AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

Execution Copy

     

AGREEMENT AND PLAN OF MERGER

dated as of

October 15, 2007

among

QUEST RESOURCE CORPORATION,

PINNACLE GAS RESOURCES, INC.

and

QUEST MERGERSUB, INC.

     

TABLE OF CONTENTS

		Page
ARTICLE 1 THE MERGER			2
Section 1.1 The Merger			2
Section 1.2 The Closing			2
ARTICLE 2 CERTIFICATE OF INCORPORATION AND BYLAWS			2
Section 2.1 Certificate of Incorporation of the Surviving Corporation			2
Section 2.2 Bylaws of the Surviving Corporation			3
ARTICLE 3 DIRECTORS AND OFFICERS OF QUEST AND OF THE SURVIVING CORPORATION			3
Section 3.1 Board of Directors and Officers of Quest			3
Section 3.2 Board of Directors of the Surviving Corporation			3
Section 3.3 Officers of the Surviving Corporation			3
ARTICLE 4 CONVERSION OF SECURITIES			3
Section 4.1 Conversion of Capital Stock of Pinnacle and MergerSub			3
Section 4.2 Exchange of Certificates Representing Pinnacle Common Stock			5
Section 4.3 Adjustment of Exchange Ratio			7
Section 4.4 Rule 16b-3 Approval			7
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PINNACLE			7
Section 5.1 Existence; Good Standing; Corporate Authority			8
Section 5.2 Authorization, Validity and Effect of Agreements			8
Section 5.3 Capitalization			8
Section 5.4 Subsidiaries			9
Section 5.5 Compliance with Laws; Permits			9
Section 5.6 No Conflict			9
Section 5.7 SEC Documents and Compliance			10
Section 5.8 Litigation			12
Section 5.9 Absence of Certain Changes			12
Section 5.10 Taxes			13
Section 5.11 Employee Benefit Plans			14
Section 5.12 Labor Matters			16
Section 5.13 Environmental Matters			16
Section 5.14 Intellectual Property			17
Section 5.15 Decrees, Etc.			17
Section 5.16 Insurance			17
Section 5.17 No Brokers			18
Section 5.18 Opinion of Financial Advisor and Board Approval			18
Section 5.19 Quest Stock Ownership			18
Section 5.20 Vote Required			19
Section 5.21 Certain Contracts			19
Section 5.22 Capital Expenditure Program			19
Section 5.23 Improper Payments			19

		Page
Section 5.24 Takeover Statutes; Rights Plans			19
Section 5.25 Title, Ownership and Related Matters			20
Section 5.26 Proxy Statement			20
Section 5.27 Properties; Oil and Gas Matters			21
Section 5.28 Hedging			23
Section 5.29 Gas Regulatory Matters			24
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF QUEST AND MERGERSUB			24
Section 6.1 Existence; Good Standing; Corporate Authority			24
Section 6.2 Authorization, Validity and Effect of Agreements			24
Section 6.3 Capitalization			25
Section 6.4 Subsidiaries			25
Section 6.5 Compliance with Laws; Permits			26
Section 6.6 No Conflict			26
Section 6.7 SEC Documents			27
Section 6.8 Litigation			29
Section 6.9 Absence of Certain Changes			29
Section 6.10 Taxes			30
Section 6.11 Employee Benefit Plans			31
Section 6.12 Labor Matters			33
Section 6.13 Environmental Matters			33
Section 6.14 Intellectual Property			34
Section 6.15 Decrees, Etc.			34
Section 6.16 Insurance			34
Section 6.17 No Brokers			35
Section 6.18 Opinion of Financial Advisor and Board Approvals			35
Section 6.19 Pinnacle Stock Ownership			35
Section 6.20 Vote Required			36
Section 6.21 Certain Contracts			36
Section 6.22 Capital Expenditure Program			36
Section 6.23 Improper Payments			36
Section 6.24 Takeover Statutes; Rights Plans			36
Section 6.25 Title, Ownership and Related Matters			37
Section 6.26 Proxy Statement			37
Section 6.27 Properties; Oil and Gas Matters			38
Section 6.28 Hedging			39
Section 6.29 Gas Regulatory Matters			40
ARTICLE 7 COVENANTS			40
Section 7.1 Conduct of Business			40
Section 7.2 No Solicitation by Quest			43
Section 7.3 No Solicitation by Pinnacle			46
Section 7.4 Meetings of Stockholders			48
Section 7.5 Filings; Reasonable Best Efforts, Etc.			49
Section 7.6 Inspection			51
Section 7.7 Publicity			51
Section 7.8 Registration Statement on Form S-4			52

		Page
Section 7.9 Listing Application			53
Section 7.10 Letters of Accountants			53
Section 7.11 Agreements of Rule 145 Affiliates			53
Section 7.12 Expenses			53
Section 7.13 Indemnification and Insurance			54
Section 7.14 Antitakeover Statutes			54
Section 7.15 Notification			54
Section 7.16 Employee Matters			55
Section 7.17 Quest Board of Directors; Executive Officers			56
Section 7.18 Quest Rights Agreement			56
Section 7.19 Registration Rights			56
Section 7.20 Quest Guarantee			56
ARTICLE 8 CONDITIONS			57
Section 8.1 Conditions to Each Party’s Obligation to Effect the Merger			57
Section 8.2 Conditions to Obligation of Pinnacle to Effect the Merger			57
Section 8.3 Conditions to Obligation of Quest and MergerSub to Effect the Merger			58
ARTICLE 9 TERMINATION			59
Section 9.1 Termination by Mutual Consent			59
Section 9.2 Termination by Pinnacle or Quest			59
Section 9.3 Termination by Quest			60
Section 9.4 Termination by Pinnacle			60
Section 9.5 Effect of Termination			61
Section 9.6 Extension; Waiver			62
ARTICLE 10 GENERAL PROVISIONS			62
Section 10.1 Nonsurvival of Representations, Warranties and Agreements			62
Section 10.2 Notices			63
Section 10.3 Assignment; Binding Effect; Benefit			64
Section 10.4 Entire Agreement			64
Section 10.5 Amendments			64
Section 10.6 Governing Law			64
Section 10.7 Counterparts			64
Section 10.8 Headings			64
Section 10.9 Interpretation. In this Agreement:			64
Section 10.10 Waivers			65
Section 10.11 Incorporation of Disclosure Letters and Exhibits			66
Section 10.12 Severability			66
Section 10.13 Enforcement of Agreement			66
Section 10.14 Consent to Jurisdiction and Venue			66

Exhibit Number		Document
7.11		Affiliate Letter
7.19		Registration Rights
8.1(f)		Consents

GLOSSARY OF DEFINED TERMS

Defined Terms		Where Defined
Agreement		Preamble
Antitrust Laws		Section 7.5(c)
Applicable Laws		Section 5.5(a)
Average Price		Section 4.2(e)
CGAI		Section 6.27(c)
Certificate of Merger		Section 1.1(b)
Certificates		Section 4.2(b)
Closing		Section 1.2
Closing Date		Section 1.2
Code		Recitals
Confidentiality Agreement		Section 7.6
Cut-off Time		Section 5.3
DGCL		Section 1.1(a)
Effective Time		Section 1.1(b)
Environmental Laws		Section 5.13(a)
ERISA		Section 5.11(a)
ERISA Affiliate		Section 5.11(b)
Exchange Act		Section 4.4
Exchange Agent		Section 4.2(a)
Exchange Fund		Section 4.2(a)
Exchange Ratio		Section 4.1(a)
FBR		Section 6.17
Form S-4		Section 5.26
GGAI		Section 6.27(c)
Hazardous Materials		Section 5.13(b)
HSR Act		Section 5.6(b)
Hydrocarbons		Section 5.27(b)
Incentive Stock Options		Section 7.16(b)
JRD		Section 5.17
Letter of Transmittal		Section 4.2(b)
Liens		Section 6.4(a)
Material Adverse Effect		Section 10.9(c)
Merger		Section 1.1(a)
MergerSub		Preamble
MLP		Section 8.2(b)
Oil and Gas Properties		Section 5.27(b)
Permitted Liens		Section 5.25(a)
Pinnacle		Recitals
Pinnacle Adverse Recommendation Change		Section 7.3(b)
Pinnacle Benefit Plans		Section 5.11(a)

Defined Terms		Where Defined
Pinnacle Common Stock		Recitals
Pinnacle Disclosure Letter		Article 5
Pinnacle Material Contracts		Section 5.21(a)
Pinnacle Notice of Adverse Recommendation		Section 7.3(b)
Pinnacle Options		Section 4.1(d)
Pinnacle Permits		Section 5.5(b)
Pinnacle Preferred Stock		Section 5.3
Pinnacle Real Property		Section 5.5(c)
Pinnacle Reports		Section 5.7
Pinnacle Reserve Reports		Section 5.27(c)
Pinnacle Stock Plan		Section 4.1(d)
Pinnacle Stockholder Approval		Section 5.20
Pinnacle Superior Proposal		Section 7.3(a)
Pinnacle Takeover Proposal		Section 7.3(a)
Proxy Statement/Prospectus		Section 5.26
Quest		Preamble
Quest Adverse Recommendation Change		Section 7.2(b)
Quest Benefit Plans		Section 6.11(a)
Quest Common Stock		Recitals
Quest Disclosure Letter		Article 6
Quest Material Contracts		Section 6.21(a)
Quest Midstream MLP		Section 10.9(d)
Quest Notice of Adverse Recommendation		Section 7.2(b)
Quest Permits		Section 6.5(b)
Quest Preferred Stock		Section 6.3
Quest Real Property		Section 6.5(c)
Quest Reports		Section 6.7(a)
Quest Reserve Reports		Section 6.27
Quest Rights Agreement		Section 6.24
Quest Stockholder Approval		Section 6.20
Quest Superior Proposal		Section 7.2(a)
Quest Takeover Proposal		Section 7.2(a)
Regulatory Filings		Section 5.6(b)
Representatives		Section 7.2(a)
Returns		Section 5.10
Rule 145 Affiliates		Section 7.11
Sarbanes-Oxley Act		Section 5.7(b)
SEC		Section 4.1(d)
Securities Act		Section 4.2(d)
Subsidiary		Section 10.9(d)
Support Agreement		Recitals
Surviving Corporation		Section 1.1(a)

Defined Terms		Where Defined
Takeover Statute		Section 5.24
Taxes		Section 5.10(d)
Termination Date		Section 9.2(a)
Treasury Regulations		Recitals

AGREEMENT AND PLAN OF MERGER

      AGREEMENT AND PLAN OF MERGER (the “Agreement”) dated as of October 15, 2007, is by and among Quest Resource Corporation, a Nevada corporation (“Quest”), Pinnacle Gas Resources, Inc., a Delaware corporation (“Pinnacle”), and Quest MergerSub, Inc., a Delaware corporation and a wholly owned Subsidiary of Quest (“MergerSub”).

RECITALS

      WHEREAS , the Board of Directors of Quest and the Board of Directors of Pinnacle have each determined that a business combination between Quest and Pinnacle is fair to and in the best interests of their respective stockholders and presents a unique opportunity for their respective companies to achieve long-term strategic and financial benefits, and accordingly have agreed to effect a business combination upon the terms and subject to the conditions set forth in this Agreement and have approved this Agreement and declared this Agreement and the Merger advisable;

      WHEREAS , in furtherance of the foregoing, the Board of Directors of each of Quest, Pinnacle and MergerSub has approved this Agreement and the Merger, upon the terms and subject to the conditions of this Agreement, pursuant to which each share of common stock, par value $0.01 per share, of Pinnacle (the “Pinnacle Common Stock”) issued and outstanding immediately prior to the Effective Time will be converted into the right to receive shares of common stock, par value $0.001 per share, of Quest (the “Quest Common Stock”) as set forth herein, other than Pinnacle Common Stock owned by Quest or MergerSub (or any of their respective direct or indirect wholly owned Subsidiaries);

      WHEREAS , concurrently with the execution of this Agreement, as a condition and inducement to Quest’s and MergerSub’s willingness to enter into this Agreement, Quest, MergerSub and certain stockholders of Pinnacle are entering into a support agreement, of even date herewith (the “Support Agreement”) pursuant to which such stockholders have agreed, subject to the terms thereof, to vote their respective shares of Pinnacle Common Stock in favor of adoption of this Agreement and otherwise to support the Merger upon the terms and conditions set forth therein; and

      WHEREAS , for federal income tax purposes, it is intended by the parties hereto that (i) the merger qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and the rules and regulations promulgated thereunder (the “Treasury Regulations”), and (ii) this Agreement constitute a plan of reorganization within the meaning of Section 368 of the Code and such Treasury Regulations.

      ACCORDINGLY , in consideration of the foregoing, and of the representations, warranties, covenants and agreements contained in this Agreement, and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties to this Agreement agree as follows:

ARTICLE 1

THE MERGER

      Section 1.1 The Merger.

          (a) Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, MergerSub shall be merged with and into Pinnacle (the “Merger”) in accordance with Delaware law and this Agreement, and the separate corporate existence of MergerSub shall thereupon cease. Pinnacle shall be the surviving corporation in the Merger (sometimes referred to herein as the “Surviving Corporation”). The Merger shall have the effects specified herein and in the General Corporation Law of the State of Delaware (the “DGCL”). As a result of the Merger, the Surviving Corporation shall become a wholly owned Subsidiary of Quest.

          (b) As soon as practicable following the satisfaction or waiver (subject to Applicable Laws) of the conditions set forth in this Agreement, at the Closing, Pinnacle shall cause a properly executed certificate of merger (the “Certificate of Merger”) meeting the requirements of Section 251 of the DGCL to be filed in accordance with such section. The Merger shall become effective at the time of filing of the Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the DGCL or at such later time that Pinnacle and Quest shall have agreed upon and designated in the Certificate of Merger as the effective time of the Merger (the “Effective Time”).

      Section 1.2 The Closing. Upon the terms and subject to the conditions set forth in this Agreement, the closing of the Merger (the “Closing”) shall take place at the offices of Stinson Morrison Hecker LLP, 1201 Walnut Street, Suite 2900, Kansas City, Missouri 64106, at 9:00 a.m., local time, on the first business day immediately following the date of fulfillment or waiver (in accordance with the provisions hereof) of the last to be fulfilled or waived of the conditions set forth in Section 8.1 , or, if on such day any condition set forth in Section 8.2 or Section 8.3 has not been fulfilled or waived (in accordance with the provisions hereof) (other than those conditions that by their nature are to be fulfilled at the Closing, but subject to the fulfillment or waiver of such conditions), as soon as practicable after all the conditions set forth in Article 8 have been fulfilled or waived in accordance herewith. The date on which the Closing occurs is hereinafter referred to as the “Closing Date.”

ARTICLE 2

CERTIFICATE OF INCORPORATION AND BYLAWS

      Section 2.1 Certificate of Incorporation of the Surviving Corporation. As of the Effective Time, the certificate of incorporation of MergerSub as in effect immediately prior to the Effective Time shall be the certificate of incorporation of the Surviving Corporation, until thereafter amended as provided therein or by Applicable Law, provided, however, that the certificate of incorporation of the Surviving Corporation shall be amended in the Merger to provide that the Surviving Corporation shall have the name “Pinnacle Gas Resources, Inc.”

      Section 2.2 Bylaws of the Surviving Corporation. As of the Effective Time, the bylaws of MergerSub as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation, until thereafter amended as provided therein or by applicable law, provided, however, that such bylaws shall be amended to reflect the change of the name of the Surviving Corporation as contemplated by Section 2.1 .

ARTICLE 3

DIRECTORS AND OFFICERS OF QUEST AND
OF THE SURVIVING CORPORATION

      Section 3.1 Board of Directors and Officers of Quest. Quest shall take all requisite action to cause the directors and executive officers of Quest as of the Closing to be as provided in Section 7.17 . Each such director and executive officer shall remain in office until his or her successor shall be elected and qualified or his or her earlier death, resignation or removal in accordance with the articles of incorporation and bylaws of Quest in effect at the time.

      Section 3.2 Board of Directors of the Surviving Corporation. The directors of MergerSub immediately prior to the Effective Time shall be the directors of the Surviving Corporation from and after the Effective Time, until their successors shall be elected and qualified or their earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.

      Section 3.3 Officers of the Surviving Corporation. The officers of MergerSub immediately prior to the Effective Time shall be the officers of the Surviving Corporation from and after the Effective Time, until their successors shall be elected and qualified or their earlier death, resignation or removal in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.

ARTICLE 4

CONVERSION OF SECURITIES

      Section 4.1 Conversion of Capital Stock of Pinnacle and MergerSub.

          (a) At the Effective Time, the holders of shares of Pinnacle Common Stock issued and outstanding immediately prior to the Effective Time (other than shares of Pinnacle Common Stock to be canceled without payment of any consideration therefor pursuant to Section 4.1(c) ) shall, by virtue of the Merger, have the right to receive 0.6584 (the “Exchange Ratio”) of a validly issued, fully paid and nonassessable share of Quest Common Stock, together with associated preferred stock purchase rights issuable under the Quest Rights Agreement, in exchange for each share of Pinnacle Common Stock. Each such share of Pinnacle Common Stock shall cease to be outstanding and shall be canceled and shall cease to exist, and each holder of any such share of Pinnacle Common Stock shall thereafter cease to have any rights with respect to such share of Pinnacle Common Stock, except the right to receive, without interest, shares of Quest Common Stock in accordance with Section 4.2 , any unpaid dividends and distributions on shares of Quest Common Stock in accordance with Section 4.2(c) and cash for

fractional shares in accordance with Section 4.2(e) upon the surrender of the relevant Certificate or cancellation of uncertificated shares.

          (b) At the Effective Time, each issued and outstanding share of common stock, par value $0.01 per share, of MergerSub shall be converted, by reason of the Merger, into one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

          (c) At the Effective Time, each share of Pinnacle Common Stock issued and held in Pinnacle’s treasury and each share of Pinnacle Common Stock owned immediately prior to the Effective Time by MergerSub or Quest (or any of their respective direct or indirect wholly owned Subsidiaries) shall, by virtue of the Merger, cease to be issued and shall be canceled without payment of any consideration therefor, and no shares of Quest Common Stock or other consideration shall be delivered in exchange therefor.

          (d) At the Effective Time, each stock option to purchase one or more shares of Pinnacle Common Stock (in each case, an “Option”) that is then outstanding, whether or not then exercisable or vested, shall be converted into an obligation of the Surviving Corporation to pay to the holder thereof an amount in cash (reduced by any applicable withholding) equal to the product of (i) the number of shares previously subject to such Option, whether or not then exercisable or vested, and (ii) the excess, if any, of the Consideration Per Share over the exercise price per share previously subject to such Option, and the effect of such action shall extinguish all Options for all purposes. For purposes herein, “Consideration Per Share” means the product obtained by multiplying (x) the Exchange Ratio by (y) the Average Price. The Surviving Corporation shall make all such payments as soon as practicable and, in any event, within ten (10) business days after the Closing Date. Prior to the Effective Time, Pinnacle shall use its reasonable best efforts to take any and all action necessary to effectuate the matters described in this Section 4.1(d) .

          (e) Immediately prior to the Effective Time, each outstanding award of restricted stock, granted by Pinnacle to a non-employee director of Pinnacle, that has not vested shall become fully vested and each such share of restricted Pinnacle Stock shall be treated at the Effective Time the same as, and have the same rights and be subject to the same conditions, as each share of Pinnacle Common Stock not subject to any restrictions; provided, that, upon vesting the holder may satisfy the applicable withholding tax obligations by returning to the Surviving Corporation a sufficient number of shares of Pinnacle Common Stock equal in value to such obligation. Prior to the Effective Time, Pinnacle shall use its reasonable best efforts to take any and all action necessary to effectuate the matters described in this Section 4.1(e) .

          (f) At the Effective Time, each other share of restricted stock of Pinnacle that was issued by Pinnacle prior to the Effective Time shall be converted into and exchanged for the right to receive restricted shares of Quest Common Stock (i) equal to the number of shares of such restricted Pinnacle Common Stock immediately prior to the Effective Time multiplied by the Exchange Ratio, and rounded down to the nearest whole share, and (ii) otherwise subject to the terms of the applicable plan of Pinnacle and the agreement or other document evidencing the grant of such restricted stock. Prior to the Effective Time, Pinnacle shall use its reasonable best

efforts to take any and all action necessary to effectuate the matters described in this Section 4.1(f) .

      Section 4.2 Exchange of Certificates Representing Pinnacle Common Stock.

          (a) Prior to the Effective Time, Quest shall appoint a bank or trust company reasonably satisfactory to Pinnacle to act as exchange agent (the “Exchange Agent”). Quest shall, when and as needed, deposit, or cause to be deposited with the Exchange Agent, for the benefit of the holders of shares of Pinnacle Common Stock for exchange in accordance with this Article 4 , certificates representing the shares of Quest Common Stock to be issued pursuant to Section 4.1 and delivered pursuant to this Section 4.2 in exchange for outstanding shares of Pinnacle Common Stock. When and as needed, Quest shall provide the Exchange Agent immediately following the Effective Time cash sufficient to pay cash in lieu of fractional shares of Quest Common Stock in accordance with Section 4.2(e) (such cash and certificates for shares of Quest Common Stock, together with any dividends or distributions with respect thereto, being hereinafter referred to as the “Exchange Fund”).

          (b) Uncertificated shares of Pinnacle Common Stock subject to conversion in accordance with this Agreement shall be automatically cancelled by the transfer agent of Pinnacle, and Quest shall issue to the holders thereof Certificates, or upon the due request of a holder thereof, uncertificated shares of Quest Common Stock, and Quest shall pay any unpaid dividends and distributions on shares of Quest Common Stock in accordance with Section 4.2(c) and cash in lieu of fractional shares in accordance with Section 4.2(e) . Promptly after the Effective Time, Quest shall cause the Exchange Agent to mail to each holder of record of one or more certificates (“Certificates”) that immediately prior to the Effective Time represented shares of Pinnacle Common Stock: (A) a letter of transmittal (the “Letter of Transmittal”), which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions as Quest may reasonably specify and (B) instructions for use in effecting the surrender of the Certificates in exchange for certificates representing shares of Quest Common Stock, any unpaid dividends and distributions on shares of Quest Common Stock in accordance with Section 4.2(c) and cash in lieu of fractional shares in accordance with Section 4.2(e) . Upon surrender of a Certificate for cancellation to the Exchange Agent together with such Letter of Transmittal, duly executed and completed in accordance with the instructions thereto, the holder of such Certificate shall be entitled to receive in exchange therefor (x) a certificate representing that number of whole shares of Quest Common Stock and (y) a check representing the amount of cash in lieu of fractional shares, if any, and unpaid dividends and distributions, if any, which such holder has the right to receive pursuant to the provisions of this Article 4 , after giving effect to any required withholding tax, and the Certificate so surrendered shall forthwith be canceled. No interest will be paid or accrued on the cash in lieu of fractional shares and unpaid dividends and distributions, if any, payable to holders of Certificates. In the event of a transfer of ownership of Pinnacle Common Stock that is not registered in the transfer records of Pinnacle, a certificate representing the proper number of shares of Quest Common Stock, together with a check for the cash to be paid in lieu of fractional shares, may be issued to such a transferee if the Certificate representing such Pinnacle Common Stock is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid.

          (c) Notwithstanding any other provisions of this Agreement, no dividends or other distributions declared or made after the Effective Time with respect to shares of Quest Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate with respect to the shares of Quest Common Stock issuable upon surrender of such Certificate as a result of the conversion provided in this Article 4 until such Certificate is surrendered as provided herein. Subject to the effect of Applicable Laws, following surrender of any such Certificate, there shall be paid to the holder of the Certificate so surrendered, without interest, (i) at the time of such surrender, the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date prior to surrender payable with respect to the number of whole shares of Quest Common Stock issued pursuant to Section 4.1 , less the amount of any withholding taxes, and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to surrender and a payment date subsequent to surrender payable with respect to such whole shares of Quest Common Stock, less the amount of any withholding taxes.

          (d) At or after the Effective Time, the Surviving Corporation shall pay from funds on hand at the Effective Time any dividends or make other distributions with a record date prior to the Effective Time that may have been declared or made by Pinnacle on shares of Pinnacle Common Stock which remain unpaid at the Effective Time, and, after the Effective Time, there shall be no transfers on the stock transfer books of the Surviving Corporation of the shares of Pinnacle Common Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to Quest, the presented Certificates shall be canceled and exchanged for certificates representing shares of Quest Common Stock and cash in lieu of fractional shares, if any, deliverable in respect thereof pursuant to this Agreement in accordance with the procedures set forth in this Article 4 . Certificates surrendered for exchange by any person constituting an “affiliate” of Pinnacle for purposes of Rule 145(c) under the Securities Act of 1933, as amended (the “Securities Act”), shall not be exchanged until Pinnacle has received a written agreement from such person as provided in Section 7.11 .

          (e) No fractional shares of Quest Common Stock shall be issued pursuant hereto. In lieu of the issuance of any fractional shares of Quest Common Stock pursuant to Section 4.1(b) , cash adjustments will be paid to holders in respect of any fractional shares of Quest Common Stock that would otherwise be issuable, and the amount of such cash adjustment shall be equal to such fractional proportion of the Average Price of Quest Common Stock. “Average Price” means the average of the closing prices of a share of Quest Common Stock, as such price is reported on the NASDAQ Global Market as reported in The Wall Street Journal or such other source as the parties shall agree in writing, for the 15 trading days ending on the third trading day immediately preceding the Effective Time.

          (f) Any portion of the Exchange Fund (including the proceeds of any investments thereof and any certificates for shares of Quest Common Stock) that remains undistributed to the former stockholders of Pinnacle one year after the Effective Time shall be delivered to Quest. Any former stockholders of Pinnacle who have not theretofore complied with this Article 4 shall thereafter look only to Quest for delivery of certificates representing their shares of Quest Common Stock and cash in lieu of fractional shares and for any unpaid

dividends and distributions on the shares of Quest Common Stock deliverable to such former stockholder pursuant to this Agreement.

          (g) None of Quest, Pinnacle, Surviving Corporation, the Exchange Agent or any other person shall be liable to any person for any portion of the Exchange Fund properly delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.

          (h) In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by Quest, the posting by such person of a bond in such reasonable amount as Quest may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate certificates representing the shares of Quest Common Stock, cash in lieu of fractional shares and unpaid dividends and distributions on shares of Quest Common Stock, as provided in Section 4.2(c) , deliverable in respect thereof pursuant to this Agreement.

      Section 4.3 Adjustment of Exchange Ratio. If, between the date of this Agreement and the Effective Time (and as permitted by Section 7.l ), the outstanding shares of Pinnacle Common Stock or Quest Common Stock shall have been increased, decreased, changed into or exchanged for a different number of shares or different class, in each case, by reason of any reclassification, recapitalization, stock split, split-up, combination or exchange of shares or a stock dividend or dividend payable in other securities shall be declared with a record date within such period, or any similar event shall have occurred, the Exchange Ratio shall be appropriately adjusted to provide to Quest and the holders of Pinnacle Common Stock the same economic effect as contemplated by this Agreement prior to such event.

      Section 4.4 Rule 16b-3 Approval. Prior to the Closing, Quest and Pinnacle, and their respective Boards of Directors or committees thereof, shall use their reasonable best efforts to take all actions to cause any dispositions of Pinnacle Common Stock (including derivative securities with respect to Pinnacle Common Stock) or acquisitions of Quest Common Stock (including derivative securities with respect to Quest Common Stock) resulting from the transactions contemplated hereby by each individual who is subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to be exempt from Section 16(b) of the Exchange Act under Rule 16b-3 promulgated under the Exchange Act in accordance with the terms and conditions set forth in no-action letters issued by the SEC in similar transactions.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF PINNACLE

     Except as set forth in the disclosure letter delivered to Quest by Pinnacle at or prior to the execution of this Agreement (the “Pinnacle Disclosure Letter”) and making reference to the particular subsection of this Agreement to which exception is being taken ( provided that any information set forth in one section or subsection of the Pinnacle Disclosure Letter shall be deemed to apply to each other section or subsection thereof to which its relevance is reasonably apparent), Pinnacle represents and warrants to Quest and MergerSub that:

      Section 5.1 Existence; Good Standing; Corporate Authority. Pinnacle is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Pinnacle is duly qualified to do business and, to the extent such concept or a similar concept exists in the relevant jurisdiction, is in good standing under the laws of any jurisdiction in which the character of the properties owned or leased by it therein or in which the transaction of its business requires such qualification, except where the failure to be so qualified or in good standing, individually or in the aggregate, has not had and is not reasonably likely to have a Pinnacle Material Adverse Effect. Pinnacle has all requisite corporate power and authority to own, operate and lease its properties and to carry on its business as now conducted. The copies of Pinnacle’s certificate of incorporation and bylaws on file with the SEC are true and correct and contain all amendments as of the date of this Agreement.

      Section 5.2 Authorization, Validity and Effect of Agreements. Pinnacle has the requisite corporate power and authority to execute and deliver this Agreement and, upon receipt of the Pinnacle Stockholder Approval, to consummate the transactions contemplated by this Agreement. The execution of this Agreement and the consummation by Pinnacle of the transactions contemplated hereby have been duly authorized by all requisite corporate action on behalf of Pinnacle, other than the receipt of the Pinnacle Stockholder Approval. Pinnacle has duly executed and delivered this Agreement. Assuming this Agreement constitutes the valid and legally binding obligation of the other parties hereto, this Agreement constitutes the valid and legally binding obligation of Pinnacle, enforceable against Pinnacle in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditors’ rights and general principles of equity. Assuming the accuracy of the representations and warranties set forth in Section 6.19 , Pinnacle has taken all action necessary to render the restrictions set forth in Section 203 of the DGCL, and any other applicable takeover law restricting or purporting to restrict business combinations, inapplicable to this Agreement and the transactions contemplated hereby.

      Section 5.3 Capitalization. The authorized capital stock of Pinnacle consists of 100,000,000 shares of Pinnacle Common Stock and 25,000,000 shares of preferred stock, par value $0.01 per share (“Pinnacle Preferred Stock”). As of October 12, 2007 (the “Cut-off Time”), there were (i) 29,025,751 outstanding shares of Pinnacle Common Stock (which includes outstanding restricted stock), (ii) 881,000 shares of Pinnacle Common Stock reserved for issuance upon exercise of outstanding Pinnacle Options, and (iii) no outstanding shares of Pinnacle Preferred Stock. From the Cut-off Time to the date of this Agreement, no additional shares of Pinnacle Common Stock or Pinnacle Preferred Stock have been issued (other than pursuant to Pinnacle Options which were outstanding as of the Cut-off Time and are included in the number of shares of Pinnacle Common Stock reserved for issuance upon exercise of outstanding Pinnacle Options in clause (ii) above), no additional Pinnacle Options have been issued or granted, and there has been no increase in the number of shares of Pinnacle Common Stock issuable upon exercise of the Pinnacle Options from the number issuable under such Pinnacle Options as of the Cut-off Time. All such issued and outstanding shares of Pinnacle Common Stock are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights. As of the date of this Agreement, except as set forth in this Section 5.3 , there are no outstanding shares of capital stock and there are no options, warrants, calls, subscriptions, convertible securities or other rights, agreements or commitments which obligate Pinnacle or any of its Subsidiaries to issue, transfer, sell or register any shares of capital stock or other voting

securities of Pinnacle or any of its Subsidiaries. Pinnacle has no outstanding bonds, debentures, notes or other obligations the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the stockholders of Pinnacle on any matter.

      Section 5.4 Subsidiaries. As of the date of this Agreement, Pinnacle does not have any Subsidiaries.

      Section 5.5 Compliance with Laws; Permits. Except for such matters as, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect and except for matters related to taxes and Environmental Laws, which are treated exclusively in Sections 5.10 and 5.13 , respectively:

          (a) Neither Pinnacle nor any Subsidiary of Pinnacle is in violation of any applicable law, rule, regulation, code, governmental determination, order, treaty, convention, governmental certification requirement or other public limitation, U.S. or non-U.S. (collectively, “Applicable Laws”), and no claim is pending or, to the knowledge of Pinnacle, threatened with respect to any such matters. No condition exists which does or could reasonably be expected to constitute a violation of or deficiency under any Applicable Law by Pinnacle or any Subsidiary of Pinnacle.

          (b) Pinnacle and each Subsidiary of Pinnacle hold all permits, licenses, certifications, variations, exemptions, orders, franchises and approvals of all governmental or regulatory authorities necessary for the lawful conduct of their respective businesses (the “Pinnacle Permits”). All Pinnacle Permits are in full force and effect and there exists no default thereunder or breach thereof, and Pinnacle has no notice or actual knowledge that such Pinnacle Permits will not be renewed in the ordinary course after the Effective Time. No governmental authority has given, or to the knowledge of Pinnacle threatened to give, any action to terminate, cancel or reform any Pinnacle Permit.

          (c) Pinnacle and each Subsidiary of Pinnacle possess all permits, licenses, operating authorities, orders, exemptions, franchises, variances, consents, approvals or other authorizations required for the present ownership and operation of all its real property or leaseholds (“Pinnacle Real Property”). There exists no material default or breach with respect to, and no party or governmental authority has taken or, to the knowledge of Pinnacle, threatened to take, any action to terminate, cancel or reform any such permit, license, operating authority, order, exemption, franchise, variance, consent, approval or other authorization pertaining to the Pinnacle Real Property.

      Section 5.6 No Conflict.

          (a) Except as disclosed in Section 5.6(a) of the Pinnacle Disclosure Letter, neither the execution and delivery by Pinnacle of this Agreement nor the consummation by Pinnacle of the transactions contemplated by this Agreement in accordance with the terms hereof will (i) subject to receipt of the Pinnacle Stockholder Approval, conflict with or result in a breach of any provisions of the certificate of incorporation or bylaws of Pinnacle; (ii) violate, or conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with

notice or lapse of time or both, would constitute a default) under, or result in the termination or in a right of termination or cancellation of, or give rise to a right of purchase under, or accelerate the performance required by, or result in the creation of any Lien upon any of the properties of Pinnacle or its Subsidiaries under, or result in being declared void, voidable, or without further binding effect, or otherwise result in a detriment to Pinnacle or any of its Subsidiaries under, any of the terms, conditions or provisions of, any note, bond, mortgage, indenture, deed of trust, license, concession, franchise, permit, lease, contract, agreement, joint venture or other instrument or obligation to which Pinnacle or any of its Subsidiaries is a party, or by which Pinnacle or any of its Subsidiaries or any of their properties may be bound or affected; or (iii) subject to the filings and other matters referred to in Section 5.6(b) , contravene or conflict with or constitute a violation of any provision of any law, rule, regulation, judgment, order or decree binding upon or applicable to Pinnacle or any of its Subsidiaries, except as, in the case of matters described in clause (ii) or (iii), individually or in the aggregate, that have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect.

          (b) Neither the execution and delivery by Pinnacle of this Agreement nor the consummation by Pinnacle of the transactions contemplated hereby in accordance with the terms hereof will require any consent, approval, qualification or authorization of, or filing or registration with, any court or governmental or regulatory authority, other than filings required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the Exchange Act, the Securities Act or applicable state securities and “Blue Sky” laws (collectively, the “Regulatory Filings”), and (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, except for any consent, approval, qualification or authorization the failure to obtain which, and for any filing or registration the failure to make which, has not had and is not reasonably likely to have a Pinnacle Material Adverse Effect.

          (c) Except as set forth in Section 5.6(c) of the Pinnacle Disclosure Schedule, this Agreement, the Merger and the transactions contemplated hereby do not, and will not, upon consummation of such transactions in accordance with their terms, result in any “change of control” or similar event or circumstance under (i) the terms of any Pinnacle Material Contract or (ii) any contract or plan under which any employees, officers or directors of Pinnacle or any of its Subsidiaries are entitled to payments or benefits, which, in the case of either clause (i) or (ii), gives rise to rights or benefits not otherwise available absent such change of control or similar event and requires either a cash payment or an accounting charge in accordance with U.S. generally accepted accounting principles, or (iii) any material Pinnacle Permit.

      Section 5.7 SEC Documents and Compliance.

          (a) Pinnacle and its Subsidiaries have filed with the SEC all documents (including exhibits and any amendments thereto) required to be so filed by them since May 10, 2007 (each registration statement, report, proxy statement or information statement (other than preliminary materials) they have so filed, each in the form (including exhibits and any amendments thereto) filed with the SEC, collectively, the “Pinnacle Reports”). As of its respective date, each Pinnacle Report (i) complied in all material respects with the applicable requirements of the Exchange Act or the Securities Act, as the case may be, and the rules and regulations thereunder and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made

therein, in the light of the circumstances under which they were made, not misleading, except for any statements in any Pinnacle Report that have been modified by an amendment to such report filed with the SEC prior to the date hereof. Each of the consolidated balance sheets included in or incorporated by reference into the Pinnacle Reports (including related notes and schedules) complied as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto and fairly presents in all material respects the consolidated financial position of Pinnacle and its Subsidiaries (or such entities as indicated in such balance sheet) as of its date, and each of the consolidated statements of operations, cash flows and changes in stockholders’ equity included in or incorporated by reference into the Pinnacle Reports (including any related notes and schedules) fairly presents in all material respects the results of operations, cash flows or changes in stockholders’ equity, as the case may be, of Pinnacle and its Subsidiaries (or such entities as indicated in such balance sheet) for the periods set forth therein (subject, in the case of unaudited statements, to (x) such exceptions as may be permitted by Form 10-Q of the SEC and (y) normal, recurring year-end audit adjustments which are not material in the aggregate), in each case in accordance with generally accepted accounting principles consistently applied during the periods involved, except as may be noted therein. Except as and to the extent set forth on the consolidated balance sheet of Pinnacle and its Subsidiaries included in the most recent Pinnacle Report filed prior to the date of this Agreement that includes such a balance sheet, including all notes thereto, as of the date of such balance sheet, neither Pinnacle nor any of its Subsidiaries had any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) that would be required to be reflected on, or reserved against in, a consolidated balance sheet of Pinnacle or in the notes thereto prepared in accordance with generally accepted accounting principles consistently applied, other than liabilities or obligations which, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect.

          (b) Since May 10, 2007, the chief executive officer and chief financial officer of Pinnacle have made all certifications (without qualification or exceptions to the matters certified) required by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the statements contained in any such certifications are complete and correct; neither Pinnacle nor its officers have received notice from any governmental authority questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certification. Pinnacle has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. Pinnacle’s disclosure controls and procedures are reasonably designed to ensure that all material information required to be disclosed by Pinnacle in the reports that it files under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to the management of Pinnacle as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. To the knowledge of Pinnacle, it has disclosed, based on its most recent evaluations, to Pinnacle’s outside auditors and the audit committee of the board of directors of Pinnacle (A) all significant deficiencies in the design or operation of internal controls over financial reporting and any material weaknesses, which have more than a remote chance to materially adversely affect Pinnacle’s ability to record, process, summarize and report financial data (as defined in Rule 13a-15(f) of the Exchange Act) and (B) any fraud, whether or not

material, that involves management or other employees who have a significant role in Pinnacle’s internal controls over financial reporting.

          (c) Since January 1, 2007, to the knowledge of Pinnacle, neither Pinnacle nor any of its Subsidiaries nor any director, officer, employee, auditor, accountant or representative of Pinnacle or any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of Pinnacle or any of its Subsidiaries, including any material complaint, allegation, assertion or claim that Pinnacle or any of its Subsidiaries has a “significant deficiency” or “material weakness” (as such terms are defined in the Public Accounting Oversight Board’s Auditing Standard No. 2, as in effect on the date hereof), in Pinnacle’s controls over financial reporting.

          (d) None of Pinnacle or any of its Subsidiaries has, since May 10, 2007, extended or maintained credit, arranged for the extension of credit, or renewed an extension of credit, in the form of a personal loan to or for any director or executive officer (or equivalent thereof) of Pinnacle. No loan or extension of credit is maintained by Pinnacle or its Subsidiaries to which the second sentence of Section 13(k)(1) of the Exchange Act applies.

      Section 5.8 Litigation. Except as described in the Pinnacle Reports filed prior to the date of this Agreement, there are no actions, suits or proceedings pending against Pinnacle or any of its Subsidiaries or, to Pinnacle’s knowledge, threatened against Pinnacle or any of its Subsidiaries, at law or in equity or in any arbitration or similar proceedings, before or by any U.S. federal or state court, commission, board, bureau, agency or instrumentality or any arbitral or other dispute resolution body, that, individually or in the aggregate, have had or are reasonably likely to have a Pinnacle Material Adverse Effect.

      Section 5.9 Absence of Certain Changes. From January 1, 2007 to the date of this Agreement, there has not been (i) a Pinnacle Material Adverse Effect or (ii) except as described in the Pinnacle Reports filed with the SEC prior to the date of this Agreement, (A) any material change by Pinnacle or any of its Subsidiaries in any of their respective accounting methods, principles or practices or any of their respective tax methods, practices or elections applicable to Pinnacle’s consolidated financial statements, except as may have been required by a change in law or generally accepted accounting principles; (B) any declaration, setting aside or payment of any dividend or distribution in respect of any capital stock of Pinnacle or any redemption, purchase or other acquisition of any of its equity securities, other than the acquisition by Pinnacle of shares of Pinnacle Common Stock and Pinnacle Options in connection with the forfeiture of such awards for no consideration; (C) any split, combination or reclassification of any capital stock of Pinnacle or any of its Subsidiaries or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of that capital stock; (D) any damage to or any destruction or loss of physical properties owned or used by Pinnacle or any of its Subsidiaries, whether or not covered by insurance, that individually or in the aggregate constitutes a Pinnacle Material Adverse Effect; or (E) any reevaluations by Pinnacle or any of its Subsidiaries of any of their assets which, in accordance with generally accepted accounting principles, Pinnacle will reflect in its consolidated financial statements, including any impairment of assets, and which in the aggregate are material to them, other than changes to

financial statements resulting from the impairment of oil and gas assets due to changes in commodity prices.

      Section 5.10 Taxes.

          (a) All tax returns, statements, reports, declarations, estimates and forms (“Returns”) required to be filed by or with respect to Pinnacle or any of its Subsidiaries (including any Return required to be filed by an affiliated, consolidated, combined, unitary or similar group that included Pinnacle or any of its Subsidiaries) have been properly filed on a timely basis with the appropriate governmental authorities, except to the extent that any failure to file, individually or in the aggregate, has not had and is not reasonably likely to have a Pinnacle Material Adverse Effect, and all taxes that have become due (regardless of whether reflected on any Return) have been duly paid or deposited in full on a timely basis or adequately reserved for in accordance with generally accepted accounting principles, except to the extent that any failure to pay or deposit or make adequate provision for the payment of such taxes, individually or in the aggregate, has not had and is not reasonably likely to have a Pinnacle Material Adverse Effect.

          (b) Except to the extent such matters, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect, (i) no audit or other administrative proceeding or court proceeding is presently pending with regard to any tax or Return of Pinnacle or any of its Subsidiaries as to which any taxing authority has asserted in writing any claim; (ii) no governmental authority is now asserting in writing any deficiency or claim for taxes or any adjustment to taxes with respect to which Pinnacle or any of its Subsidiaries may be liable; and (iii) neither Pinnacle nor any of its Subsidiaries has any liability for any tax under Treasury Regulation Section 1.1502-6 or any similar provision of any other tax law, except for taxes of the affiliated group of which Pinnacle or any of its Subsidiaries is the common parent, within the meaning of Section 1504(a)(1) of the Code or any similar provision of any other tax law. As of the date of this Agreement, neither Pinnacle nor any of its Subsidiaries has granted any material request, agreement, consent or waiver to extend any period of limitations applicable to the assessment of any tax upon Pinnacle or any of its Subsidiaries. Neither Pinnacle nor any of its Subsidiaries is a party to any closing agreement described in Section 7121 of the Code or any predecessor provision thereof or any similar agreement under any tax law. Neither Pinnacle nor any of its Subsidiaries is a party to, is bound by or has any obligation under any tax sharing, allocation or indemnity agreement or any similar agreement or arrangement other than with respect to any such agreement or arrangement among Pinnacle and any of its Subsidiaries. Since December 31, 2005, Pinnacle has not made or rescinded any material election relating to taxes or settled or compromised any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to any material taxes, or, except as may be required by Applicable Law, made any material change to any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its most recently filed federal Returns. Pinnacle has not engaged in any “listed transaction” within the meaning of Treasury Regulation Section 1.6011-4. Neither Pinnacle nor any of its Subsidiaries has been a “controlled corporation” or a “distributing corporation” in any distribution that was purported or intended to be governed by Section 355 of the Code (or any similar provision of state, local or foreign law) (i) occurring during the two-year period ending on the date hereof or (ii) that otherwise constitutes part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) that includes the Merger.

          (c) Neither Pinnacle nor any of its Subsidiaries knows of any fact or has taken or failed to take any action that could reasonably be expected to prevent the Merger from qualifying as a reorganization within the meaning of Section 368 of the Code.

          (d) For purposes of this Agreement, “tax” or “taxes” means all net income, gross income, gross receipts, sales, use, ad valorem, transfer, accumulated earnings, personal holding company, excess profits, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, disability, capital stock or windfall profits taxes, customs duties or other taxes, fees, assessments or governmental charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any taxing authority.

      Section 5.11 Employee Benefit Plans.

          (a) Section 5.11 of the Pinnacle Disclosure Letter contains a list of all Pinnacle Benefit Plans. The term “Pinnacle Benefit Plans” means all employee benefit plans and other benefit arrangements, including all “employee benefit plans” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”), whether or not U.S.-based plans, and all other material employee benefit, bonus, incentive, deferred compensation, stock option (or other equity-based), severance, employment, change in control, welfare (including post-retirement medical and life insurance) and fringe benefit plans, practices or agreements, whether or not subject to ERISA or U.S.-based and whether written or oral, sponsored, maintained or contributed to or required to be contributed to by Pinnacle or any of its Subsidiaries or ERISA Affiliates or to which Pinnacle or any of its Subsidiaries or ERISA Affiliates is a party or is required to provide benefits under Applicable Laws. Pinnacle has made available to Quest true and complete copies of the Pinnacle Benefit Plans and, if applicable, the most recent trust agreements, Forms 5500, summary plan descriptions, funding statements, annual reports, actuarial reports and Internal Revenue Service determination or opinion letters for each such plan.

          (b) Except to the extent such matters, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect: all applicable reporting and disclosure requirements have been met with respect to the Pinnacle Benefit Plans; to the extent applicable, the Pinnacle Benefit Plans comply with the requirements of ERISA and the Code or with the regulations of any applicable jurisdiction, and any Pinnacle Benefit Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service (or is entitled to rely upon a favorable opinion letter issued by the Internal Revenue Service); the Pinnacle Benefit Plans have been maintained and operated in accordance with their terms, and, to Pinnacle’s knowledge, there are no breaches of fiduciary duty in connection with the Pinnacle Benefit Plans; there are no pending or, to Pinnacle’s knowledge, threatened claims against or otherwise involving any Pinnacle Benefit Plan, and no suit, action or other litigation (excluding routine claims for benefits incurred in the ordinary course of Pinnacle Benefit Plan activities) has been brought against or with respect to any Pinnacle Benefit Plan; all material contributions required to be made as of the date of this Agreement to the Pinnacle Benefit Plans have been made or provided for; with respect to any “employee pension benefit plans,” as defined in Section 3(2) of ERISA, that are subject to Title IV of ERISA and have been maintained or contributed to within six years prior to the Effective

Time by Pinnacle, its Subsidiaries or any trade or business (whether or not incorporated) which is under common control, or which is treated as a single employer, with Pinnacle or any of its Subsidiaries under Section 414(b), (c), (m) or (o) of the Code (an “ERISA Affiliate”), (i) neither Pinnacle nor any of its Subsidiaries or ERISA Affiliates has incurred any direct or indirect liability under Title IV of ERISA in connection with any termination thereof or withdrawal therefrom, and (ii) there does not exist any accumulated funding deficiency within the meaning of Section 412 of the Code or Section 302 of ERISA, whether or not waived.

          (c) No Pinnacle Benefit Plan (including for such purpose, any employee benefit plan described in Section 3(3) of ERISA which Pinnacle or any of its Subsidiaries or ERISA Affiliates maintained, sponsored or contributed to within the six-year period preceding the Effective Time) is (i) a “multiemployer plan” (as defined in Section 4001(a)(3) of ERISA), (ii) a “multiple employer plan” (within the meaning of Section 413(c) of the Code) or (iii) subject to Title IV or Section 302 of ERISA or Section 412 of the Code. Except as set forth in Section 5.11(c) of the Pinnacle Disclosure Letter, (A) neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall cause any payments or benefits to any employee, officer or director of Pinnacle or any of its Subsidiaries to be either subject to an excise tax or non-deductible to Pinnacle under Sections 4999 and 280G of the Code, respectively, whether or not some other subsequent action or event would be required to cause such payment or benefit to be triggered, and (B) the execution of, and performance of the transactions contemplated by, this Agreement will not (either alone or upon the occurrence of any additional or subsequent events) constitute an event under any benefit plan, policy, arrangement or agreement or any trust or loan (in connection therewith) that will or may result in any payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in benefits or obligations to fund benefits with respect to any employee of Pinnacle or any Subsidiary thereof.

          (d) No Pinnacle Benefit Plan provides medical, surgical, hospitalization, death or similar benefits (whether or not insured) for employees or former employees of Pinnacle or any Subsidiary of Pinnacle for periods extending beyond their retirement or other termination of service other than (i) coverage mandated by Applicable Laws, (ii) death benefits under any “pension plan” or (iii) benefits the full cost of which is borne by the current or former employee (or his beneficiary).

          (e) From January 1, 2007 to the date of this Agreement, except in the ordinary course of business consistent with past practice or as described in the Pinnacle Reports filed prior to the date of this Agreement, there has not been (i) any granting, or any commitment or promise to grant, by Pinnacle or any of its Subsidiaries to any officer of Pinnacle or any of its Subsidiaries of (A) any increase in compensation or (B) any increase in severance or termination pay (other than increases in severance or termination pay as a result of an increase in compensation in accordance with Section 5.11(e)(i)(A) ), (ii) any entry by Pinnacle or any of its Subsidiaries into any employment, severance or termination agreement with any person who is an employee of Pinnacle or any of its Subsidiaries, (iii) any increase in, or any commitment or promise to increase, benefits payable or available under any pre-existing Pinnacle Benefit Plan, except in accordance with the pre-existing terms of that Pinnacle Benefit Plan, (iv) any establishment of, or any commitment or promise to establish, any new Pinnacle Benefit Plan, (v) any amendment of any existing stock options, stock appreciation rights, performance awards or

restricted stock awards or (vi) except in accordance with and under pre-existing compensation policies, any grant, or any commitment or promise to grant, any stock options, stock appreciation rights, performance awards, or restricted stock awards.

      Section 5.12 Labor Matters.

          (a) Neither Pinnacle nor any of its Subsidiaries is a party to, or bound by, any collective bargaining agreement or similar contract, agreement or understanding with a labor union or similar labor organization. As of the date of this Agreement, to Pinnacle’s knowledge, there are no organizational efforts with respect to the formation of a collective bargaining unit presently being made or threatened.

          (b) Except for such matters as, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect, (i) neither Pinnacle nor any Subsidiary of Pinnacle has received any written complaint of any unfair labor practice or other unlawful employment practice or any written notice of any material violation of any federal, state or local statutes, laws, ordinances, rules, regulations, orders or directives with respect to the employment of individuals by, or the employment practices of, Pinnacle or any Subsidiary of Pinnacle or the work conditions or the terms and conditions of employment and wages and hours of their respective businesses and (ii) there are no unfair labor practice charges or other employee-related complaints against Pinnacle or any Subsidiary of Pinnacle pending or, to the knowledge of Pinnacle, threatened, before any governmental authority by or concerning the employees working in their respective businesses.

      Section 5.13 Environmental Matters.

          (a) Except as described in the Pinnacle Reports filed with the SEC prior to the date of this Agreement, Pinnacle and each Subsidiary of Pinnacle has been and is in compliance with all applicable orders of any court, governmental authority or arbitration board or tribunal and any applicable law, ordinance, rule, regulation or other legal requirement (including common law) related to human health and the environment (“Environmental Laws”) except for such matters as, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect. There are no past or present facts, conditions or circumstances that interfere with the conduct of any of their respective businesses in the manner now conducted or which interfere with continued compliance with any Environmental Law, except for any non-compliance or interference that, individually or in the aggregate, has not had and is not reasonably likely to have a Pinnacle Material Adverse Effect.

          (b) Except for such matters as, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect, no judicial or administrative proceedings or governmental investigations are pending or, to the knowledge of Pinnacle, threatened against Pinnacle or its Subsidiaries that allege the violation of or seek to impose liability pursuant to any Environmental Law, and there are no past or present facts, conditions or circumstances at, on or arising out of, or otherwise associated with, any current (or, to the knowledge of Pinnacle or its Subsidiaries, former) businesses, assets or properties of Pinnacle or any Subsidiary of Pinnacle, including but not limited to on-site or off-site disposal, release or spill of any material, substance or waste classified, characterized or otherwise

regulated as hazardous, toxic, pollutant, contaminant or words of similar meaning under Environmental Laws, including petroleum or petroleum products or byproducts (“Hazardous Materials”) which violate Environmental Law or are reasonably likely to give rise to (i) costs, expenses, liabilities or obligations for any cleanup, remediation, disposal or corrective action under any Environmental Law, (ii) claims arising for personal injury, property damage or damage to natural resources, or (iii) fines, penalties or injunctive relief.

          (c) Neither Pinnacle nor any of its Subsidiaries has (i) received any notice of noncompliance with, violation of, or liability or potential liability under any Environmental Law or (ii) entered into any consent decree or order or is subject to any order of any court or governmental authority or tribunal under any Environmental Law or relating to the cleanup of any Hazardous Materials, except for any such matters as have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect.

      Section 5.14 Intellectual Property. Pinnacle and its Subsidiaries own or possess adequate licenses or other valid rights to use all patents, patent rights, know-how, trade secrets, trademarks, trademark rights and other proprietary information and other proprietary intellectual property rights used or held for use in connection with their respective businesses as currently being conducted, except where the failure to own or possess such licenses and other rights, individually or in the aggregate, has not had and is not reasonably likely to have a Pinnacle Material Adverse Effect, and there are no assertions or claims challenging the validity of any of the foregoing that, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect. The conduct of Pinnacle’s and its Subsidiaries’ respective businesses as currently conducted does not conflict with any patents, patent rights, licenses, trademarks, trademark rights, trade names, trade name rights or copyrights of others, except for such conflicts that, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect. There is no material infringement of any proprietary right owned by or licensed by or to Pinnacle or any of its Subsidiaries, except for such infringements that, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect.

      Section 5.15 Decrees, Etc. Except for such matters as, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect, (a) no order, writ, fine, injunction, decree, judgment, award or determination of any court or governmental authority or any arbitral or other dispute resolution body has been issued or entered against Pinnacle or any Subsidiary of Pinnacle that continues to be in effect that materially affects the ownership or operation of any of their respective assets, and (b) no criminal order, writ, fine, injunction, decree, judgment or determination of any court or governmental authority has been issued against Pinnacle or any Subsidiary of Pinnacle.

      Section 5.16 Insurance.

          (a) Except for such matters as, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect, Pinnacle and its Subsidiaries maintain insurance coverage with financially responsible insurance companies in such amounts and against such losses as are customary in the industries in which Pinnacle and its Subsidiaries operate on the date of this Agreement.

          (b) Except for such matters as, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect, no event relating specifically to Pinnacle or its Subsidiaries has occurred that could reasonably be expected, after the date of this Agreement, to result in material upward adjustment in premiums under any insurance policies they maintain. Excluding insurance policies that have expired and been replaced in the ordinary course of business, no excess liability or protection and indemnity insurance policy has been canceled by the insurer within one year prior to the date of this Agreement, and no threat in writing has been made to cancel (excluding cancellation upon expiration or failure to renew) any such insurance policy of Pinnacle or any Subsidiary of Pinnacle during the period of one year prior to the date of this Agreement. Prior to the date of this Agreement, no event has occurred, including the failure by Pinnacle or any Subsidiary of Pinnacle to give any notice or information or by giving any inaccurate or erroneous notice or information, which materially limits or impairs the rights of Pinnacle or any Subsidiary of Pinnacle under any such excess liability or protection and indemnity insurance policies.

      Section 5.17 No Brokers. Pinnacle has not entered into any contract, arrangement or understanding with any person or firm which may result in the obligation of Quest or Pinnacle to pay any finder’s fees, brokerage or other like payments in connection with the negotiations leading to this Agreement or the consummation of the transactions contemplated hereby, except that Pinnacle has retained Jefferies Randall & Dewey, a division of Jefferies & Company, Inc. (“JRD”), as its financial advisor, the fees of which shall not exceed those set forth in Section 5.17 of the Pinnacle Disclosure Letter.

      Section 5.18 Opinion of Financial Advisor and Board Approval. The Board of Directors of Pinnacle has received the opinion of JRD to the effect that, subject to the assumptions, qualifications and limitations relating to such opinion, the Exchange Ratio is fair, from a financial point of view, as of the date of this Agreement, to the holders of Pinnacle Common Stock other than Quest or any of its affiliates, it being agreed that none of Quest or MergerSub has any rights with respect to such opinion. Pinnacle’s Board of Directors, at a meeting duly called and held, (i) determined that this Agreement and the transactions contemplated hereby are advisable and in the best interests of the stockholders of Pinnacle, (ii) approved this Agreement and the transactions contemplated hereby and (iii) recommended adoption of this Agreement by the stockholders of Pinnacle. Pinnacle shall provide Quest (solely for informational purposes) a true, correct and complete copy of such opinion promptly following the date of this Agreement.

      Section 5.19 Quest Stock Ownership. Neither Pinnacle nor any of its Subsidiaries owns any shares of capital stock of Quest or any other securities convertible into or otherwise exercisable to acquire shares of capital stock of Pinnacle or has the right to acquire or vote such shares under any agreement, arrangement or understanding, whether or not in writing, nor does it have any agreement, arrangement or understanding, whether or not in writing, for the purpose of acquiring, holding, voting or disposing of such shares or other securities. Pinnacle is not an “interested stockholder” (within the meaning of Nevada Revised Statutes Section 78.423) with respect to Quest and has not, within the last three years, been an “interested stockholder” with respect to Quest.

      Section 5.20 Vote Required. Assuming the accuracy of the representations and warranties set forth in Section 6.19 , the only vote of the holders of any class or series of Pinnacle capital stock necessary to approve any transaction contemplated by this Agreement is the affirmative vote in favor of the adoption of this Agreement by the holders of at least a majority of the outstanding shares of Pinnacle Common Stock (the “Pinnacle Stockholder Approval”).

      Section 5.21 Certain Contracts.

          (a) Except for this Agreement and except as filed as an exhibit to the Pinnacle Reports, neither Pinnacle nor any of its Subsidiaries is a party to or bound by any “material contract” (as such term is defined in item 601(b)(10) of Regulation S-K of the SEC) (all contracts of the type described in this Section 5.21(a) being referred to herein as the “Pinnacle Material Contracts”).

          (b) Each Pinnacle Material Contract is in full force and effect, and Pinnacle and each of its Subsidiaries have in all material respects performed all obligations required to be performed by them to date under each Pinnacle Material Contract to which they are party, except where such failure to be in full force and effect or such failure to perform, individually or in the aggregate, has not had and is not reasonably likely to have a Pinnacle Material Adverse Effect. Except for such matters as, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect, neither Pinnacle nor any of its Subsidiaries (x) knows of, or has received written notice of, any breach of or violation or default under (nor, to the knowledge of Pinnacle, does there exist any condition which with the passage of time or the giving of notice or both would result in such a violation or default under) any Pinnacle Material Contract or (y) has received written notice of the desire of the other party or parties to any such Pinnacle Material Contract to exercise any rights such party has to cancel, terminate or repudiate such contract or exercise remedies thereunder. Each Pinnacle Material Contract is enforceable by Pinnacle or a Subsidiary of Pinnacle in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditors’ rights and general principles of equity, except where such unenforceability does not constitute, individually or in the aggregate, a Pinnacle Material Adverse Effect.

      Section 5.22 Capital Expenditure Program. Section 5.22 of the Pinnacle Disclosure Letter accurately sets forth in all material respects the capital expenditures that are forecast, as of the date of this Agreement, to be incurred by Pinnacle and its Subsidiaries during the balance of 2007 and during 2008 on a quarterly basis.

      Section 5.23 Improper Payments. No bribes, kickbacks or other similar payments have been made in violation of Applicable Laws by Pinnacle or any Subsidiary of Pinnacle or agent of any of them in connection with the conduct of their respective businesses or the operation of their respective assets, and neither Pinnacle or any Subsidiary of Pinnacle nor any agent of any of them has received any such payments from vendors, suppliers or other persons.

      Section 5.24 Takeover Statutes; Rights Plans. Assuming the accuracy of the representations of Quest in Section 6.19 hereof, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not cause to be applicable to the Merger the restrictions on “business combinations” set forth in Section 203 of

the DGCL or any similar provision (a “Takeover Statute”). Pinnacle does not have any preferred share purchase rights plan or similar rights plan in effect.

      Section 5.25 Title, Ownership and Related Matters.

          (a) Pinnacle and its Subsidiaries have, free and clear of all Liens except for Permitted Liens, defensible title to their respective inventory, equipment and other tangible and intangible property, including the natural gas production, gathering and processing equipment owned and/or operated by Pinnacle or its Subsidiaries and related spare parts as may be reduced by the consumption thereof, or increased through the replacement thereof or addition thereto, in the ordinary course of maintenance and operation of their respective businesses, in each case as necessary to permit Pinnacle and its Subsidiaries to conduct their respective businesses as currently conducted in all material respects. As used in this Agreement, the term “Permitted Liens” shall mean Liens for taxes not yet due and payable; statutory Liens of lessors; Liens of carriers, warehousemen, repairmen, mechanics and materialmen arising by operation of law in the ordinary course of business; Liens incurred in the ordinary course of business that secure obligations not yet due and payable; Liens securing indebtedness of Pinnacle and its Subsidiaries or Quest and its Subsidiaries outstanding as of the date of this Agreement or incurred in accordance with Section 7.1 hereof and Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security.

          (b) Each of Pinnacle and its Subsidiaries has complied in all respects with the terms of all leases to which it is a party and under which it is in occupancy, except as, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect, and all leases to which Pinnacle or any of its Subsidiaries is a party or under which it is in occupancy are in full force and effect. Each of Pinnacle and its Subsidiaries enjoys peaceful and undisturbed possession of the properties or assets purported to be leased under its material leases. As used in this Section 5.25(b) , the term “leases” does not include Oil and Gas Properties.

          (c) Neither Pinnacle nor any of its Subsidiaries has received any written notice from any person disputing or challenging its ownership of the fee interests, easements or rights-of-way through which any of its pipeline or gathering systems extend, other than disputes or challenges that have not had or are not reasonably likely to have a Pinnacle Material Adverse Effect.

      Section 5.26 Proxy Statement. None of the information to be supplied by Pinnacle for inclusion in (a) the joint proxy statement relating to Pinnacle Stockholder Approval and Quest Stockholder Approval (in each case, as defined below) (also constituting the prospectus in respect of the Quest Common Stock into which Pinnacle Common Stock will be converted) (the “Proxy Statement/Prospectus”), to be filed by Pinnacle and Quest with the SEC, and any amendments or supplements thereto, or (b) the Registration Statement on Form S-4 (the “Form S-4”) to be filed by Quest with the SEC in connection with the Merger, and any amendments or supplements thereto, will, at the respective times such documents are filed, and, in the case of the Proxy Statement/Prospectus, at the time the Proxy Statement/Prospectus or any amendment or supplement thereto is first mailed to Pinnacle and Quest stockholders, at the time of Pinnacle

Stockholders Approval and the Quest Stockholders Approval and at the Effective Time, and, in the case of the Registration Statement, when it becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any material fact required to be made therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

      Section 5.27 Properties; Oil and Gas Matters.

          (a) All major items of operating equipment owned or leased by Pinnacle or its Subsidiaries in connection with the operation of its Oil and Gas Properties are, in the aggregate, in a state of repair so as to be adequate in all material respects for reasonably prudent operations in the areas in which they are operated, except as have not had and are not reasonably likely to have, individually or in the aggregate, a Pinnacle Material Adverse Effect.

          (b) Except for goods and other property sold, used or otherwise disposed of since the dates of the respective Pinnacle Reserve Reports (defined in clause (c) below) in the ordinary course of business or reflected as having been sold, used or otherwise disposed of in Pinnacle SEC Reports, as of the date of this Agreement, Pinnacle and its Subsidiaries have good and defensible title to, or valid leases or contractual rights to, all equipment and other personal property used or necessary for use in the operation of its Oil and Gas Properties in the manner in which such properties were operated prior to the date hereof. For purposes of this Agreement, “Oil and Gas Properties” means direct and indirect interests in and rights with respect to oil, gas, mineral, and related properties and assets of any kind and nature, direct or indirect, including working, leasehold and mineral interests and operating rights and royalties, overriding royalties, production payments, net profit interests and other non-working interests and non-operating interests; all interests in rights with respect to oil, condensate, gas, casinghead gas and other liquid or gaseous hydrocarbons (collectively, “Hydrocarbons”) and other minerals or revenues therefrom, all contracts in connection therewith and claims and rights thereto (including all oil and gas leases, operating agreements, unitization and pooling agreements and orders, division orders, transfer orders, mineral deeds, royalty deeds, oil and gas sales, exchange and processing contracts and agreements, and in each case, interests thereunder), surface interests, fee interests, reversionary interests, reservations, and concessions; all easements, rights of way, licenses, permits, leases, and other interests associated with, appurtenant to, or necessary for the operation of any of the foregoing; and all interests in equipment and machinery (including wells, well equipment and machinery), oil and gas production, gathering, transmission, treating, processing, and storage facilities (including tanks, tank batteries, pipelines, and gathering systems), pumps, water plants, electric plants, gasoline and gas processing plants, refineries, and other tangible personal property and fixtures associated with, appurtenant to, or necessary for the operation of any of the foregoing.

          (c) Except for property sold or otherwise disposed of since the dates of the respective Pinnacle Reserve Reports in the ordinary course of business or reflected as having been sold or otherwise disposed of in Pinnacle SEC Reports, as of the date of this Agreement, Pinnacle and its Subsidiaries have good and defensible title to all Oil and Gas Properties forming the basis for the reserves reflected in the reserve reports of Netherland, Sewell & Associates, Inc. (“NSAI”) relating to Pinnacle interests referred to therein as of December 31, 2006 and in the internal reserve reports prepared by Pinnacle and furnished to Quest (the “Pinnacle Reserve

Reports”), and in each case as attributable to interests owned by Pinnacle and its Subsidiaries, free and clear of any liens, except: (a) liens reflected in the Reserve Reports or in Pinnacle SEC Documents filed prior to the date of this Agreement, and (b) such imperfections of title, easements, liens, government or tribal approvals or other matters and failures of title as, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect. Except as has not had and is not reasonably likely to have, individually or in the aggregate, a Pinnacle Material Adverse Effect, all material proceeds from the sale of hydrocarbons produced from the Oil and Gas Properties of Pinnacle and its Subsidiaries are being received by them in a timely manner and are not being held in suspense for any reason. To Pinnacle’s knowledge, the gross and net undeveloped acreage of Pinnacle and its Subsidiaries as most recently reported in a Pinnacle SEC Report was correct in all material respects as of the date of such Pinnacle SEC Report, and there have been no changes in such gross and net undeveloped acreage since such date which have had or are reasonably likely to have a Pinnacle Material Adverse Effect.

          (d) The leases and other agreements pursuant to which Pinnacle and its Subsidiaries lease or otherwise acquire or obtain operating rights affecting any real or personal property given value in Pinnacle Reserve Reports are in good standing, valid and effective, and the rentals due by Pinnacle or any of its Subsidiaries to any lessor of any such oil and gas leases have been properly paid, except in each case as, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect. Pinnacle and its Subsidiaries have paid all royalties, overriding royalties and other burdens on production due by Pinnacle and its Subsidiaries with respect to their Oil and Gas Properties, except for any non-payment of which, individually or in the aggregate, has not had and is not reasonably likely to have a Pinnacle Material Adverse Effect.

          (e) For the purposes of this Agreement, “good and defensible title” means title that is free from reasonable doubt to the end that a reasonable person engaged in the business of purchasing and owning, developing, and operating producing oil and gas properties in the geographical areas in which they are located, with knowledge of all of the material facts and their legal bearing, would be willing to accept the same in a transaction involving interests of comparable magnitude to those of Pinnacle or Quest reflected in Pinnacle Reserve Reports or the Quest Reserve Reports, respectively, taken as a whole, which title (i) entitles Pinnacle or Quest, as the case may be (or their respective Subsidiaries), to receive a percentage of the hydrocarbons produced, saved and marketed from the respective oil, gas and mineral lease, unit or well throughout the duration of the productive life of such lease, unit or well, which is not less than the “net revenue interest” shown on the Pinnacle Reserve Report or the Quest Reserve Report, as the case may be, for such lease, unit or well, except for decreases in connection with those operations in which Pinnacle or Quest (or their respective Subsidiaries), as applicable, may be or hereafter become a non-consenting co-owner; (ii) obligates Pinnacle or Quest (or their respective Subsidiaries), as the case may be, to bear a percentage of the costs and expenses associated with the ownership, operation, maintenance and repair of any oil, gas and mineral lease, unit or well which is not greater than the “working interest” shown on the Pinnacle Reserve Report or the Quest Reserve Report, as the case may be, with respect to such lease, unit or well, without increase throughout the life of such lease, unit or well other than (x) increases accompanied by at least a proportionate interest in the net revenue interest, (y) increases reflected in the Pinnacle Reserve Report or the Quest Reserve Report, as applicable, and (z) increases resulting from

contribution requirements with respect to defaulting co-owners under applicable operating agreements that are accompanied by at least a proportionate increase in the net revenue interest.

          (f) All information (excluding assumptions and estimates but including the statement of the percentage of reserves from the oil and gas wells and other interests evaluated therein to which Pinnacle or its Subsidiaries are entitled and the percentage of the costs and expenses related to such wells or interests to be borne by Pinnacle or its Subsidiaries) supplied to NSAI, in each case relating to Pinnacle interests referred to in Pinnacle Reserve Reports as of December 31, 2006, by or on behalf of Pinnacle and its Subsidiaries that was material to such firms’ estimates of proved oil and gas reserves attributable to the Oil and Gas Properties of Pinnacle and its Subsidiaries in connection with the preparation of Pinnacle Reserve Reports was (at the time supplied or as modified or amended prior to the issuance of Pinnacle Reserve Reports) to Pinnacle’s knowledge accurate in all material respects and Pinnacle has no knowledge of any material errors in such information that existed at the time of such issuance.

          (g) Except as has not had and is not reasonably likely to have, individually or in the aggregate, a Pinnacle Material Adverse Effect, all Oil and Gas Properties operated by Pinnacle or its Subsidiaries have been operated in accordance with reasonable, prudent oil and gas field practices and in compliance with the applicable oil and gas leases and applicable law.

          (h) Neither Pinnacle nor any of its Subsidiaries has produced hydrocarbons from its Oil and Gas Properties in excess of regulatory allowables or other applicable limits on production that could result in curtailment of production from any such property, except any such violations which, individually or in the aggregate, have not had and are not reasonably likely to have a Pinnacle Material Adverse Effect.

          (i) Except as set forth in Section 5.27(i) of the Pinnacle Disclosure Letter, none of the material Oil and Gas Properties of Pinnacle or any of its Subsidiaries is subject to any preferential purchase, consent or similar right which would become operative as a result of the transactions contemplated by this Agreement.

          (j) None of the Oil and Gas Properties of Pinnacle or any of its Subsidiaries are subject to any tax partnership agreement or provisions requiring a partnership income tax return to be filed under Subchapter K of Chapter 1 of Subtitle A of the Code.

          (k) Attached as Section 5.27(k) of the Pinnacle Disclosure Letter is a schedule of all remaining costs and expenses for the plugging and abandonment by Pinnacle of wells for which Pinnacle is liable pursuant to any Applicable Law or contract, which schedule is true and correct as of its date.

      Section 5.28 Hedging. Section 5.28 of the Pinnacle Disclosure Letter sets forth for the periods shown all obligations of Pinnacle and each of its Subsidiaries for the delivery of Hydrocarbons attributable to any of the properties of Pinnacle or any of its Subsidiaries in the future on account of prepayment, advance payment, take-or-pay, forward sale or similar obligations without then or thereafter being entitled to receive full value therefor. Except as set forth in Section 5.28 of the Pinnacle Disclosure Letter, as of the date of this Agreement, neither Pinnacle nor any of its Subsidiaries is bound by futures, hedge, swap, collar, put, call, floor, cap,

option or other contracts that are intended to benefit from, relate to or reduce or eliminate the risk of fluctuations in the price of commodities, including Hydrocarbons, or securities.

      Section 5.29 Gas Regulatory Matters. None of Pinnacle or any of its Subsidiaries is a gas utility under Applicable Law.

ARTICLE 6

REPRESENTATIONS AND WARRANTIES
OF QUEST AND MERGERSUB

     Except as set forth in the disclosure letter delivered to Pinnacle by Quest at or prior to the execution of this Agreement (the “Quest Disclosure Letter”) and making reference to the particular subsection of this Agreement to which exception is being taken ( provided that any information set forth in one section or subsection of the Quest Disclosure Letter shall be deemed to apply to each other section or subsection thereof to which its relevance is reasonably apparent), Quest and MergerSub, jointly and severally, represent and warrant to Pinnacle that:

      Section 6.1 Existence; Good Standing; Corporate Authority. Quest is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada. MergerSub is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Each of Quest and MergerSub is duly qualified to do business and, to the extent such concept or a similar concept exists in the relevant jurisdiction, is in good standing under the laws of any jurisdiction in which the character of the properties owned or leased by it therein or in which the transaction of its business requires such qualification, except where the failure to be so qualified or in good standing, individually or in the aggregate, has not had and is not reasonably likely to have a Quest Material Adverse Effect. Each of Quest and MergerSub has all requisite corporate power and authority to own, operate and lease its properties and to carry on its business as now conducted. The copies of the articles or certificate of incorporation and bylaws of Quest and MergerSub previously made available to Pinnacle are true and correct and contain all amendments as of the date of this Agreement.

      Section 6.2 Authorization, Validity and Effect of Agreements. Each of Quest and MergerSub has the requisite corporate power and authority to execute and deliver this Agreement and, upon receipt of the Quest Stockholder Approval, to consummate the transactions contemplated by this Agreement. The execution of this Agreement and the consummation by each of Quest and MergerSub of the transactions contemplated hereby have been duly authorized by all requisite corporate action on behalf of each of them, other than (i) the receipt of Quest Stockholder Approval, and (ii) the adoption of this Agreement by Quest in its capacity as sole stockholder of MergerSub. Each of Quest and MergerSub has duly executed and delivered this Agreement. Assuming this Agreement constitutes a valid and legally binding obligation of Pinnacle, this Agreement constitutes the valid and legally binding obligation of each of Quest and MergerSub, enforceable against Quest and MergerSub in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditors’ rights and general principles of equity. Assuming the accuracy of the representations and warranties set forth in Section 5.19 , MergerSub has taken all action necessary to render the restrictions set forth in Section 203 of the DGCL, and Quest has taken all

action necessary to render the restrictions set forth in Nevada Revised Statutes Section 78.411 et seq., and any other applicable takeover law restricting or purporting to restrict business combinations, inapplicable to this Agreement and the transactions contemplated hereby.

      Section 6.3 Capitalization. The authorized capital stock of Quest consists of 200,000,000 shares of Quest Common Stock and 50,000,000 shares of preferred stock, par value $0.001 per share (“Quest Preferred Stock”), of which 500,000 shares have been designated as Series A Convertible Preferred Stock and 100,000 shares have been designated as Series B Junior Participating Preferred Stock. As of the Cut-off Time, there were (i) 22,432,145 outstanding shares of Quest Common Stock, (ii) 1,284,134 shares of Quest Common Stock reserved for issuance upon exercise of outstanding Quest Options or to be issued upon vesting of outstanding equity awards, and (iii) no outstanding shares of Quest Preferred Stock, including the Series A Convertible Preferred Stock and the Series B Junior Participating Preferred Stock, which Series B Junior Participating Preferred Stock has been reserved for issuance upon the exercise of the preferred stock purchase rights issued under the Quest Rights Agreement. From the Cut-off Time to the date of this Agreement, no additional shares of Quest Common Stock have been issued (other than pursuant to Quest Options which were outstanding as of the Cut-off Time and are included in the number of shares of Quest Common Stock reserved for issuance upon exercise of outstanding Quest Options in clause (ii) above), no additional Quest Options have been issued or granted, and there has been no increase in the number of shares of Quest Common Stock issuable upon exercise of the Quest Options from those issuable under such Quest Options as of the Cut-off Time. All such issued and outstanding shares of Quest Common Stock are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights. As of the date of this Agreement, except as set forth in Section 6.3 of the Quest Disclosure Letter, there are no outstanding shares of capital stock and there are no options, warrants, calls, subscriptions, convertible securities or other rights, agreements or commitments which obligate Quest or any of its Subsidiaries to issue, transfer, sell or register any shares of capital stock or other voting securities of Quest or any of its Subsidiaries. Quest has no outstanding bonds, debentures, notes or other obligations the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the stockholders of Quest on any matter.

      Section 6.4 Subsidiaries.

          (a) Each of Quest’s Subsidiaries is a corporation or other legal entity duly organized, validly existing and, to the extent such concept or a similar concept exists in the relevant jurisdiction, in good standing under the laws of its jurisdiction of incorporation or organization, has the corporate or other entity power and authority to own, operate and lease its properties and to carry on its business as it is now being conducted, and is duly qualified to do business and is in good standing (where applicable) in each jurisdiction in which the ownership, operation or lease of its property or the conduct of its business requires such qualification, except for jurisdictions in which such failure to be so qualified or in good standing, individually or in the aggregate, has not had and is not reasonably likely to have a Quest Material Adverse Effect. As of the date of this Agreement, all of the outstanding shares of capital stock of, or other ownership interests in, each of Quest’s Subsidiaries are duly authorized, validly issued, fully paid and nonassessable (except as nonassessability may be affected by Applicable Law), and are owned, directly or indirectly, by Quest free and clear of all mortgages, deeds of trust, liens,

security interests, pledges, leases, conditional sale contracts, charges, privileges, easements, rights of way, reservations, options, rights of first refusal and other encumbrances (“Liens”) other than Permitted Liens.

          (b) All of the outstanding capital stock of MergerSub is owned directly by Quest. MergerSub has been formed solely for the purpose of engaging in the transactions contemplated hereby and, as of the Effective Time, will not have engaged in any activities other than in connection with the transactions contemplated by this Agreement. Immediately prior to the Effective Time, MergerSub will have 100 outstanding shares of its common stock, par value $0.01 per share, which shares will be validly issued, fully paid, nonassessable and free of preemptive rights.

      Section 6.5 Compliance with Laws; Permits. Except for such matters as, individually or in the aggregate, have not had and are not reasonably likely to have a Quest Material Adverse Effect and except for matters related to taxes and Environmental Laws, which are treated exclusively in Sections 6.10 and 6.13 , respectively:

          (a) Neither Quest nor any Subsidiary of Quest is in violation of any Applicable Laws, and no claim is pending or, to the knowledge of Quest, threatened with respect to any such matters. No condition exists which does or could reasonably be expected to constitute a violation of or deficiency under any Applicable Law by Quest or any Subsidiary of Quest.

          (b) Quest and each Subsidiary of Quest hold all permits, licenses, certifications, variations, exemptions, orders, franchises and approvals of all governmental or regulatory authorities necessary for the lawful conduct of their respective businesses (the “Quest Permits”). All Quest Permits are in full force and effect and there exists no default thereunder or breach thereof, and Quest has no notice or actual knowledge that such Quest Permits will not be renewed in the ordinary course after the Effective Time. No governmental authority has given, or to the knowledge of Quest threatened to give, any action to terminate, cancel or reform any Quest Permit.

          (c) Quest and each Subsidiary of Quest possess all permits, licenses, operating authorities, orders, exemptions, franchises, variances, consents, approvals or other authorizations required for the present ownership and operation of all its real property or leaseholds (“Quest Real Property”). There exists no material default or breach with respect to, and no party or governmental authority has taken or, to the knowledge of Quest, threatened to take, any action to terminate, cancel or reform any such permit, license, operating authority, order, exemption, franchise, variance, consent, approval or other authorization pertaining to the Quest Real Property.

      Section 6.6 No Conflict.

          (a) Except as disclosed in Section 6.6 of the Quest Disclosure Letter, neither the execution and delivery by Quest and MergerSub of this Agreement nor the consummation by any of them of the transactions contemplated by this Agreement in accordance with the terms hereof will (i) conflict with or result in a breach of any provisions of the articles or certificate of

incorporation or bylaws of Quest or MergerSub or the limited partnership agreement or certificate of limited partnership of either Quest Midstream MLP or the MLP; (ii) violate, or conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or in a right of termination or cancellation of, or give rise to a right of purchase under, or accelerate the performance required by, or result in the creation of any Lien upon any of the properties of Quest or its Subsidiaries under, or result in being declared void, voidable, or without further binding effect, or otherwise result in a detriment to Quest or any of its Subsidiaries under, any of the terms, conditions or provisions of, any note, bond, mortgage, indenture, deed of trust, license, concession, franchise, permit, lease, contract, agreement, joint venture or other instrument or obligation to which Quest or any of its Subsidiaries is a party, or by which Quest or any of its Subsidiaries or any of their properties may be bound or affected; or (iii) subject to the filings and other matters referred to in Section 6.6(b) , contravene or conflict with or constitute a violation of any provision of any law, rule, regulation, judgment, order or decree binding upon or applicable to Quest or any of its Subsidiaries, except as, in the case of matters described in clause (ii) or (iii), individually or in the aggregate, that have not had and are not reasonably likely to have a Quest Material Adverse Effect.

          (b) Neither the execution and delivery by Quest or MergerSub of this Agreement nor the consummation by either of them of the transactions contemplated hereby in accordance with the terms hereof will require any consent, approval, qualification or authorization of, or filing or registration with, any court or governmental or regulatory authority, other than (i) the Regulatory Filings, (ii) the filing of a listing application with the NASDAQ Stock Market pursuant to Section 7.9 , and (iii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, except for any consent, approval, qualification or authorization the failure to obtain which, and for any filing or registration the failure to make which, has not had and is not reasonably likely to have a Quest Material Adverse Effect.

          (c) This Agreement, the Merger and the transactions contemplated hereby do not, and will not, upon consummation of such transactions in accordance with their terms, result in any “change of control&