Item 1.01. Entry into a Material Definitive Agreement.
On March 4, 2021, U.S. Energy Corp. ("U.S. Energy", the "Company", "we" or
"us"), entered into and closed the transactions contemplated by a Debt
Conversion Agreement (the "Conversion Agreement") with APEG Energy II, L.P.
("APEG"). Patrick E. Duke, a former director of the Company, has shared voting
power and shared investment power over APEG. Pursuant to the Conversion
Agreement, APEG converted $412,500 of debt owed to it by the Company pursuant to
the terms of that certain Secured Promissory Note issued by the Company to APEG
on September 24, 2020, into 97,962 shares of restricted common stock of the
Company, based on a conversion price of $4.21 per share, a 9.9% discount to the
ten day volume weighted average price of the Company's common stock on the 10
trading days immediately preceding the signing of Conversion Agreement (the
"Discounted VWAP"). The Conversion Agreement contains customary representations
and warranties of the parties.
Also, on March 4, 2021, APEG entered into a Subscription Agreement with the
Company, whereby APEG subscribed to purchase 90,846 shares of restricted common
stock of the Company for an aggregate of $382,536, based on the Discounted VWAP.
The $382,536 subscription price was paid by way of the forgiveness by APEG of
the same amount of funds owed by the Company to APEG in reimbursement of APEG's
legal costs in connection with those certain shareholder derivative actions
brought by APEG against the Company and its former Chief Executive Officer in
Texas and Colorado, which were dismissed in August 2020 and May 2020,
respectively. The Subscription Agreement contains customary representations and
warranties of the parties.
The foregoing summary description of the Conversion Agreement and Subscription
Agreement does not purport to be complete and is qualified in its entirety by
reference to the full text of the Conversion Agreement and Subscription
Agreement, which are incorporated by reference as Exhibits 10.1 and 10.2 to this
Current Report on Form 8-K, and are incorporated by reference into this Item
1.01.
Item 3.02. Unregistered Sales of Equity Securities.
As noted in Item 1.01 above, which description is incorporated by reference into
this Item 3.02 in its entirety, on March 4, 2021, the Company issued APEG 97,962
shares of restricted common stock of the Company pursuant to the Conversion
Agreement. The issuance of the common shares was exempt from registration
pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the
"Securities Act"), because such shares were exchanged by the Company with an
existing security holder of the Company exclusively where no commission or other
remuneration was paid or given directly or indirectly for soliciting such
exchange.
As noted in Item 1.01 above, which description is incorporated by reference into
this Item 3.02 in its entirety, on March 4, 2021, the Company sold APEG 90,846
shares of restricted common stock. The issuance of the common shares pursuant to
the Subscription Agreement was exempt from registration pursuant to Section
4(a)(2) and/or Rule 506(b) of Regulation D of the Securities Act, since the
foregoing issuance did not involve a public offering, the recipient was an
"accredited investor", and the recipient acquired the securities for investment
only and not with a view towards, or for resale in connection with, the public
sale or distribution thereof. The securities were offered without any general
solicitation by us or our representatives. The securities are subject to
transfer restrictions, and the certificates evidencing the securities contain an
appropriate legend stating that such securities have not been registered under
the Securities Act and may not be offered or sold absent registration or
pursuant to an exemption therefrom.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
10.1* Debt Conversion Agreement by and between U.S. Energy Corp. and APEG
Energy II, L.P. dated as of March 4, 2021
10.2* Subscription Agreement of APEG Energy II, L.P., dated as of March 4,
2021
*Filed herewith.
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