UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
Report (date of earliest event reported): January 24, 2007 (January 19,
2007)
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U.S.
ENERGY CORP.
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(Exact
Name of Company as Specified in its
Charter)
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Wyoming
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0-6814
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83-0205516
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(State
or other jurisdiction of
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(Commission
File No.)
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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Glen
L. Larsen Building
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877
North 8th
West
Riverton,
WY
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82501
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code: (307)
856-9271
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Not
Applicable
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Former
Name, Former Address or Former Fiscal Year,,
If
Changed From Last Report)
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Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2):
o
Written
communications pursuant to Rule 425 under the Securities Act
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
Section
1: Registrant’s Business and Operations
Item
1.01. Entry into a Material Definitive Agreement - Plan and Agreement of
Merger
for Crested Corp.
On
January 23, 2007, U.S. Energy Corp. (“USE”) and its majority owned subsidiary
Crested Corp. (“Crested”) signed a plan and agreement of merger (the “merger
agreement”) for the proposed acquisition of the minority shares of Crested
(approximately 29%) not owned by USE (approximately 71%), and the subsequent
merger of Crested into USE pursuant to Wyoming and Colorado law (USE and
Crested
are Wyoming and Colorado corporations, respectively). The merger agreement
was
approved by all directors of both companies. The exchange ratio of 1 USE
share
for each 2 Crested shares (not owned by USE) was negotiated between the special
committees of independent directors of both companies, and approved by the
full
boards of both companies, on December 20, 2006. See the Forms 8-K filed October
13 and December 26, 2006. The exchange ratio represents an approximate 12%
premium to the relative stock prices between the two companies for the 30
days
ended December 18, 2006.
Pursuant
to the merger agreement, USE will issue a total of approximately 2,811,684
shares of common stock to the minority holders of Crested common stock,
including the shares equal to the equity value of options to buy Crested
common
stock underlying 1,700,000 options (exercise price of $1.71 per share) issued
to
employees, officers and directors of USE (Crested has no employees itself),
pursuant to the Crested incentive stock option plan (the “ISOP”) adopted by
Crested and approved by its shareholders in 2004. The ISOP will be amended
to
allow for exercise of options by cashless exercise, and if the merger is
to be
consummated, immediately prior to that date, the Crested options will be
so
exercised, and the holders of the resulting Crested stock will be entitled
to
participate in the merger on the same exchange ratio basis as the current
Crested minority shareholders.
USE
(and
its officers and directors) have signed an agreement to vote its and their
Crested shares in line with the vote of the holders of a majority of the
Crested
minority shares. The affirmative vote of the holders of a majority of the
Crested outstanding shares is required to consummate the merger. USE will
not
seek USE shareholder approval of the merger.
USE
may
decline to consummate the merger, even after approval by the holders of a
majority of the minority Crested shares, if the holders of more than 200,000
Crested shares perfect their rights to dissent from the merger under Colorado
law. In addition, USE or Crested may decline to consummate the merger if
the
ratio of the closing stock price of either company is 20% greater or less
than
the exchange ratio for two or more consecutive trading days, even if the
merger
has been approved by the holders of a majority of the minority Crested
shares.
Consummation
of the merger also is subject to (i) USE delivering to the Crested minority
shareholders a proxy statement/prospectus (following declaration of
effectiveness by the SEC of a Form S-4 to be filed by USE) for a special
meeting
of the Crested shareholders to vote on the merger agreement; and (ii)
satisfaction of customary representations and warranties in the merger
agreement.
Navigant
Capital Advisors, LLC is acting as financial advisor to the USE special
committee, and Neidiger Tucker Bruner Inc. is acting as financial advisor
to the
Crested special committee. These firms have delivered opinions to USE and
Crested, to the effects that the exchange ratio is fair to the USE shareholders
and to the Crested minority shareholders, respectively.
Section
4: Matters Related to Accountants and Financial Statements
Item
4.01. Changes in Registrant’s Certifying Accountant
On
January 19, 2007, USE and Crested received a letter (dated January 10, 2007)
from Epstein, Weber & Conover, PLC (“EWC”), stating that EWC is combining
with Moss Adams LLP, that EWC therefore has resigned as the registered
independent accounting firm for both companies, and that the client-auditor
relationship between USE and Crested therefore has ceased. EWC has advised
that
all partners of EWC have become partners of Moss Adams.
EWC’s
audit reports on the companies’ financial statements for the past two years did
not contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.
There have not been any disagreements between USE and Crested, and EWC, on
any
matter of accounting principles or practices, financial statement disclosure,
or
auditing scope of procedure
EWC’s
notice to the companies (dated January 10, 2007 but received on January 19,
2007) of the cessation of the auditor-client relationship, and EWC’s separate
concurrence with the statements in the preceding paragraph, are filed as
exhibits to this report.
A
subsequent Form 8-K will be filed at such time as a new registered independent
accounting firm has been appointed.
Section
5: Corporate Governance and Management
Item
5.02. Departure
of Directors or Principal Officers; Election of Directors; Appointment
of Principal
Officers.
(a) (1) At
the
regular scheduled meeting of the Board of Directors on January 23, 2007,
Allen
S. Winters was appointed to the Board of Directors of USE to fill the vacancy
as
the result of the retirement of Don C. Anderson. The appointment was made
upon
the unanimous recommendation of USE’s Nominating Committee, which consists
entirely of independent members of the Board of Directors.
(2) Mr.
Winters was also appointed to the Audit Committee, Compensation Committee,
Compliance Committee and Nominating Committee for the Company replacing Mr.
Anderson.
(3) There
is
no arrangement or understanding between Allen S. Winters and any other person
pursuant to which Mr. Winters was appointed as a director.
(4) Allen
S.
Winters will continue to serve on the Board of Directors for U.S. Moly Corp.
and
Sutter Gold Mining Inc., subsidiaries of USE.
(c) (1) At
the
regular scheduled meeting of the Board of Directors on January 23, 2007,
Steven
R. Youngbauer was appointed by the Board of Directors as Secretary and General
Counsel to fill the vacancy as a result of the retirement of Daniel P. Svilar.
The appointment was made upon the unanimous recommendation of the Nominating
Committee, which consists entirely of independent members of the Board of
Directors.
(2) There
is
no arrangement or understanding between Mr. Youngbauer and any other person
pursuant to which Mr. Youngbauer was appointed, and he is not related to
any of
USE officers or directors. Mr. Youngbauer serves at the will of the Board
of
Directors.
Mr.
Youngbauer, age 56, served as Assistant Secretary and Associate General Counsel
to USE and Crested since February, 2004. Mr. Youngbauer has over 24 years
experience in the legal profession and 30 years in the mining industry. Prior
to
joining USE, Mr. Youngbauer was the President and CEO of Hi-Pro Production,
LLC.
from June 2001 to February 2004. Mr. Youngbauer was also employed for 25
years
for Amax Coal West, Inc. and their subsidiaries and affiliates as Vice
President, General Counsel and Assistant Secretary and various other Director
and Manager positions. Mr. Youngbauer received a Juris Doctorate Degree from
the
University of Wyoming Law School in 1982 and also served as a Wyoming State
Senator, Chairman of the Wyoming Environmental Quality Council and on the
Board
of Directors of the Wyoming Mining Association.
(3) In
2006,
USE paid Mr. Youngbauer $120,000 in salary; his salary for the new positions
is
$130,000. In 2006, USE (upon the recommendation of the Compensation Committee
made on September 29, 2006) paid Mr. Youngbauer a cash bonus of $138,000.
The
bonus paid to Mr. Youngbauer was part of a USE-wide bonus in the aggregate
amount of $3,013,000 which was allocated to all 29 employees. For more
information on the bonus, see the Form 8-K filed October 19, 2006. Mr.
Youngbauer also received a Christmas bonus of $12,000 during December 2006.
Mr.
Youngbauer continues to participate, as an employee, in USE’s equity incentive
and other compensation plans and will become eligible to participate in the
2001
Stock Compensation Plan after one year of service in the office of General
Counsel.
Section
9. Financial Statements and Exhibits
Financial
Statements: None
Exhibits: 16(a)
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EWC’s
notice of cessation of client-auditor relationship.
16(b) - EWC’s
concurrence letter.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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U.S.
ENERGY CORP.
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Dated:
January 24, 2006
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By:
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/s/
Keith G. Larsen
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Keith
G. Larsen, CEO
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