EXHIBIT 10.35
 

AMENDMENT TO
CONTRIBUTION AND SUBSCRIPTION AGREEMENT
 
This AMENDMENT TO CONTRIBUTION AND SUBSCRIPTION AGREEMENT (this “Amendment”),
dated as of August 9, 2005, is entered into by and among Pinnacle Gas Resources,
Inc., a Delaware corporation (the “Company”), CCBM, Inc., a Delaware corporation
(“CCBM”), U.S. Energy Corp., a Wyoming corporation (“US Energy”), Crested Corp.,
a Colorado corporation (“Crested”), and each of the CSFB Parties (as defined in
the Contribution and Subscription Agreement (defined herein), and collectively
with CCBM, US Energy and Crested, the “Investors”).
 
W I T N E S S E T H:
 
WHEREAS, the Company, CCBM, Rocky Mountain Gas, Inc., a Wyoming corporation
(“RMG”), and the CSFB Parties (collectively, the “Parties”) are parties to that
certain Contribution and Subscription Agreement, dated as of June 23, 2003 (the
“Contribution and Subscription Agreement”); and
 
WHEREAS, by an assignment dated May 31, 2005, RMG transferred all its shares of
common stock of the Company and all right, title, interest and obligations in
and to the Contribution and Subscription Agreement to US Energy and Crested,
which transfers are permitted under the terms of the Contribution and
Subscription Agreement; and
 
WHEREAS, the Parties desire to amend certain terms of the Contribution and
Subscription Agreement.
 
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements hereinafter contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree
as follows:
 
ARTICLE 1

 
Definitions
 
All capitalized terms used in the recitals above and the succeeding provisions
of this Amendment which are not defined herein shall have the meaning ascribed
to such terms in the Contribution and Subscription Agreement, as amended by this
Amendment. All sections referred to in this Amendment shall be references to
sections in the Contribution and Subscription Agreement unless otherwise noted.
 
ARTICLE 2

 
Amendments
 
2.1  Section 2.3(a) is hereby amended by deleting the first sentence thereof in
its entirety and replacing it with the following sentence:
 
“For so long as CCBM or any of its Permitted Transferees shall own of record
Common Stock, CCBM or, in the event CCBM has transferred all of the Common
 

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Stock it holds to a Permitted Transferee, such Permitted Transferee shall have a
continuing option upon 10 Business Days’ notice to the Company, to purchase in
one or more transactions after the date of this Agreement (i) a Pro Rata Portion
of up to 25,000 additional shares of Common Stock (“Tranche A Shares”) at a
purchase price per share equal to $100 as increased by 10% per annum compounded
quarterly beginning on the Closing Date and accruing daily through the date of
the purchase of such shares (the “Tranche A Price”) and (ii) a Pro Rata Portion
of up to 25,000 additional shares of Common Stock (“Tranche B Shares” and
together with the Tranche A Shares, “Additional Shares”) at a purchase price
equal to $100 per share as increased by 20% per annum compounded quarterly
beginning on the Closing Date and accruing daily through the date of the
purchase of such shares (the “Tranche B Price”).”
 
2.2  Section 2.3(b) is hereby amended by deleting the first sentence thereof and
replacing it with the following sentence:
 
“For so long as US Energy, Crested or any of their Permitted Transferees shall
own of record Common Stock, US Energy or Crested or, in the event US Energy or
Crested has transferred all of the Common Stock it holds to a Permitted
Transferee, such Permitted Transferee shall have a continuing option upon 10
Business Days’ notice to the Company, to purchase in one or more transactions
after the date of this Agreement (i) a Pro Rata Portion of up to 25,000 Tranche
A Shares at a purchase price per share equal to the Tranche A Price and (ii) a
Pro Rata Portion of up to 25,000 Tranche B Shares at a purchase price per share
equal to the Tranche B Price.”
 
ARTICLE 3

 
Acknowledgement
 
For the avoidance of doubt, each of the parties hereto acknowledge that the
assignment by RMG to US Energy and Crested of all of its Capital Stock in the
Company and all of its rights, title and interest under the Contribution and
Subscription Agreement and the Securityholders Agreement constitute transfers to
Permitted Transferees (as such term is defined in the Securityholders Agreement)
permitted by the terms of the Contribution Agreement and Securityholders
Agreement, and that such assignments were effected in accordance with the terms
thereof.
 
ARTICLE 4

 
Miscellaneous
 
4.1  Descriptive Headings. The descriptive headings of the several Sections of
this Amendment are inserted for convenience only and do not constitute a part of
this Amendment.
 
4.2  Governing Law. This Amendment shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the law of the State
of Texas, without giving effect to the choice of law or conflicts principles
thereof.
 
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4.3  Counterparts. This Amendment may be executed by the parties hereto on
separate counterparts (including by facsimile), and such counterparts taken
together shall be deemed to constitute one and the same instrument.
 
4.4  Notices. All communications and notices to the parties hereunder shall be
given as provided in the Contribution and Subscription Agreement.
 
4.5  Severability. Whenever possible, each provision of this Amendment will be
interpreted in such manner as to be effective and valid under applicable Law,
but if any provision of this Amendment is held to be prohibited or unenforceable
in any jurisdiction, such provision will be ineffective only to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
 
4.6  Further Assurances. In connection with this Amendment and the transactions
contemplated hereby, each Party shall execute and deliver any additional
documents and instruments and perform any additional acts that may be necessary
or appropriate to effectuate and perform the provisions of this Amendment and
those transactions.
 
[Signature Pages to Follow]
 
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IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date
first set forth above.
 

 
PINNACLE GAS RESOURCES, INC.
     
By:  /s/ Pete Schoonmaker
 
Name: Pete Schoonmaker
 
Title: CEO
         
CCBM, INC.
     
By:  /s/ S.P. Johnson IV
 
Name: S.P. Johnson IV
 
Title: President
         
U.S. ENERGY CORP.
     
By:  /s/ Keith Larsen
 
Name: Keith Larsen
 
Title: President
         
CRESTED CORP.
     
By:  /s/ Hal Herron
 
Name: Hal Herron
 
Title: President
         
MILLENNIUM PARTNERS II, L.P.
     
By:
DLJ Merchant Banking III, Inc.,
a Managing General Partner
     
By:  /s/ Ken Lonson
 
Name: Ken Lonson
 
Title: Vice President

 

[Signature page to Amendment to Contribution and Subscription Agreement]

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DLJ MERCHANT BANKING III, INC.,
as Advisory General Partner on behalf of DLJ Offshore Partners III, C.V.
     
By:  /s/ Ken Lonson
 
Name: Ken Lonson
 
Title: President
         
DLJ MERCHANT BANKING III, INC.,
as Advisory General Partner on behalf of DLJ Offshore Partners III-1, C.V. and
as attorney-in-fact for DLJ Merchant Banking III, L.P., as Associate General
Partner of DLJ Offshore Partners III-1, C.V.
     
By:  /s/ Ken Lonson
 
Name: Ken Lonson
 
Title: President
         
DLJ MERCHANT BANKING III, INC.,
as Advisory General Partner on behalf of DLJ Offshore Partners III-2, C.V. and
as attorney-in-fact for DLJ Merchant Banking III, L.P., as Associate General
Partner of DLJ Offshore Partners III-2, C.V.
     
By:  /s/ Ken Lonson
 
Name: Ken Lonson
 
Title: Vice President
         
DLJ MERCHANT BANKING PARTNERS III, L.P.
 
 
By: DLJ Merchant Banking III, Inc.,
 
as Managing General Partner
     
By:  /s/ Ken Lonson
 
Name: Ken Lonson
 
Title: Vice President
       

 
 

[Signature page to Amendment to Contribution and Subscription Agreement]

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DLJ MB PARTNERS III GMBH & CO. KG
 
 
By: DLJ Merchant Banking III, L.P.,
as Managing Limited Partner
 
By: DLJ Merchant Banking III, LLC,
as General Partner
 
By: DLJ Merchant Banking III, Inc., as Managing Member
     
By:  /s/ Ken Lonson
 
Name: Ken Lonson
 
Title: Vice President
         
MBP III PLAN INVESTORS, L.P.
 
By: DLJ Merchant Banking III, Inc.,
as General Partner
     
By:  /s/ Ken Lonson
 
Name: Ken Lonson
 
Title: Vice President

 

[Signature page to Amendment to Contribution and Subscription Agreement]

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