PINNACLE GAS RESOURCES, INC. AMENDED AND RESTATED SECURITYHOLDERS AGREEMENTShareholder Agreement |
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PINNACLE GAS RESOURCES, INC. AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT Dated February 16, 2006
ii This AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT, dated as of February 16, 2006, is by and among Pinnacle Gas Resources, Inc., a Delaware corporation (the " Corporation "), CCBM, Inc., a Delaware corporation (" CCBM "), U.S. Energy Corporation, a Wyoming corporation (" US Energy "), Crested Corp., a Colorado corporation (" Crested "), each of the CSFB Parties (as defined herein), Peter G. Schoonmaker, a natural person (" Schoonmaker "), Gary Uhland, a natural person (" Uhland "), each Shareholder (as such terms are defined herein) who may hereafter execute in accordance with this Agreement a separate agreement to be bound by the terms hereof and, for purposes of Section 5.10 only, Carrizo Oil & Gas, Inc., a Texas corporation (" Carrizo "). W I T N E S S E T H : WHEREAS, the Corporation, CCBM, Rocky Mountain Gas, Inc., a Wyoming corporation (" RMG "), and the CSFB Parties are parties to that certain Contribution and Subscription Agreement dated June 23, 2003 (the " Contribution Agreement ") pursuant to which, among other things, the Corporation issued and sold to each of CCBM and RMG, shares of Common Stock and to the CSFB Parties, shares of Common Stock and Preferred Stock and Warrants; WHEREAS, subject to their execution of the Securityholders Agreement dated as of June 23, 2003 (the " Initial Agreement "), the Corporation granted Schoonmaker and Uhland certain Common Stock Equivalents; WHEREAS, the Contribution Agreement provided that the execution and delivery of the Initial Agreement was a condition to the consummation of the capital contributions contemplated thereby; WHEREAS, by assignment dated May 31, 2005, RMG transferred all its shares of common stock of the Corporation and all right, title, interest and obligations in and to the Initial Agreement to US Energy and Crested, which transfers were permitted under the terms of the Initial Agreement; WHEREAS, in connection with the assignment by RMG of its interests in the Corporation to US Energy and Crested the parties entered into an Amendment to Securityholders Agreement dated as of August 26, 2005 (the " Amendment "); and WHEREAS, the Parties desire to further amend and restate the Initial Agreement as amended by the Amendment; NOW, THEREFORE, in consideration of the mutual covenants and obligations hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows: Section 1.1 Certain Terms. In addition to the terms defined elsewhere herein, when used herein the following terms shall have the meanings indicated: " 2005 Subscription Agreement " means, collectively, any subscription agreements entered into by and among the Company and one or more of its stockholders pursuant to the certain Notice to Stockholders, dated March 15, 2005, or the certain Notice to Stockholders, dated April 15, 2005, in each case as such agreements may be amended, restated, supplement or otherwise modified from time to time. " AAA " has the meaning set forth in Section 9.16(d) . " Accepting Holder " has the meaning set forth in Section 5.3(b) . " Accredited Investor " has the meaning set forth for such term in Regulation D promulgated by the SEC under the Securities Act. " Action " has the meaning set forth in Section 6.10 . " Affiliate " means, with respect to any Person, any Person controlling, controlled by, or under common control with such Person. For the purposes of this definition, "control" means the possession of the power to direct or cause the direction of management and policies of such Person, whether through the direct or indirect ownership of Voting Stock, by contract or otherwise. " Agreement " means this Securityholders Agreement, as amended and restated from time to time. " Amendment " has the meaning given thereto in the recitals. " AMI Agreement " means that certain Area of Mutual Interest Agreement, dated as of June 23, 2003, among the Corporation, RMG, U.S. Energy, CCBM and Carrizo. " Associate " of any Person, means any officer, director or employee of such Person and such officer's, director's or employee's spouse, heirs, executors, administrators, testamentary trustees, legatees or beneficiaries. " Board " has the meaning set forth in Section 3.1 . " Bona Fide Offer " means any bona fide offer to acquire shares of Preferred Stock, Common Stock or Common Stock Equivalents (whether in the form of a purchase of shares of Common Stock or Common Stock Equivalents, merger, business combination, recapitalization or otherwise) made by a Person which has the demonstrable financial ability to consummate such a transaction. " Business Day " means any day other than a Saturday, a Sunday, or a holiday on which national banking associations in New York City, New York, Houston, Texas, or Sheridan, Wyoming are authorized or obligated by law or executive order to close. " Bylaws " means the bylaws of the Corporation, as amended or restated from time to time. " Capital Stock " means any and all shares, interests, participations, or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), and any and all warrants, options, or other rights to purchase or acquire any of the foregoing, including, without limitation, any Common Stock Equivalents. " Carrizo " has the meaning given thereto in the preamble. " Cause " means the termination of a Management Holder's employment with the Corporation for any of the following reasons: (i) such Person's conviction of, or plea of nolo contendere to, a felony crime; (ii) a breach by such Person of a fiduciary duty owed to the Corporation; (iii) the engagement by such Person in any Prohibited Activity; (iv) the breach by such Person of an obligation of confidentiality contained in any written agreement to which such Person is bound; (v) the willful and gross neglect by such Person of his or her duties or, with respect to a Management Holder who is party to a written employment agreement with the Corporation, the willful or gross neglect by such Person of the duties specifically and expressly required by such employment agreement; (v) such Person's continuing failure to substantially perform the duties and responsibilities required of such Person or, with respect to a Management Holder is party to a written employment agreement with the Corporation, such Person's continuing failure to substantially perform the duties and responsibilities required of such Person under such employment agreement (except, in either case, by reason of such Person's incapacity due to physical or mental illness or injury) for a period of 15 days after the Board, acting pursuant to a majority of its members, has delivered to such Person a written demand for substantial performance which specifically identifies the basis for the Board's determination that such Person has not substantially performed his or her duties and responsibilities; or (iv) commission of any act or acts of moral turpitude in violation of the Corporation's policy. " CCBM " has the meaning given thereto in the recitals. 2 " Certificate of Incorporation " means the certificate of incorporation of the Corporation, as amended and restated from time to time. " Change of Control " means, with respect to any Person, the occurrence of (i) the consummation of any transaction or series of transactions, including without limitation, any tender or exchange offer, open market purchases, privately negotiated purchases, merger, consolidation or otherwise, which results in any Person(s) becoming the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of more than 50% of the Voting Stock of such Person, measured by voting power rather than number of shares or (ii) the direct or indirect sale, lease, exchange, transfer or other disposition of all or substantially all of the assets of such Person and its subsidiaries to any other Person(s). "Co-Sellers" has the meaning set forth in Section 5.5(a) . " Common Stock " means shares of the common stock, par value $.01 per share, of the Corporation. " Common Stock Equivalents " means (without duplication with any other shares of Common Stock or Common Stock Equivalents) rights, warrants, options, securities or indebtedness, or other rights, exercisable for or convertible or exchangeable into, directly or indirectly, shares of Common Stock (other than the Preferred Stock), whether at the time of issuance or upon the passage of time or the occurrence of some future event. " Contribution Agreement " has the meaning given thereto in the recitals. " Corporation " has the meaning given thereto in the recitals. " Crested " has the meaning given thereto in the recitals. " CSFB Shares " has the meaning set forth in Section 5.5(a) . " CSFB Parties " means, collectively, DLJ MB Partners III GmbH & Co. KG, a limited company organized under the laws of Germany, DLJ Offshore Partners III, C.V., a partnership organized under the laws of the Netherland Antilles, DLJ Offshore Partners III-1, C.V., a partnership organized under the laws of the Netherland Antilles, DLJ Offshore Partners III-2, C.V., a partnership organized under the laws of the Netherland Antilles, Millennium Partners II, L.P., a Delaware limited partnership, DLJ Merchant Banking Partners III, L.P., a Delaware limited partnership, and MBP III Plan Investors, L.P., a Delaware limited partnership. " Demand Period " has the meaning set forth in Section 6.1(a) . " Demand Registration " has the meaning set forth in Section 6.1(a) . " Demand Request " has the meaning set forth in Section 6.1(a) . " Diluted Common Stock " means, at any time, the then outstanding shares of Common Stock (except for any shares held by Management Holders or shares issued upon the exercise of Common Stock Equivalents held by Management Holders) plus (without duplication) all shares of Common Stock issuable upon the exercise of all then-outstanding Warrants. " Director " means a natural person appointed to the Board in accordance with the terms of this Agreement, which person need not be a stockholder of the Corporation or a resident of the State of Delaware. " Disability " means, with respect to any Management Holder, the absence of such Person from his or her duties with the Corporation on a full-time basis for either (i) 60 consecutive business days or (ii) in any two-year period 120 nonconsecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Corporation or its insurers and acceptable to such Person or his or her legal representative (such agreement as to acceptability not to be withheld unreasonably.) 3 " Dispute " has the meaning set forth in Section 9.16(a) . " Dispute Notice " has the meaning set forth in Section 9.16(b) . " Employment Agreements " means those certain employment agreements executed by the Company with each of Gary W. Uhland and Peter G. Schoonmaker. " Equity Incentive Plan " means any stock option, issuance, appreciation rights, restricted stock, phantom stock, stock purchase plan or other equity incentive plan for the directors, officers and employees of, and consultants to, the Corporation and its subsidiaries. " Exchange Act " means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated by the SEC thereunder. " Fair Market Value " means, in respect of any share of Common Stock or any Common Stock Equivalents, (i) if the Corporation is not publicly traded at such time, the fair saleable value of such Common Stock and/or Common Stock Equivalents (determined without giving effect to any discount for minority interest or any lack of liquidity of the Common Stock, or for the fact that the Corporation may have no class of equity registered under the Exchange Act) based on the equity value of the Corporation as determined, in good faith, by the Corporation and the Management Holder whose Common Stock and/or Common Stock Equivalents are being repurchased pursuant to Section 4.2 or, in the event such parties cannot agree, by an investment banking or valuation firm of nationally recognized standing mutually agreed upon by the Corporation and such Management Holder and (ii) if Corporation is publicly traded at such time, the average of the daily market prices for 20 consecutive Business Days commencing 30 days before such date. For purposes of this definition, (i) the value of Common Stock Equivalents shall be equal to the aggregate of Fair Market Value of the shares of Common Stock issuable upon conversion or exercise thereof less the aggregate exercise price thereof and (ii) the "daily market price" for each such Business Day shall be (A) the last sale price on such day on the principal stock exchange or NASDAQ Stock Market (" NASDAQ ") on which such Common Stock is then listed or admitted to trading, (B) if no sale takes place on such day on any such exchange or NASDAQ, the average of the last reported closing bid and asked prices on such day as officially quoted on any such exchange or NASDAQ, (C) if the Common Stock is not then listed or admitted to trading on any stock exchange or NASDAQ, the average of the last reported closing bid and asked prices on such day in the over the counter market, as furnished by the National Association of Securities Dealers Automatic Quotation System or the National Quotation Bureau, Inc., (D) if neither such corporation at the time is engaged in the business of reporting such prices, as furnished by any similar firm then engaged in such business or (E) if there is no such firm, as furnished by any member of the National Association of Securities Dealers (the " NASD ") selected mutually by the Management Holder whose Common Stock and/or Common Stock Equivalents are being repurchased pursuant to Section 4.2 and the Corporation or, if they cannot agree upon such selection, as selected by two such members of the NASD, one of which shall be selected by the such Management Holder and one of which shall be selected by Corporation. " Fully Diluted Common Stock " means, at any time, the then outstanding shares of Common Stock plus (without duplication) all shares of Common Stock issuable, whether at such time or upon the passage of time or the occurrence of future events, upon the exercise, conversion or exchange of all then-outstanding Common Stock Equivalents. " GAAP " means United States generally accepted accounting principles as in effect from time to time. " Good Reason " means (i) with respect to any Management Holder party to a written employment agreement with the Corporation, (A) the assignment by the Corporation to such Person any duties materially inconsistent with such Person's duties as contemplated in such employment agreement or any other action by the Corporation which results in a material diminution in such position, excluding for 4 this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Corporation promptly after receipt of notice thereof given by such Person; (B) any material failure by the Corporation to comply with any of the provisions of any written employment agreement with the Corporation to which such Person is a party, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Corporation promptly after receipt of notice thereof given by such Person; (C) any purported termination by the Corporation of such Person's employment otherwise than as expressly permitted by such Person's employment agreement; or (iv) any failure by the Corporation to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to assume expressly and agree to perform the terms of such Person's employment agreement with the Corporation in the same manner and to the same extent that the Corporation would be required to perform such terms pursuant thereto if no such succession had taken place and (ii) with respect to any Management Holder not party to a written employment agreement with the Corporation, any action by the Corporation which results in a material diminution in such Person's position, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Corporation promptly after receipt of notice thereof given by such Person. " Holder " means each Initial Holder and each other Person that may become a party to this Agreement pursuant to Section 5.7 , but shall not include (i) the Corporation, (ii) any Management Holder or (iii) any Person who executes this Agreement or a separate agreement to be bound by the terms hereof solely in his or her capacity as a spouse of a Holder; provided , however , that if any Holder ceases to own any Common Stock or Common Stock Equivalents, then such Holder shall cease to be a Holder hereunder and shall not thereafter be subject to this Agreement (other than Section 9.6 ) even if such former Holder thereafter acquires any securities of the Corporation, unless such former Holder thereafter acquires any securities of the Corporation in a transaction in which it becomes a Holder again pursuant to Section 5.7 . " Indemnified Holder " has the meaning set forth in Section 6.10(d) . " Indemnifying Holder " has the meaning set forth in Section 6.10(d) . " Initial Agreement " has the meaning given thereto in the recitals. " Initial Holders " means CCBM, US Energy and Crested and each CSFB Party. " Initial Public Offering " means the earlier to occur of either (i) the first consummated public offering of Common Stock which is underwritten on a firm commitment basis by one or more Underwriters or (ii) the date the registration statement filed pursuant to registration rights granted in connection with a Proposed Private Offering is declared effective by the SEC. " Inspectors " has the meaning set forth in Section 6.7(j) . " Involuntary Transfer " means a Transfer resulting from the death of a Person or another involuntary Transfer occurring by operation of law (including, but not limited to, transfers resulting from death of such Person, the initiation and continuation for 60 days of bankruptcy proceedings against such Person, the execution of either a judgment or a foreclosure by a court of law against such Person or any other event that forces such Person to Transfer any of its Common Stock or Common Stock Equivalents to a third party). " Involuntary Transfer Notice " has the meaning set forth in Section 5.6 . " Loss or Losses " has the meaning set forth in Section 6.10 . " Management Holder " means any employee of the Corporation who beneficially owns any Common Stock or Common Stock Equivalents and each employee of the Corporation who hereafter executes an 5 agreement to be bound by the terms of this Agreement as a "Management Holder" (other than any Person who executes this Agreement or a separate agreement to be bound by the terms hereof solely in his or her capacity as a spouse of a Management Holder); provided , however , that if any Management Holder ceases to own any Common Stock or Common Stock Equivalents, then such Management Holder shall cease to be a Management Holder hereunder and shall not thereafter be subject to this Agreement (other than Section 9.6 ) even if such former Management Holder thereafter acquires any securities of the Corporation, unless such former Management Holder thereafter acquires any securities of the Corporation in a transaction in which it becomes a Management Holder again pursuant to Section 5.7 . " Material Adverse Effect " has the meaning set forth in Section 6.3 . " Minimum Purchase Amount " has the meaning set forth in Section 5.5(d)(i)(B) . " NASD " means the National Association of Securities Dealers, Inc. " New Securities " has the meaning set forth in Section 4.1(b) . " Notice " has the meaning set forth in Section 9.5 . " Notice Date " has the meaning set forth in Section 5.5(b) . " Participating Amount " has the meaning set forth in Section 5.4(a) . " Participation Offer " has the meaning set forth in Section 5.3(b) . " Payable Note " means a promissory note subordinated to all other financial obligations of the Corporation and bearing interest at 6% per annum (which interest may be payable by delivery of notes of like tenor in principal amount equal to the interest then due) with a maturity one year beyond the maturity of the Corporation's most subordinated debt outstanding at the time of issuance of such note. " Permitted Transferee " means, (a) with respect to any CSFB Party, (i) any Affiliate of any CSFB Party, (ii) any managing director, director, managing general partner, associate general partner, advisory general partner, general partner or limited partner of any CSFB Party, (iii) any Associate of any CSFB Party and (iv) any trust, the beneficiaries of which, or any corporation, limited liability company or partnership, the shareholders, members or general or limited partners of which, include only one or more CSFB Parties, or any of their respective Associates, (b) with respect to CCBM, (i) Carrizo or any other Affiliate of CCBM (other than any Person deemed an Affiliate of CCBM through control of Carrizo or any other publicly traded parent, direct or indirect, of CCBM), (ii) any Associate of CCBM and (iii) any trust, the beneficiaries of which, or any corporation, limited liability company or partnership, the shareholders, members or general or limited partners of which, include only CCBM or any of its Associates, (c) with respect to US Energy and Crested, (i) US Energy and Crested or any other Affiliate of US Energy and Crested (other than any Person deemed an Affiliate of US Energy and Crested through control of US Energy or any other publicly traded parent, direct or indirect, of US Energy and Crested), (ii) any Associate of US Energy and Crested, and (iii) any trust, the beneficiaries of which, or any corporation, limited liability company or partnership, the shareholders, members or general or limited partners of which, include only US Energy and Crested or any of their Associates and (d) with respect to any Management Holder, (i) any trust established for the benefit of such Management Holder, the spouse and/or one or more of the lineal descendants of such Management Holder which is controlled by such Management Holder and (ii) the spouse, parent, and/or one or more of the lineal descendants of such Management Holder; provided , however , that any transferee from any CSFB Party, CCBM, US Energy and Crested or any Management Holder pursuant to clauses (a), (b), (c) or (d) above will act through DLJ Merchant Banking Partners III, L.P., CCBM, US Energy and Crested and such Management Holder, respectively. 6 " Person " means any natural person, corporation, limited partnership, general partnership, joint stock company, joint venture, association, company, limited liability company, trust, bank trust company, land trust, business trust, or other organization, whether or not a legal entity, and any government or agency or political subdivision thereof. " Piggyback Registration " has the meaning set forth in Section 6.4(a) . " Piggyback Securities " has the meaning set forth in Section 6.4(b) . " Preemptive Right Holder " has the meaning set forth in Section 4.1(a) . " Preferred Stock " means shares of the Series A Redeemable Preferred Stock, par value $.01 per share, of the Corporation. " Preferred Stock Certificate " means the Certificate of Designations, Preferences and Rights of Series A Redeemable Preferred Stock of the Corporation filed with the Secretary of State in the State of Delaware on June 23, 2003. " Prohibited Activity ": a Person engages in a "Prohibited Activity" if during such Person's employment with the Corporation and (i) for a period of one year after the date of such Person's termination of employment, within the Area of Mutual Interest (as defined in the AMI Agreement) such Person (A) accepts employment with, advises, assists or renders service in any way, directly or indirectly, to any Person that is engaged in a business directly competitive with the business then engaged in by the Corporation or any of its affiliated companies or (B) enters into or takes part in or lends his or her name, counsel or assistance to any business, either as proprietor, principal, investor, partner, director, officer, executive, consultant, advisor, agent, independent contractor, or in any other capacity whatsoever, for any purpose that would be competitive with the business of the Corporation or any of its affiliated companies and (ii) for a period of two years after the date of termination of such Person's employment with the Corporation, such Person, on his own behalf or on behalf of any other Person, directly or indirectly, solicits or offers employment to any Person who has been employed by the Corporation or any subsidiary thereof at any time during the one-year period immediately preceding such solicitation. " Proportional Share " has the meaning set forth in Section 5.3(b) . " Proposed Disposition " has the meaning set forth in Section 5.3(a) . " Proposed Private Offering " has the meaning set forth in Section 3.1 . " Proposed Transferee " has the meaning set forth in Section 5.3(a) . " Public Offering " means the consummation of a public offering pursuant to a registration statement under the Securities Act. " Public Sale " means (i) any unregistered sale in "brokers' transactions" pursuant to Rule 144 under the Securities Act or (ii) a spin-off exempt from registration (pursuant to SEC Staff Legal Bulletin No. 4 or otherwise). " Registrable Securities " means all shares of Common Stock and Common Stock issuable upon conversion or exercise of Common Stock Equivalents and any other securities issued or issuable with respect to Common Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or reorganization; provided, however, that any Registrable Security will cease to be a Registrable Security when (i) a registration statement covering such Registrable Security has been declared effective by the SEC and it has been disposed of pursuant to such effective registration statement, (ii) it is sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) promulgated by the SEC under the Securities Act are met, or (iii) (A) it has been otherwise transferred, (B) the Corporation has delivered 7 a new certificate or other evidence of ownership for it not bearing any legend similar to that required pursuant to Section 9.4 of this Agreement and (C) it may be resold without subsequent registration or other restriction under the Securities Act. " Registration Expenses " has the meaning set forth in Section 6.9 . " Requesting Holder " has the meaning set forth in Section 6.1(a) . " Required Filing Date " has the meaning set forth in Section 6.1(b) . " Required Sale " has the meaning set forth in Section 5.5(a) . " Required Sale Date " has the meaning set forth in Section 5.5(b) . " Required Sale Notice " has the meaning set forth in Section 5.5(b) . " Response " has the meaning set forth in Section 9.16(b) . " Restriction " has the meaning set forth in Section 9.4(b) . " RMG " has the meaning given thereto in the recitals. " ROFR Acceptance Deadline " has the meaning set forth in Section 5.3(b) . " ROFR Acceptance Notice " has the meaning set forth in Section 5.3(b) . " ROFR/Participation Notice " has the meaning set forth in Section 5.3(g) . " Sale Notice " has the meaning set forth in Section 5.3(a) . " Sale Shares " has the meaning set forth in Section 5.3(a) . " SEC " means the Securities and Exchange Commission or any successor governmental agency. " Securities Act " means the Securities Act of 1933, as amended from time to time. " Seller " has the meaning set forth in Section 5.5(a) . " Selling Holder " means a Holder who is selling Registrable Securities pursuant to a registration statement under the Securities Act. " Senior Manager " has the meaning set forth in Section 9.16(b) . " Share " has the meaning set forth in Section 5.1 . " Shareholder " means, collectively, Holders and Management Holders. " Shelf Request " has the meaning set forth in Section 6.2 . " Shelf Registration Statement " has the meaning set forth in Section 6.2 . " Spouse " has the meaning set forth in Section 9.15 . " Substitute Director " has the meaning set forth in Section 3.2(d) . " Suspension Period " has the meaning set forth in Section 6.6(c) . " Tranche A Shares " has the meaning given thereto in the Contribution Agreement. " Tranche B Shares " has the meaning given thereto in the Contribution Agreement. " Transfer ," including the correlative terms " Transferring " or " Transferred ", means any direct or indirect transfer, assignment, sale, gift or other encumbrance, or any other disposition (whether voluntary or involuntary or by operation of law) of Common Stock and/or any Common Stock Equivalents (or any interest (pecuniary or otherwise) therein or right thereto), including without 8 limitation derivative or similar transactions or arrangements whereby a portion or all of the economic interest in, or risk of loss or opportunity for gain with respect to, Common Stock and/or any Common Stock Equivalents is transferred or shifted to another Person (but not any pledge or hypothecation thereof, placement of a lien thereon or grant of a security interest therein or other encumbrance thereon until the execution and foreclosure with respect to the foregoing); provided , however , that an exchange, merger, recapitalization, consolidation or reorganization involving the Corporation in which shares of the Common Stock and/or Common Stock Equivalents of the Corporation are converted or exchanged shall not be deemed a Transfer. " Transferring Holder " has the meaning set forth in Section 5.3(a) . " Underwriter " means a nationally-recognized securities dealer which purchases any Registrable Securities as principal and not as part of such dealer's market-making activities. " US Energy " has the meaning given thereto in the recitals. " Voting Stock " of any Person as of any date means the Capital Stock of such person that is at the time entitled to vote in the election of the Board of Directors of such Person. " Warrants " means all warrants exercisable for the purchase of Common Stock granted by the Corporation to any Initial Holder or its Permitted Transferee. " Withdrawing Director " has the meaning set forth in Section 3.2(b) . Section 2.1 Representations and Warranties of Shareholders. Each Shareholder represents and warrants to the Corporation and the other Shareholders that: (a) with respect to a Shareholder that is not a natural person, such Person is duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation or organization, as the case may be, with full corporate and/or other entity power and authority under its certificate of incorporation and/or other organizational document(s) to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, and the execution, delivery and performance by it of this Agreement and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action; (b) with respect to a Shareholder that is a natural person, such Person has full power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby, and the execution, delivery, and performance by such Person of this Agreement and the consummation by such Person of the transactions contemplated hereby have been duly authorized by all necessary action; (c) this Agreement has been duly and validly executed and delivered by such Person and constitutes the legal, valid and binding obligation of such Person, and except as may be affected (i) by applicable bankruptcy, insolvency, moratorium, reorganization and other similar laws and judicial decisions affecting the rights of creditors generally and (ii) by general principles of equity and public policy (regardless of whether considered at law or in equity), are enforceable against such Person in accordance with their respective terms; and (d) the execution, delivery, and performance by such Person of this Agreement and the consummation by such Person of the transactions contemplated hereby will not, with or without the giving of notice or the lapse of time, or both, (i) violate any provision of law, statute, rule, or regulation to which such Person is subject, (ii) violate any order, judgment, or decree applicable to such Person, or (iii) conflict with, or result in a breach or default under, any term or condition of 9 its certificate of incorporation or bylaws, or partnership or other organizational document, as applicable, or any agreement or other instrument to which such Person is a party or by which such Person is bound. Section 2.2 Representations and Warranties of the Corporation. The Corporation hereby represents and warrants to each Shareholder that: (a) it is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware; it has full corporate power and authority under its Certificate of Incorporation to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby; and the execution, delivery, and performance by it of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action; (b) this Agreement has been duly and validly executed and delivered by the Corporation and constitutes the legal, valid and binding obligation thereof, and except as may be affected (i) by applicable bankruptcy, insolvency, moratorium, reorganization and other similar laws and judicial decisions affecting the rights of creditors generally and (ii) by general principles of equity and public policy (regardless of whether considered at law or in equity), are enforceable against such Person in accordance with their respective terms; and (c) the execution, delivery, and performance by the Corporation of this Agreement and the consummation by the Corporation of the transactions contemplated hereby will not, with or without the giving of notice or the lapse of time, or both, (i) violate any provision of law, statute, rule, or regulation to which the Corporation is subject, (ii) violate any order, judgment, or decree applicable to the Corporation or (iii) conflict with, or result in a breach or default under, any term or condition of its Certificate of Incorporation or Bylaws or any agreement or other instrument to which the Corporation is a party or by which it is bound. Section 3.1 Management by Directors. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors (the " Board ") and, subject to the restrictions imposed by law, by the Certificate of Incorporation and Bylaws and by this Agreement, the Board may exercise all powers of the Corporation. The provisions and rights set forth in Sections 3.2, 3.3, 3.5, 3.8 , 3.9 and 3.13 shall terminate and be of no further force or effect, effective as of the consummation of a private placement of the Corporation's Common Stock to "qualified institutional buyers" pursuant to Rule 144A and to "accredited investors" pursuant to Regulation D with net proceeds to the Corporation of not less than $100.0 million, with a portion of the net proceeds used to redeem all of the outstanding Preferred Stock (the " Proposed Private Offering "). Section 3.2 Board of Directors. Each Shareholder and, to the fullest extent allowed by law, the Corporation, shall take all action within its power, including, but not limited to, the voting of shares of Capital Stock of the Corporation, required to cause: (a) [Reserved.] (b) in the event the CSFB Parties and their respective Permitted Transferees beneficially own an aggregate number of Shares equal to, (i) not less than 35% of the Diluted Common Stock of the Corporation, the nomination and election or appointment of (A) one Director designated by DLJ Merchant Banking Partners III, L.P., and (B) three Directors designated by all other CSFB Parties; and 10 (ii) less than 35% but not less than 25% of the Diluted Common Stock of the Corporation, the nomination and election or appointment of (A) one Director designated by DLJ Merchant Banking Partners III, L.P., and (B) two Directors designated by all other CSFB Parties; (iii) less than 25% but not less than 13% of the Diluted Common Stock of the Corporation, the nomination and election or appointment of (A) one Director designated by DLJ Merchant Banking Partners III, L.P., and (B) one Director designated by all other CSFB Parties; and (iv) less than 13% but not less than 5% prior to the date of the Initial Public Offering or 10% at any time thereafter, of the Diluted Common Stock of the Corporation, the nomination and election or appointment of one Director designated by DLJ Merchant Banking Partners III, L.P. (c) in the event CCBM and its Permitted Transferees beneficially own an aggregate number of Shares equal to, (i) not less than 13% of the Diluted Common Stock of the Corporation, the nomination and election or appointment of two Directors designated by CCBM; and (ii) less than 13% but not less than 5% prior to the date of the Initial Public Offering or 10% at any time thereafter, of the Diluted Common Stock of the Corporation, the nomination and election or appointment of one Director designated by CCBM; and (d) in the event US Energy and Crested and its Permitted Transferees beneficially own an aggregate number of Shares equal to, (i) not less than 13% of the Diluted Common Stock of the Corporation, the nomination and election or appointment of two Directors designated by US Energy and Crested; and (ii) less than 13% but not less than 5% prior to the date of the Initial Public Offering or 10% at any time thereafter, of the Diluted Common Stock of the Corporation, the nomination and election or appointment of one Director designated by US Energy. Section 3.3 Substitute Directors. In the event that any Director (a " Withdrawing Director ") designated in the manner set forth in Section 3.2 is unable to serve, or once having commenced to serve, is removed or withdraws from the Board, such Withdrawing Director's replacement on the Board (the " Substitute Director ") shall be designated in accordance with this Section 3.3 by the Holder that designated such Withdrawing Director. Each Shareholder agrees to take all action within its power, including, but not limited to, (i) the voting of Capital Stock of the Corporation to cause the nomination and election or appointment of such Substitute Director as soon as practicable following his designation and (ii) instructing the Directors it had previously designated to serve as members of the Board, as the first order of business at the first meeting thereof after such Substitute Director has been so designated, to vote to seat such designated Substitute Director as a Director in place of the Withdrawing Director. In the event any Holder entitled to designate a Director or Directors pursuant to this Agreement fails to designate a Director or Directors, such directorship or directorships shall remain vacant unless such vacancy results in fewer than the minimum number of Directors required by law, in which case such vacancy shall be filled by an individual elected by a majority of the Directors then serving. Section 3.4 Quorum; Vote Required for Board Action. Unless otherwise required by law, each Director shall have one vote. A quorum for the transaction of business at a meeting of the Board shall exist when a majority of the Directors are present, and the approval of a majority of the Directors shall be required to approve any action by the Board. 11 Section 3.5 Removal. A Holder entitled to designate Directors of the Corporation pursuant to Section 3.2 may at any time request that any one or all of the Directors designated by such Holder be removed from the Board (with our without cause) by written notice thereof to the other Holders. Upon receipt of any such notice, each of the Shareholder hereby agrees to vote all shares of Capital Stock of the Corporation beneficially owned or held of record by such Shareholder to effect such removal upon any such request. No Director designated by a Holder shall otherwise be involuntarily removed as a Director (or as a member of any committee thereof) except for cause for as long as such Holder is entitled to designate that Director as a member of the Board pursuant to this Agreement. Section 3.6 Compensation. Members of the Board who are non-employees and are not Affiliates of any of the Holders shall receive compensation for their services as Directors as determined by the Board. In addition, all Directors shall be entitled to be reimbursed by the Corporation for their respective reasonable out-of-pocket costs and expenses incurred in connection with the meetings of the Board and any committees thereof. Section 3.7 Voting of Preferred Stock. The CSFB Parties agree that at such time as there shall be outstanding only one share of Preferred Stock, in any vote of the stockholders of the Corporation in which the shares of Preferred Stock are required by law to vote as a separate class, the CSFB Parties shall cause the voting rights of such share to be cast in a manner proportionate to the manner in which the votes of the outstanding Common Stock are cast in such vote. Section 3.8 Cooperation by Holders. Each Shareholder agrees to take such action, or refrain from taking such action, as is within its reasonable control to effect the provisions of Section 3.2 , 3.3 , and 3.5 including, without limitation, using its best efforts to cause any Director nominated thereby to take or refrain from taking action for the foregoing purpose. Section 3.9 Governance of Subsidiaries. It being the intention of the Shareholders that any subsidiary of the Corporation be managed in a manner consistent with that of the Corporation, the Corporation hereby agrees that it shall at all times, and each Shareholder agrees to use reasonable efforts at all times to, cause: (i) each board of directors of the Corporation's subsidiaries to consist of the same individuals who serve on the Board; and (ii) the officers of each subsidiary are to be those persons so identified by the Board. Section 3.10 Financial Statements. Following an Initial Public Offering, all of the provisions and obligations set forth in Section 3.10 may be deemed satisfied by the Corporation by its filing of annual and quarterly financial statements with the SEC reasonably in advance of the date by which any Initial Holder is required to include such information in any annual or quarterly report filed with the SEC pursuant to the Exchange Act. In the event the Corporation provides any information to an Initial Holder pursuant to Section 3.10 following an Initial Public Offering and such information constitutes nonpublic information, as long as such information remains nonpublic information, the Initial Holder agrees that the Initial Holder shall (1) comply with all applicable securities laws regarding trading on the basis of material nonpublic information and (2) disclose only such information that is required to be disclosed in any applicable filing with the SEC. In addition, following an Initial Public Offering, the following provisions and obligations of the Corporation set forth in Section 3.10 shall not apply with respect to any Initial Holder who is not required to include such information in any reports filed with the SEC pursuant to the Exchange Act and shall cease to apply to an Initial Holder for so long as the Initial Holder is not required to include such information in any reports filed with the SEC pursuant to the Exchange Act. (a) As soon as practicable following the end of each fiscal year of the Corporation, and in any event reasonably in advance of the date by which any Initial Holder is required to include such information in any annual report filed with the SEC pursuant to the Exchange Act, the Corporation shall cause its independent accountant to prepare and deliver to each of the Initial Holders an audited consolidated balance sheet of the Corporation as of the end of such fiscal year 12 and the related audited consolidated statement of operations, changes in stockholders' equity and cash flows of the Corporation for such fiscal year (or similar statements if such statements change as the result of changes in GAAP), together with the notes related thereto. Such financial statements shall be accompanied by a report of the Corporation's independent accountants to the effect that such financial statements have been prepared in conformity with GAAP applied on a basis consistent with prior years (except as otherwise specified in such report) and that the audit of such financial statements has been performed in accordance with GAAP. (b) As soon as practicable following the end of the each fiscal quarter of the Corporation, including the final fiscal quarter, and in any event reasonably in advance of the date by which any Initial Holder is required to include such information in any quarterly report filed with the SEC pursuant to the Exchange Act, the Corporation shall prepare and deliver to each of the Initial Holders an unaudited consolidated balance sheet of the Corporation as of the end of such fiscal quarter and the related unaudited consolidated statement of operations, changes in stockholders' equity and cash flows of the Corporation for such fiscal quarter and for the fiscal year to date (or similar statements if such statements change as the result of changes in GAAP), in each case setting forth in comparative form the figures for corresponding periods in the prior fiscal year. Section 3.11 Reserve Reports. Following an Initial Public Offering, all of the provisions and obligations set forth in Section 3.11 shall be deemed satisfied by the Corporation by its filing of reserve information with the SEC and the Corporation shall be under no obligation to provide any non-public reserve information to any of the parties hereto. (i) On or before February 15 of each calendar year, the Corporation will furnish to each Initial Holder a reserve report, prepared as of the preceding December 31 by independent petroleum engineers of recognized national standing approved by the Board, evaluating all oil and gas reserves (which shall include proved and probable reserves) and interests owned by the Corporation and (ii) the Corporation will promptly furnish to each Initial Holder copies of such additional reserve reports with respect to the Corporation's oil and gas properties and interests as may be prepared from time to time by or on behalf of the Corporation. Section 3.12 Operating Reports. Following an Initial Public Offering, all of the provisions and obligations set forth in Section 3.12 shall be deemed satisfied by the Corporation by its filing of annual and quarterly financial statements with the SEC and the Corporation shall be under no obligation to provide any non-public interim operating information to any of the parties hereto. The Corporation will furnish to each Initial Holder (i) within 30 days after the end of each month, a report describing (A) the gross and net volume of production and sales of production from or attributable to the Corporation's oil and gas properties and interests during the preceding period, (B) estimated revenues and estimated severance taxes, other taxes, leasehold operating expenses and capital costs attributable to such properties and interests and incurred during the preceding period, (C) variances from the expenses and capital costs for such properties and interests included in the Corporation's budget for such period and (D) such other information (in any form, electronic or otherwise), as any Initial Holder may reasonably request from time to time, and (ii) within 30 days after the end of each fiscal quarter, a reconciliation of previous estimates of severances, taxes, expenses and costs to such actual revenues, taxes, expenses and costs for the applicable period, to the extent such actual information is then available to the Corporation. Section 3.13 Certain Competing Activities by Director. (a) No director of the Corporation shall serve as an officer, director or employee of, or consultant to, or own an equity interest in, provide financial advisory services to, or assist in providing, underwriting or arranging debt or equity financing to any entity a majority (as measured in book value) of the assets of which are within the AMI (as defined in the AMI Agreement), other than serving in any of the aforementioned capacities with respect to CCBM, Carrizo, or US Energy and Crested. Notwithstanding the foregoing, no director shall be restricted by the 13 preceding sentence to the extent such activities relate to an Acquired Interest (as defined in the AMI Agreement) which the Corporation has elected not to acquire or as to which the Corporation fails to timely respond to an Offer Notice (as defined in the AMI Agreement) under Section 2.6 of the AMI Agreement. The restrictions in this paragraph shall continue as to a director until the earliest of (i) one year following the date such person resigns as a director of the Company, (ii) the time of the termination of the AMI Agreement pursuant to Section 2.7 thereof, and (iii) in the case of a director and who is a director officer, employee or consultant of an Affiliate of a CSFB Party and who is designated under Section 3.2(b) above, the date such director ceases to be either a director, officer, employee or consultant of a CSFB Party. (b) The foregoing restriction shall not apply to any director of the Corporation solely because of such status as a director prior to December 31, 2003 if such director resigns his directorship with the Corporation prior to and is not serving as a director of the Corporation on December 31, 2003. (c) Each party shall be responsible for the performance by and liability for any breach of this Section 3.13 with respect to a director of the Corporation that has been designated by that party. Section 4.1 Preemptive Rights. In accordance with Article VIII , all of the preemptive rights set forth in Section 4.1 shall terminate and be of no further force or effect, effective immediately prior to the consummation of the Proposed Private Offering. (a) If the Corporation proposes to sell any of its Capital Stock to any Person in one transaction or a series of related transactions, other than (i) Preferred Stock issued or to be issued pursuant to the Contribution Agreement, or as an in-kind dividend on such Preferred Stock; (ii) Warrants issued or to be issued pursuant to the Contribution Agreement or a 2005 Subscription Agreement or distributed as an in-kind dividend on Preferred Stock; (iii) Common Stock or Common Stock Equivalents issued or to be issued pursuant to the Contribution Agreement or a 2005 Subscription Agreement or upon the exercise of any Warrants; (iv) securities issued or granted to eligible officers, employees or directors of, or consultants to, the Corporation and its subsidiaries pursuant to an Equity Incentive Plan approved by the Board; (v) securities issued by the Corporation as consideration in a merger, business combination or acquisition of property or assets; (vi) securities issued in a distribution from the Corporation, stock split, reverse stock split, subdivision, stock dividend, reclassification, combination or capital reorganization; or (vii) securities issued or to be issued in a firm commitment underwritten offering registered under the Securities Act, then each Holder which is an Accredited Investor (a " Preemptive Right Holder ") shall have the right to purchase, at the same price per share and upon substantially similar terms and conditions, up to a number of shares of such Capital Stock sufficient for it to maintain the same percentage ownership of Fully Diluted Common Stock as it owned immediately prior to such issuance; provided, however, if the proposed sale involves a new class or series of Capital Stock, each Preemptive Right Holder may purchase that percentage of the new shares proposed to be issued which equals such Holder's percentage ownership of the Fully Diluted Common Stock at the time. (b) In the event of a proposed transaction or transactions, as the case may be, that would give rise to preemptive rights under Section 4.1(a) , the Corporation shall give each Preemptive Right Holder written notice not later than 20 Business Days prior to the expected consummation of the proposed transaction or transactions, describing the type of Capital Stock of the Corporation to be issued and sold (the " New Securities "), and the price and the general terms upon which the Corporation proposes to issue the same. Without limiting the generality of any other provision hereof, the description of the price and terms in the Corporation's notice to Preemptive 14 Rights Holders may be in the form of a term sheet agreed upon by the Corporation and the Person to whom the Corporation proposes to sell its Capital Stock; provided , that the Company shall give each Preemptive Right Holder an additional written notice of any change in the price or other material change in the terms upon which the Corporation proposes to issue such New Securities. Each Preemptive Right Holder shall have 15 Business Days after any such written notice (including any additional notice of a change in terms) is deemed delivered to agree to purchase up to such Preemptive Right Holder's pro rata share of such New Securities as determined pursuant to Section 4.1(a) for the price and upon the terms specified in the notice by giving a binding and irrevocable written notice to the Corporation and stating the exact number of New Securities such Preemptive Right Holder desires to purchase. Each Preemptive Right Holder shall also have a right of over-allotment such that if any Preemptive Right Holder fails to exercise its rights hereunder to purchase any part of its pro rata share, the other Preemptive Right Holders may purchase such unexercised portion on a pro rata basis (based upon the ratio of New Securities subscribed for by each to the New Securities subscribed for by all other Holders exercising over-allotment purchase rights) or such other basis as such Preemptive Right Holders shall agree. Any Preemptive Right Holder desiring to exercise an over-allotment right shall indicate in its initial response to the Corporation the number of additional New Securities up to which it will purchase. (c) With respect to that portion, if any, of the New Securities for which the Preemptive Right Holders fail to exercise their right to purchase within such 15 Business Day period, subject to approval by the Board, the Corporation shall have 90 days thereafter to sell any or all of such portion of the New Securities, at a price and upon terms that are in all material respects no more favorable to the purchasers thereof than specified in the Corporation's notice to Preemptive Right Holders pursuant to Section 4.1(b) . If the Corporation has not sold the New Securities in accordance with the foregoing within such 90-day period, the Corporation shall not thereafter issue or sell any New Securities without first again offering such securities to the Preemptive Right Holders in the manner provided above. Section 4.2 Repurchase of Management Shares. In accordance with Article VIII , the provisions of Section 4.2 shall terminate and be of no further force or effect, effective as of the consummation of an Initial Public Offering. (a) In the event that any Management Holder voluntarily resigns from the Corporation without Good Reason, the Corporation shall have the option, exercisable for a period of 12 months following such resignation, to acquire any or all Common Stock and any or all Common Stock Equivalents beneficially owned by such Management Holder and such Management Holder's Permitted Transferees. If the Corporation elects to exercise such option, it shall pay such resigning Management Holder a price for such Common Stock or Common Stock Equivalents equal to the lesser of (i) the price originally paid by such Person to acquire such Common Stock or Common Stock Equivalents and (ii) the Fair Market Value thereof as of the date of such resignation. The Corporation shall pay such purchase price in the form of three equal annual installments on the first, second and third anniversaries of the effective date of the Management Holder's resignation with interest thereon until paid at the minimum rate necessary to avoid the imputation of interest or original issue discount under the U.S. Internal Revenue Code of 1986, as amended, or similar provision in any other applicable jurisdiction. (b) In the event that at any time the Corporation dismisses or terminates the employment of any Management Holder for Cause, the Corporation shall have the option, exercisable for a period of 12 months following such dismissal or termination, to acquire any or all Common Stock and any or all Common Stock Equivalents beneficially owned by such Management Holder and such Management Holder's Permitted Transferees at a price per share for such Common Stock or Common Stock Equivalents equal to the lesser of (i) the price originally paid by such Person to 15 acquire such Common Stock or Common Stock Equivalents and (ii) the Fair Market Value thereof as of the effective date of such dismissal or termination, which purchase price shall be payable by delivery of a Payable Note. (c) In the event that the Corporation dismisses or terminates the employment of any Management Holder without Cause, or any Management Holder voluntarily resigns with Good Reason, the Corporation shall have the option, exercisable for a period of 12 months following dismissal, termination or resignation, to acquire any or all Common Stock and any or all Common Stock Equivalents beneficially owned by such Management Holder and such Management Holder's Permitted Transferees at a price per share for such Common Stock or Common Stock Equivalents equal to the Fair Market Value thereof. (d) In the event that any Management Holder's employment by the Corporation is terminated due to the death or Disability of such Management Holder (i) the Corporation shall have the option, exercisable for a period of 12 months after such death or Disability occurs, to acquire any or all Common Stock and any or all Common Stock Equivalents beneficially owned by such Management Holder and such Management Holder's Permitted Transferees at a price per share for such Common Stock or Common Stock Equivalents equal to the Fair Market Value thereof. (e) Notwithstanding anything to the contrary in this Section 4.2 , in the event that any Management Holder voluntarily resigns from the Corporation and thereafter engages in a Prohibited Activity, then the Corporation shall have the option to acquire any or all Common Stock and any or all Common Stock Equivalents beneficially owned by such Management Holder and such Management Holder's Permitted Transferees at a price per share for such Common Stock or Common Stock Equivalents equal to the lesser of (i) the price originally paid by such Person to acquire such Common Stock or Common Stock Equivalents and (ii) the Fair Market Value thereof, which purchase price shall be payable by delivery of a Payable Note. If such Common Shares and Common Stock Equivalents have previously been purchased by the Corporation pursuant to any other provision of this Section 4.2 , then such Management Holder and such Management Holder's Permitted Transferees shall immediately return to the Corporation any excess amounts received by such Management Holder or such Management Holder's Permitted Transferees, respectively, pursuant to such provisions as compared to the amount receivable under this Section 4.2(e) . (f) In the event that the Corporation elects to exercise any option granted pursuant to this Section 4.2 to acquire any Common Stock or any Common Stock Equivalents beneficially owned by one or more Management Holders or Permitted Transferees, the Corporation shall pay the purchase price for such Common Stock or Common Stock Equivalents (less any amounts owed by the Management Holder to the Corporation) in cash (except as otherwise set forth in Section 4.2(b) or Section 4.2(e)) , up to an aggregate maximum purchase price for all such cash purchases of $500,000. If the aggregate amount paid to all Management Holders and their respective Permitted Transferees pursuant to this Section 4.2 equals or exceeds $500,000 in any year, then the Corporation may make any additional payments required under this Section 4.2 by delivery of a Payable Note. Section 5.1 General Rule. The provisions and rights set forth in Sections 5.1 , 5.2 , 5.3 , 5.4 , 5.6 , 5.7(d) and (e) , 5.8 , 5.9 and 5.10 shall terminate and be of no further force or effect, effective as of the consummation of an Initial Public Offering. No Shareholder or any Permitted Transferee may Transfer any shares of Preferred Stock, Common Stock or Common Stock Equivalents of the Corporation 16 (collectively, " Shares ") except (i) pursuant to Section 4.2 , in the case of any Management Holder, (ii) as otherwise contemplated by this Article V , (iii) pursuant to a Public Offering or (iv) after an Initial Public Offering, pursuant to a Public Sale (all of which Transfers shall be exempt from this Article V ). Any attempted Transfer of Shares, other than in accordance with the terms of this Agreement shall be, and is hereby declared, null and void ab initio . Section 5.2 Permitted Transfers. Notwithstanding anything in this Agreement to the contrary (other than Section 5.7 ), any Shareholder or any Permitted Transferee may, without the consent of the Corporation or any of the Holders and without compliance with Section 5.3 , 5.4 or 5.5 , but subject to Section 5.7 , at any time Transfer any or all of its Shares to any CSFB Party, CCBM, US Energy and Crested and/or to any of such Shareholder's Permitted Transferees, provided that the Transfer to such Person is in compliance with the transfer provisions of the Contribution Agreement or a 2005 Subscription Agreement, as the case may be, and not in violation of applicable U.S. federal or state securities laws, or other similar laws. Section 5.3 Rights of First Refusal. (a) Should one or more Shareholders propose to Transfer (other than an Involuntary Transfer, a Transfer in a Public Offering, a Public Sale after an Initial Public Offering or a Transfer governed by Section 5.4, but including a Transfer by the CSFB Parties pursuant to Section 5.5 ) (such Shareholder(s), the " Transferring Holder ") any of its Shares, pursuant to a Bona Fide Offer from another Person (a " Proposed Disposition "), not less than 20 Business Days prior to such Proposed Disposition the Transferring Holder shall give notice thereof (a " Sale Notice ") to the Corporation and all of the other Holders. The Sale Notice shall contain (i) the name and address of the prospective acquiror (the " Proposed Transferee "), (ii) the number and type of Shares that the Transferring Holder intends to Transfer (the " Sale Shares "), (iii) the purchase price, including a description of any non-cash consideration, and the encumbrances, if any, to which such Shares Transferred will be subject, and (iv) an irrevocable offer to sell the Sale Shares to the other Holders upon the same terms and subject to the same conditions as those contemplated by the Proposed Disposition, and such notice shall be accompanied by a true and correct copy of the agreement, if any, embodying the terms and conditions of the Proposed Disposition or a written summary thereof if there is no agreement. (b) Each of the other Holders shall have an optional preferential right, exercisable by giving written notice stating that such notice is binding and irrevocable to the Transferring Holder at any time prior to the 15th Business Day after its receipt of the Sale Notice (the " ROFR Acceptance Deadline "), to acquire a portion of the Shares to be Transferred as described in the Sale Notice. Each Holder that delivers a ROFR/Participation Notice (an " Accepting Holder ") to the Transferring Holder before the ROFR Acceptance Deadline (the " ROFR Acceptance Notice ") shall have the right to purchase, for a cash purchase price equal to the purchase price set forth in the Sale Notice (with the value of any non-cash consideration contained therein being the current market value thereof as determined in good faith by the Board using a generally accepted method of valuation (which shall require that no Board member who is nominated by or affiliated with an Accepting Holder take part in such determination) by a method deemed acce | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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