisional claim has been made on or before the said
expiry. Such provisional claim shall be as specified as
the circumstances allow. After having made such
provisional claim Silva shall make its best efforts to
appraise without delay the damage or loss suffered and
shall forthwith notify USE of its specified and detailed
claim. Notwithstanding the foregoing, claims in respect
of taxes, duties or similar levies and charges may be
made until two (2) months after a binding decision from
the competent authority becomes legally effective.
Upon Silva becoming aware of a claim relevant for the purpose of
this Section 7.1, Silva shall:
(c)not make any admission of liability, agreement or
compromise with any person, body or authority in
relation thereto without the prior consent (not to be
unreasonably withheld) of USE; and
(d)cause USE and its professional advisers to have
reasonable access to the personnel of Brunton and to any
relevant accounts, documents and records within the
possession or control of Brunton (except to the extent
that any such accounts, documents and records are of a
confidential nature) to enable USE and its professional
advisers to examine such claim, accounts, documents and
records and (except as aforesaid) to take copies or
photographs thereof at their own expense.
ARTICLE VIII
NON-COMPETITION AND SECRECY
SECTION 8.1 Non-competition by USE. USE undertakes, during a
period of three (3) years after Closing not to, directly or
indirectly, carry out or further or support any activity which in
any way may compete with the compass, optics, professional
instrument or cutlery business carried on by Brunton.
SECTION 8.2 Secrecy. USE undertakes not to make any
unauthorized disclosure of any confidential information regarding
the Company or its activities except as required by law and the
regulations of the Securities and Exchange Commission.
"Confidential information" shall mean any information, technical,
commercial or of any other kind, whether written or oral, except
such information which is or will be publicly known or which has
come to or will come to the public knowledge in any way other
than through USE's breach of this secrecy undertaking.
SECTION 8.3 Penalty. In the event that USE should commit a
breach of Sections 8.1 or 8.2 above Silva shall be entitled to
injunctive relief against USE.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Expenses. Except as provided below, the Parties
hereto shall pay their own expenses relating to the transactions
contemplated by this Agreement, including, without limitation,
the fees and expenses of their respective counsel and financial
advisers, it being understood that all expenses Brunton incurred
in connection with the transactions contemplated by this
Agreement shall be paid by USE.
SECTION 9.2 Governing Law. The interpretation and construction
of this agreement, and all matters relating hereto, shall be
governed by the laws of the state of Wyoming applicable to
agreements executed and to be performed solely within such state.
SECTION 9.3 Publicity. Except as otherwise required by law, none
of the Parties hereto shall issue, prior to the Closing Date, any
press release or make any other public statement, in each case
relating to, connected with or arising out of this Agreement or
the matters contained herein, without obtaining the prior
approval of USE, on the one hand, and Silva, on the other hand,
to the contents and the manner of presentation and publication
thereof.
SECTION 9.4 Notices. Any notice or other communication required
or permitted under this Agreement shall be sufficiently given if
delivered in person or sent by telecopy, fax, or by registered or
certified mail, postage prepaid, addressed as follows:
If to Silva: Silva Production AB
Kuskvagen 4
S-19162 Sollentuna
Sweden
Fax: 011 46 892 7601
Attn: Hans-Gunnar Tillander
If to USE: U.S. Energy Corp.
877 North 8th West
Riverton, WY 82501
Fax: (307) 857-3050
Attn: John L. Larsen
or other such address or number as shall be furnished in writing
by any such party. Such notice or communication shall be deemed
to have been given as of the date so delivered, sent by facsimile
or in the case of mail, may be deemed to have been delivered five
(5) days after posted.
SECTION 9.5 Parties in Interest. This Agreement may not be
transferred, assigned, pledged or hypothecated by any party
hereto, other than by operation of law. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns, but no assignment of
this Agreement shall be valid unless the consent of the other
party to this Agreement is received and the assignee shall assume
in writing satisfactory in form and substance to the nonassigning
party to this Agreement, all obligations of its assignment under
this Agreement.
SECTION 9.6 Counterparts. This Agreement may be executed in two
or more counterparts, each of which taken together shall
constitute one instrument.
SECTION 9.7 Entire Agreement. This Agreement, including the
Exhibits hereto and other documents referred to herein which form
a part hereof, contains the entire understanding of the parties
hereto with respect to the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings
between the Parties with respect to such subject matter.
SECTION 9.8 Amendments. This Agreement may not be changed
orally, but only by an agreement in writing signed by USE and
Silva.
SECTION 9.9 Severability. In case any provision in this
Agreement shall be held invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
of this Agreement will not in any way be affected or impaired
thereby.
SECTION 9.10 Third Party Beneficiaries. Each party hereto
intends that this Agreement shall not benefit or create any right
or cause of action in or on behalf of any person other than the
parties hereto.
SECTION 9.11 Employment of Harold F. Herron. Mr. Herron agrees
to be employed in the capacity as president of Brunton with the
same current duties and obligations pursuant to a mutually
acceptable employment agreement between Silva and Mr. Herron.
SECTION 9.12 Exhibits "E" and "F" to be delivered to Silva at
closing, contain a complete list of tooling and machinery,
respectively.
IN WITNESS WHEREOF, USE and Silva have caused their corporate
names to be hereunto subscribed by their respective officers
thereunto duly authorized, all as of the day and year first above
written.
Seller: The foregoing is agreed to by:
U.S. ENERGY CORP. (USE) THE BRUNTON COMPANY
(BRUNTON)
By: s/ John L. Larsen By: s/ John L. Larsen
------------------------- ------------------------
JOHN L. LARSEN, JOHN L. LARSEN,
President Chairman
Purchaser:
SILVA PRODUCTION AB (SILVA)
By: s/ Hans-Gunnar Tillander
----------------------------
HANS-GUNNAR TILLANDER,
President
Approved as to continued employment with Brunton referred to in
Section 7.11 above.
s/ Harold F. Herron
- -------------------------------
Harold F. Herron
<PAGE>
U.S. ENERGY CORP.
877 NORTH 8TH WEST
RIVERTON, WYOMING 82501
(307) 856-9271
TO: Mr. Hans Tillander, President
SILVA PRODUCTION AB
Fax: 011 46 17420060
FROM: Hal Herron
Fax: 307.856.1840
DATE: 6 Feb. 1996
SUBJ: Modification to Stock Purchase Agreement
Dear Hans:
Per our conversation of today, this fax shall serve as written
modification to Section 1.4, paragraph (c) of the Stock Purchase
Agreement by and between U.S. Energy Corp. ("USE"), Silva
Production AB ("Silva") and The Brunton Company ("Brunton") dated
the 30th of January, 1996 to add the following language to this
Section.
"It is mutually agreed and understood that the Purchase Price
formula shall apply to the Purchase Price paid by Silva only if
the decrease in the $2,400,000 Shareholders Equity is greater
than $50,000, so that any reduction in the Adjusted shareholders
Equity (ASE) ranging between $2,400,000 and $2,350,000 will have
a dollar for dollar reduction in the Purchase Price to be paid by
Silva."
If you agree with this amendment to the Stock Purchase Agreement,
please execute this letter and fax it back to me
Sincerely,
The Brunton Company
s/ Hal Herron
President
The foregoing agreed to this 6th day of February, 1996:
U.S. Energy Corp. Silva Production AB
/s Daniel P. Svilar s/ Hans-Gunnar Tillander
---------------------- ---------------------------
Ass't Secretary President
<PAGE>
SECOND AMENDMENT TO STOCK PURCHASE AGREEMENT
This Second Amendment to Stock Purchase Agreement ("SPA") was
made and entered into on the 15th day of February, 1996 by and
among U.S. Energy Corp. ("USE"), Silva Production AB ("Silva")
and The Brunton Company ("Brunton").
WHEREAS, USE, Silva and Brunton entered into a Stock
Purchase Agreement ("SPA") on January 30, 1996, which provides
for the closing of the sale of Brunton stock to Silva to be
completed on or before Thursday, February 15, 1996; and
WHEREAS, the parties have agreed to extend the Closing Date
to Friday, February 16, 1996 at 2:00 p.m. local time in the
offices of USE at 877 North 8th West, Riverton, Wyoming.
NOW for $1.00 and other consideration, it is agreed that the
Closing Date of the SPA be extended from Thursday, February 15,
1996 to Friday, February 16, 1996 at 2 p.m.
DATED the day and year first above written.
U.S. ENERGY CORP. SILVA PRODUCTION AB
By: s/ Max T. Evans By: s/ Han-Gunnar Tillander
------------------------ -------------------------
MAX T. EVANS, HANS-GUNNAR TILLANDER,
Secretary President
THE BRUNTON COMPANY
By: s/ Harold F. Herron
-----------------------
HAROLD F. HERRON,
President
