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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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:
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1.1
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Definitions
. Section 1.01
of the Credit Agreement is amended
as follows:
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(a)
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The following definition is amended
in its entirety to read as follows:
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“ 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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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.”
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“Quest
O&G means Quest
Oil & Gas, LLC, a Kansas limited liability
company.”
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“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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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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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