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Agreement And Plan of Merger

This is an actual contract by Crested.
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Sectors: Metals and Mining
Governing Law: Wyoming, View Wyoming State Laws
Effective Date: January 23, 2007
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AGREEMENT AND PLAN OF MERGER


dated as of January 23, 2007


by and between


U.S. ENERGY CORP., a Wyoming corporation,


and


CRESTED CORP., a Colorado corporation






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TABLE OF CONTENTS


Page



ARTICLE 1

THE MERGER

3





1.1

The Merger

3





1.2

Closing

3





1.3

Effective Date

4





1.4

Effects of the Merger

4





1.5

Effect on Capital Stock

4





1.6

Stock Options, and Equity and Other Compensation Plans and Benefits

5





1.7

Exchange Of Certificates

5





1.8

Taking of Necessary Action; Further Action

7



ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

8





2.1

Organization

8





2.2

Capital Stock of the Company

9





2.3

Authority Relative to this Agreement

9





2.4

SEC Reports and Financial Statements

10





2.5

Certain Changes

11





2.6

Litigation

11





2.7

Disclosure in Proxy Statement

11





2.8

Broker or Finder Fees

11





2.9

Employee Plans

11





2.10

Board Recommendation; Company Action; Requisite Vote of the Company Stockholders

12





2.11

Taxes

12





2.12

Environmental

14





2.13

Compliance with Laws

15





2.14

Employment Matters

15





2.15

Certain Contracts and Arrangements

15





2.16

Financial and Commodity Hedging

16





2.17

Properties

16





2.18

Accounting Controls

16





2.19

Intellectual Property

16



ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF PARENT

16





3.1

Organization

16





3.2

Capital Stock

17





3.3

Authority Relative to this Agreement

18





3.4

SEC Reports and Financial Statements

18





3.5

Certain Changes

19





3.6

Litigation

19





3.7

Disclosure in Proxy Statement

19





3.8

Broker or Finder Fees

20





3.9

Employee Plans

20





3.10

Board Recommendation

22





3.11

Taxes

22





3.12

Environmental

23





3.13

Compliance with Laws

24





3.14

Employment Matters

24





-i-




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TABLE OF CONTENTS


(continued)


Page





3.15

Certain Contracts and Arrangements

25





3.16

Financial and Commodity Hedging

25





3.17

Properties

25





3.18

Accounting Controls

25





3.19

Intellectual Property

25



ARTICLE 4

CONDUCT OF BUSINESS PENDING THE MERGER

26





4.1

Conduct of Business by the Company Pending the Merger

26





4.2

Conduct of Business of Parent

27



ARTICLE 5

ADDITIONAL AGREEMENTS

28





5.1

Shareholders Meeting

28





5.2

Registration Statement

28





5.3

Employee Benefit Matters

29





5.4

Consents and Approvals

29





5.5

Public Statements

30





5.6

Commercially Reasonable Best Efforts

30





5.7

Notification of Certain Matters

30





5.8

Access to Information; Confidentiality

31





5.9

No Solicitation

31





5.10

Section 16 Matters

32





5.11

Voting Agreement

32





5.12

Nasdaq Listing

33





5.13

Tax Treatment

33





5.14

Indemnification

33



ARTICLE 6

CONDITIONS

33





6.1

Conditions to the Obligation of Each Party to Effect the Merger

33





6.2

Additional Conditions to the Obligations of Parent

34





6.3

Additional Conditions to the Obligation of the Company

34



ARTICLE 7

TERMINATION, AMENDMENT AND WAIVER

35





7.1

Termination

35





7.2

Effect of Termination

36





7.3

Fees and Expenses

36





7.4

Amendment

37





7.5

Waiver

37



ARTICLE 8

GENERAL PROVISIONS

38





8.1

Notices

38





8.2

Representations and Warranties

38





8.3

Governing Law; Waiver of Jury Trial

38





8.4

Counterparts; Facsimile Transmission of Signatures

39





8.5

Assignment; No Third Party Beneficiaries

39





8.6

Severability

39





8.7

Entire Agreement

39













-ii-




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Schedule of Definitions





Term

Section



'33 Act

2.3(c)



'34 Act

2.3(c)



Action

5.14



Agreement

Preamble



Articles of Merger

1.3



Book-Entry Shares

1.7(a)



CBCA

1.1(a)



CCCA

1.3



CERCLA

2.12(h)



Closing

1.2



Closing Date

1.2



Code

Recitals



Company

Preamble



Company Board

1.6



Company Cases

2.6



Company Common Stock

1.5



Company Disclosure Letter

2



Company Financial Statements

2.4(b)



Company Material Adverse Effect

2.1(a)



Company SEC Reports

2.4(a)



Company Stock Option

1.6



Company Stock Plan

1.6



Company Subsidiaries

2.1(a)



Dissenters Rights Statute

1.5(b)



Effective Date

1.3



Electing Cash Out Holders

1.5(d)



Employee Benefit Plan

2.9(b)



Environmental Laws

2.12(h)



ERISA

2.9(b)



Exchange Agent

1.7(a)



Exchange Ratio

1.5(b)



GAAP

2.4(b)



Hazardous Substance

2.12(i)



Indemnified Liabilities

5.14



Indemnitees

5.14



Intellectual Property

2.19



Intended Tax Treatment

5.13



Law

2.13



Liens

2.1(b)



Merger

1.1(a)



Merger Consideration

1.5(b)



Navigant

3.10(a)



Order

2.3(b)



Other Filings

5.2(b)



Outside Date

7.1(c)







-iv-




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Parent

Preamble



Parent Board

3.3(a)



Parent Cases

3.6



Parent Common Stock

1.5(a)



Parent Financial Statements

3.4(b)



Parent Material Adverse Effect

3.1(a)



Parent SEC Reports

3.4(a)



Parent Subsidiaries

3.1(a)



person

2.1(b)



Proxy Statement/Prospectus

2.7



RCRA

2.12(h)



S-4

5.2(a)



SARs

2.2(b)



SEC

2



SGMI

2.1(a)



Shareholders Meeting

5.1



Statement of Merger

1.3



Stock Certificate

1.5(c)



Superior Proposal

5.9(c)



Surviving Company

1.1(a)



Takeover Proposal

5.9(c)



Termination Fee

7.3(a)



USECB Joint Venture

1.4



Voting Agreement

Recitals



WBCA

1.1(a)










-v-




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AGREEMENT AND PLAN OF MERGER




THIS AGREEMENT AND PLAN OF MERGER (this Agreement ), dated as of January 23, 2007 is by and between U.S. Energy Corp., a Wyoming corporation ( Parent ), and Crested Corp., a Colorado corporation (the Company ).


WHEREAS, the parties desire that the Company be merged with and into Parent with Parent as the surviving company, all as set forth in Article 1 of this Agreement;


WHEREAS, the boards of directors of Parent and the Company established special committees in order to evaluate the proposed Merger (as defined below), and each special committee evaluated the Merger and recommended approval of the Merger to its board of directors;


WHEREAS, the boards of directors of Parent and the Company have approved this Agreement and deem it advisable and in the best interests of their respective stockholders to consummate the transactions contemplated hereby on the terms and conditions set forth herein;


WHEREAS, in consideration of Parent entering into this Agreement and incurring certain related fees and expenses, Parent, the officers and directors of Parent who own Company Common Stock and the Company are executing a voting agreement, of even date herewith (the Voting Agreement ), relating to the Company Common Stock (as defined below) beneficially owned by Parent;


WHEREAS, it is intended that, for United States federal income tax purposes, the Merger (as defined below) shall qualify as a reorganization within the meaning of Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the Code ), and the regulations promulgated thereunder and this Agreement constitutes a of reorganization within the meaning of Section 1.368(c) of the Treasury Regulations.


NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants contained in this Agreement and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Parent and the Company, intending to be legally bound, hereby agree as follows:


ARTICLE 1


THE MERGER




1.1 The Merger .




(a) On the terms and subject to the conditions set forth in this Agreement, and in accordance with the Colorado Business Corporation Act ( CBCA ) and the Wyoming Business Corporation Act ( WBCA ), the Company shall be merged with and into Parent at the Effective Date (the Merger ). At the Effective Date, the separate corporate existence of the Company shall cease and Parent shall continue as the surviving corporation of the Merger (the Surviving Company ).




(b) It is intended that the Merger shall constitute a reorganization under the Code .


1




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1.2 Closing . Unless this Agreement is earlier terminated, the closing (the Closing ) of the Merger shall take place at the offices of Parent, 877 North 8 West, Riverton, Wyoming 82501, at 10:00 am on the first business day following the satisfaction or waiver (to the extent permitted by applicable Law (as defined in Section 2.13 )) of the conditions set forth in Article 6 , or at such other place, time and date as shall be agreed in writing between Parent and the Company. The date on which the Closing occurs is referred to in this Agreement as the Closing Date .




1.3 Effective Date . Prior to the Closing, Parent shall prepare, and on the Closing Date or as soon as practicable thereafter, Parent shall file (a) a statement of merger (the Statement of Merger ) executed in accordance with the relevant provisions of the Colorado Corporations and Associations Act (the CCAA ) with the Secretary of State of the State of Colorado, and (b) articles of merger ( Articles of Merger ) executed in accordance with the relevant provisions of the WBCA with the Secretary of State of the State of Wyoming. The Merger shall become effective at such time as both the Statement of Merger and the Articles of Merger have been duly filed with the Secretaries of State of the States of Colorado and Wyoming, or at such subsequent time as Parent and the Company shall agree and specify in the Statement of Merger and the Articles of Merger (the date the Merger becomes effective being the Effective Date ).




1.4 Effects of the Merger . The Merger shall have the effects set forth in section 7-90-204(1)(a) of the CCAA and section 17-16-1106(a) of the WBCA. The articles of incorporation and bylaws of Parent immediately prior to the Effective Date shall be the articles of incorporation and bylaws of the Surviving Company. The directors and officers of Parent immediately prior to the Effective Date shall continue in service until the earlier of their resignation or removal or until their respective successors are duly elected or appointed and qualified, as the case may be. When Parent deems it appropriate, the joint venture between Parent and the Company ( USECB Joint Venture ) shall be terminated and wound up.




1.5 Effect on Capital Stock . At the Effective Date, by virtue of the Merger and without any action on the part of the holder of any shares of common stock, par value $0.001, of the Company ( Company Common Stock ), the following shall occur:




(a) Cancellation Of Treasury Stock, Parent-Owned Stock and Certain Parent Common Stock . Each share of Company Common Stock that is owned by the Company or Parent shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and no consideration shall be delivered or deliverable in exchange therefor. Any common stock of Parent ( Parent Common Stock ) owned by the Company shall no longer be outstanding and shall automatically be canceled and shall cease to exist.




(b) Conversion Of Company Common Stock; Merger Consideration . Subject to Sections 1.5(a) , 1.6 and 1.7(e) , every two issued and outstanding shares of Company Common Stock not held by Parent (including shares of Company Common Stock issued on exercise of the Company Stock Options (as those terms are defined in Section 1.6 below)) shall be converted into the right to receive one validly issued, fully paid and non-assessable share of Parent Common Stock (the Merger Consideration ), resulting in an exchange ratio of 2:1 (the Exchange Ratio ). The Merger Consideration on the Effective Date is subject to (i) reduction by operation of sections 7-113-101 to 7-113-302 of the CBCA (the Dissenters Rights Statute ); and (ii) increase by such additional shares as may be needed to pay for fractional shares of Company Common Stock under Section 1.7(e) (such additional share number not being determinable until the Effective Date).


2




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(c) Effect Of Conversion . From and after the Effective Date, all of the shares of Company Common Stock converted into the Merger Consideration pursuant to this Section 1.5 shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of such shares evidenced by a certificate (each a Stock Certificate ), representing any such shares of Company Common Stock (and each holder of shares of Company Common Stock issued upon exercise of a Company Stock Option, but not evidenced by a stock
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