[USE LOGO] U.S. ENERGY CORP.
AMENDMENT NO. 1
MINERALS PLAZA, GLEN L. LARSEN BUILDING
877 NORTH 8TH WEST
RIVERTON, WYOMING 82501
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FRIDAY, DECEMBER 5, 1997
TO THE SHAREHOLDERS OF U.S. ENERGY CORP:
PLEASE TAKE NOTICE that the Annual Meeting of Shareholders of U.S. Energy
Corp., a Wyoming corporation (the "Company" or "USE"), will be held at the
Company's executive offices, 877 North 8th West, Riverton, Wyoming 82501 on
Friday, December 5, 1997, at 11:00 a.m., local time, or at any adjournments
thereof (the "Meeting"), for the purpose of acting upon:
1. The election of one director to serve until the third succeeding
annual meeting of shareholders, and until his successor has been duly
elected or appointed and qualified;
2. Amending the 1996 Stock Award Program to extend the term of the Stock
Award Program through 2007 and eliminate the requirement of annual
shareholder approval of the number of shares awarded each year. The
total number of shares which may be issued under the Stock Award
Program (approved by the shareholders in 1996) will not be increased.
3. Such other business as may properly come before such meeting.
Only shareholders of record at the close of business on Friday, October
10, 1997, will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof. The Company's transfer books will not be closed for the
Meeting.
A list of shareholders entitled to vote at the Meeting will be available
for inspection by any record shareholder at the Company's principal executive
offices in Riverton, Wyoming. The inspection period begins two days after the
date this Notice is given and ends at the conclusion of the Meeting.
By Order of the Board of Directors
/s/ Max T. Evans
MAX T. EVANS, Secretary
Please date, sign and return your Proxy so that your shares may be voted
as you wish, and to assure quorum. The prompt return of your signed Proxy,
regardless of the number of shares you hold, will aid the Company in reducing
the expense of additional Proxy solicitation. The giving of such Proxy does not
affect your right to vote in person should you attend the Meeting.
YOUR VOTE IS IMPORTANT
Dated: November 7, 1997
<PAGE>
U.S. ENERGY CORP.
MINERALS PLAZA, GLEN L. LARSEN BUILDING
877 NORTH 8TH WEST
RIVERTON, WYOMING 82501
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FRIDAY, DECEMBER 5, 1997
The enclosed Proxy is solicited on behalf of the Board of Directors (the
"Board") of U.S. Energy Corp. (the "Company" or "USE") for use at the Annual
Meeting of Shareholders to be held at 11:00 a.m. local time on Friday, December
5, 1997 (the "Meeting"). It is expected that the Notice of Meeting, Proxy
Statement and Proxy will be mailed to record shareholders on or about November
7, 1997.
REVOCABILITY OF PROXY
The Proxy may be revoked at any time, to the extent it has not been
exercised, by: (i) written revocation; (ii) executing a later-dated Proxy and
delivering it to the Company; (iii) requesting (in writing) a return of the
Proxy; or (iv) the shareholder voting in person at the Meeting.
VOTING OF PROXY
If the enclosed Proxy is executed and returned, it will be voted as
indicated by the shareholder on the proposals. Unless otherwise instructed to
the contrary in the Proxy, the appointees named in the Proxy will:
1. VOTE FOR the management nominee to the Board; and
2. VOTE in favor of extending the term of the 1996 Stock Award
Program, and eliminate the requirement of annual shareholder
approval of the number of shares awarded each year.
3. VOTE in accordance with their best judgment on any other matters
that may properly come before the Meeting.
As of the date of the Notice of Meeting and Proxy Statement, the
management of the Company has no knowledge of other matters that may be brought
before the Meeting.
SOLICITATION
The costs of preparing, assembling and mailing the Notice of Meeting,
Proxy Statement, Proxy, (collectively the "Proxy Materials") as well as
solicitations of the Proxies and miscellaneous costs with respect to the same,
will be paid by the Company. The solicitation is to be made by use of the mails.
The Company may also use the services of its directors, officers and employees
to solicit Proxies, personally or by telephone and telegraph, at no additional
salary or compensation. The Board does not expect to use specially engaged
employees or paid solicitors, although it reserves the right to do so.
The Company intends to request banks, brokerage houses and other such
custodians, nominees and fiduciaries to forward copies of the Proxy Materials to
those persons for whom they hold shares and request authority for the execution
of the Proxies. The Company will reimburse the nominee holders for reasonable
out-of-pocket expenses incurred by them in so doing.
VOTING SECURITIES
Only holders of record of shares of the Company's $.01 par value common
stock (the "Common Stock"), at the close of business on Friday, October 10,
1997, will be entitled to vote at the Meeting. On the record date, the Company
had 6,855,051 shares of Common Stock outstanding and entitled to vote. The
Company has no other class of voting securities outstanding. Each share of
Common Stock is entitled to one vote, in person or by proxy, on all matters
other than the election of directors, with respect to which cumulative voting is
provided. Cumulative voting generally allows each holder of shares of Common
Stock to multiply the number of shares owned by the number of directors being
elected, and to distribute the resulting number of votes among nominees in any
proportion that the holder chooses.
<PAGE>
A majority of the issued and outstanding shares of Common Stock,
represented in person or by Proxy, constitutes a quorum at any shareholders'
meeting.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following is a list of all record holders who, as of October 10,
1997 beneficially owned more than five percent of the outstanding shares of
Common Stock, as reported in filings with the Securities Exchange Commission
(the "SEC") or as otherwise known to the Company. Except as otherwise noted,
each holder exercises the sole voting and dispositive powers over the shares
listed opposite the holder's name, excluding the shares subject to forfeiture
and those held in ESOP accounts established for the employee's benefit.
Dispositive powers over the forfeitable shares held by employees and a
non-employee director who are not officers is shared by the Company's Board of
Directors. Voting and dispositive powers are shared by the Company's
non-employee directors (Messrs. Anderson, Bebout, Brenman and Fraser) over
forfeitable shares held by the Company's five executive officers ("Officers
Forfeitable Shares"). The ESOP Trustees exercise voting powers over
non-allocated ESOP shares and dispositive powers over all ESOP shares. It should
be noted that voting and dispositive powers over certain shares are shared by
two or more of the listed holders. Such securities are reported opposite each
holder having a shared interest therein. See "Certain Other Transactions".
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
----------------------------------------------------------------
TOTAL
NAME AND ADDRESS VOTING RIGHTS DISPOSITIVE RIGHTS BENEFICIAL PERCENT
OF BENEFICIAL OWNER SOLE SHARED SOLE SHARED OWNERSHIP OF CLASS(1)
- ------------------- ---- ------ ---- ------ --------- -----------
<S> <C> <C> <C> <C> <C> <C>
John L. Larsen(2) 575,277 1,056,338 548,636 1,404,826 1,982,888 27.5%
201 Hill Street
Riverton, WY 82501
Max T. Evans(3) 108,461 868,726 108,461 1,115,364 1,242,111 17.8%
1410 Smith Road
Riverton, WY 82501
Daniel P. Svilar(4) 135,363 524,059 113,163 524,059 685,272 9.9%
580 S. Indiana Street
Hudson, WY 82515
Michael D. Zwickl(5) 65,839 512,359 65,839 512,359 578,198 8.4%
137 North Beech Street
Casper, WY 82601
Kathleen R. Martin(6) -0- 512,359 -0- 512,359 512,359 7.5%
309 North Broadway
Riverton, WY 82501
Crested Corp. 512,359 -0- 512,359 -0- 512,359 7.5%
877 North 8th West
Riverton, WY 82501
Harold F. Herron(7) 84,674 368,979 79,067 717,467 817,547 11.8%
3425 Riverside Road
Riverton, WY 82501
U.S. Energy Corp. ESOP(8) 155,811 -0- 402,449 -0- 402,449 5.9%
877 North 8th West
Riverton, WY 82501
Kennedy Capital
Management, Inc. 565,323 -0- 806,473 -0- 806,473 11.8%
10829 Olive Boulevard
St. Louis, MO 63141
2
<PAGE>
<FN>
(1) Percent of class is computed by dividing the number of shares
beneficially owned plus any options held by the reporting person, by the number
of shares outstanding plus the shares underlying options held by that person.
(2) Mr. Larsen exercises sole voting powers over 242,536 directly owned
shares, 106,000 shares held in joint tenancy with his wife, 200,100 shares
underlying options and 26,641 shares held in the U.S. Energy Corp. Employee
Stock Ownership Plan ("ESOP") account established for his benefit. The directly
owned shares include 27,500 shares gifted to his wife, that have remained in Mr.
Larsen's name. He exercised shared voting rights over 155,811 shares held by the
ESOP, which have not been allocated to accounts established for specific
beneficiaries and shares held by corporations of which Mr. Larsen is a director
consisting of 512,359 shares held by Crested Corp. ("Crested"), 125,556 shares
and 75,000 shares underlying options held by Plateau Resources Limited
("Plateau"), 100,000 shares held and 75,000 shares underlying options held by
Sutter Gold Mining Company ("SGMC"), and 12,612 shares held by Ruby Mining
Company ("Ruby"). Mr. Larsen shares voting and dispositive rights over such
shares with the other directors of those corporations. Mr. Larsen shares voting
powers over the unallocated ESOP shares and dispositive powers over all ESOP
shares in his capacity as an ESOP Trustee with the other ESOP Trustees. Shares
over which sole dispositive rights are exercised consist of directly owned
shares, joint tenancy shares and options, less the 27,500 shares gifted, but not
transferred, to his wife. Shares for which shared dispositive powers are held
consist of the 402,449 shares held by the ESOP, 101,850 shares held by employees
who are not officers or directors of the Company and a non-employee director
("Forfeitable Shares") which are subject to forfeiture, the shares held by
Crested, Plateau, SGMC and Ruby, and the Plateau and SGMC option shares. The
shares listed under "Total Beneficial Ownership" also include 29,426 shares
beneficially held by Mr. Larsen which are subject to forfeiture. The Company's
non-employee directors exercise shared voting and dispositive powers over such
shares. The shares shown as beneficially owned by Mr. Larsen do not include
42,350 shares owned directly by his wife, who exercises the sole investment and
voting powers over those shares.
(3) Mr. Evans exercises sole voting and dispositive powers over 2,901
directly owned shares, 36,389 shares held in joint tenancy with his wife, 11,971
shares held in an Individual Retirement Account ("IRA") for his benefit and
57,200 shares underlying options. Shares over which Mr. Evans exercises shared
voting rights consist of the shares held by Crested, Plateau, the unallocated
ESOP shares and the Plateau options. He exercises shared dispositive rights over
the shares held by Crested, Plateau, the ESOP, and the Plateau options. Mr.
Evans shares voting and dispositive powers over the shares held by Crested and
Plateau with the remaining directors of those companies and over the ESOP shares
with the other ESOP Trustees. The shares listed under "Total Beneficial
Ownership" also include 18,286 shares beneficially held by Mr. Evans which are
subject to forfeiture. The Company's non-employee directors exercise shared
voting and dispositive powers over such shares.
(4) Mr. Svilar exercises sole voting powers over 22,084 directly owned
shares, 12,700 shares held in joint tenancy with his wife, 11,000 shares held
jointly with a deceased family member, 1,000 shares held as custodian for his
minor child under the Wyoming Uniform Transfers to Minors Act (the Minor's
shares), 66,000 shares underlying options and 22,200 shares held in the ESOP
account established for his benefit. He holds sole dispositive power over his
directly held shares, joint tenancy shares, Minor's shares and the shares
underlying his options. The shares over which he exercises shared voting and
dispositive rights consist of the 512,359 shares held by Crested as a director
of Crested with the other directors of Crested and 11,700 shares held by a
nonaffiliated company of which Mr. Svilar is a partner. The shares listed under
"Total Beneficial Ownership" also include 25,850 shares beneficially held by Mr.
Svilar which are subject to forfeiture. The Company's non-employee directors
exercise shared voting and dispositive powers over such shares.
(5) Mr. Zwickl exercises sole voting and dispositive powers over 8,770
directly held shares, 3,444 shares held in an IRA established for his benefit
and 53,625 shares held by two (2) limited partnerships. He is the sole officer
and director of the corporate general partner of those partnerships. As a
director of Crested, Mr. Zwickl exercises shared voting and dispositive powers
over the 512,359 shares held by Crested with the other Crested directors.
(6) Consists of shares held by Crested over which shared voting and
dispositive powers are exercised with the other Crested directors.
3
<PAGE>
(7) Mr. Herron exercises sole voting powers over 54,486 directly owned
shares, 12,000 shares held for his minor children under the Wyoming Uniform
Transfers to Minors Act (the Minor's shares), 11,000 shares underlying options,
5,607 shares held in the ESOP account established for his benefit and 1,581
shares held by Northwest Gold, Inc. ("NWG"). Sole dispositive powers are
exercised over the directly held shares, the Minor's shares, the shares
underlying options and the shares held by NWG. Mr. Herron exercises sole voting
and investment powers over the NWG shares as NWG's sole director. Mr. Herron
exercises shared voting rights over 125,556 shares and 75,000 shares underlying
options held by Plateau, 12,612 shares held by Ruby and the 155,811 unallocated
ESOP shares. Shared dispositive rights are exercised over the shares held by
Plateau, Ruby, all ESOP shares and the 101,850 Forfeitable Shares. Mr. Herron
exercises shared dispositive and voting powers over the shares held by Plateau
and Ruby as a director of those companies with the other directors of those
companies and over the ESOP shares in his capacity as an ESOP Trustee with the
other ESOP Trustees. The shares listed under "Total Beneficial Ownership" also
include 21,013 shares beneficially held by Mr. Herron which are subject to
forfeiture. The Company's non-employee directors exercise shared voting and
dispositive powers over such shares. The shares shown as beneficially owned by
Mr. Herron do not include 2,895 shares owned directly by his wife who exercises
the sole voting and dispositive powers over those shares.
(8) The ESOP holds 402,449 shares, 155,811 of which have not been
allocated to accounts of individual plan beneficiaries. The Trustees exercise
the voting rights over the unallocated shares an dispositive rights over all
ESOP shares. Plan participants exercise voting rights over allocated shares.
</FN>
</TABLE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Pursuant to the Bylaws, Company's directors are divided into three
classes, each consisting of two persons so far as is practicable. Directors are
elected until the third succeeding annual meeting and until their successors
have been duly elected or appointed and qualified or until death, resignation or
removal. Because of the addition of Mr. Fraser in 1996, and the resignation of
Mr. Evans in 1997, only one director is in the class up for re-election in 1977.
The term of one director, John L. Larsen will expire at the Meeting, and he has
been nominated for re-election. The current directors of the Company are:
OTHER MEETING AT
NAME, AGE AND POSITIONS WITH DIRECTOR WHICH TERM
DESIGNATION WITH THE COMPANY SINCE WILL EXPIRE
- ----------- ---------------- ----- -----------
John L. Larsen (66) Chairman, CEO 1966 1997
(nominee) and President Annual Meeting
(c)(d)(e)
Harold F. Herron (44) Vice President 1989 1998
(continuing director) (a)(b)(c)(e) Annual Meeting
David W. Brenman (41) (b)(d) 1989 1998
(continuing director) Annual Meeting
Don C. Anderson (71) (a) 1990 1999
(continuing director) Annual Meeting
Nick Bebout (47) (b)(d) 1989 1999
(continuing director) Annual Meeting
H. Russell Fraser (56) (b)(c)(d) 1996 1999
(continuing director) Annual Meeting
4
<PAGE>
(a) Member of the nominating committee.
(b) Member of the compensation/stock option committee.
(c) Member of the executive committee.
(d) Member of the audit committee.
(e) ESOP trustee.
As noted under "Voting Securities", cumulative voting is allowed in the
election of directors. However, since only one director is up for re-election,
he will be elected providing he receives a majority of all votes cast.
Management recommends that the shareholders vote for the re-election of
Mr. Larsen to the Board of Directors.
Executive officers of the Company are elected by the Board at annual
directors' meetings, which follow each Annual Shareholders' Meeting, to serve
until the officer's successor has been duly elected and qualified, or until
death, resignation or removal by the Board.
FAMILY RELATIONSHIPS.
HAROLD F. HERRON, a director and Vice-President, is the son-in-law of
John L. Larsen, a principal shareholder, Chairman, President and CEO. Nick
Bebout, a director, is a nephew of Daniel P. Svilar, a principal shareholder and
General Counsel. There are no other family relationships among the executive
officers or directors of the Company.
BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS OF DIRECTORS AND NOMINEES.
JOHN L. LARSEN has been principally employed as an officer and director
of the Company and Crested Corp. for more than the past five years. He is also a
director of the Company's subsidiary, Ruby Mining Company ("Ruby"). Crested and
Ruby have registered equity securities under the Securities Exchange Act of 1934
(the "Exchange Act"). Mr. Larsen is Chief Executive Officer and Chairman of the
board of directors of Plateau Resources, Limited and of Sutter Gold Mining
Company, and he is a director of Yellow Stone Fuels Corp.
MAX T. EVANS has been principally employed as an officer and chief
geologist of the Company and Crested for more than the past five years. Mr.
Evans resigned as a director of the Company in 1997. He is President and a
director of Crested, and a director and officer of Plateau. Mr. Evans received
B.S. and M.S. degrees in geology from Brigham Young University.
HAROLD F. HERRON has been the Company's Vice-President since January
1989. From 1976, Mr. Herron has been an employee of Brunton, a manufacturer
and/or marketer of compasses, binoculars and knives. Brunton was a wholly owned
Company subsidiary until Brunton was sold in February 1996. Initially, he was
Brunton's sales manager, and since 1987 he has been its President. Mr. Herron is
a director of Ruby and NWG, which have registered equity securities under the
Exchange Act. He is also an officer and director of Plateau. Mr. Herron received
an M.B.A. degree from the University of Wyoming after receiving a B.S. degree in
Business Administration from the University of Nebraska at Omaha.
DAVID W. BRENMAN has been a director of the Company since January 1989.
Since September 1988, Mr. Brenman has been a self-employed financial consultant.
In that capacity, Mr. Brenman has assisted the Company and Crested in
negotiating certain financing arrangements. From February 1987 through September
1988, Mr. Brenman was a vice-president of project financing for Lloyd's
International Corp., a wholly-owned subsidiary of Lloyd's Bank, PLC. From
October 1984 through February 1987, Mr. Brenman was President, and continues to
be a director of Cogenco International, Inc., a company engaged in the electric
cogeneration industry, which has registered equity securities under the Exchange
Act. Mr. Brenman has an L.L.M. degree in taxation from New York University and a
J.D. degree from the University of Denver.
5
<PAGE>
DON C. ANDERSON has been a Company director since May 1990. From January
1990 until mid-fiscal 1993, Mr. Anderson was the Manager of the Geology
Department for the Company. Mr. Anderson was Manager of Exploration and
Development for Pathfinder Mines Corporation, a major domestic uranium mining
and milling corporation, from 1976 until his retirement in 1988. Previously, he
was Mine Manager for Pathfinder's predecessor, Utah International, Inc., from
1965 to 1976. He received a B. S. degree in geology from Brigham Young
University.
NICK BEBOUT has been director and President of NUCOR, Inc. ("NUCOR"), a
privately-held corporation that provides exploration and development drilling
services to the mineral and oil and gas industries, since 1987. Prior to that
time, Mr. Bebout was Vice President of NUCOR from 1984. Mr. Bebout is also an
officer, director and owner of other privately-held entities involved in the
resources industry.
H. RUSSELL FRASER has been chairman of the board and chief executive
officer of Fitch Investors Services, L.P. for more than the past five years.
Fitch Investors Services, L.P., New York, New York, is a nationwide stock and
bond rating and information distribution company. From 1980-1989, Mr. Fraser
served as president and chief executive officer of AMBAC, the oldest municipal
bond issuer in the United States. Under his direction, AMBAC's assets grew to
more than $1 billion at year-end 1988 from $35 million at the beginning of 1980,
while statutory net income after taxes increased to $57 million in 1988 from a
loss in 1979.
Before joining AMBAC, Mr. Fraser was senior vice president and director
of fixed-income research at Paine Webber, Inc. While a member of the board of
directors at Paine Webber, Mr. Fraser participated in both the corporate and
public finance departments and headed Paine Webber's trading and sales for all
corporate bond products. Previously, he managed corporate ratings at Standard &
Poor's, supervising research analysis of corporate bonds, preferred stock, and
commercial paper. During his tenure at S&P he started commercial paper ratings
'A-1' through 'A-3', initiating the plus and minus qualifiers and rating the
first two financial guaranty companies, AMBAC and MBIA. Mr. Fraser holds a B.S.
in finance and economics from the University of Arizona. He is a member of the
Municipal Analysts Group of New York and founder of the Fixed Income Analysts
Society.
ADVISORY BOARD
The Board of Directors has established an Advisory Board to be comprised
of individuals with experience in the areas of business, financial services,
national elected office, and other areas. The members of the Advisory Board will
meet quarterly to review topics of interest or concern to the Board of
Directors, and report to the Board of Directors the findings and recommendations
of the Advisory Board. The Advisory Board will not include any directors or
officers of the Company, and none of the findings or recommendations of the
Advisory board will be binding upon the Company.
The first appointment to the Advisory Board is the Honorable Alan K.
Simpson.
SECURITY OWNERSHIP OF NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of October 10, 1997, the shares of
Common Stock, and the $.001 par value common stock of the Company's 52%-owned
subsidiary, Crested, held by each director and nominee, and by all officers and
directors as a group. Unless otherwise noted, the listed record holder exercises
sole voting and dispositive powers over the shares reported as beneficially
owned, excluding the shares subject to forfeiture and those held in ESOP
accounts established for the employee's benefit. Dispositive powers over the
forfeitable shares held by employees and a non-employee director who are not
officers, is shared by the Company's Board of Directors. Voting and dispositive
powers are shared by the Company's non-employee directors (Messrs. Anderson,
Bebout, Brenman and Fraser) over forfeitable shares held by the Company's five
executive officers. The ESOP Trustees exercise voting powers over unallocated
ESOP shares and dispositive powers over all ESOP shares. It should be noted that
voting and dispositive powers for certain shares are shared by two or more of
the listed holders. Such shares are reported opposite each holder having a
shared interest therein, but are only included once in the shareholdings of the
group presented in the table.
6
<PAGE>
<TABLE>
<CAPTION>
COMPANY COMMON STOCK CRESTED COMMON STOCK
------------------------------- ------------------------------
AMOUNT AND PERCENT AMOUNT AND PERCENT
NATURE OF OF NATURE OF OF
BENEFICIAL OWNERSHIP CLASS(1) BENEFICIAL OWNERSHIP CLASS(1)
-------------------- -------- -------------------- --------
<S> <C> <C> <C> <C>
John L. Larsen 1,982,888(2) 27.5% 5,879,182(9) 55.5%
Harold F. Herron 817,547(2) 11.8% 5,574,999(10) 53.3%
Don C. Anderson 222,813(3) 3.3% 5,300,297(11) 51.4%
Nick Bebout 229,764(4) 3.6% 5,300,297(11) 51.4%
David W. Brenman 218,658(5) 3.2% 5,300,297(11) 51.4%
H. Russell Fraser 217,658(6) 3.2% 5,300,297(11) 51.4%
Max T. Evans 1,242,111(2) 17.8% 414,236(12) 4.0%
Daniel P. Svilar 685,272(2) 9.9% 280,000(13) 2.7%
R. Scott Lorimer 64,379(7) 1.0% 15,000(14) *
All officers and
directors as a
group (eight persons) 2,444,772(8) 35.7% 6,244,235(15) 60.6%
<FN>
* Less than one percent.
(1) Percent of class is computed by dividing the number of shares
beneficially owned plus any options held by the reporting person or group, by
the number of shares outstanding plus the shares underlying the options held by
that person or group.
(2) See footnotes for this person to the table presented under the
heading "Principal Holders of Voting Securities".
(3) Includes 6,100 directly held shares, 3,055 shares held in an IRA
established for Mr. Anderson's benefit, and 213,658 shares subject to
forfeiture. Mr. Anderson exercises sole voting and dispositive power over the
directly held shares and IRA shares. He exercises sole voting power over 21,000
shares he holds which are subject to forfeiture. Mr. Anderson exercises shared
dispositive powers over the 101,850 shares held by individuals who are not
officers of the Company which are subject to forfeiture ("Forfeitable Shares"),
with the other directors of the Company. As a non-employee director, Mr.
Anderson exercises shared voting and dispositive rights over 111,808 shares held
by executive officers which are subject to forfeiture ("Officers Forfeitable
Shares"), with the other non-employee directors.
(4) Consists of 16,056 shares held directly, 50 shares held in joint
tenancy with his wife and 213,658 shares subject to forfeiture. Mr. Bebout
exercises sole voting and dispositive powers over the directly held shares and
joint tenancy shares. He exercises shared dispositive powers over the 101,850
Forfeitable Shares with the other directors of the Company and as a non-employee
director, Mr. Bebout exercises shared voting and dispositive rights over the
111,808 Officers Forfeitable Shares, with the other non-employee directors.
(5) Consists of 5,000 shares held directly and 213,658 shares subject to
forfeiture. Mr. Brenman exercises sole voting and dispositive powers over the
5,000 directly held shares. Mr. Brenman exercises shared dispositive
7
<PAGE>
powers over the 101,850 Forfeitable Shares with the other directors of the
Company. As a non-employee director, Mr. Brenman exercises shared voting and
dispositive rights over the 111,808 Officers Forfeitable Shares, with the other
non-employee directors.
(6) Consists of 1,000 directly held shares and 4,000 shares held in an
IRA for Mr. Fraser's benefit, and 213,658 shares subject to forfeiture. Mr.
Fraser exercises sole voting and dispositive rights over the directly held
shares and the IRA shares. Mr. Fraser exercises shared dispositive powers over
the 101,850 Forfeitable Shares with the other directors of the Company. As a
non-employee director, Mr. Fraser exercises shared voting and dispositive rights
over the 111,808 Officers Forfeitable Shares, with the other non-employee
directors.
(7) Mr. Lorimer exercises sole voting powers over 2 directly held
shares, 17,444 shares held in the ESOP account established for his benefit, and
29,700 shares underlying options. Mr. Lorimer exercises sole dispositive powers
over his directly held shares and the shares underlying his options. The shares
listed under "Total Beneficial Ownership" also include 17,233 shares
beneficially held by Mr. Lorimer which are subject to forfeiture. The Company's
non-employee directors exercise shared voting and dispositive powers over such
shares.
(8) Consists of 1,006,182 shares over which the group members exercise
sole voting rights, including 364,000 shares underlying options and 32,248
shares allocated to ESOP accounts established for the benefit of group members.
The listed shares include 913,290 shares, including 364,000 shares underlying
options, over which group members exercise sole dispositive rights. Shared
voting and dispositive rights are exercised with respect to 1,167,234 and
1,528,334 (including 213,658 shares subject to forfeiture) shares, respectively.
(9) Consists of 5,300,297 Crested shares held by the Company, 100,000
shares and 150,000 shares underlying options held by SGMC, 60,000 shares and
150,000 shares underlying options held by Plateau, 53,885 shares held by Ruby
with respect to which shared voting and dispositive powers are exercised as a
director with the other directors of those Companies and 65,000 forfeitable
shares held by employees, over which Mr. Larsen exercises shared dispositive
powers with the remaining Crested directors.
(10) Includes 6,932 directly held shares and 3,885 shares held by NWG
over which Mr. Herron exercises sole voting and investment powers. Mr. Herron is
the sole director of NWG. Also includes the Crested shares held by the Company
and Ruby, and the shares and shares underlying options held by Plateau, with
respect to which shared voting and dispositive powers are exercised as a USE,
Plateau and Ruby director with the other directors of those companies.
(11) Consist of the Crested shares held by the Company with respect to
which shared voting and dispositive powers are exercised as a director with the
other directors of the Company.
(12) Includes 139,236 directly held shares, and 60,000 shares and
150,000 shares underlying options held by Plateau, with respect to which shared
voting and dispositive powers are exercised as a director with the other
directors of Plateau and 65,000 forfeitable shares held by employees, over which
Mr. Evans exercises shared dispositive powers with the remaining Crested
directors.
(13) Consists of 175,000 directly held shares and 40,000 shares which
are held in joint tenancy with a deceased family member, over which Mr. Svilar
exercises sole voting and dispositive powers and 65,000 forfeitable shares held
by employees, over which Mr. Svilar exercises shared dispositive powers with the
remaining Crested directors.
(15) Consists of 15,000 shares which are subject to forfeiture. Mr.
Lorimer exercises sole voting power of such shares, while the Crested directors
share the dispositive powers over the shares.
(15)Consists of 380,053 shares over which the group members exercise
sole voting rights, including 15,000 shares subject to forfeiture. The listed
shares include 365,053 shares over which group members exercise sole dispositive
rights. Shared voting and dispositive rights are exercised with respect to
5,814,182 and 5,79,182 (including 65,000 shares subject to forfeiture) shares,
respectively.
</FN>
</TABLE>
8
<PAGE>
Each director beneficially holds the 2,400,000, 2,040,000 and
255,000,000 shares of Ruby, NWG and Four Nines Gold, Inc. ("FNG") common stock,
respectively, held by the Company. They exercise shared voting and dispositive
powers over those shares as Company directors with the other Company directors.
Those shares represent 26.7%, 7.6%, and 50.9% of the outstanding shares of Ruby,
NWG, and FNG, respectively. John L. Larsen beneficially holds 272,500,000 shares
of FNG common stock (54.4% of the outstanding shares), which includes
255,000,000 shares held by the Company, 5,000,000 held by USECC Joint Venture
and 5,000,000 shares held by Crested, over which Mr. Larsen shares voting and
dispositive powers with the remaining directors of the Company and Crested.
Harold F. Herron beneficially holds 2,400,500, 2,597,500, and 265,000,000 shares
of the common stock of Ruby, NWG, and FNG, respectively, representing 26.7%,
9.7%, and 52.9%, respectively, of those classes of stock. Daniel P. Svilar
beneficially owns 14,000,000 shares of the common stock of FNG (4,000,000 shares
directly in joint tenancy with other family members), representing 2.8% of that
class. None of the other directors or officers directly hold any other shares of
stock of Ruby, NWG or FNG. All executive officers and directors of the Company
as a group (8 persons) hold 2,400,500, 2,597,500, and 284,500,000 shares of the
stock of Ruby, NWG, and FNG, representing 26.7%, 9.7%, 60.0% and 56.2% of the
outstanding shares of those companies, respectively.
The Company has reviewed Forms 3, 4 and 5 reports concerning ownership
of Common Stock in the Company, which have been filed with the SEC under Section
16(a) of the Exchange Act, and received written representations from the filing
persons. Based solely upon review of the reports and representations, Messrs.
Larsen and Herron each had three late filings; Messrs. Evans, Svilar, Lorimer
and Fraser each had two late filings, and Crested Corp. and Messrs. Anderson and
Brenman each had one late filing. The Company believes no other director,
executive officer, beneficial owner of more than ten percent of the Common
Stock, or other person subject to obligations, failed to file such reports on a
timely basis during fiscal 1997.
INFORMATION CONCERNING EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following information is provided pursuant to Item 401 of Reg. S-B,
regarding the executive officers of the Company who are not also directors.
MAX T. EVANS, age 73, has been Secretary for USE and President of
Crested for more than the past five years. Mr. Evans had been a director of USE
for more than the past five years, prior to April 17, 1997. He is also an
officer and director of Plateau. He serves at the will of each board of
directors. There are no understandings between Mr. Evans and any other person
pursuant to which he was named as an officer. He has no family relationships
with any of the other executive officers or directors of USE or Crested. During
the past five years, Mr. Evans has not been involved in any Reg. S-B Item 401(d)
proceeding.
DANIEL P. SVILAR, age 68 has been General Counsel for USE and Crested
for more than the past five years. He also has served as Secretary and a
director of Crested, Assistant Secretary of USE, and is an officer of Plateau
and SGMC. His positions of General Counsel to, and as officers of the companies,
are at the will of each board of directors. There are no understandings between
Mr. Svilar and any other person pursuant to which he was named as officer or
General Counsel. He has no family relationships with any of the other executive
officers or directors of USE or Crested, except his nephew Nick Bebout is a USE
director. During the past five years, Mr. Svilar has not been involved in any
Reg. S-B Item 401(d) proceeding.
ROBERT SCOTT LORIMER, age 46, has been Treasurer, Chief Financial
Officer, Controller and Chief Accounting Officer for USE and Crested for more
than the past five years. Mr. Lorimer is also an officer of Plateau, SGMC and
Yellow Stone Fuels Corp. Mr. Lorimer is also chief financial officer and a
director of the Brunton Company. He serves at the will of the Boards of
Directors. There are no understandings between Mr. Lorimer and any other person,
pursuant to which he was named an officer, and he has no family relationship
with any of the other executive officers or directors of USE or Crested. During
the past five years, he has not been involved in any Reg. S-B Item 401(d) listed
proceeding.
9
<PAGE>
EXECUTIVE COMPENSATION
Under a Management Agreement dated August 1, 1981, the Company and
Crested share certain general and administrative expenses, including
compensation of the officers and directors of the companies (but excluding
directors' fees) which have been paid through the USECC Joint Venture ("USECC").
Substantially all the work efforts of the officers of the Company and Crested
are devoted to the business of both the Company and Crested.
All USECC personnel are Company employees, in order to utilize the
Company's ESOP as an employee benefit mechanism. The Company charges USECC for
the direct and indirect costs of its employees for time spent on USECC matters,
and USECC charges one-half of that amount to each of Crested and the Company.
The following table sets forth the compensation paid to the USE Chief
Executive Officer, and those of the four most highly compensated USE executive
officers who were paid more than $100,000 cash in any of the three fiscal years
ended May 31, 1997. The table includes compensation paid such persons by Crested
for 1995, 1996 and 1997, and Brunton for 1995 and 1996 for such persons'
services to such subsidiaries.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Name Annual Restricted All Other
and Compen- Stock LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary($) Bonus($) ($) ($) SARS(#) ($) ($)(4)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John L. Larsen 1997 $131,200 $4,000 -- $ 98,158(1) -0- -- $13,500
CEO and 1996 148,600 -0- -- -- -0- -- 15,566
President 1995 144,023 2,751 -- 9,000(2) -0- -- 13,361
Daniel P. Svilar 1997 $109,700 $3,400 -- $ 81,454(1) -0- -- $11,300
General Counsel 1996 124,153 -0- -- -- -0- -- 14,009
and Assistant 1995 112,615 2,076 -- 8,100(2) -0- -- 11,008
Secretary
Harold F. Herron 1997 $31,900 $ 990 -- $120,858(3) -0- -- $ 3,300
Vice President 1996 113,600 -0- -- -- -0- -- 4,037
1995 117,238 2,033 -- -- -0- -- 6,626
R. Scott Lorimer 1997 $100,300 $3,200 -- $ 54,299(1) -0- -- $10,300
Treasurer 1996 110,100 -0- -- -- -0- -- 13,749
and CFO 1995 112,403 2,098 -- 5,681(2) -0- -- 10,989
<FN>
(1) Includes bonus shares of USE common stock equal to 40% of original
bonus shares issued FY 1990, multiplied by $10.875, the closing bid price on
issue dates. Also includes shares issued under 1996 Stock Award Program
multiplied by $10.875, the closing bid price on the issue dates. These shares
are subject to forfeiture on termination of employment, except for retirement,
death or disability.
(2) Includes bonus shares equal to 20% of original bonus shares issued
FY 1990, multiplied by $3.75 in 1995, the closing bid price on issue dates.
These shares are subject to forfeiture on termination of employment, except for
retirement, death or disability.
10
<PAGE>
(3) Includes bonus shares equal to 100% of original bonus shares issued
FY 1990, multiplied by $10.875, the closing bid price on issue date. Also
includes shares issued under the 1996 Stock Award Program multiplied by $10.875,
the closing bid price on the issue date. These shares are subject to forfeiture
on termination of employment, except for retirement, death or disability.
(4) Dollar values for ESOP contributions and 401K matching contributions.
</FN>
</TABLE>
EXECUTIVE COMPENSATION PLANS AND EMPLOYMENT AGREEMENTS
To provide an incentive to Mr. Larsen to develop the Green Mountain
Mining Venture (" GMMV") into a producing mine as soon as possible, in fiscal
1993 the USE Board adopted a long-term incentive arrangement under which Mr.
Larsen is to be paid a non-recurring $1,000,000 cash bonus, provided that the
Nuexco Exchange Value of uranium oxide concentrates has been maintained at
$25.00 per pound for six consecutive months, and provided further that USE has
received cumulative cash distributions of at least $10,000,000 from GMMV as a
producing property.
The Company has adopted a plan to pay the estates of Messrs. Larsen,
Evans and Svilar amounts equivalent to the salaries they are receiving at the
time of their death, for a period of one year after death, and reduced amounts
for up to five years thereafter. The amounts to be paid in such subsequent years
have not yet been established, but would be established by the Boards of the
Company and Crested.
Mr. Svilar has an employment agreement with the Company and Crested,
which provides for an annual salary in excess of $100,000, with the condition
that Mr. Svilar pay an unspecified amount of expenses incurred by him on behalf
of the Company and its affiliates. In the event Mr. Svilar's employment is
involuntarily terminated, he is to receive an amount equal to the salary he was
being paid at termination, for a two year period. If he should voluntarily
terminate his employment, the Company and Crested will pay him that salary for
nine months thereafter. The foregoing is in addition to Mr. Svilar's Executive
Severance and Non-Compete Agreement with the Company (see below).
In fiscal 1992, the Company signed Executive Severance and Non-Compete
Agreements with Messrs. Larsen, Evans, Svilar and Lorimer, providing for payment
to such person upon termination of his employment with the Company, occurring
within three years after a change in control of the Company, of an amount equal
to (i) severance pay in an amount equal to three times the average annual
compensation over the prior five taxable years ending before change in control,
(ii) legal fees and expenses incurred by such persons as a result of
termination, and (iii) the difference between market value of securities
issuable on exercise of vested options to purchase securities in USE, and the
options' exercise price. These Agreements also provide that for the three years
following termination, the terminated individual will not compete with USE in
most of the western United States in regards to exploration and development
activities for uranium, molybdenum, silver or gold. For such non-compete
covenant, such person will be paid monthly over a three year period an agreed
amount for the value of such covenants. These Agreements are intended to benefit
the Company's shareholders, by enabling such persons to negotiate with a hostile
takeover offeror and assist the Board concerning the fairness of a takeover,
without the distraction of possible tenure insecurity following a change in
control. As of this Proxy Statement date, the Company is unaware of any proposed
hostile takeover.
The Company and Crested provide all of their employees with certain
forms of insurance coverage, including life and health insurance. The health
insurance plan does not discriminate in favor of executive employees; life
insurance of $50,000 is provided to each member of upper management (which
includes all persons in the compensation table), $25,000 of such coverage is
provided to middle-management employees, and $15,000 of such coverage is
provided to other employees.
EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP"). An ESOP has been adopted to
encourage ownership of the Common Stock by employees, and to provide a source of
retirement income to them. The ESOP is a combination stock bonus plan and money
purchase pension plan. It is expected that the ESOP will continue to invest
primarily in the Common Stock. Messrs. Larsen, Herron and Evans are the trustees
of the ESOP.
11
<PAGE>
Contributions to the stock bonus plan portion of the ESOP are
discretionary and are limited to a maximum of 15% of the covered employees'
compensation for each year ended May 31. Contributions to the money purchase
portion of the ESOP are mandatory (fixed at ten percent of the compensation of
covered employees for each year), are not dependent upon profits or the presence
of accumulated earnings, and may be made in cash or shares of Company's Common
Stock.
The Company made a contribution of 24,069 shares to the ESOP for fiscal
1997, all of which were contributed under the money purchase pension plan. At
the time the shares were contributed, the market price was approximately $8.87
per share, for a total contribution with a market value of $213,492, (which has
been funded by the Company). Crested and the Company are each responsible for
one-half of that amount (i.e., $106,746) and Crested currently owes its one-half
to the Company.
Employees are eligible to participate in the ESOP on the first day of
the plan year (June 1) following completion of one year of service in which at
least 1,000 hours are credited. Each employee's participation in the ESOP
continues until the ESOP's anniversary date coinciding with or next following
termination of service by reason of retirement, disability or death. In these
cases, the participant will share in the allocation of USE's contributions for
the ESOP year in which the retirement, death or disability occurs, and will have
a fully-vested interest in allocations to the participant's account.
An employee's participation in the ESOP does not cease upon termination
of employment. If the employment of a participant in the ESOP is terminated for
reasons other than disability, death, or retirement (unless the employee
receives a lump sum distribution upon the termination of employment),
participation continues following the termination, until five consecutive
one-year breaks in service have been incurred. An employee is deemed to have
incurred a one-year break in service during any year in which 500 or fewer hours
of service are completed.
Employee interests in the ESOP are earned pursuant to a seven year
vesting schedule. Upon completion of three years of service for the Company, the
employee is vested as to 20% of the employee's account in the ESOP, and
thereafter at the rate of 20% per year. Any portion of an employee's ESOP
account which is not vested is forfeited upon termination of employment for any
reason, other than retirement, disability, or death.
The 24,069 shares issued to the ESOP for fiscal 1997 included 1,524
shares allocated to John L. Larsen's account, 886 shares allocated to Max T.
Evans' account, 371 shares allocated to Harold F. Herron's account, 1,274 shares
allocated to Daniel P. Svilar's account, and 1,166 shares allocated to R. Scott
Lorimer's account, for a total of 5,221 shares allocated to accounts for all
executive officers as a group (five persons). Shares forfeited by terminated
employees who were not fully vested were reallocated to plan participants and
included 323, 188, 78, 271 and 247 shares to the accounts of Messrs. Larsen,
Evans, Herron, Svilar and Lorimer, respectively. The accounts of the executive
officers are fully vested, as they have all been employed by the Company and
USECC for more than the past seven years. Allocations of shares for fiscal 1998
have not been made with respect to any participant in the ESOP.
The maximum loan outstanding during fiscal 1997 under a loan arrangement
between the Company and the ESOP, was $1,014,300 at May 31, 1997 for loans made
in fiscal 1992 and 1991. Interest owed by the ESOP was not booked by the
Company. Crested pays one-half of the amounts contributed to the ESOP by USE.
Because the loans are expected to be repaid by contributions to the ESOP,
Crested may be considered to indirectly owe one-half of the loan amounts to USE.
The loan was reduced by $183,785 plus interest of $168,574.84 through the
contribution of shares by the ESOP to the ESOP in 1996. There was no similar
reduction, however, for fiscal 1997.
STOCK OPTION PLAN. The Company has an incentive stock option plan
("ISOP"), reserving an aggregate of 975,000 shares of Common Stock for issuance
upon exercise of options granted thereunder. Awards under the plan are made by a
committee of two or more persons selected by the Board (presently Messrs.
Herron, Bebout, Brenman and Fraser). The committee establishes the exercise
periods and exercise prices for options granted under the plan. The Board
ultimately ratifies the actions of the committee. Total grants to officers and
directors as a group may not exceed 275,000 shares.
12
<PAGE>
Options expire no later than ten years from the date of grant, and upon
termination of employment for cause. Subject to the ten year maximum period,
upon termination, unless terminated for cause, options are exercisable for three
months or in the case of retirement, disability or death, for one year. In
fiscal 1994, conditions relating to periods of Company service before vesting of
stock purchased on exercise of the non-qualified options were removed.
For fiscal 1996, options to purchase 360,000 shares of Common Stock were
granted to USE employees (none were granted to officers or directors), at an
exercise price of $4.00 per share (the closing bid price on grant date in
December 1996). In fiscal 1997, options to purchase 106,100 shares (previously
issued to employees in 1992 and 1996) were exercised. None of the exercised
options had been held by officers or directors.
The following table shows unexercised options, how much thereof were
exercisable, and the dollar values for in-the-money options, at May 31, 1997.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares FY-End (#) FY-End($)
Acquired Value Exercisable/ Exercisable
Name On Exercise (#) Realized($) Unexercisable Unexercisable
- ---- --------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
John L. Larsen, -0- -0- 100,000 $687,000(1)
CEO, President exercisable exercisable and
unexercised
100,100 $597,597(2)
exercisable exercisable and
unexercised
Max T. Evans, -0- -0- 57,200 $341,484(2)
Secretary exercisable exercisable and
unexercised
Harold F. Herron, -0- -0- 11,000 $65,670(2)
Vice President exercisable exercisable and
unexercised
Daniel P. Svilar -0- -0- 66,000 $394,020(2)
Assistant Secretary exercisable exercisable and
unexercised
R. Scott Lorimer -0- -0- 29,700 $177,309(2)
Treasurer exercisable exercisable and
unexercised
<FN>
(1) Equal to $8.87 closing bid on last trading day in FY 1997, less $2.00 per share option exercise price,
multiplied by all shares exercisable.
(2) Equal to $8.87 closing bid on last trading day in FY 1997, less $2.90 per share option exercise price,
multiplied by all shares exercisable.
</FN>
</TABLE>
RESTRICTED STOCK PLANS. The Company and Crested have issued stock
bonuses to various executive officers and directors of the Company and others.
These shares are subject to forfeiture to the issuer by the grantee if
employment terminates otherwise than for death, retirement or disability. If the
required service is completed, the risk of forfeiture lapses and the shares
become the unrestricted property of the holder. Messrs. Larsen, Evans, Herron,
Svilar, Lorimer and all executive officers who are participants of this
restricted stock plan, as a group (five persons), received 25,200, 12,750,
18,900, 18,360, 15,120, and 90,330 shares of Common Stock, respectively,
13
<PAGE>
through fiscal 1997. Shares issued through fiscal 1997 also include 20,000 for
Don C. Anderson, director. The shares issued in 1997 represent a 40% bonus (20%
for 1996 and 20% for 1997, and 100% for Mr. Herron) on this plan's original
shares. The expenses relating to these stock issuances are shared equally by the
Company and Crested. Additional shares were issued in calendar 1997 under the
1996 Stock Award Program. See below.
SUBSIDIARY PLANS. During the year ended May 31, 1991, Brunton adopted a
salary deduction plan intended to qualify as a deferred compensation plan under
Internal Revenue Code Section 401(k). Harold F. Herron, John L. Larsen, Daniel
P. Svilar and R. Scott Lorimer are the only Company officers who are able to
participate in this retirement plan. The fiscal 1994 acquisition of Brunton by
the Company, and the sale of Brunton in 1996, have not affected the Brunton
401(k) plan.
Other than as set forth above, neither the Company nor any of its
subsidiaries have any pension, stock option, bonus, share appreciation, rights
or other plans pursuant to which they compensate the executive officers and
directors of the Company. Other than as set forth above, no executive officer
received other compensation in any form which, with respect to any individual
named in the Cash Compensation Table, exceeded ten percent of the compensation
reported for that person, nor did all executive officers as a group receive
other compensation in any form which exceeded ten percent of the compensation
reported for the group.
DIRECTORS' FEES AND OTHER COMPENSATION
The Company pays non-employee directors a fee of $150 per meeting
attended. All directors are reimbursed for expenses incurred with attending
meetings.
Prior to fiscal 1992, the Board authorized the Executive Committee to
make loans to members of the Board, or to guarantee their obligations in amounts
of up to $50,000, if such loans or surety arrangements would benefit the
Company. Any loans or surety arrangements for directors which are in excess of
$50,000 will require Board rather than Executive Committee approval. The Company
loaned $25,000 to David W. Brenman under this plan prior to fiscal 1991. The
loan to Mr. Brenman bears interest at the prime rate of the Chase Manhattan Bank
and was due September 1, 1994, but has been extended to December 31, 1997 by
Board vote (Mr. Brenman abstaining). The loan was provided as partial
consideration for Mr. Brenman's representation of the Company to the financial
community in New York City. The loan to Mr. Brenman originally was approved by
the executive committee.
1996 STOCK AWARD PROGRAM. The Board of Directors and the shareholders of
the Company have approved an annual incentive compensation arrangement for the
issuance of up to 67,000 shares of Common Stock each year (from 1997 through
2002) to the five executive officers of the Company, in amounts to be determined
each year based on the earnings of the Company for the prior fiscal year ended
May 31.
Shares will be issued annually, provided that each officer to whom the
shares are to be issued is employed by the Company as of the issue date of the
grant year, and provided further that the Company has been profitable in the
preceding fiscal year. The officers will receive up to an aggregate total of
67,000 shares per year for the years 1997 through 2002, although if in prior
years, starting in 1997, fewer than 67,000 USE shares are awarded in any one or
more years, the unissued balance of the 67,000 share maximum will be available
for issue in subsequent years. One-half of the compensation expense under the
Program is the responsibility of Crested. The Board of Directors determines the
date each year (starting in 1997) when shares are to be issued.
The number of shares to be awarded each year out of such 67,000 shares
aggregate limit is determined by the Compensation Committee, and will be based
on certain criteria including the Company's earnings per share of Common Stock
for the prior fiscal year. The total shares issued shall be divided among the
officers based on the following percentages: John L. Larsen 29.85%, Daniel P.
Svilar 22.39%, Max T. Evans 17.91%, Harold F. Herron 14.93% and R. Scott Lorimer
14.93%. Other factors bearing on the prior year's profitability may be taken
into consideration by the Compensation Committee. In addition, the actual
issuance of the number of shares recommended by the Compensation Committee to be
awarded to the officers presently is required to be submitted for approval by
shareholders of the Company at the Annual Meeting held subsequent to the end of
the fiscal year.
14
<PAGE>
In fiscal 1996, the Compensation Committee determined the Program award
for fiscal 1996 to be 14,158 shares of Common Stock, as follows: John L. Larsen
(4,226 shares), Harold F. Herron 2,113 shares), R. Scott Lorimer (2,113 shares),
Daniel P. Svilar (3,170 shares), and Max T. Evans (2,536 shares). This award was
approved by the shareholders at the 1996 Annual Meeting. Such shares have been
issued to the officers as of the date of this Proxy Statement.
The 1996 Stock Award Program is proposed to be changed. See Proposal Two.
PROPOSAL TWO
To approve the Restated 1996 Stock Award Program to (i) extend its term
for an additional five years (through 2007), without increasing the total number
of shares presently issuable under the Plan; (ii) increase the incentive for
eligible officers to remain with the Company by making shares issued under the
Program forfeitable until retirement, death or disability; and (iii) eliminate
the present requirement of annual shareholder approval of amounts of shares to
be awarded to the eligible officers.
The Board of Directors has approved the following changes to the
Program, which has been renamed the "Restated 1996 Stock Award Program" and will
take effect upon approval by shareholders at the 1997 Annual Meeting of
Shareholders.
First, the Program is proposed to be extended for an additional five
years to allow for the distribution (if warranted by Company performance) of the
total number of shares available under the Program. Currently, 67,000 shares of
Common Stock are issuable each year (402,000 shares from and including 1997
through 2002). Although shares not issued out of the annual 67,000 share limit
are available for issue in future years, the present expiration of the Program
in 2002 could result in the premature elimination of the Program if shares were
available for issue from prior years, but not issued out by 2002. The term of
the Restated 1996 Stock Award Program has been extended through 2007.
Second, to provide additional incentive for the officers to remain with
the company over the years, each allocation of shares to an officer under the
Restated Program each year will be issued in the name of the officer, and will
be earned out (vested) over 5 years, at the rate of 20% as of May 31 of each
year following the date of issue of the shares. However, none of the vested
shares shall become available to or come under the control of the officer in
whose name the shares were issued, until termination of employment by
retirement, death or disability. Upon termination of employment, the shares and
certificates will be released to the officer. Until termination, the share
certificates will be held by the Treasurer of the company. Voting rights will be
exercised over the shares by the non-employee directors of the Company, in their
discretion. Dividends or other distributions on or with respect to the shares
will be held by the Treasurer for the benefit of the officers.
Third, to eliminate unnecessary corporate administration expense, the
number of shares to be awarded annually to each officer under the Restate
Program, as determined by the Compensation Committee, will not be submitted to
the shareholders of the Company for approval, as the overall 1996 Stock Award
Program was approved by the shareholders in 1996.
Management of the Company recommends the shareholders vote for Proposal
Two.
COMMITTEES AND MEETING ATTENDANCE
During the fiscal year ended May 31, 1997 there were six Board meetings
and three Executive Committee meetings. Each current member of the Board
attended at least 75% of the combined Board meetings and meetings of committees
on which the director serves. From time to time, the Board and Executive
Committee act by unanimous written consent pursuant to Wyoming law. Such actions
are counted as meetings for purposes of disclosure under this paragraph.
15
<PAGE>
The Board has established an Executive Committee to act in place of the
Board between meetings of the Board. The Executive Committee had three meetings
in fiscal 1997.
An Audit Committee has also been established by the Board. The Audit
Committee had one meeting in fiscal 1997. Members of the Audit Committee have
also met informally at various times during the year. The Audit Committee
reviews the Company's financial statements and accounting controls, and contacts
the independent public accountants as necessary to ensure that adequate
accounting controls are in place and that proper records are being kept. The
Audit Committee also reviews the audit fees of the independent public
accountants.
The Compensation Committee reviews, approves and makes recommendations
on the Company's compensation policies, practices and procedures. During the
year ended May 31, 1997, the members of the Compensation Committee discussed
compensation matters on an individual basis and had one formal meeting.
A Management Cost Apportionment Committee was established by USE and
Crested in 1982, for the purpose of reviewing the apportionment of costs between
USE and Crested. John L. Larsen, Max T. Evans and Scott Lorimer are members of
this Committee.
The Board of Directors has a Nominating Committee, which did not meet
during the most recently completed year. The Nominating Committee will consider
nominees recommended by security holders for consideration as potential
nominees. Anyone wishing to submit a potential nominee for consideration as a
management nominee for the 1998 Annual Meeting must provide the nominee's name
to the Nominating Committee not later than June 9, 1998, together with a
completed questionnaire, the form of which will be supplied by the Company on
request.
CERTAIN OTHER TRANSACTIONS
TRANSACTIONS WITH SHEEP MOUNTAIN PARTNERS ("SMP"). In fiscal 1989, the
Company and Crested through USECC sold a one-half interest in the Sheep Mountain
properties to Cycle Resource Investment Corporation ("CRIC"), a wholly-owned
subsidiary of Nukem, Inc., and thereafter USECC and CRIC contributed their 50%
interests in the properties to a new Colorado partnership, SMP, which was
organized to further develop and mine uranium claims, market uranium and acquire
additional uranium sales contracts. Due to disputes with CRIC and Nukem, (which
had been in arbitration proceedings, and the results of the arbitration having
been appealed by Nukem and CRIC to the United States Tenth Circuit Court of
Appeals), necessary mine maintenance has been funded by USECC alone. During
fiscal 1997, the Company and Crested received $4,000,000 from the SMP escrow
accounts as part of their monetary damages awarded by the Arbitration Panel.
This $4,000,000 was first applied to the account receivable for mine standby
costs as required under recovery cost accounting rules. At May 31, 1997 a
$8,600,000 monetary award remains unpaid as well as certain equity damages.
TRANSACTIONS WITH GREEN MOUNTAIN MINING VENTURE ("GMMV"). On June 23,
1997, USE and USECC signed an Acquisition Agreement with Kennecott Uranium
Company ("Kennecott") for the right to acquire Kennecott's interest in the GMMV
for $15,000,000 and other consideration. Kennecott paid USE and USECC $4,000,000
on signing, and committed to loan the GMMV up to $16,000,000 for payment of
reimbursable costs incurred by USECC in developing the proposed underground
Jackpot Uranium Mine for production and in changing the status of the Sweetwater
Mill from standby to operational. For a more detailed explanation of this
transaction, see Note F to the Financial Statements contained in the Company's
1997 Annual Report.
TRANSACTIONS WITH YELLOW STONE FUELS CORP. Yellow Stone Fuels Corp.,
hereafter ("YSFC") was organized on February 17, 1997 in Ontario, Canada. As of
February 17, 1997, YSFC acquired all the outstanding shares of Common Stock of
Yellow Stone Fuels, Inc. (a Wyoming corporation which was organized on June 3,
1996), in exchange for YSFC issuing the same number of shares of YSFC Stock to
the former shareholders of Yellow Stone Fuels, Inc. ("YFI"). YSFC and its
wholly-owned subsidiary Yellow Stone Fuels, Inc. will hereafter be referred to
collectively as YSFC.
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In order to concentrate the efforts of USECC on conventional uranium
mining using the Shootaring and Sweetwater Mills, USECC decided to take a
minority position in YSFC and not be directly involved in properties believed
suitable for the production of uranium through the in-situ leach ("ISL") mining
process. USECC will have first call on any uranium ore bodies YSFC discovers
which are amenable to conventional mining and milling and YSFC will have a call
on ore bodies discovered by USECC amenable to the ISL process. In the ISL
process, groundwater fortified with oxidizing agents is pumped into the ore
body, causing the uranium contained into the ore to dissolve. The resulting
solution is pumped to the surface where it is further processed to a dried form
of uranium which is shipped to conversion facilities for eventual sale.
Generally, the ISL process is more cost effective and environmentally benign
compared to conventional underground mining techniques. In addition, less time
may be required to bring an ISL mine into operation than to permit and build a
conventional mine.
As of May 31, 1997, YSFC had 10,545,000 shares of Common Stock issued
and outstanding, including 3,000,000 shares (28.5%) issued to USE and Crested.
Most of the funds used by YSFC have been provided by USECC under a $400,000 loan
facility. As part consideration for the loan, USE and Crested entered into a
Voting Trust Agreement having an initial term of 24 months or until the $400,000
loan facility is paid, with two principal shareholders of YSFC, whereby USE and
Crested will have voting control of more than 50% of the outstanding shares of
YSFC. The majority of the remaining outstanding YSFC shares are owned by family
members of John L. Larsen, Chairman of USE.
YSFC has staked and/or leases or holds unpatented mining claims, state
leases, and patented mining claims covering approximately 10,200 acres in
Wyoming and New Mexico.
YSFC will require additional funding to maintain its property
acquisition program, conduct the geological and engineering studies on
properties to evaluate their suitability to in-situ recovery methods, and to
build and operate in-situ recovery facilities on suitable properties. YSFC is
currently seeking additional funding, but there is no assurance that such
funding will be obtained. If YSFC obtains equity funding, the current
shareholders' ownership interest would be reduced, however the $400,000 loan
facility from USE and Crested is convertible to YSFC common stock, so that USE's
and Crested's equity ownership levels could be maintained.
In fiscal 1997, USE and USECC entered into several agreements with YSFC,
including a Milling Agreement through Plateau Resources. The Shootaring Canyon
mill facilities will be available to YSFC to transport uranium concentrate
slurry and loaded resin to the mill and process it into uranium concentrate
("yellowcake"), for which Plateau will be paid its direct costs plus 10%. Other
agreements include a Drill Rig Lease Agreement for YSFC to have access to USE
drilling rigs at the prevailing market rates; an Outsourcing and Lease Agreement
for assistance from USECC accounting and technical personnel on a cost plus 10%
basis and a sublease for 1,000 square feet of office space for $1,000 per month;
and a Ratification of Understanding by which USECC will offer to YSFC (with a
reserved royalty in amounts to be agreed on later but not exceeding 10% of
uranium concentrated produced) any uranium properties amenable to in-situ
production which USECC acquires or has the right to acquire. In return, YSFC
will offer to USECC ( with a reserve royalty in amounts to be agreed on later)
uranium properties amenable to conventional mining methods which YSFC acquires
or has the right to acquire. USECC also will make its library of geological
information and related materials available to YSFC. YSFC also has a Storage
Agreement with GMMV by which YSFC stores used low-level contaminated mining
equipment purchased from a third party at GMMV's Sweetwater Mill. YSFC is
responsible for any bonding and handling obligations for the stored equipment,
and pays GMMV nominal rent for the storage.
TRANSACTIONS WITH SUTTER GOLD MINING COMPANY. In fiscal 1991, USE
acquired an interest in the Lincoln Project (including the underground Lincoln
Mine and the 2,800 foot Stringbean Alley decline) in the Mother Lode Mining
District of Amador County, California, held by a mining joint venture known as
the Sutter Gold Venture ("SGV"). The entire interest of SGV is now owned by
USECC Gold L.L.C., a Wyoming limited liability company, which is a subsidiary of
Sutter Gold Mining Company, a Wyoming corporation ("SGMC").
In fiscal 1997, SGMC completed private financings totalling a net of
$6,511,200 ($1,106,700 through a private placement conducted in the United
States by RAF Financial Corporation, and $5,404,500 through a private placement
conducted in Toronto, Ontario, Canada by C.M. Oliver & Company Limited). The
proceeds from these
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financings (after deduction of commissions and offering costs) are being applied
to pre-production mine development, mill design, and property holding and
acquisition costs. SGMC anticipates production mining will commence in
mid-calendar 1998 and that by that time, construction of a 500 ton per day gold
mill will have been completed. Additional financing will be sought in 1998 to
complete mill construction and start production mining.
After completion of the two private financings, and taking into account
a restructuring of the ownership of USE and Crested in SGMC (and additional
issue of 75,000 shares to settle a dispute with Amador United, see below), USE
and Crested each own the following securities of SGMC:
(a) 30.7% and 3.2% of the outstanding shares of SGMC Common Stock which
would be reduced to 23.5% and 2.5%, respectively, in the event outstanding
warrants held by the Canadian investors to purchase 1,454,800 more shares of
SGMC Common Stock are exercised at Cdn$6.00 per share 18 months from the date of
closing of the offering in Canada and the outstanding warrants held by C.M.
Oliver to purchase 145,480 more shares of SGMC Common Stock are exercised at
Cdn$5.50 per share, before May 13, 1999. The preceding percentages of SGMC
Common Stock do not reflect 345,200 warrants that may be sold in the Offering or
shares that may be acquired by USE and Crested pursuant to the USECC $10,000,000
Contingent Stock Purchase Warrant (described below) issued as consideration for
certain of the voluntary reductions in the ownership of SGMC shares by USE and
Crested, in connection with the private offering in Canada. One reorganization
of the capital structure was required by RAF Financial Corporation in connection
with its private placement of SGMC shares, and the other was required by C.M.
Oliver & Company Limited in the Canadian private placement.
(b) A $10,000,000 Contingent Stock Purchase Warrant (the "USECC
Warrant") was issued to USE and Crested in connection with the restructuring of
SGMC. The USECC Warrant is owned 88.9% by USE and 11.1% by Crested. The USECC
Warrant provides that for each ounce of gold over 300,000 ounces added to the
proven and probable category of SGMC's reserves (up to a maximum of 400,000
additional ounces), using a cut-off grade of 0.10 ounces of gold per ton (at
minimum vein thickness of 4 feet), USE and Crested will be entitled to acquire
additional shares of Common Stock from SGMC (without paying additional
consideration). The number of additional shares issuable for each new ounce of
gold reserves will be determined by dividing US$25 by the greater of $5.00 or
the weighted average closing price of the SGMC Common Stock for the 20 trading
days before exercise of the USECC Warrant. The USECC Warrant is to be exercised
semi-annually. However, as an alternative to exercise of the USECC Warrant, SGMC
has the right to pay USE and Crested US$25 in cash for each new ounce of gold
(payable out of a maximum of 60% of net cash-flow from SGMC's mining
operations). Additions to reserves will be determined by an independent
geologist agreed upon by the parties.
In fiscal 1997, SGMC issued 75,000 shares of Common Stock to Amador
United Gold Mines to settle certain disputes between such company and SGMC, USE
and Crested. In addition, SGMC bought about one-third of the outstanding shares
of Keystone Mining Company owned by The Salvation Army. The Keystone Mining
Company owns property in the Lincoln Project leased to SGMC.
Effective June 1, 1996, SGMC entered into a Management Agreement (dated
as of May 22, 1996) with USE under which USECC provides administrative staff and
services to SGMC. USECC is reimbursed for actual costs incurred, plus an extra
10% during the exploration and development phases; 2% during the construction
phase; and 2.5% during the mining phase (such 2.5% charge to be replaced with a
fixed sum which with parties will negotiate at the end of two years starting
when the mining phase begins). The Management Agreement replaces a prior
agreement by which USE provided administrative services to SGMC.
TRANSACTIONS WITH DIRECTORS. Two of the Company's directors, Messrs.
Larsen and Herron, and one of Crested's directors, Max T. Evans, are trustees of
the ESOP. Mr. Larsen is also a director of Crested. In that capacity they have
an obligation to act in the best interests of the ESOP participants. This duty
may conflict with their obligations as directors of the Company in times of
adverse market conditions for the Common Stock, or in the event of a tender
offer or other significant transaction.
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In general, the ESOP trustees exercise dispositive powers over shares
held by the ESOP, and exercise voting powers with respect to ESOP shares that
have not been allocated to a participant's account. In addition, the Department
of Labor has taken the position that in certain circumstances ESOP trustees may
not rely solely upon voting or dispositive decisions expressed by plan
participants, and must investigate whether those expressions represent the
desires of the participants, and are in their best interests.
Harold F. Herron, son-in-law of John L. Larsen, has been living in and
caring for a house owned by the Company until such time as the property was
sold. In fiscal 1995, Mr. Herron purchased the house for $260,000, the appraised
value of the property, and was reimbursed by the Company for leasehold
improvements totaling $22,830. The Company accepted a promissory note in the
amount of $112,170 with interest compounded annually at 7% due on September 6,
1999 as a result of this transaction. This note is secured by 30,000 shares of
USE common stock owned by Mr. Herron.
OTHER INFORMATION. The Company has adopted a stock repurchase plan under
which it may purchase up to 275,000 shares of its Common Stock. These shares
would be purchased in part to provide a source of shares for issuance upon the
exercise of various outstanding options.
Three of John L. Larsen's sons and a son-in-law are employed by the
Company (as manager of USECC's commercial operations, uranium fuels marketing
director, as chief pilot and landman, respectively). Mr. Larsen's son-in-law
Harold F. Herron is an officer and director of the Company, and president and a
director of Brunton. Collectively, the five individuals received $265,500 in
cash compensation (paid by the Company and Crested) for those services during
the fiscal year ended May 31, 1997. The foregoing compensation expense was
shared by the Company and Crested, in accordance with the compensation
arrangements for all employees. Mr. Herron continues as president and a director
of Brunton.
The Company and Crested provide management and administrative services
for affiliates under the terms of various management agreements. Revenues from
services by the Company and Crested from unconsolidated affiliates were $397,700
in fiscal 1997 and $92,900 in fiscal 1996. The Company provides all employee
services required by Crested. In exchange Crested is obligated to the Company
for its share of the costs for providing such employees.
CERTAIN INDEBTEDNESS
TRANSACTIONS INVOLVING USECC. The Company and Crested conduct the bulk
of their activities through their equally-owned joint venture, USECC. From time
to time the Company and Crested advance funds to or make payments on behalf of
USECC in furtherance of their joint activities. These advances and payments
create intercompany debt between the Company and Crested. The party extending
funds is subsequently reimbursed by the other venturer. The Company had a note
receivable of $6,023,400 from Crested at May 31, 1997 ($6,460,300 during fiscal
1996).
DEBT ASSOCIATED WITH USE'S ESOP. During the year ended May 31, 1997, the
Company made a contribution of 24,069 shares of Common Stock to the ESOP.
Because Crested engages the Company's employees to discharge substantially all
of its functions, these contributions benefitted Crested. As a result, Crested
owes the Company $106,800 for one-half of the Company's contribution to the
ESOP. Regular and substantial contributions by the Company to the ESOP are
required to maintain the ESOP in effect. In fiscal 1996 the Company contributed
10,089 shares of Common Stock to the ESOP, for one-half of which Crested owes
the Company $43,650.
LOANS TO FOUR DIRECTORS. As of May 31, 1997 three of the Company's and
one of Crested's directors owed the Company $487,000 as follows (each loan is
secured with shares of Common Stock of the Company owned by the individual):
Harold F. Herron $11,000 (1,000 shares); John L. Larsen $413,600 (124,000
shares), David W. Brenman $25,000 (4,000 shares) and Max T. Evans $37,400 (7,500
shares). The outstanding loan amounts represent various loans made to the
individuals over a period of several years. The loans mature December 31, 1997
and bear interest at 10% per year. For information on an additional loan to Mr.
Herron, see below. At May 31, 1997, John L. Larsen and members of his immediate
family were indebted to the Company for $745,300
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secured by 160,000 shares of the Company's Common Stock. Such indebtedness of
the Larsen family would be paid by the Company withholding an equal amount out
of the $1 million cash bonus payable to Mr. Larsen when the GMMV properties have
been placed into production and certain related conditions have been met. See
"Executive Compensation Plans and Engagement Agreements." The preceding amounts
do not include the loan to Mr. Herron, see below.
In fiscal 1995, the Company made a five year non-recourse loan in the
amount of $112,170 to Harold F. Herron. The loan is secured by 30,000 shares of
the Company's Common Stock, bears interest at a rate of 7% and is payable at
maturity. The Board approved the loan to obtain a higher interest rate of return
on the funds compared to commercial rates, and to avoid having the USE stock
prices depressed from Mr. Herron selling his shares to meet personal
obligations. See Transactions with Directors above.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP has audited the Company's financial statements for
the fiscal year ended May 31, 1997. Such firm has audited the Company's
financial statements since 1990. A representative of Arthur Andersen LLP may be
present at the meeting and if present, will be available to respond to
appropriate questions, and will be provided the opportunity to make a statement
at the Meeting. The Board of Directors of the company has not determined if
Arthur Andersen LLP will be selected to audit the Company's financial statements
for the fiscal year ending May 31, 1998, or if another audit firm will be
selected. There have been no disagreements between the Company and Arthur
Andersen LLP concerning any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which were not
resolved to the satisfaction of Arthur Andersen LLP. The Board of Directors will
select the audit firm for the fiscal year ending May 31, 1998 with due
consideration for the recurring fees and expenses of the audit firm selected.
ANNUAL REPORT TO SHAREHOLDERS
A copy of the 1997 Annual Report to Shareholders, including financial
statements, has been forwarded to all record shareholders entitled to vote at
the Meeting. If any recipient of this Proxy Statement has not received a copy of
that Annual Report, please notify Max T. Evans, 877 North 8th West, Riverton, WY
82501, telephone (307) 856-9271, and the Company will send a copy.
SHAREHOLDERS' PROPOSALS
The next Annual Meeting of Shareholders is expected to be held in
November of 1998. Shareholder proposals to be presented at the next Annual
Meeting of Shareholders must be received in writing by the Company at its
offices in Riverton, Wyoming, addressed to the President, no later than June 9,
1998.
OTHER MATTERS
The Board does not know of any other matters which may properly come
before the Meeting. However, if any other matters properly come before the
Meeting, it is the intention of the appointees named in the enclosed form of
Proxy to vote said Proxy in accordance with their best judgment on such matters.
Your cooperation in giving these matters your immediate attention, and
in returning your Proxy promptly, will be appreciated.
By Order of the Board of Directors
U.S. ENERGY CORP.
/s/ Max T. Evans
MAX T. EVANS, Secretary
Dated: November 7, 1997
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PROXY U.S. ENERGY CORP. PROXY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned shareholder of U.S.
Energy Corp. (the "Company") in the amount noted below, hereby constitutes and
appoints Messrs. John L. Larsen and Max T. Evans, or either of them with full
power of substitution, as attorneys and proxies, to appear, attend and vote all
of the shares of stock standing in the name of the undersigned at the Annual
Meeting of the Company's shareholders to be held at the Company's executive
offices, 877 North 8th West, Riverton, Wyoming 82501, on Friday, December 5,
1997 at 11:00 a.m., local time, or at any adjournments thereof upon the
following:
(INSTRUCTION: Mark only one box as to each item.)
1. Election of Directors:
__ FOR the nominees listed below __ AGAINST the nominees listed below
__ ABSTAIN
John L. Larsen
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, PLEASE DRAW A
LINE THROUGH THE NAME OF THAT NOMINEE.
2 To adopt an amendment to the current 1996 Stock Award Program for executive
officers.
__ FOR __ AGAINST __ ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
<PAGE>
PROXY U.S. ENERGY CORP. PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THE SHARES REPRESENTED
HEREBY WILL BE VOTED AS SPECIFIED HEREON WITH RESPECT TO THE ABOVE PROPOSALS.
WHERE NO VOTE IS SPECIFIED, THE PROXYHOLDER WILL CAST VOTES FOR THE ELECTION OF
MANAGEMENT'S NOMINEES AND, IN THEIR DISCRETION, ON ANY OTHER MATTERS THAT MAY
COME BEFORE THE MEETING.
Sign your name exactly as it appears on the mailing label below. It is
important to return this Proxy properly signed in order to exercise your right
to vote, if you do not attend in person. When signing as an attorney, executor,
administrator, trustee, guardian, corporate officer, etc., indicate your full
title as such.
-----------------------------------
(Sign on this line - joint holders
may sign appropriately)
-------------- ------------------
(Date) (Number of Shares)
PLEASE NOTE: Please sign, date and
place this Proxy in the enclosed
self-addressed, postage prepaid
envelope and deposit it in the mail
as soon as possible. Please check
if you are planning to attend the
meeting __
Ifthe address on the mailing label
is not correct, please provide the
correct address in the following
space.
-----------------------------------
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