Exhibit 10.1
SUPPORT AGREEMENT
     THIS SUPPORT AGREEMENT (this “Agreement”), dated as of October 15, 2007, is
by and between Quest Resource Corporation, a Nevada corporation (“Quest”), and
the stockholders of Pinnacle Gas Resources, Inc., a Delaware corporation
(“Pinnacle” or the “Company”), set forth on Schedule I hereto (each a
“Stockholder” and collectively the “Stockholders”).
     WHEREAS, Quest and Pinnacle have entered into an Agreement and Plan of
Merger, dated as of October 15, 2007, by and among Pinnacle, Quest, and a
wholly-owned subsidiary of Quest (the “Merger Agreement”); and
     WHEREAS, each Stockholder is the beneficial owner, for itself or the
benefit of certain funds and/or accounts managed by it, of that number of shares
of common stock, par value $0.01 per share, of the Company (the “Shares”) set
forth below the Stockholder’s name on the signature page hereto (the Shares
owned by such Stockholder, together with any additional Shares of the Company
acquired after the date hereof, being collectively referred to herein as the
Stockholder’s “Subject Shares”); and
     WHEREAS, as a condition to the willingness of Quest to enter into the
Merger Agreement, and as an inducement to it to do so, the Stockholders have
agreed for the benefit of Quest as set forth in this Agreement;
     NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained in this Agreement, the parties hereto hereby severally, and
not jointly, agree as follows:
ARTICLE I
VOTING AGREEMENT AND PROXY
     Section 1.1 Agreement to VoteAt any meeting of the holders of the Company’s
Shares held prior to the termination of Article I of this Agreement pursuant to
Section 2.11 hereof (the “Article I Termination Date”), however called, and at
every adjournment or postponement thereof prior to the Article I Termination
Date, each Stockholder shall vote or cause to be voted the Subject Shares (a) in
favor of (i) the adoption of the Merger Agreement by the Company, (ii) the
merger (the “Merger”) and other transactions contemplated by the Merger
Agreement, and (iii) any actions required in furtherance of the Merger and the
other transactions contemplated by the Merger Agreement, and (b) against (i) any
Pinnacle Takeover Proposal (as defined in the Merger Agreement) in the absence
of a Pinnacle Adverse Recommendation Change (as defined in the Merger
Agreement), (ii) any proposal for action or agreement that is reasonably likely
to result in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or that is
reasonably likely to result in any of the conditions to the obligations of the
Company under the Merger Agreement not being fulfilled, or (iii) any other
action which could reasonably be expected to impede, interfere with, delay,
postpone or materially affect the transactions contemplated by the Merger
Agreement or the likelihood of such transactions being consummated (clauses
(a) and (b) together, the “Proxy Matters”).

 

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     Section 1.2 Proxies and Voting AgreementsEach Stockholder hereby revokes
any and all previous proxies granted with respect to the Subject Shares with
respect to the Proxy Matters. Prior to the Article I Termination Date, each
Stockholder agrees not to, directly or indirectly, with respect to the Subject
Shares (a) grant any proxies or powers of attorney (other than pursuant to the
Merger proxy statement), (b) deposit any of such Shares into any voting trust or
(c) enter into any other voting agreement or understanding, in each case
relating to the Proxy Matters.
     Section 1.3 Transfer of Shares by the StockholderPrior to the Article I
Termination Date, each Stockholder agrees not to sell, transfer, assign, convey
or otherwise dispose of, directly or indirectly, any of the Subject Shares held
by the Stockholder to any persons controlling, controlled by or under common
control with the Stockholder who do not agree to become bound by the terms of
this Agreement or to any other Person for the primary purpose of the
circumvention of the obligations under this Agreement.
     Section 1.4 Stockholder Representations and WarrantiesEach Stockholder
represents and warrants to Quest that (i) the Stockholder has duly authorized,
executed and delivered this Agreement and that this Agreement constitutes a
valid and binding agreement, (ii) the consummation by the Stockholder of the
transactions contemplated hereby will not violate, or require any consent,
approval or notice under, any provision of law applicable to the Stockholder,
other than notice filings or other information required to be included in
filings pursuant to the Securities Exchange Act of 1934, as amended, and, if
applicable, filings under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, (iii) there are no outstanding options, warrants or rights to
purchase or acquire, or proxies, powers-of-attorney or voting agreements
relating to, the Subject Shares, other than this Agreement, (iv) the Shares set
forth below the Stockholder’s name on the signature page hereto constitute all
of the securities of the Company owned of record by the Stockholder on the date
hereof and (v) the Stockholder has the present power and right to direct, as to
the voting of all of the issued and outstanding Shares set forth below the
Stockholder’s name on the signature page hereto, the record owner thereof as
contemplated herein.
ARTICLE II
MISCELLANEOUS
     Section 2.1 Further AssurancesFrom time to time, at the reasonable request
of Quest, each Stockholder shall execute and deliver or cause to be executed and
delivered such additional documents and instruments and take all such further
action as may be reasonably necessary or desirable to consummate the
transactions contemplated by this Agreement.

 

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     Section 2.2 Specific PerformanceEach Stockholder agrees that Quest would be
irreparably damaged if for any reason the Stockholder fails to perform any of
its obligations under this Agreement, and that Quest would not have an adequate
remedy at law for money damages in such event. Accordingly, Quest shall be
entitled to seek specific performance and injunctive and other equitable relief
to enforce the performance of this Agreement by the Stockholder. This provision
is without prejudice to any other rights that Quest may have against the
Stockholder for any failure to perform its obligations under this Agreement.
     Section 2.3 NoticesAll notices to be given pursuant hereto shall be given
in accordance with Section 10.2 of the Merger Agreement, with the address for
the Stockholder as set forth on the signature page hereof.
     Section 2.4 Definitions and InterpretationCapitalized terms that are used
but not defined herein shall have the meanings ascribed to them in the Merger
Agreement. Section 10.9 of the Merger Agreement shall govern the interpretation
hereof.
     Section 2.5 CounterpartsThis Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement.
     Section 2.6 Binding Effect and AssignmentThis Agreement shall be binding
upon and inure to the benefit of the parties hereto, their respective permitted
successors and assigns and any transferee of the Stockholder’s Subject Shares.
This Agreement shall not be assignable by either party hereto without the
written consent of the other party hereto; provided that Quest may assign its
rights under this Agreement to a wholly owned subsidiary of Quest, but any such
assignment shall not relieve Quest of its obligations hereunder. Nothing in this
Agreement, express or implied, is intended to confer upon any person other than
the parties hereto and their respective permitted successors and assigns, any
rights, benefits or obligations hereunder. No person other than the parties
hereto is an intended beneficiary of this Agreement or any portion hereof.
     Section 2.7 Governing Law; Jurisdiction; Waiver of Jury TrialTo the maximum
extent permitted by Applicable Law, the provisions of this Agreement shall be
governed by and construed and enforced in accordance with the Applicable Laws of
the State of Delaware, without regard to principles of conflicts of law. Each of
the parties hereto agrees that this Agreement involves at least U.S. $100,000
and that this Agreement has been entered into in express reliance upon 6 Del. C.
§ 2708. Each of the parties hereto irrevocably and unconditionally confirms and
agrees that it is and shall continue to be (i) subject to the jurisdiction of
the courts of the State of Delaware and of the federal courts sitting in the
State of Delaware, and (ii) subject to service of process in the State of
Delaware. Each party hereto hereby irrevocably and unconditionally (a) consents
and submits to the exclusive jurisdiction of any federal or state court located
in the State of Delaware (the “Delaware Courts”), including the Delaware Court
of Chancery in and for New Castle County, for any actions, suits or proceedings
arising out of or relating to this Agreement or the transactions contemplated by
this Agreement (and agrees not to commence any litigation relating thereto
except in such courts), (b) waives any objection to the laying of venue of any
such litigation in the Delaware Courts and agrees not to plead or claim in any
Delaware Court that such litigation brought therein has been brought in any
inconvenient forum and (c) acknowledges and agrees that any controversy that may
arise under

 

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this Agreement is likely to involve complicated and difficult issues, and
therefore each such party hereby irrevocably and unconditionally waives any
right such party may have to a trial by jury in respect of any litigation
directly or indirectly arising or relating to this Agreement or the transactions
contemplated by this Agreement.
     Section 2.8 Entire Agreement; Amendments and WaiversThis Agreement
constitutes the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, and there
are no other agreements between the parties in connection with the subject
matter hereof except as set forth specifically herein or contemplated hereby. No
supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. The failure of a party to
exercise any right or remedy shall not be deemed or constitute a waiver of such
right or remedy in the future. No waiver of any of the provisions of this
Agreement shall be deemed to or shall constitute a waiver of any other provision
hereof (regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided.
     Section 2.9 SeverabilityWhenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision, and this Agreement will be reformed, construed and
enforced as if such invalid, illegal or unenforceable provision or portion of
any provision had never been contained herein. The parties shall endeavor in
good faith negotiations to replace any invalid, illegal or unenforceable
provision with a valid provision the effects of which come as close as possible
to those of such invalid, illegal or unenforceable provision.
     Section 2.10 Attorneys’ FeesIf any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys’ fees, costs and necessary disbursements, in
addition to any other relief to which such party may be entitled.
     Section 2.11 TerminationThis Agreement shall terminate and be of no further
force and effect upon the first to occur of (i) the termination of the Merger
Agreement in accordance with its terms, (ii) the Effective Time (as defined in
the Merger Agreement) or (iii) at such time as the Board of Directors of
Pinnacle determines in accordance with Section 7.3 of the Merger Agreement to
make a Pinnacle Adverse Recommendation Change (as defined in the Merger
Agreement).
     Section 2.12 HSR Filing Fee.
     At the Effective Time of the Merger, Quest hereby agrees to reimburse the
Stockholders for any applicable filing fees paid by the Stockholders (assuming
one filing for the entire group) pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
[signature page follows]

 

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

            Quest Resource Corporation
      By:   /s/ Jerry D. Cash         Name:   Jerry D. Cash        Title:  
Chief Executive Officer        DLJ MERCHANT BANKING PARTNERS III, L.P.

By: DLJ Merchant Banking III, Inc., as Managing
       General Partner
      By:   /s/ Kenneth Lohsen         Name:   Kenneth Lohsen        Title:  
Vice President        DLJ Merchant Banking III, Inc., as Advisory General
Partner on behalf of DLJ OFFSHORE PARTNERS III, C.V.
      By:   /s/ Kenneth Lohsen         Name:   Kenneth Lohsen        Title:  
Vice President        DLJ Merchant Banking III, Inc., as Advisory General
Partner on behalf of DLJ OFFSHORE PARTNERS III-1, C.V. and as attorney-in-fact
for DLJ Merchant Banking III, L.P., as Associate General Partner of DLJ OFFSHORE
PARTNERS III-1, C.V.
      By:   /s/ Kenneth Lohsen         Name:   Kenneth Lohsen        Title:  
Vice President     

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            DLJ Merchant Banking III, Inc., as Advisory General Partner on
behalf of DLJ OFFSHORE PARTNERS III-2, C.V. and as attorney-in-fact for DLJ
Merchant Banking III, L.P., as Associate General Partner of DLJ OFFSHORE
PARTNERS III-2, C.V.
      By:   /s/ Kenneth Lohsen         Name:   Kenneth Lohsen        Title:  
Vice President        MILLENNIUM PARTNERS II, L.P.

By: DLJ Merchant Banking III, Inc., as Managing
       General Partner
      By:   /s/ Kenneth Lohsen         Name:   Kenneth Lohsen        Title:  
Vice President        MBP III PLAN INVESTORS, L.P.

By: DLJ LBO Plans Management Corporation II, its
       General Partner
      By:   /s/ Kenneth Lohsen         Name:   Kenneth Lohsen        Title:  
Vice President   

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            DLJ Merchant Banking III, LLC, as General Partner of DLJ Merchant
Banking III, L.P., and as attorney- in-fact for DLJ Merchant Banking III, L.P.,
as Managing Limited Partner for and on behalf of DLJ MB PARTNERS III GMBH & CO.
KG
      By:   /s/ Kenneth Lohsen         Name:   Kenneth Lohsen        Title:  
Vice President        DLJ MB GmbH, as General Partner for and on behalf of DLJ
MB PARTNERS III GMBH & CO. KG
      By:   /s/ Kenneth Lohsen         Name:   Kenneth Lohsen        Title:  
Vice President     

Address for Notice for each of the above Stockholders:
DLJ Merchant Banking Partners
2121 Avenue of the Stars
Los Angeles, 90067 CA
Attention:   Susan Schnabel
Facsimile:    (310) 712-2734
with a copy to (which does not constitute notice):
Credit Suisse Private Equity
Eleven Madison Avenue, 16th Floor
New York, New York 10010
Attention:   Daniel Gewirtz
Facsimile:    (212) 743-1053

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Schedule I

          Stockholder   Number of Shares
DLJ MB Partners III GmbH & Co. KG,
    61,263  
a limited company organized under the laws of Germany
       
DLJ Offshore Partners III, C.V.,
    390,820  
a partnership organized under the laws of the Netherland Antilles
       
DLJ Offshore Partners III-1, C.V.,
    129,635  
a partnership organized under the laws of the Netherland Antilles
       
DLJ Offshore Partners III-2, C.V.,
    92,338  
a partnership organized under the laws of the Netherland Antilles
       
Millennium Partners II, L.P.,
    41,643  
a Delaware limited partnership
       
DLJ Merchant Banking Partners III, L.P.,
    7,264,092  
a Delaware limited partnership
       
MBP III Plan Investors, L.P.,
    1,619,711  
a Delaware limited partnership
       
 
       
TOTAL:
    9,599,502  

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