SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS SECOND AMENDMENT TO AMENDED AND RESTATED AGREEMENT (this “Second
Amendment”) is entered into as of November 4, 2008, 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 (as amended, the “Credit
Agreement”). Unless otherwise defined in this Second 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 Second Amendment.

RECITALS

A.      To clarify that the Additional Term Loan Commitment will be reduced to
the extent the Borrower retains Net Cash Proceeds from Dispositions, the
Borrower, Administrative Agent and Lender desire to enter into this Second
Amendment.

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

Paragraph 1.    Amendments. Effective as of the Second 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 definitions are amended in their entirety to read as follows:

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

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

“Second Amendment Effective Date means November 4, 2008.”

“Second Amendment to Credit Agreement means that certain Second Amendment to
Amended and Restated Agreement dated as of November 4, 2008, among the Borrower,
Royal Bank of Canada, as Administrative Agent, Collateral Agent and as the
Lender.”

1.2       Section 2.05. Section 2.05 of the Credit Agreement is amended to add a
new sentence at the beginning thereof to read in its entirety as follows:

“The Additional Term Loan Commitment shall be reduced dollar for dollar for each
dollar retained by the Borrower from Net Cash Proceeds of Dispositions pursuant
to Section 2.04(c)(i).”

 

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Amended and Restated Credit Agreement

 

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Paragraph 2.    Effective Date. This Second Amendment shall not become effective
until the date (such date, the “Second Amendment Effective Date”) the
Administrative Agent receives this Second Amendment, executed by the Borrower,
the Guarantors, the Administrative Agent and the Lender;

Paragraph 3.    Acknowledgment and Ratification. The Borrower and the Guarantors
each (i) consent to the agreements in this Second Amendment and (ii) agree and
acknowledge that the execution, delivery, and performance of this Second
Amendment shall in no way release, diminish, impair, reduce, or otherwise affect
the respective obligations of the Borrower or any Guarantor under the Loan
Documents to which it is a party, which Loan Documents shall remain in full
force and effect, as amended and waived hereby, and all rights thereunder are
hereby ratified and confirmed.

Paragraph 4.    Representations. The Borrower and the Guarantors each represent
and warrant to the Administrative Agent and the Lender that as of the Second
Amendment Effective Date and after giving effect to the waivers and amendments
set forth in this Second Amendment (a) all representations and warranties in the
Loan Documents are true and correct in all material respects as though made on
the date hereof, except to the extent that any of them speak to a different
specific date, and (b) no Default or Event of Default exists.

Paragraph 5.    Expenses. The Borrower shall pay on demand all reasonable costs,
fees, and expenses paid or incurred by the Administrative Agent incident to this
Second Amendment, including, without limitation, Attorney Costs in connection
with the negotiation, preparation, delivery, and execution of this Second
Amendment and any related documents, filing and recording costs, and the costs
of title insurance endorsements, if any.

 

Paragraph 6.

Miscellaneous.

 

(a)        This Second Amendment is a “Loan Document” referred to in the Credit
Agreement. The provisions relating to Loan Documents in Article X of the Credit
Agreement are incorporated in this Second Amendment by reference. Unless stated
otherwise (i) the singular number includes the plural and vice versa and words
of any gender include each other gender, in each case, as appropriate, (ii)
headings and captions may not be construed in interpreting provisions, (iii)
this Second Amendment must be construed, and its performance enforced, under New
York law and applicable federal law, (iv) if any part of this Second Amendment
is for any reason found to be unenforceable, all other portions of it
nevertheless remain enforceable, and (v) this Second Amendment may be executed
in any number of counterparts with the same effect as if all signatories had
signed the same document, and all of those counterparts must be construed
together to constitute the same document.

Paragraph 7.    ENTIRE AGREEMENT. THIS SECOND AMENDMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES ABOUT THE SUBJECT MATTER OF THIS AMENDMENT AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

Paragraph 8.    Parties. This Second Amendment binds and inures to the benefit
of the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent
and the Lender, and their respective successors and assigns.

Paragraph 9.    Further Assurances. The parties hereto each agree to execute
from time to time such further documents as may be necessary to implement the
terms of this Second Amendment.

 

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Paragraph 10.  Release. As additional consideration for the execution, delivery
and performance of this Second Amendment by the parties hereto and to induce the
Administrative Agent, the Collateral Agent and the Lender to enter into this
Second Amendment, the Borrower warrants and represents to the Administrative
Agent, the Collateral Agent and the Lender that no facts, events, statuses or
conditions exist or have existed which, either now or with the passage of time
or giving of notice, or both, constitute or will constitute a basis for any
claim or cause of action against the Administrative Agent, the Collateral Agent
and the Lender or any defense to (i) the payment of Obligations under the Term
Notes and/or the Loan Documents, or (ii) the performance of any of its
obligations with respect to the Term Notes and/or the Loan Documents. In the
event any such facts, events, statuses or conditions exist or have existed,
Borrower unconditionally and irrevocably hereby RELEASES, RELINQUISHES and
forever DISCHARGES Administrative Agent, the Collateral Agent and the Lender, as
well as their predecessors, successors, assigns, agents, officers, directors,
shareholders, employees and representatives, of and from any and all claims,
demands, actions and causes of action of any and every kind or character, past
or present, which Borrower may have against any of them or their predecessors,
successors, assigns, agents, officers, directors, shareholders, employees and
representatives arising out of or with respect to (a) any right or power to
bring any claim for usury or to pursue any cause of action based on any claim of
usury, and (b) any and all transactions relating to the Loan Documents occurring
prior to the date hereof, including any loss, cost or damage, of any kind or
character, arising out of or in any way connected with or in any way resulting
from the acts, actions or omissions of any of them, and their predecessors,
successors, assigns, agents, officers, directors, shareholders, employees and
representatives, including any breach of fiduciary duty, breach of any duty of
fair dealing, breach of confidence, breach of funding commitment, undue
influence, duress, economic coercion, conflict of interest, negligence, bad
faith, malpractice, intentional or negligent infliction of mental distress,
tortious interference with contractual relations, tortious interference with
corporate governance or prospective business advantage, breach of contract,
deceptive trade practices, libel, slander or conspiracy, but in each case only
to the extent permitted by applicable Law.

The parties hereto have executed this Second Amendment in multiple counterparts
to be effective as of the Second Amendment Effective Date.

Remainder of Page Intentionally Blank

Signature Pages to Follow.

 

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            IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed as of the Second Amendment Effective Date.

 

 

BORROWERS:

 

 

 

QUEST RESOURCE CORPORATION,

 

as Borrower

 

 

 

By:

/s/ David Lawler 

 

 

David Lawler,

 

 

President

 

The undersigned, as the Guarantors referred to in the Credit Agreement, as
amended and restated by this Second Amendment, hereby consent to this Second
Amendment and hereby confirm and agree that (i) the Loan Documents (which
specifically includes the Guaranty executed by each Guarantor and each Security
Agreement and Mortgage executed by each Guarantor) in effect on the date hereof
to which each are a party are, and shall continue to be, in full force and
effect and are hereby confirmed and ratified in all respects except that, upon
the effectiveness of, and on and after the Second Amendment Effective Date, all
references in such Loan Documents to the Credit Agreement shall mean the Credit
Agreement as amended by this Second Amendment, and (ii) such Loan Documents
consisting of Guaranties, Security Agreements, Mortgages, and assignments and
all of the collateral described therein do, and shall continue to, secure the
payment by the Borrower of the Obligations under the Credit Agreement.

 

 

GUARANTORS:

 

 

 

QUEST OIL & GAS, LLC,

 

as a Guarantor

 

 

 

By:

/s/ David Lawler 

 

 

David Lawler,

 

 

President

 

 

 

QUEST ENERGY SERVICE, LLC,

 

as a Guarantor

 

 

 

By:

/s/ David Lawler 

 

 

David Lawler,

 

 

President

 

 

Signature Page 1

Second Amendment to Quest

Resource Corporation

Amended and Restated Credit Agreement

 

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QUEST EASTERN RESOURCE, LLC,

 

as a Guarantor

 

 

 

By:

/s/ David Lawler 

 

 

David Lawler,

 

 

President

 

 

 

QUEST MERGERSUB, INC.

 

as a Guarantor

 

 

 

By:

/s/ David Lawler 

 

 

David Lawler,

 

 

President

 

 

 

Signature Page 2

Second Amendment to Quest

Resource Corporation

Amended and Restated Credit Agreement

 

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ADMINISTRATIVE AGENT:

 

 

 

ROYAL BANK OF CANADA,

 

as Administrative Agent and Collateral Agent

 

 

 

By:

/s/ Susan Khokher 

 

Name:

Susan Khokher 

 

Title:

Manager, Agency 

 

 

 

Signature Page 3

Second Amendment to Quest

Resource Corporation

Amended and Restated Credit Agreement

 

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L/C ISSUER AND LENDER:

 

 

 

ROYAL BANK OF CANADA, as a Lender

 

and L/C Issuer

 

 

 

By:

/s/ Jason York 

 

 

Jason York

 

 

Authorized Signatory

 

 

 

 

Signature Page 4

Second Amendment to Quest

Resource Corporation

Amended and Restated Credit Agreement