Execution Copy
AMENDED AND RESTATED GUARANTY
THIS
AMENDED AND RESTATED
GUARANTY (as the same may be amended, restated,
supplemented or otherwise modified from time to time, this
"Guaranty") is
made
as of December 22, 2006, by each of J-W GAS GATHERING, L.L.C., a Kansas limited
liability company,
PONDEROSA GAS PIPELINE COMPANY, LLC, a Kansas limited
liability company,
PRODUCERS SERVICE,
LLC, a Kansas limited liability company,
QUEST CHEROKEE
OILFIELD SERVICE,
LLC, a Delaware
limited liability
company,
QUEST ENERGY SERVICE, LLC, a Kansas limited liability company,
QUEST OIL &
GAS,
LLC, a Kansas limited
liability company, and STP CHEROKEE, LLC, an Oklahoma
limited liability
company (each, an "Initial Guarantor," and together with
any
additional
Subsidiaries which
become parties to this
Guaranty by executing
a
Supplement hereto in the form attached hereto as Annex I, the
"Guarantors"), in
favor of Guggenheim
Corporate Funding, LLC, as Administrative Agent (the
"Administrative
Agent") for the
benefit of the Secured
Parties (as defined in
the Security
Agreement).
Each capitalized term used herein and not defined
herein shall have the
meaning ascribed thereto in the Second Lien Term Loan
Agreement described below.
WITNESSETH:
WHEREAS, Quest Cherokee, LLC and Quest Resource Corporation
(collectively,
the "Borrowers") have entered into that certain Amended and
Restated Second Lien
Term Loan Agreement
dated as of June 9,
2006 by and among the
Borrowers, the
Administrative Agent, and certain financial institutions from time
to time party
thereto (the "Lenders") (as the same may be amended, restated, supplemented or
otherwise modified
from time to time, the
"Second Lien Term Loan
Agreement"),
which amended and restated the original Second Lien Term Loan
Agreement dated as
of November 14, 2005 (the "Original Second Lien Term Loan
Agreement").
WHEREAS, the Second Lien Term Loan Agreement provides, subject to
the terms
and conditions
thereof,
for extensions of credit and other financial
accommodations by the Lenders to the Borrowers;
WHEREAS, certain
Guarantors have
previously
entered into directly
or by
joinder that
certain Guaranty dated as of November 14, 2005 in favor of the
Administrative Agent
(the "Original Guaranty") pursuant to which certain
Guarantors guaranteed
all of the
Borrowers'
obligations
arising under the
Original Second Lien Term Loan Agreement as amended by the Second
Lien Term Loan
Agreement;
WHEREAS, it is a
condition precedent to
the extensions
of credit by the
Lenders under the Second Lien Term Loan Agreement that each of the Guarantors
execute and deliver
this Guaranty,
whereby each of the Guarantors, without
limitation and with full recourse, shall guarantee the payment when due of
all
Indebtedness,
including, without limitation, all principal, interest, letter
of
credit reimbursement
obligations
and other amounts that shall be at any
time
payable by each Borrower under the Second Lien Term Loan
Agreement or the other
Loan Documents; and
<PAGE>
WHEREAS, in
consideration of the
direct and indirect
financial and other
support that the Borrowers have provided, and such direct and
indirect financial
and other support as the Borrowers may in the future provide, to
the Guarantors,
and in order to induce the Lenders and the Administrative Agent to enter into
the Second
Lien Term Loan
Agreement,
each of the
Guarantors
is willing to
guarantee the
Indebtedness
under the Second Lien
Term Loan Agreement
and the
other Loan Documents;
NOW,
THEREFORE,
in consideration of
the foregoing premises and other good
and valuable
consideration,
the receipt and
sufficiency
of which are
hereby
acknowledged, the
parties hereto
agree that the
Original Guaranty is hereby
amended and restated in its entirety as follows:
Section 1.
Representations,
Warranties and Covenants. In order to induce
the Administrative Agent and the Lenders to enter into the Second
Lien Term Loan
Agreement and to make the Loans and the other financial accommodations to the
Borrowers, each of the Guarantors represents and warrants to each
Lender and the
Administrative Agent
as of the date of this
Agreement, giving
effect to the
consummation of the
transactions
contemplated
by the Loan
Documents on the
Effective Date,
and thereafter on each
date as required by Section 6.02 of the
Second Lien Term Loan Agreement that:
(a)
It (i) is a corporation, partnership or limited liability
company duly
incorporated or
organized,
as the case may be,
validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
(ii) is duly
qualified to do business as a foreign entity and is in good
standing under the laws of each jurisdiction where the business by
it makes such
qualification
necessary,
except where
the failure to qualify could not
reasonably be expected
to have a Material
Adverse Effect, and (iii) has all
requisite corporate,
partnership
or limited liability company power and
authority, as the case
may be, to own, operate and encumber its property and to
conduct its business in each jurisdiction in which its business is
conducted.
(b)
It has the requisite corporate, limited liability company or
partnership, as
applicable, power and
authority and legal right to execute and
deliver this Guaranty and to perform its obligations hereunder. The execution
and delivery
by it of this Guaranty and the performance by each of its
obligations hereunder have been duly authorized by proper
proceedings, and
this
Guaranty constitutes a
legal, valid and
binding obligation of
each Guarantor,
enforceable against
such Guarantor,
in accordance
with its terms,
except as
enforceability may
be limited by (i) bankruptcy, insolvency, fraudulent
conveyances,
reorganization or
similar laws relating to or affecting the
enforcement of creditors' rights generally, (ii) general equitable
principles
(whether considered in a proceeding in equity or at law), and (iii)
requirements
of reasonableness, good faith and fair dealing.
(c)
Neither the execution
and delivery by it of this
Guaranty, nor the
consummation by it of the transactions herein contemplated, nor
compliance by it
with the terms and
provisions hereof,
will (i) conflict with the charter or
other organizational documents of such Guarantor, (ii) conflict with, result in
a breach of or
constitute (with or
without notice or
lapse of time or both) a
default under any law, rule, regulation, order, writ, judgment, injunction,
decree or award
(including, without
limitation,
any environmental property
transfer laws or regulations) applicable to such Guarantor or
any provisions of
any indenture,
instrument or
agreement to which such Guarantor is party or is
subject or which it or its property is bound or affected, or
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<PAGE>
require termination of any such indenture, instrument or agreement,
except where
such conflict,
breach or default
could not reasonably be expected to have a
Material Adverse
Effect, (iii) result
in or require the creation or imposition
of any Lien whatsoever
upon any of the
property or assets of
such Guarantor,
other than Liens permitted or created by the Loan Documents, or
(iv) require any
approval of such
Guarantor's board of
directors or shareholders or unitholders
except such as have been obtained. Except as set forth in Section
7.03 of the
Second Lien Term Loan Agreement the execution, delivery and performance by the
Guarantors of each of the Loan Documents to which such
Guarantor is a party
do
not and will not
require any
registration with,
consent or
approval of, or
notice to, or other action to, with or by any governmental
authority,
including
under any environmental property transfer laws or
regulations, except
filings,
consents or notices which have been made.
(d)
It has no Debt other
than Debt permitted
under Section 9.02 of the
Second Lien Term Loan Agreement.
In
addition to the
foregoing, each of the
Guarantors covenants
that, so
long as any Lender has any Commitment outstanding under the Second Lien Term
Loan Agreement or any
amount payable under
the Second Lien Term Loan Agreement
or any other Indebtedness shall remain unpaid, it will, and, if
necessary, will
enable the Borrowers to, fully comply with those covenants and
agreements of the
Borrowers applicable
to such Guarantor set
forth in such Second Lien Term Loan
Agreement.
Section 2. The
Guaranty. Each of the
Guarantors
hereby unconditionally
guarantees, jointly
and severally with the other Guarantors, the full and
punctual payment and
performance
when due (whether at
stated maturity,
upon
acceleration or otherwise) of the Indebtedness, including, without limitation,
(i) the principal of and interest on each Loan made to each
Borrower pursuant to
the Second Lien Term
Loan Agreement,
(ii) all other
amounts payable by each
Borrower under the Second Lien Term Loan Agreement and the other
Loan Documents,
including, without
limitation, all obligations under Swap Agreements, and (iii)
the punctual and faithful performance, keeping, observance, and fulfillment by
each Borrower of all of the agreements, conditions, covenants, and obligations
of such Borrower
contained in the Loan
Documents (all of the
foregoing being
referred to collectively as the "Guaranteed Indebtedness"). Upon
(x) the failure
by any Borrower, or any of its Affiliates, as applicable, to pay punctually
any
such amount or perform such obligation, and (y) such failure continuing beyond
any applicable grace
or notice and cure period, each of the Guarantors
agrees
that it shall
forthwith on demand pay such amount or perform such obligation
at
the place and in the manner specified in the Second Lien Term
Loan Agreement or
the relevant Loan Document, as the case may be. Each of the
Guarantors
hereby
agrees that this Guaranty is an absolute, irrevocable and
unconditional guaranty
of payment
and is not a guaranty of collection. This Guaranty shall be
subordinated in right
of payment to the Guaranty granted by the Guarantors to
the Administrative Agent pursuant to the Senior Credit Facility and
any right to
payment under this
Guaranty shall at all times be subject to
the terms of the
Intercreditor Agreement.
Section 3. Guaranty Unconditional. Except as otherwise provided in
Section
2 of this Agreement,
the obligations of each of the Guarantors hereunder shall
be unconditional
and absolute
and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected
by:
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<PAGE>
(i) any extension, renewal, settlement, indulgence, compromise,
waiver
or
release of or with respect to the Guaranteed Indebtedness or any part
thereof or
any agreement relating thereto, or with respect to any
obligation of any other guarantor of any of the
Guaranteed
Indebtedness,
whether (in any such case) by operation of law or otherwise, or any
failure
or
omission to enforce any right, power or remedy with respect to the
Guaranteed
Indebtedness or any
part thereof
or any agreement relating
thereto, or with respect to any obligation of any other guarantor
of any of
the
Guaranteed Indebtedness;
(ii) any modification or amendment of or supplement to the Second
Lien
Term
Loan Agreement, any Swap Agreement or any other Loan Document,
including, without
limitation,
any such amendment
which may increase the
amount of, or the
interest rates
applicable
to, any of the Guaranteed
Indebtedness guaranteed hereby;
(iii) any release, surrender, compromise, settlement, waiver,
subordination or
modification,
with or without consideration, of any
collateral securing
the Guaranteed
Indebtedness or any part thereof, any
other guaranties
with respect to the
Guaranteed
Indebtedness or any part
thereof, or any other
obligation
of any person or
entity with respect to
the
Guaranteed
Indebtedness or any part thereof, or any nonperfection or
invalidity of
any direct or indirect security for the Guaranteed
Indebtedness;
(iv) any
change in the
corporate,
partnership
or other existence,
structure or ownership of any Borrower or any other guarantor of
any of the
Guaranteed Indebtedness, or any insolvency, bankruptcy, reorganization or
other similar
proceeding affecting
any Borrower or any other guarantor of
the
Guaranteed
Indebtedness,
or any of their
respective
assets or any
resulting release or
discharge of any
obligation
of any Borrower or
any
other guarantor of any of the Guaranteed Indebtedness;
(v) the existence
of any claim, setoff or other rights which the
Guarantors may have at any time against any Borrower, any other guarantor
of
any of the
Guaranteed
Indebtedness,
the Administrative Agent, any
Secured Party or any
other Person, whether
in connection
herewith or in
connection with any
unrelated
transactions, provided
that nothing herein
shall prevent
the assertion of any such claim by separate suit or
compulsory counterclaim;
(vi) the enforceability or validity of the Guaranteed Indebtedness or
any
part thereof or the
genuineness,
enforceability
or validity of any
agreement relating
thereto or with respect to any collateral securing the
Guaranteed
Indebtedness or any
part thereof, or any
other invalidity
or
unenforceability relating to or against any Borrower or any other
guarantor
of
any of the Guaranteed Indebtedness, for any reason related to the
Second
Lien
Term Loan Agreement, any Swap Agreement or any other Loan Document,
or
any
provision of
applicable law or
regulation purporting
to prohibit the
payment by
any Borrower or any other guarantor of the Guaranteed
Indebtedness, of any
of the Guaranteed Indebtedness;
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<PAGE>
(vii) the failure
of the Administrative Agent to take any steps to
perfect and maintain
any security
interest in, or to
preserve any rights
to,
any security or collateral for the Guaranteed Indebtedness, if
any;
(viii) the
election by, or on behalf of, any one or more of the
Holders of Secured Indebtedness, in any proceeding instituted under
Chapter
11 of Title 11 of the
United States Code (11 U.S.C. 101 et seq.) (the
"Bankruptcy Code"),
of the application of Section 1111(b)(2) of the
Bankruptcy Code;
(ix) any borrowing or grant of a security interest by any Borrower,
as
debtor-in-possession, under Section 364 of the Bankruptcy Code;
(x) the disallowance, under Section 502 of the Bankruptcy Code, of
all
or
any portion of the claims of the Secured Parties or the Administrative
Agent for repayment of all or any part of the Guaranteed
Indebtedness;
(xi) the failure of
any other guarantor
to sign or become
party to
this
Guaranty or any amendment, change, or reaffirmation hereof; or
(xii) any other
act or omission to act or delay of any kind by
any
Borrower, any
other guarantor of the Guaranteed Indebtedness, the
Administrative Agent,
any Secured
Party or any other
Person or any other
circumstance whatsoever which might, but for the provisions of this
Section
3,
constitute a legal or equitable discharge of any Guarantor's
obligations
hereunder.
Section 4. Discharge
Only Upon Payment In Full; Reinstatement In Certain
Circumstances. Each of
the Guarantors'
obligations
hereunder shall remain
in
full force and effect until all Guaranteed Indebtedness (other than contingent
indemnity obligations and Indebtedness in respect of Swap
Agreements) s
