Voting Agreement Between And Certain Shareholders of Crested Corp.
Between
U.S.
Energy Corp. and Crested Corp.
And
Certain Shareholders of Crested Corp.
This
Voting Agreement (“Agreement”)
is
entered into as of January 23, 2007 by and between U.S. Energy Corp., a Wyoming
corporation (“USE”);
the
individual shareholders (the “Individual
Shareholders”)
of
Crested Corp., a Colorado corporation (“Crested”)
identified on the signature page; and Crested. Each of USE and the Individual
Shareholders are referred to as a “Shareholder;”
collectively, those parties are referred to as the “Shareholders.”
Whereas,
USE and Crested have entered into an Agreement and Plan of Merger (the
“Merger
Agreement”)
providing for the merger (the “Merger”),
dated
as of the date hereof. Terms not defined in this Agreement have the meanings
defined in the Merger Agreement.
Whereas,
the Merger Agreement requires that the Shareholders, solely in their capacities
as holders of Crested common stock, enter into, and the Shareholders have
agreed
to enter into, this Voting Agreement.
NOW,
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
parties hereby agree as follows:
1. Representations
and Warranties of the Shareholders.
Each of
the Shareholders represents and warrants to Crested as follows:
(a) Authority;
Binding Obligation.
The
Shareholder has all necessary power and authority to enter into this Agreement
and perform all of the Shareholder’s obligations hereunder. This Agreement has
been duly and validly executed and delivered by the Shareholder and constitutes
a valid and legally binding obligation of the Shareholder, enforceable against
the Shareholder in accordance with its terms.
(b) Ownership
of Shares.
The
Shareholder is the beneficial owner or record holder of the number of shares
of
Crested listed under the Shareholder’s name on the signature page (the
“Existing
Shares”
and,
together with any shares of Crested common stock the record or beneficial
ownership of which is acquired by the Shareholder after the date hereof,
the
“Shares”
including (only for the individual Shareholders) any shares of common stock
of
Crested which are acquired by the Company
Stock Option Payment
under
the Merger Agreement (such latter shares hereafter referred to as the
“Option
Shares”)
and,
as of the date hereof, the Existing Shares and Option Shares constitute all
the
shares of Crested common stock owned of record or beneficially by the
Shareholder). Provided,
that
the Existing Shares shown for each individual Shareholder does not reflect
that
person’s beneficial ownership (as defined in SEC rule 13d-3) of shares of
Crested common stock which he holds as an officer or director of USE.
With
respect to the Existing Shares, the Shareholder has, without any restrictions
except as imposed by law and this Agreement, (i) sole voting power and sole
power to issue instructions with respect to or otherwise engage in the actions
set forth in Section 2; (ii) sole power of disposition; and (iii) sole power
to
demand appraisal rights under Article 113 of the Colorado Business Corporation
Act. With respect to the Option Shares, the Shareholder will have sole power
of
disposition.
(c) No
Conflicts.
Neither
the execution, delivery and performance of this Agreement nor the consummation
of the transactions contemplated hereby will conflict with or constitute
a
violation of or a default under (with or without notice, lapse of time, or
both)
any contract, agreement, voting agreement, shareholders’ agreement, trust
agreement, voting trust, proxy, power of attorney, pooling arrangement, note,
mortgage, indenture, instrument, arrangement or other obligation or restriction
of any kind to which the Shareholder is a party or to which the Shareholder
or
the Shareholder’s Shares are subject to or bound.
2. Voting
Agreement and Agreement Not to Transfer.
(a) The
Shareholder agrees to vote or cause to be voted all of the Shareholder’s
Existing Shares
(i) consistent
with the vote of holders of a majority of the shares of Crested common stock
not
held by the Shareholders (the “Majority
Vote of the Minority Holders”),
whether in favor of, or against, the approval of the Merger Agreement at
a
meeting of the Crested shareholders, as well as any other matters required
to be
approved by the Crested shareholders at the meeting wherein the Merger is
voted
upon by the Crested shareholders. Provided,
that
USE may elect not to vote in favor of the Merger, even if the Merger Agreement
has been approved by Majority Vote of the Minority Holders, as such election
is
permitted pursuant to the termination provisions of the Merger Agreement.
(ii) against
any action or agreement that would result in a breach in any material respect
of
any covenant, representation or warranty or any other obligation or agreement
of
Crested under the Merger Agreement; and
(iii) against
the following actions (other than the Merger or the consummation of any actions
contemplated by the Merger Agreement):
(A) any
extraordinary corporate transactions, such as a merger, consolidation or
other
business combination involving Crested;
(B) any
sale,
lease, transfer or disposition of a material amount of the assets of Crested,
except as may be contemplated by the Company SEC Reports.;
(C) any
change in the majority of the board of directors of Crested;
(D)
any
material change in the present capitalization of Crested;
2
(E) any
amendment of Crested’s articles of incorporation or bylaws;
(F) any
other
change in the corporate structure, business, assets or ownership of Crested
(but
a vote in favor of amending the Crested Incentive Stock Option Plan to allow
for
cashless exercise shall be permitted); or
(G) any
other
action which is intended, or could reasonably be expected to, impede, interfere
with, delay, postpone, discourage or adversely affect the contemplated economic
benefits to Crested of the Merger and the transactions contemplated by the
Merger Agreement.
(b) The
Shareholder agrees not to (i) sell, transfer, convey, assign or otherwise
dispose of any of his, her or its Existing Shares, or any of the Option Shares
if an Individual Shareholder exercises his or her Option before the Effective
Date; or (ii) pledge, mortgage or otherwise encumber such Existing or Option
Shares.
3. Cooperation.
The
Shareholder agrees that he, she or it will not (directly or indirectly)
initiate, solicit, encourage or facilitate any Takeover Proposal.
4. Shareholder
Capacity.
The
Individual Shareholder is entering into this Agreement in his or her capacity
as
the record or beneficial owner of the Shares and the Option Shares, and not
in
his or her capacity as a director or officer of Crested. Nothing in this
Agreement shall be deemed in any manner to limit the discretion of any
Shareholder to take any action, or fail to take any action, in his or her
capacity as a director or officer of Crested that may be either (a) required
of
the Shareholder under applicable law or (b) is otherwise permitted by the
Merger
Agreement.
5. Termination.
The
obligations of the Shareholder hereunder shall terminate upon the consummation
of the Merger. If the Merger is not consummated, the obligations of the
Shareholder shall terminate upon the termination of the Merger
Agreement.
6. Specific
Performance.
The
Shareholder acknowledges that it would be impossible to determine the amount
of
damages that would result from any breach of any of its obligations under
this
Agreement, and that the remedy at law for any breach, or threatened breach,
would likely be inadequate. Accordingly, the Shareholder agrees that Crested
shall, in addition to any other rights or remedies which it may have at law
or
in equity, be entitled to seek such equitable and injunctive relief as may
be
available from any court of competent jurisdiction to restrain the Shareholder
from violating any of his, her, or its obligations under this Agreement.
In
connection with any action or proceeding for such equitable or injunctive
relief, the Shareholder hereby waives any claim or defense that a remedy
at law
alone is adequate and agrees, to the maximum extent permitted by law, to
have
the obligations of the Shareholder under this Agreement specifically enforced
against him, her or it, without the necessity of posting bond or other security,
and consents to the entry of equitable or injunctive relief against the
Shareholder enjoining or restraining any breach or threatened breach of this
Agreement.
3
7. Indemnification.
(a) If
and
only if the Merger is consummated in accordance with the Merger Agreement,
USE
and its successors and assigns (the “Indemnifying
Party”)
shall,
to the fullest extent permitted by law, indemnify, defend and hold harmless
the
Individual Shareholders (as incurred to the extent incurred subsequent to
the
Effective Date) against all costs or expenses (including reasonable attorneys’
fees), judgments, fines, losses, claims, damages or liabilities incurred
by
Shareholder, regardless of whether incurred prior to or after the Effective
Date
(collectively, “Costs”)
in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of this Agreement
other than an action for specific performance under Section 6. A
Shareholder wishing to claim indemnification under this Section 7, upon
learning of any claim, action, suit, proceeding or investigation described
above, shall promptly notify Indemnifying Party thereof; provided that the
failure so to notify shall not affect the obligations of Indemnifying Party
under this Section 7 unless and to the extent that Indemnifying Party is
actually and materially prejudiced as a result of such failure. In case any
such
action shall be brought against Shareholder, he or she shall promptly notify
the
Indemnifying Party of the commencement thereof, and the Indemnifying Party
shall
be entitled to assume the defense thereof, with counsel reasonably satisfactory
to Shareholder, and after notice from the Indemnifying Party to Shareholder
of
its election to so assume the defense thereof, the Indemnifying Party shall
not
be liable to Shareholder for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by Shareholder.
(b) If
USE or
any of its successors or assigns shall consolidate with or merge into any
other
entity and shall not be the continuing or surviving entity of such consolidation
or merger or shall transfer all or substantially all of its assets to any
other
entity, then and in each case, USE shall cause proper provision to be made
so
that its successors and assigns shall assume the obligations set forth in
this
Section 7.
(c) The
provisions of this Section 7 shall survive termination of this Agreement.
(d) The
indemnification provisions of Section 5.15 of the Merger Agreement, relating
to
officers and directors of Crested, shall not be affected by this Section
7.
8. Miscellaneous.
(a) Entire
Agreement.
This
Agreement constitutes the entire agreement of the parties with reference
to the
transactions contemplated hereby and supersedes all other prior agreements,
understandings, representations and warranties, both written and oral, between
the parties or their respective representatives, agents or attorneys, with
respect to the subject matter hereof.
4
(b) Parties
in Interest.
This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto and the other parties to the Merger Agreement and their respective
successors, assigns, estate, heirs, executors, administrators and other legal
representatives, as the case may be. Nothing in this Agreement, express or
implied, is intended to confer upon any other person, other than parties
hereto
or their respective successors, assigns, estate, heirs, executors,
administrators and other legal representatives, as the case may be, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
(c) Modifications;
Waivers.
This
Agreement shall not be amended, altered or modified in any manner except
in
writing. No waiver of breach hereunder shall be considered valid unless in
writing, and no waiver shall be deemed a waiver of any subsequent breach.
(d) Severability.
Any
term or provision of this Agreement which is invalid or unenforceable in
any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of
such invalidity and unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement. If any provision of
this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
(e) Governing
Law.
This
Shareholder Agreement shall be deemed to be made in and in all respects shall
be
interpreted, construed and governed by and in accordance with the laws of
the
State of Wyoming, without regard to the conflict of law principles thereof.
(f) Jurisdiction
and Venue.
Any
legal action or proceeding with respect to this Agreement may be brought
only in
Fremont County, Wyoming, or in the courts of the United States of America
for
Wyoming. By this Agreement, each party (i) accepts for itself the jurisdiction
of and venue in such courts; and (ii) irrevocably consents to the service
of
process out of such courts by the delivery of notice as provided below, such
service to become effective 10 days after delivery.
(g) Attorney’s
Fees.
The
prevailing party in any litigation, arbitration, mediation, bankruptcy,
insolvency or other proceeding (“Proceeding”)
relating to the enforcement or interpretation of this Agreement may recover
from
the unsuccessful party all fees and disbursements of counsel (including expert
witness and other consultants’ fees and costs) relating to or arising out of (a)
the Proceeding (whether or not the Proceeding results in a judgment) and
(b) any
post-judgment or post-award Proceeding including, without limitation, one
to
enforce or collect any judgment or award resulting from any Proceeding. All
such
judgments and awards shall contain a specific provision for the recovery
of all
such subsequently incurred costs, expenses, fees and disbursements of counsel.
(h) Counterparts.
This
Agreement may be executed in one or more counterparts (including by facsimile),
each of which shall be deemed to be an original, but all of which shall
constitute one and the same instrument.
5
(i) Notices.
All
notices, requests, instructions and other communications to be given hereunder
shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail,
postage prepaid (return receipt requested), to such party at its address
set
forth below or such other address as such party may specify to the other
party
by notice:
If
to
USE:
U.S.
Energy Corp.
▇▇▇
▇.
▇▇▇
▇.
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax
▇▇▇.▇▇▇.▇▇▇▇
With
copy
(which shall not constitute notice) to:
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Attorney
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax
▇▇▇.▇▇▇.▇▇▇▇
If
to
Crested:
Crested
Corp.
▇▇▇
▇.
▇▇▇
▇.
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax
▇▇▇.▇▇▇.▇▇▇▇
With
copy
(which shall not constitute notice) to
▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax
▇▇▇.▇▇▇.▇▇▇▇
If
to an
Individual Shareholder, to the address on the signature page
(j) Advice
of Counsel.
Each
Individual shareholder acknowledges that he or she has had the opportunity
to
seek the advice of independent legal counsel, and has read and understood
all of
this Agreement. This Agreement shall not be construed against any party by
reason of the drafting hereof.
6
IN
WITNESS WHEREOF, the parties execute this Agreement as of the date first
above
written.
Crested
Corp.
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇
▇.
▇▇▇▇▇▇,
President
U.S.
Energy Corp. Existing
Shares
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
12,028,618
▇▇▇▇▇
▇.
▇▇▇▇▇▇, CEO
|
Option
Shares for which
|
||
|
Individual
Shareholders*
|
Existing
Shares
|
USE
Shares will be issued
|
|
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
||
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
156,850
|
200,000
|
|
/s/
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
|
||
|
▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
|
15,000
|
200,000
|
|
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
||
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
3,466
|
200,000
|
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
||
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇
|
0
|
200,000
|
|
/s/
▇▇▇▇ ▇. ▇▇▇▇▇▇
|
||
|
▇▇▇▇
▇. ▇▇▇▇▇▇
|
0
|
200,000
|
|
/s/
▇▇▇ ▇▇▇▇▇▇▇▇
|
||
|
▇▇▇
▇▇▇▇▇▇▇▇
|
0
|
30,000
|
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
|
||
|
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
|
0
|
30,000
|
|
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
|
||
|
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇
|
0
|
30,000
|
|
/s/
H. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
||
|
H.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
29,500
|
30,000
|
* Notice
for each Individual Shareholder shall be at the USE address.
7