Exhibit 10.1

 

Privileged and Confidential

 

EXCHANGE AGREEMENT

 

This Exchange Agreement (this “Agreement”) is made and entered into on September
28, 2017, by and between U.S. Energy Corp., a Wyoming corporation (the
“Company”), Energy One LLC, a Wyoming limited liability company (the “Borrower”)
and APEG Energy II, L.P. (the “Holder”), the sole Lender and the Administrative
Agent under the Credit Agreement dated as of July 30, 2010, as amended (the
“Credit Facility”). Capitalized terms used herein but not defined herein shall
have the meanings given to them in the Credit Facility.

 

RECITALS

 

WHEREAS, the Holder currently holds $6,000,000 in principal amount of Loans
under the Credit Facility, comprising the entire principal balance outstanding
under the Credit Facility (the “Balance”);

 

WHEREAS, the Holder desires to exchange $5,063,380 of the Balance (the
“Exchanged Balance”) for shares of the Company’s common stock, par value $0.01
per share (“Common Stock”) and for cash, on the terms and conditions set forth
in this Agreement (the “Exchange”);

 

WHEREAS, the Company desires to issue to the Holder that number of shares of the
Company’s Common Stock and to pay to the Holder that amount of cash, determined
as set forth in Section 1.1 below, in exchange for the Exchanged Balance;

 

NOW, THEREFORE, in consideration of the premises and the agreements set forth
below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

 

ARTICLE I

Exchange

 

Section 1.1          Exchange of the Exchanged Balance for Common Stock and
Cash.

 

(a)         Upon the terms and subject to the conditions of this Agreement, on
the Closing Date (as defined herein), the Company shall issue, subject to this
Section 1.1 and Section 1.7 hereof, to the Holder, and the Holder agrees to
accept from the Company, the number of shares of Common Stock and cash
determined in accordance with the terms of subsections (b) and (d) hereof in
exchange for the Exchanged Balance.

 

(b)         On the Closing Date, the Holder will receive a final number of
shares of Common Stock determined as set forth below plus a cash payment in
exchange for the Exchanged Balance. The number of shares of Common Stock issued
to the Holder pursuant to the terms of this Agreement is referred to herein as
the “Exchange Shares.” The Exchange Shares shall equal the Balance, less any
cash payments received by the Holder, divided by the “Share Price” (as defined
below), rounded down to the nearest whole share.           

 

 

 

 

Privileged and Confidential

 

(c)         Definitions. For purposes of this Exchange Agreement:

 

(i) “Share Price” means One Hundred One and 3/10ths (101.3%) of the arithmetic
average of the 30 day VWAP as shown in Exhibit A.

 

(ii) “VWAP” will be determined as shown in Exhibit A.

 

(iii) “Trading Day” means a day on which (i) there is no Market Disruption Event
(as defined below), and (ii) trading in the Company’s securities generally
occurs on the NASDAQ Stock Market.

 

(iv) “Market Disruption Event” means the occurrence or existence on any
Scheduled Trading Day (as defined below) for the Common Stock of any suspension
or limitation imposed on trading of the Common Stock (by reason of movements in
price exceeding limits permitted by the relevant stock exchange or otherwise) in
the Common Stock, and such suspension or limitation occurs or exists throughout
the 30 minutes prior to the closing time of the relevant exchange on such day.

 

(v) “Scheduled Trading Day” means a day that is regularly scheduled Trading Day
of the NASDAQ Stock Market.

 

(d)        The Company and the Holder agree that the Exchange Shares shall be
capped such that the Holder (together with the Holder’s affiliates or any other
person deemed to be a member of a “group” under Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (a “Section 13(d)(3) group”) with
the Holder with respect to Common Stock of the Company) will beneficially own no
more than 49.9% of the Common Stock outstanding immediately after issuance of
the Exchange Shares. The Holder acknowledges that as a result of this
restriction, the Exchange Shares may change depending upon changes in the
outstanding shares of Common Stock. Immediately prior to the Closing Date, the
Holder shall certify in writing the number of shares of Common Stock that it
beneficially owns (including through derivative securities) and the shares of
Common Stock beneficially owned by the Holder’s affiliates and any other person
with whom it may have formed a Section 13(d)(3) group. Any portion of the
Exchanged Balance that is not exchanged for Common Stock due to the above
limitation will be paid to the Holder in cash (or other mutually agreeable
consideration) at the Closing (as defined below).

 

(c)         Upon execution of this Agreement, the Company will promptly make a
public announcement regarding the terms hereof.

 

Section 1.2          Exchange Shares Legend; Registration Rights.

 

(a)         The Exchange Shares may only be disposed of in compliance
with state and federal securities laws. In connection with any transfer of the
Exchange Shares other than pursuant to an effective registration statement or
Rule 144 under the Securities Act (as defined below), the Company may require
the transferor thereof to provide to the Company an opinion of counsel selected
by the transferor and reasonably acceptable to the Company, the form and
substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such transferred
Exchange Shares under the Securities Act. Any certificate or certificates
representing the Exchange Shares shall bear a legend substantially as follows:

 

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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.

 

(b)         Certificates evidencing the Exchange Shares shall not contain any
legend (including the legend set forth in Section 1.2(a) hereof): (i) while a
registration statement covering the resale of such securities is effective under
the Securities Act, or (ii) following any sale of such Exchange Shares pursuant
to Rule 144, or (iii) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Commission). In any such event, upon
receipt from the Holder of certificates bearing restrictive legends representing
the Exchange Shares, together with any documentation reasonably requested by the
Company and its counsel, the Company shall promptly cause its counsel to issue a
legal opinion to the Transfer Agent, if required by the Transfer Agent, to
effect the removal of the legend hereunder. Certificates for Exchange Shares
free of restrictive legends shall be transmitted by the Transfer Agent to the
Holder by crediting the account of the Holder’s prime broker with the Depository
Trust Company System as directed by such Holder.

 

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(c)         No later than December 31, 2017, the Company shall file a
registration statement on Form S-1 providing for the resale by the Holder of the
Exchange Shares issued and issuable upon exercise of the Warrants. The Company
shall use commercially reasonable efforts to cause such registration to become
effective and to keep such registration statement effective at all times until
(a) the Exchange Shares are sold under such registration statement or pursuant
to Rule 144 or other exemption under the Securities Act, (b) the Exchange Shares
may be sold without volume or manner-of-sale restrictions pursuant to Rule 144
under the Securities Act, and (c) the two (2) year anniversary of the date of
the issuance of the Exchange Shares, whichever is the earliest to occur. Subject
to the accuracy of the information provided by the Holder to the Company, the
Company shall ensure that such registration statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they were made) not
misleading. After the date hereof and during any period in which a prospectus or
prospectus supplement relating to any of the Exchange Shares subject to
registration under this Section 1.2(c) is required to be delivered by the Holder
pursuant to the Securities Act (including in circumstances where such
requirement may be satisfied pursuant to Rule 172 of the Securities Act), (i)
the Company will notify the Holder promptly of the time when any subsequent
amendment to such registration statement, other than documents incorporated by
reference, has been filed with the Commission or has become effective or any
subsequent supplement to the prospectus regarding such Securities or the Holder
or any subsequent amendment to the prospectus or any supplement or amendment to
the prospectus supplement has been filed with the Commission and of any comment
letter from the Commission or any request by the Commission for any amendment or
supplement to such registration statement, any amendment to the prospectus, any
supplement to the prospectus that relates to the Securities subject to such
registration statement under this Section or the Holder, or any amendment or
supplement to the prospectus supplement, provided that no notification of the
Holder shall be required if such amendment, supplement, or comment, or request
would not, and would not seek, to limit the rights of the Holder or the Exchange
Shares, (ii) the Company will prepare and file with the Commission, promptly
upon the Holder’s request, any amendments or supplements to such registration
statement, prospectus or prospectus supplement that, in the Company’s reasonable
opinion, may be necessary in connection with any resale of the Exchange Shares
by the Holder (provided, however, that the failure of the Holder to make such
request shall not relieve the Company of any obligation or liability hereunder),
(iii) the Company will not file any amendment or supplement to a registration
statement, prospectus or prospectus supplement, other than documents
incorporated by reference, relating to the Exchange Shares subject to
registration under this Section 1.2(c) unless a copy thereof has been submitted
or made available to the Holder within a reasonable period of time before the
filing and the Holder has not reasonably objected in writing thereto (provided,
however, that (A) the failure of the Holder to make such objection shall not
relieve the Company of any obligation or liability hereunder, and (B) the
Company has no obligation to provide the Holder any advance copy of such filing
or to provide the Holder an opportunity to object to such filing if such filing
does not name the Holder or specifically discuss the Exchange Shares subject to
registration under this Section 1.2(c) as contemplated hereby) and the Company
will furnish or make available to the Holder at the time of filing thereof a
copy of any document that upon filing is deemed to be incorporated by reference
into a registration statement, prospectus or prospectus supplement, except for
those documents available via EDGAR, and (iv) the Company will cause each
amendment or supplement to the prospectus or prospectus supplement, other than
documents incorporated by reference, to be filed with the Commission as required
pursuant to the applicable paragraph of Rule 424(b) of the Securities Act. The
Holder shall furnish the Company a completed questionnaire in customary form
prior to the filing of such registration statement.

 

Section 1.3          Lock-up. The Holder hereby agrees that it will not, without
the prior written consent of the Company, during the period commencing on the
Closing Date (as defined below) and ending twelve (12) months after the Closing
Date, (a) lend, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock; or (b) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of Common Stock, whether any such transaction
described in clause (a) or (b) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise. The foregoing provisions of
this Section 1.3 shall not apply to the sale of any shares to an underwriter
pursuant to an underwriting agreement. The Holder further agrees to execute such
agreements as may be reasonably requested by the Company that are necessary to
give effect to this Section 1.3. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to the shares of
Common Stock of the Holder (and transferees and assignees thereof) until the end
of such restricted period.

 

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Section 1.4          Prepayment under Credit Facility.

 

(a)         The parties agree that the Credit Facility and any documents and
instruments delivered pursuant thereto shall remain in effect and without
amendment by reason of this Agreement.

 

(b)         The Holder hereby waives the requirements of prior notice of
prepayment and payment of accrued interest as to the Exchange and the Exchanged
Balance under Section 3.04 of the Credit Agreement, and acknowledges and agrees
that no premium or penalty shall be due upon the Exchange.

 

(c)         The parties further agree that, upon the completion of the Closing,
the Exchanged Balance shall no longer be due and payable under the Credit
Agreement.

 

Section 1.5          Share Exchange. In consideration of and for the Exchange
hereunder, the Company agrees to issue to the Holder the Exchange Shares. The
issuance of the Exchange Shares to the Holder will be made pursuant to an
exemption from registration under the Securities Act.

 

Section 1.6          Closing Mechanics. The closing of the transactions
contemplated by this Agreement (the “Closing”) shall occur on 10:00 a.m.,
Central Standard Time, on October 31, 2017 or at such other time on the same
date or such other date as the parties may agree in writing (such time and date,
the “Closing Date”). On the Closing Date, upon satisfaction of the Company’s
conditions to Closing, the Company will: (i) effect delivery of the Exchange
Shares by instructing its transfer agent to credit the account of Holder’s prime
broker with DTC through DTC’s Deposit/Withdrawal at Custodian (“DWAC”) program;
and (ii) pay to the Holder the amount of cash determined in accordance with
Section 1.1(d) by wire transfer to an account designated in writing by the
Holder at least two business days in advance of the Closing Date.

 

Section 1.7          Conditions to Closing.

 

(a)         The obligation of the Holder hereunder to consummate the
transactions contemplated hereby at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided
that these conditions are for the Holder’s sole benefit and may be waived by the
Holder at any time in its sole discretion by providing the Company with prior
written notice thereof:

 

(i)        The Company shall have submitted an additional share listing
application for the Exchange Shares with the NASDAQ on or prior to the Closing
Date and shall cause the Exchange Shares to be approved by the NASDAQ for
listing on the Closing Date or as soon as practicable thereafter;

 

(ii)       The Company shall have received all necessary approvals from
shareholders, exchanges, and regulatory bodies; and

 

(iii)      The representations and warranties of the Company in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date and the Company shall have
complied in all material respects with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the Closing
Date;

 

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(b)         The obligation of the Company hereunder to consummate the
transactions contemplated hereby at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided
that these conditions are for the Company’s sole benefit and may be waived by
the Company at any time in its sole discretion by providing the Holder with
prior written notice thereof:

 

(i)        The representations and warranties of the Holder in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as if made on the Closing Date and the Holder shall have
complied in all material respects with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the Closing
Date.

 

ARTICLE II

Representations and Warranties of the Holder

 

The Holder hereby makes the following representations and warranties, each of
which is true and correct on the date hereof and the Closing Date and shall
survive the Closing Date and the transactions contemplated hereby to the extent
set forth herein:

 

Section 2.1          Existence and Power.

 

(a)         The Holder is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has the power,
authority and capacity to execute and deliver this Agreement, to perform its
obligations hereunder, and to consummate the transactions contemplated hereby.

 

(b)         The execution of this Agreement by the Holder and the consummation
by the Holder of the transactions contemplated hereby do not and will not
constitute or result in a breach, violation, conflict or default under any note,
bond, mortgage, deed, indenture, lien, instrument, contract, agreement, lease or
license to which the Holder is a party, whether written or oral, express or
implied, or any statute, law, ordinance, decree, order, injunction, rule,
directive, judgment or regulation of any court, administrative or regulatory
body, governmental authority, arbitrator, mediator or similar body on the part
of the Holder or on the part of any other party thereto or cause the
acceleration or termination of any obligation or right of the Holder, except for
such breaches, conflicts, defaults, rights or violations which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the ability of the Holder to perform its obligations
hereunder. As used in this Agreement, the term “Material Adverse Effect” shall
mean a material adverse effect on the business, condition (financial or
otherwise), properties or results of operations of the party, or an event,
change or occurrence that would materially adversely affect the ability of the
party to perform its obligations under this Agreement or which would limit the
Holder’s power to transfer the Exchanged Balance hereunder.

 

Section 2.2          Valid and Enforceable Agreement; Authorization. This
Agreement has been duly executed and delivered by the Holder and constitutes a
legal, valid and binding obligation of the Holder, enforceable against the
Holder in accordance with its terms, except that such enforcement may be subject
to (a) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors’ rights generally, and (b)
general principles of equity.

 

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Section 2.3          Title. The Holder has good and valid title to the Exchanged
Balance in the aggregate principal amount set forth in the recitals to this
Agreement, free and clear of any mortgage, lien, pledge, charge, security
interest, encumbrance, title retention agreement, option, equity or other
adverse claim thereto. The Holder has not, in whole or in part, (i) assigned,
transferred, hypothecated, pledged or otherwise disposed of the Exchanged
Balance or its rights in the Exchanged Balance, or (ii) given any person or
entity any transfer order, power of attorney or other authority of any nature
whatsoever with respect to the Exchanged Balance which would limit the Holder’s
power to transfer the Exchanged Balance hereunder.

 

Section 2.4         Investment Decision. The Holder is either a “qualified
institutional buyer” within the meaning of Rule 144A under the Securities Act or
an institutional “accredited investor” with the meaning of Rule 501(a)(1)(2) or
(3) of Regulation D under the Securities Act and was not organized for the
purpose of acquiring the Exchange Shares. The Holder is acquiring the Exchange
Shares solely for its own account, for investment purposes only and not with a
view to the resale or distribution thereof, in whole or in part. The Holder is
knowledgeable, sophisticated and experienced in business and financial matters
and has previously invested in securities similar to the Exchange Shares. The
Holder is able to bear the economic risk of its investment in the Exchange
Shares and is presently able to afford the complete loss of such investment.

 

The Holder (or its authorized representative) has had the opportunity to review
the Company’s filings with the Securities and Exchange Commission (the
“Commission”), including, without limitation, the Company’s Annual Report on
Form 10-K for the year ended December 31, 2016; the Company’s Quarterly Reports
on Form 10-Q for the quarters ended June 30, 2017, March 31, 2017 and September
30, 2016; the Company’s current reports on Form 8-K; and the Company’s 2017
Proxy Statement (all of such filings with the Commission referred to,
collectively, as the “SEC Documents”). The Holder has had such opportunity to
ask questions of the Company and its representatives and to obtain from
representatives of the Company such information as is necessary to permit it to
evaluate the merits and risks of its investment in the Company. The Holder has
independently, without reliance upon any representatives of the Company and
based on such information as the Holder deemed appropriate, made its own
analysis and decision to enter into this Agreement. The Holder has had the
opportunity to consult with its accounting, tax, financial and legal advisors to
be able to evaluate the risks involved in the Exchange pursuant hereto and to
make an informed investment decision with respect to the Exchange.

 

The Holder acknowledges that the Company is relying on the truth and accuracy of
the foregoing representations and warranties in the offering of the Exchange
Shares to the Holder without having first registered the Exchange Shares under
the Securities Act.

 

Section 2.5          Affiliate Status. The Holder is not, and has not been
during the preceding three months, an “affiliate” of the Company as such term is
defined in Rule 144 under the Securities Act.

 

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Section 2.6          Professional Advice. With respect to the tax, accounting
and other economic considerations involved in the Exchange, the Holder is not
relying on the Company or any of its affiliates, and the Holder has carefully
considered and has, to the extent the Holder believes such discussion is
necessary, discussed with the Holder’s professional legal, tax, accounting and
financial advisors the implications of the Exchange for the Holder’s particular
tax, accounting and financial situation.

 

Section 2.7          No Solicitation. The Holder was not solicited by anyone on
behalf of the Company to enter into this transaction.

 

ARTICLE III

Representations, Warranties and Covenants of the Company

 

The Company hereby makes the following representations, warranties, and
covenants each of which is true and correct on the date hereof and shall survive
the date of the Closing and the transactions contemplated hereby to the extent
set forth herein.

 

Section 3.1          Existence and Power.

 

(a)         The Company is duly incorporated, validly existing and in good
standing under the laws of Wyoming, with the requisite power and authority to
own and use its properties and assets and to carry on its business as currently
conducted. The Company has the requisite power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and consummate the
transactions contemplated hereby.

 

(b)         The execution of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby (i) does not require the
consent, approval, authorization, order, registration or qualification of, or
filing with, any governmental authority or court, or body or arbitrator having
jurisdiction over the Company, other than the Company’s shareholders, NASDAQ,
the Commission, relevant state securities authorities and the DTC; and (ii) does
not and will not constitute or result in a breach, violation or default under
any note, bond, mortgage, deed, indenture, lien, instrument, contract,
agreement, lease or license, whether written or oral, express or implied, or
with the certificate of incorporation or bylaws of the Company, or any statute,
law, ordinance, decree, order, injunction, rule, directive, judgment or
regulation of any court, administrative or regulatory body, governmental
authority, arbitrator, mediator or similar body on the part of the Company or on
the part of any other party thereto or cause the acceleration or termination of
any obligation or right of the Company or any other party thereto, except for
such breaches, violations or defaults which would not reasonably be expected to,
singly or in the aggregate, result in a Material Adverse Effect (as defined
above) on the ability of the Company to perform its obligations hereunder.

 

Section 3.2          Valid and Enforceable Agreement; Authorization. This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except that such enforcement may be
subject to (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors’ rights
generally, and (b) general principles of equity.

 

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Section 3.3          Valid Issuance of the Exchange Shares. The Exchange Shares,
when issued and delivered in accordance with the terms and for the consideration
set forth in this Agreement, will be validly issued, fully paid and
non-assessable and free of restrictions on transfer other than restrictions on
transfer under applicable federal and state securities laws and liens or
encumbrances created by or imposed by the Holder. Assuming the accuracy of the
representations of the Holder in Article II of this Agreement, the Exchange
Shares will be issued in compliance in all material respects with all applicable
federal and state securities laws. The Company has a sufficient number of
authorized and unissued shares of Common Stock to consummate the Exchange.

 

ARTICLE IV

Miscellaneous Provisions

 

Section 4.1          Survival of Representations and Warranties. The agreements
of the Company, as set forth herein, and the respective representations and
warranties of Holder and the Company as set forth herein in Articles II and III,
respectively, shall survive the Closing Date.

 

Section 4.2          Notice. Any notice provided for in this Agreement shall be
in writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) with return receipt requested or sent by reputable overnight
courier service (charges prepaid):

 

(a)         if to the Holder, at its address as follows:

 

APEG Energy II, L.P.
3305 Northland Drive, Suite 101
Austin, Texas 78731
Attention: Paul Haarman

 

(b)         if to the Company, at its address, as follows:

 

U.S. Energy Corp.
4643 S. South Ulster, Suite 970
Denver, Colorado 80237
Attention: David Veltri, Chief Executive Officer

 

Each party hereto by notice to the other party may designate additional or
different addresses for subsequent notices or communications. All notices and
communications will be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five business days after being deposited in the
mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by
facsimile; and the next business day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery.

 

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Section 4.3          Entire Agreement. This Agreement and the other documents
and agreements executed in connection with the Exchange embody the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersede all prior and contemporaneous oral or written
agreements, representations, warranties, contracts, correspondence,
conversations, memoranda and understandings between or among the parties or any
of their agents, representatives or affiliates relative to such subject matter,
including, without limitation, any term sheets, emails or draft documents.

 

Section 4.4          Assignment; Binding Agreement. This Agreement and the
various rights and obligations arising hereunder shall inure to the benefit of
and be binding upon the parties hereto and their successors and assigns.

 

Section 4.5          Counterparts. This Agreement may be executed in multiple
counterparts, and on separate counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument. Any counterpart or other signature hereupon delivered by facsimile
shall be deemed for all purposes as constituting good and valid execution and
delivery of this Agreement by such party.

 

Section 4.6          Remedies Cumulative. Except as otherwise provided herein,
all rights and remedies of the parties under this Agreement are cumulative and
without prejudice to any other rights or remedies available at law.

 

Section 4.7          Governing Law. This Agreement shall in all respects be
construed in accordance with and governed by the substantive laws of the State
of Texas, without reference to its conflicts of law rules. Any right to trial by
jury with respect to any action or proceeding arising in connection with this
Agreement is hereby waived by the parties hereto.

 

Section 4.8          No Third Party Beneficiaries or Other Rights. Nothing
herein shall grant to or create in any person not a party hereto, or any such
person’s dependents or heirs, any right to any benefits hereunder, and no such
party shall be entitled to sue any party to this Agreement with respect thereto.

 

Section 4.9          Waiver; Consent. This Agreement may not be changed,
amended, terminated, augmented, rescinded or discharged (other than in
accordance with its terms), in whole or in part, except by a writing executed by
the parties hereto. No waiver of any of the provisions or conditions of this
Agreement or any of the rights of a party hereto shall be effective or binding
unless such waiver shall be in writing and signed by the party claimed to have
given or consented thereto. Except to the extent otherwise agreed in writing, no
waiver of any term, condition or other provision of this Agreement, or any
breach thereof shall be deemed to be a waiver of any other term, condition or
provision or any breach thereof, or any subsequent breach of the same term,
condition or provision, nor shall any forbearance to seek a remedy for any
noncompliance or breach be deemed to be a waiver of a party’s rights and
remedies with respect to such noncompliance or breach.

 

Section 4.10       Word Meanings. The words such as “herein,” “hereinafter,”
“hereof” and “hereunder” refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
The singular shall include the plural, and vice versa, unless the context
otherwise requires. The masculine shall include the feminine and neuter, and
vice versa, unless the context otherwise requires.

 

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Section 4.11       No Broker. Neither party has engaged any third party as
broker or finder or incurred or become obligated to pay any broker’s commission
or finder’s fee in connection with the transactions contemplated by this
Agreement other than such fees and expenses for which that particular party
shall be solely responsible.

 

Section 4.12       Further Assurances. The Holder and the Company each hereby
agree to execute and deliver, or cause to be executed and delivered, such other
documents, instruments and agreements, and take such other actions, as either
party may reasonably request in connection with the transactions contemplated by
this Agreement.

 

Section 4.13       Costs and Expenses. The Holder and the Company shall each pay
their own respective costs and expenses incurred in connection with the
negotiation, preparation, execution and performance of this Agreement,
including, but not limited to, attorneys’ fees.

 

Section 4.14        Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

 

Section 4.15        Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.

 

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first above written.

 

  APEG ENERGY II, L.P.:        By: /s/Patrick Duke    Name: Patrick Duke
 Title: Managing Partner          By: /s/Paul Haarman    Name: Paul Haarman
 Title: Managing Partner         U.S. ENERGY CORP.:          By: /s/David Veltri
   Name: David Veltri
 Title: President and Chief Executive Officer

 

Signature Page to Exchange Agreement

 

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EXHIBIT A

 

U.S. Energy Corp. 15 Day Volume Weighted Average Price (as of close at 9/20/17):
$0.757

 

Signature Page to Exchange Agreement

 

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