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FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

Loan Agreement

FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT | Document Parties: QUEST RESOURCE CORP | LGS Development, LP | LGS Renewables I, LLC | QUEST EASTERN RESOURCE, LLC | Quest Energy Partners, LP | QUEST ENERGY SERVICE, LLC | Quest Entities, Rockport Energy, Rockport Georgetown Partners, LLC, Rockport Georgetown, LLC, Rockport Georgetown Holdings, LP | QUEST MERGERSUB, INC | Quest Midstream Partners, LP | QUEST OIL & GAS, LLC | QUEST RESOURCE CORPORATION | Rockport Energy, LLC | ROYAL BANK OF CANADA | STP Newco, Inc You are currently viewing:
This Loan Agreement involves

QUEST RESOURCE CORP | LGS Development, LP | LGS Renewables I, LLC | QUEST EASTERN RESOURCE, LLC | Quest Energy Partners, LP | QUEST ENERGY SERVICE, LLC | Quest Entities, Rockport Energy, Rockport Georgetown Partners, LLC, Rockport Georgetown, LLC, Rockport Georgetown Holdings, LP | QUEST MERGERSUB, INC | Quest Midstream Partners, LP | QUEST OIL & GAS, LLC | QUEST RESOURCE CORPORATION | Rockport Energy, LLC | ROYAL BANK OF CANADA | STP Newco, Inc

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Title: FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
Date: 6/3/2009
Industry: Oil and Gas Operations     Sector: Energy

FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT, Parties: quest resource corp , lgs development  lp , lgs renewables i  llc , quest eastern resource  llc , quest energy partners  lp , quest energy service  llc , quest entities  rockport energy  rockport georgetown partners  llc  rockport georgetown  llc  rockport georgetown holdings  lp , quest mergersub  inc , quest midstream partners  lp , quest oil & gas  llc , quest resource corporation , rockport energy  llc , royal bank of canada , stp newco  inc
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EXECUTION

 

FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS FOURTH AMENDMENT TO AMENDED AND RESTATED AGREEMENT (this “ Fourth Amendment ”) is entered into as of May 29, 2009, among QUEST RESOURCE CORPORATION, a Nevada corporation (the “ Borrower ”), the Guarantors listed on the signature pages hereto, ROYAL BANK OF CANADA, as Administrative Agent and Collateral Agent for the Lenders parties to the hereinafter defined Credit Agreement (in such capacities, the “ Administrative Agent ” and “ Collateral Agent ,” respectively), and as the Lender.

Reference is made to the Amended and Restated Credit Agreement dated as of July 11, 2008 among Borrower, the Administrative Agent, the Collateral Agent and the Lender, as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of October 24, 2008, Second Amendment to Amended and Restated Credit Agreement dated as of November 4, 2008 and Third Amendment to Amended and Restated Credit Agreement dated as of January 30, 2009 (as amended, the “ Credit Agreement ”). Unless otherwise defined in this Fourth Amendment, capitalized terms used herein shall have the meaning set forth in the Credit Agreement; all section, exhibit and schedule references herein are to sections, exhibits and schedules in the Credit Agreement; and all paragraph references herein are to paragraphs in this Fourth Amendment.

RECITALS

A.    Pursuant to that certain Settlement Agreement dated effective as of March 1, 2009 among Jerry D. Cash (" Cash "), the Borrower, Quest Energy Partners, L.P. and Quest Midstream Partners, L.P. (collectively, the " Quest Entities "), in connection with Cause No. 2008-52399 in the District Court of Harris County, Texas (the " Cash Settlement Agreement "), Cash agreed to transfer or cause to be transferred to Borrower, or its designee, among other assets, (a) Cash's 100% equity interest in STP Newco, Inc., an Oklahoma corporation (" STP "), which owns interests in the North Holtuke Unit located in Seminole and Pottawattamie Counties, Oklahoma and in the South Pond Creek Unit located in Grant County, Oklahoma, (b) Cash's 60% interest, held through Rockport Energy, LLC, a Texas limited liability company (" Rockport Energy "), in the Bird Island Well located in Cameron Parish, Louisiana and in LGS (hereinafter defined) and (c) the net proceeds on the sale of Cash's residence.

B.        Pursuant to that certain Full and Final Settlement Agreement and Mutual Release dated effective as of May 19, 2009 among the Quest Entities, Rockport Energy, Rockport Georgetown Partners, LLC, Rockport Georgetown, LLC, Rockport Georgetown Holdings, LP, Cash, Bryan T. Simmons (" Simmons ") and Steven Hochstein (" Hochstein "), in connection with Cause No. 2008-52399 in the District Court of Harris County, Texas (the " Rockport Settlement Agreement " and together with the Cash Settlement Agreement, the " Settlement Agreements "), Cash, Simmons and Hochstein have agreed to transfer or cause to be transferred to Borrower, or its designee, among other assets, (a) 60% of Rockport Energy's limited partnership interest in LGS Development, L.P., a Texas limited partnership (" LGS "), which owns a 50% membership interests in LGS Renewables I, LLC, a Texas limited liability company, (b) 60% of Rockport Energy's interest in the Bird Island Well located in Cameron Parish, Louisiana, and (c) $188,650 in cash to be paid by Rockport Energy, LLC. As part of the Rockport Energy Settlement Agreement the Quest Entities would relinquish the interest in Rockport Energy received from Cash pursuant to the Cash Settlement Agreement.

 

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217569 000143 HOUSTON 636501.3

Fourth Amendment to Quest

Resource Corporation

Amended and Restated Credit Agreement

 

 


B.         The Borrower has designated Quest Cherokee, LLC (" Cherokee ") as its designee to receive from Cash 100% of the equity interest in STP in satisfaction of certain reimbursement obligations owed by Borrower to Cherokee's parent, Quest Energy Partners, L.P. (" QELP ").

C.         Upon the transfer of 60% of Rockport Energy's interest in LGS to Quest Oil & Gas, LLC, a Kansas limited liability company (" Quest O&G "), Borrower's designee, pursuant to the Rockport Settlement Agreement, the Borrower will have made an Investment in LGS.

D.         The Borrower, Administrative Agent and Lender desire to, among other things, enter into this Fourth Amendment to amend the Credit Agreement to permit the Borrower's Investment in LGS, to permit the transfer of STP to Cherokee and to waive certain existing defaults under the Credit Agreement.

Accordingly, for adequate and sufficient consideration, the parties hereto agree, as follows:

Paragraph 1.     Amendments . Effective as of the Fourth Amendment Effective Date (hereinafter defined), the Credit Agreement is amended as follows:

 

1.1

Definitions . Section 1.01 of the Credit Agreement is amended as follows:

 

 

(a)

The following definition is amended in its entirety to read as follows:

Agreement means this Amended and Restated Credit Agreement as amended by the First Amendment to Credit Agreement, the Second Amendment to Credit Agreement, the Third Amendment to Credit Agreement and the Fourth Amendment to Credit Agreement.”

“Loan Documents means this Agreement, each Term Note, the PIK Note, each of the Collateral Documents, the Agent/Arranger Fee Letter, each Borrowing Notice, each Letter of Credit Application, the L/C Terms and Conditions, each Compliance Certificate, the Guaranties, and each other agreement, document or instrument delivered by any Loan Party from time to time in connection with this Agreement and the Term Notes.”

“Maturity Date means (a) with respect to the Original Term Loan and the PIK Note, the Original Term Loan Maturity Date and (b) with respect to the Additional Term Loan, the Additional Term Loan Maturity Date.”

(b)      The following definitions are inserted alphabetically into Section 1.01 of the Credit Agreement:

Fourth Amendment Effective Date means May 29, 2009.”

Fourth Amendment to Credit Agreement means that certain Fourth Amendment to Amended and Restated Credit Agreement dated as of May 29, 2009, among the Borrower, Royal Bank of Canada, as Administrative Agent, Collateral Agent and as the Lender.”

“PIK Note means a promissory note of the Borrower dated the Fourth Amendment Effective Date, in the original principal amount of $282,500.00 and substantially in the form of Exhibit B-3 , attached to the Fourth Amendment evidencing

 

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217569 000143 HOUSTON 636501.3

Fourth Amendment to Quest

Resource Corporation

Amended and Restated Credit Agreement

 

 


the obligation of Borrower to repay the one percent (1%) amendment fee earned in full as of the Fourth Amendment Effective Date and all renewals and extensions of all or any part thereof.”

 

“Quest O&G means Quest Oil & Gas, LLC, a Kansas limited liability company.”

“Settlement Agreements collectively, means (i) that certain Settlement Agreement dated effective as of March 1, 2009 among Borrower, QELP, QMLP and Jerry D. Cash and (ii) Full and Final Settlement Agreement and Mutual Release dated effective as of May 19, 2009 among Borrower, QELP, QMLP, Rockport Energy, LLC, Rockport Georgetown Partners, LLC, Rockport Georgetown, LLC, Rockport Georgetown Holdings, LP, Jerry D. Cash, Bryan T. Simmons and Steven L. Hochstein.”

STP ” means STP Newco, Inc., an Oklahoma corporation.

1.2         Section 2.04(b). Section 2.04(b) of the Credit Agreement is amended in its entirety to read as follows:

"(b)       Mandatory Prepayments-Collateral Deficiency . Except for any Collateral Deficiency occurring during the fiscal quarters ended December 31, 2008, March 31, 2009 and June 30, 2009, if for any reason a Collateral Deficiency exists, Borrower shall notify Administrative Agent in writing of such Collateral Deficiency within five (5) Business Days after becoming aware of such Collateral Deficiency and indicate in such written notice Borrower’s plan to cure such Collateral Deficiency. The Collateral Deficiency must be cured on or before the thirtieth (30) day after Borrower becomes aware of such Collateral Deficiency. To cure such Collateral Deficiency, Borrower may elect to do one or more of the following:

(i)         repay Original Term Loan Principal Debt in an aggregate amount sufficient to eliminate such Collateral Deficiency within such thirty (30) day cure period, and

(ii)        pledge additional MLP Units or Oil & Gas Properties owned by the Borrower or another Loan Party having sufficient Pledged Collateral Market Value, as of the date of such pledge, to eliminate such Collateral Deficiency."

1.3         Section 2.08(a). Section2.08(a) of the Credit Agreement is amended to read in its entirety as follows:

“(a)      Fourth Amendment Amendment Fee . On the Fourth Amendment Effective Date, the Lenders shall have earned in full a one percent (1%) amendment fee, which is non-refundable. Instead of paying such fee on such date, the Lenders will allow the fee to be evidenced by the PIK Note. Interest shall accrue on the PIK Note at the Adjusted Base Rate and will be payable at the Maturity Date. The PIK Note may be prepaid at any time without premium or penalty and the Indebtedness evidenced thereby shall be deemed a Base Rate Loan for purposes of this Agreement and constitute an Obligation and be entitled to the benefits of the Collateral Documents.”

 

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217569 000143 HOUSTON 636501.3

Fourth Amendment to Quest

Resource Corporation

Amended and Restated Credit Agreement

 

 


1.4         Section 5.13 . Section 5.13 of the Credit Agreement is amended to read in its entirety as follows:

“5.13     Subsidiaries and other Investments . Set forth on Schedule 5.13 , are the Subsidiaries of the Borrower and each equity Investment in any other Person as of the Fourth Amendment Effective Date.”

1.5         Section 6.01(a) . Section 6.01(a) of the Credit Agreement is amended by adding the following at the end thereof:

provided further that the Borrower shall deliver or cause to be delivered to the Administrative Agent and Lenders the foregoing audited stand alone balance sheets of the Borrower and the related statements of income and cash flows for its fiscal year ending December 31, 2008 and shall file or cause to be filed with the Securities Exchange Commission its annual report on Form 10-K or Form 10-KSB for its fiscal year ending December 31, 2008 by no later than June 30, 2009; provided further , that as soon as available, but in any event by March 31, 2009, the Borrower shall deliver to the Administrative Agent, in form and detail reasonably satisfactory to the Administrative Agent and all the Lenders, unaudited preliminary internally generated stand alone balance sheets of the Borrower for the fiscal year ending December 31, 2008, and the related statements of income and cash flows for such fiscal year, which preliminary internally generated financial statements will be subject to revisions arising out of the audit process as provided above in this Section 6.01(a) ;”

1.6         Section 6.01(b). Section 6.01(b) of the Credit Agreement is amended by replacing "ten (10) days" in the last proviso with "thirty (30) days" and adding the following at the end thereof:

"; provided further that with respect to the fiscal quarter ending March 31, 2009, Borrower shall not be required to deliver an unaudited stand alone balance sheet of the end of such fiscal quarter, and the related statements of income and cash flows for such fiscal quarter until June 30, 2009".

1.7         Section 6.01(e) . The word “and” at the end of Section 6.01(c) is deleted, the period at the end of Section 6.01(d) is replaced by “; and” and a new Section 6.01(e) of the Credit Agreement shall be added as follows:

“(e) on a weekly basis after the Fourth Amendment Effective Date, cash flow forecasts for the following 13 week period.”

1.8         Section 6.02(a). Section 6.02(a) of the Credit Agreement is amended by replacing "ten (10) days" in the last proviso with "thirty (30) days".

1.9         Section 7.01 . The word “and” at the end of Section 7.01(x) is deleted, the period at the end of Section 7.01(y) is replaced by “; and” and new Section 7.01(z) of the Credit Agreement shall be added as follows:

“(z)      the Lien on the limited partnership interest in LGS Development, L.P. owned by Quest O&G arising as a result of the right of first refusal on such limited partnership interest contained in Article X of the Agreement of Limited Partnership for LGS Development, L.P.”

 

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217569 000143 HOUSTON 636501.3

Fourth Amendment to Quest

Resource Corporation

Amended and Restated Credit Agreement

 

 


1.10       Section 7.02 . The period at the end of Section 7.02(j) is replaced by “; and” and new Section 7.02(k) of the Credit Agreement shall be added as follows:

“(k)      Investments consisting of the acquisition by Quest O&G of a 26.799006% limited partnershi


 
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