Exhibit 10.31
NO. 2008-52399

         
QUEST RESOURCES CORPORATION,
  §   IN THE DISTRICT COURT OF
QUEST ENERGY PARTNERS, L.P. AND
  §    
QUEST MIDSTREAM PARTNERS, L.P.
  §    
 
  §    
vs.
  §    
 
  §   HARRIS COUNTY, T E X A S
ROCKPORT ENERGY, LP, ROCKPORT
  §    
GEORGETOWN PARTNERS, LLC,
  §    
ROCKPORT GEORGETOWN LLC,
  §    
JERRY D. CASH, BRYAN T.
  §    
SIMMONS AND STEVEN L.
  §    
HOCHSTEIN
  §   165TH JUDICIAL DISTRICT

SETTLEMENT AGREEMENT
     Effective this 30th day of March, 2009, this Settlement Agreement
(“Settlement Agreement”) is entered into by and between: Jerry D. Cash (“Cash”)
and Quest Resource Corporation, Quest Energy Partners, L.P., and Quest Midstream
Partners, L.P. (collectively referred to herein as the “Quest Entities”) (all
parties to this Settlement Agreement are hereafter referred to as the
“Parties”).
RECITALS
     WHEREAS, Cash is a former officer and director of Quest Resource
Corporation, and served as such from November, 2002 through August 22, 2008.
Cash also held other positions, including officer and director positions, with
the Quest Entities and their affiliates during this time period (Cash’s
collective employment during his tenure with the Quest Entities and their
affiliates is collectively referred to herein as “Cash’s Quest Employment”).
     WHEREAS, between June 2004 and July 2008, Cash received transfers of money
from the Quest Entities (the “Transfers”).
     WHEREAS, the Quest Entities are plaintiffs and Cash is a defendant in a
lawsuit filed in the 165th Judicial District Court, Harris County, Texas
entitled Quest Resource Corporation,

 

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Quest Energy Partners, L.P., and Quest Midstream Partners, L.P. v. Rockport
Energy, L.L.C., Rockport Georgetown Partners, L.L.C., Rockport Georgetown,
L.L.C., Rockport Georgetown Holdings, L.P., Jerry D. Cash, Bryan T. Simmons and
Steve Hochstein; Case No. 2008-52399 (the “‘Lawsuit”).
     WHEREAS, disputes have arisen between the Quest Entities, on the one hand,
and Cash, on the other hand, regarding Cash’s Quest Employment, the Transfers
and the Lawsuit.
     WHEREAS, in order to avoid possible disputes, costs, burdens or
distractions of future litigation, the Parties now desire, and, through the
execution of this Settlement Agreement, intend, to resolve and settle all
disputes among the Parties, including those related to Cash’s Quest Employment,
the Transfers and the Lawsuit.
     NOW THEREFORE, in consideration of the mutual promises set forth herein,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Parties, intending to be legally bound, hereby
agree as follows:

I.   TERMS OF SETTLEMENT

     Upon execution and delivery of four original copies of this Settlement
Agreement by the Parties and the complete execution by counsel for the Parties
of an Order of Dismissal with Prejudice for filing with the Clerk of the Court
to formally dismiss Cash from the Lawsuit, the Parties agree to and will do the
following:
     (a) Cash agrees to transfer and convey to the Quest Entities the following:

  1)   the net proceeds after closing on the sale of Cash’s residence at 7401
Nichols Road, Nichols Hills, Oklahoma 73120;     2)   all of Cash’s interest in
STP Newco, Inc., including the North Holtuke Unit located in Seminole and
Pottawattamie Counties, Oklahoma and in the South Pond Creek Unit located in
Grant County, Oklahoma effective March 1, 2009;

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  3)   all of Cash’s interest in Rockport Energy, LLC, including but not limited
to interests in the Bird Island Well located in Southern Louisiana and in LGS,
L.P.

     All monies paid at the closing of the Cash residence will be paid to the
Quest Entities.
     (b) Cash represents and warrants that after the conveyance of the assets
set forth in (a) above, he has no direct or indirect ownership interest in any
other assets (other than: (i) 1.78 million shares of Quest Resource Corporation
common stock pledged to secure loans from Intrust Bank totaling approximately
$6 million; (ii) Cash’s Quest 401(K) account; (iii) a rental house at 1612
Downing Street, Oklahoma City, Oklahoma with a value of approximately $110,000,
subject to a mortgage of approximately $73,000; (iv) the balance of Cash’s
distributions from his interest in the North Holtuke Unit and South Pond Creek
Unit through March 1, 2009; (v) two 2005 Ford F-150s, one 2008 leased Range
Rover Sport and one BMW;1 and (vi) personal property excluded from the sale of
Cash’s residence and personal property included therewith).
     (c) The Quest Entities acknowledge that STP Newco, Inc. is obligated to
Coppermark Bank for a note in the approximate amount of $686,461 relating to the
North Holtuke and South Pond Creek Units.
     (d) Cash and the Quest Entities further agree to exchange for equal value
three paintings by Gordon Brown (located at the offices of the Quest Entities
and purchased by Cash) for two rock sculptures described as “Quartz Cluster” and
“Down Rabbit Hole,” as well as a “Petrified Stump” (located at Cash’s residence
and purchased by the Quest Entities).
     (e) The Quest Entities will waive the one-year non-compete as to Cash
outlined in Paragraph 15 of Cash’s Employment Agreement dated April 2, 2007.
 

1   The Range Rover and BMW are leased by STP Newco. The leases must be assigned
to a person or entity other than STP Newco or delivered to Quest’s office at 210
Park Avenue.

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     (f) Quest Resource Corporation agrees to satisfy $125,000 of Cash’s
outstanding legal fees and expenses from August 2008 through the date of the
closing of the house from Quest Resource Corporation’s general operating
account. Those funds will be directly paid to Cash’s attorneys, Locke Lord
Bissell & Liddell LLP and Ryan Whaley Coldiron Shandy. Quest Resource
Corporation will be reimbursed if and when Cash’s attorneys receive payment from
the Quest Entities’ insurance carriers for all outstanding legal fees and
expenses incurred through the date of closing of Cash’s residence. The Quest
Entities will receive the benefit of any agreed reductions in those legal bills.
     (g) The Quest entities agree to return all of Cash’s personal property,
including documents (but not including STP Newco or Rockport documents), within
five business days after closing of the Cash’s residence.

II.   MUTUAL RELEASE

     (a) Except as to such rights as may be created by this Settlement Agreement
and specifically set forth in II(d) below, the Quest Entities and their past,
present, and future predecessors, successors, affiliates (including, but not
limited to Quest Energy Service, LLC, Quest Energy GP, LLC, Quest Cherokee, LLC,
Quest Cherokee Oilfield Service, Quest Midstream GP, LLC, and Bluestem Pipeline,
LLC), agents, employees, representatives, members, fiduciaries, beneficiaries,
officers, directors, parent entities, subsidiaries, and hereby irrevocably and
unconditionally RELEASE, ACQUIT, WAIVE, AND FOREVER DISCHARGE Jerry D. Cash, his
heirs, executors, administrators, agents, representatives, successors, assigns,
and attorneys, from and against any and all known and unknown claims,
obligations, debts, loans, liabilities, losses, and damages whatsoever in law or
equity, asserted or unasserted that the Quest Entities ever had, presently have,
or may have in the future against Cash, including, but

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not limited to, any and all actual or implied claims, demands and causes of
action asserted in, arising out of or connected with, directly or indirectly,
Cash’s Quest Employment, the Transfers, and the subject matter of the Lawsuit or
that could have been asserted in the Lawsuit or in any other lawsuit. This
release of Cash by the Quest Entities and their past, present, and future
predecessors, successors, affiliates does not release and has no effect upon:
(1) any civil or criminal charges, claims, obligations, debts, liabilities,
losses, and damages by or of any third party, including but not limited to,
shareholders of Quest Resource Corporation and Quest Energy Partners, L.P., the
State of Oklahoma, and the United States of America; or (2) the rights and
obligations of American International Insurance Group, Inc. or any other
insurer.
     (b) Except as to such rights as may be created by this Settlement Agreement
and specifically set forth in II(c) below, Cash hereby irrevocably and
unconditionally RELEASES, ACQUITS, WAIVES, AND FOREVER DISCHARGES Quest Resource
Corporation, Quest Energy Partners, L.P. and Quest Midstream Partners, L.P., and
their respective heirs, executors, administrators, agents, representatives,
subsidiaries, affiliates, employees, partners, officers, directors,
shareholders, successors, assigns, and attorneys from and against any and all
known and unknown claims, obligations, debts, loans, liabilities, losses and
damages whatsoever in law or equity, asserted or unasserted that Cash ever had,
presently has, or may have in the future against the Quest Entities, including,
but not limited to, any and all actual or implied claims, demands and causes of
action, asserted in, arising out of or connected with, directly or indirectly,
Cash’s Quest Employment, the Transfers, and the subject matter of the Lawsuit or
that could have been asserted in the Lawsuit or in any other lawsuit, or any
violation of any federal, state, or local law, including, but not limited to,
any violation of Title VII of the Civil Rights Act of 1964, as amended, 42
U.S.C. § 2000e et seq., the Civil Rights Act of 1866, 42 U.S.C. § 1981, the

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Equal Pay Act, 29 U.S.C. § 206, the Employee Retirement Income Security Act of
1974, 29 U.S.C. § 1001 et seq., the Americans with Disabilities Act, 42 U.S.C. §
12101 et seq., the Age Discrimination in Employment Act of 1967, as amended
(“ADEA”), 29 U.S.C. § 621 et seq., the Family and Medical Leave Act, 29 U.S.C. §
2601 et seq., the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., the
Sarbanes-Oxley Act, 18 U.S.C. § 1514A et seq., the Occupational Safety and
Health Act, Section 11(c), 29 U.S.C. § 660(c); Oklahoma Anti-Discrimination Act,
25 O.S.A. § 1101; Oklahoma Equal Pay Act, 40 O.S.A. § 198.1, Oklahoma Genetic
Nondiscrimination In Employment Act, 36 O.S.A. § 3614.2, Oklahoma Workers’
Compensation Act, 85 O.S.A. § 5 or any other employment or civil rights act, and
any and all claims for severance pay or benefits under any compensation or
employee benefit plan, program, policy, contract, agreement or other arrangement
of the Quest Entities or affiliates, including any claim under any deferred
incentive compensation plan.
     (c) Cash DOES NOT RELEASE the Quest Entities from any obligations arising
from the Indemnification Agreement dated as of March 5, 2008 between Cash and
Quest Resource Corporation (“Cash Indemnity Agreement”), which includes the
advancement of legal fees and expenses, against any current or future threatened
or pending litigation, investigations or proceedings, by reason of the fact that
Cash was an officer, director and employee of Quest Resource Corporation and/or
the Quest Entities. Additionally, Cash DOES NOT RELEASE the Quest Entities’
insurance carriers front any rights and obligations, including but not limited
to indemnity and advancement of legal fees and expenses, of which Cash is
entitled under any applicable policy.

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     (d) The Quest Entities DO NOT RELEASE any other person or entity except as
set forth herein. Additionally, the Parties agree that the Quest Entities are
not waiving any rights to assert any applicable defense set forth in the Cash
Indemnity Agreement.

III.   NO ADMISSION OF LIABILITY

     The Parties hereto acknowledge that they expressly understand that this
Settlement Agreement and the settlement it represents (a) are entered into
solely for the purpose of avoiding any possible future disputes, expenses,
burdens or distractions of litigation and (b) in no way constitute an admission
by any party hereto of any liability of any kind to any other party or of any
wrongdoing on the part of any of the Parties.

IV.   ADEA WAIVER

     Cash, who represents and warrants that he is over forty (40) years of age,
acknowledges that the Older Workers Benefit Protection Act of 1990 (“OWBPA”) has
been fully explained to him, and that by execution of this Settlement Agreement
he knowingly and voluntarily waives all claims he has or may have under the Age
Discrimination in Employment Act, Chapter 14 of Title 29 of the United States
Code (“ADEA”), as amended. Cash acknowledges that he has been given at least
21 days in which to consider this Settlement Agreement before signing. Cash
acknowledges that he has been advised to consult with an attorney before signing
this Settlement Agreement and acknowledges that he has done so. Cash further
acknowledges that he has freely, knowingly, and voluntarily entered into this
Settlement Agreement, and that he has read this Settlement Agreement and fully
understands its terms. Cash is not waiving any rights or claims that may arise
after the date he executes this Settlement Agreement. Cash acknowledges that by
executing this Settlement Agreement, and waiving such rights and claims, he is
receiving consideration in addition to what he would actually be entitled.

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V.   CONSIDERATION

     The Parties acknowledge, warrant, and agree that adequate consideration was
exchanged and supplied by all parties to the Settlement Agreement.

VI.   JOINT EFFORTS

     This Settlement Agreement has been prepared by the joint efforts of the
respective attorneys for each of the Parties and each party acknowledges that
they have carefully read the instrument and that the instrument expresses the
entire agreement between the Parties concerning the subject it purports to cover
and that each party has executed this instrument freely and of his own accord.

VII.   ADDITIONAL DOCUMENTS

     The Parties and their counsel shall execute all such further and additional
documents that shall be reasonable, convenient, and necessary to carry out the
provisions and intent of this Settlement Agreement. The Parties agree to sign,
or direct their attorney to sign, and file all documents necessary to obtain a
Court Order dismissing all claims raised in the Lawsuit against Cash.

VIII.   GOVERNING LAW

     The validity, effect, and construction of this Settlement Agreement and any
obligations undertaken pursuant hereto, and any dispute relating to or arising
from the negotiation and execution of this Settlement Agreement shall he
governed by the laws of the State of Oklahoma, without regard to any conflict of
laws provisions.
     EXECUTED this 14th day of May, 2009.

         
 
       
 
  /s/ Jerry D. Cash    
 
       
 
  JERRY D. CASH    

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     EXECUTED this 30th day of March, 2009.

                  QUEST RESOURCE CORPORATION    
 
           
 
           
 
  By:   /s/ David C. Lawler    
 
           
 
  Its:   President    
 
           

     EXECUTED this 30th day of March, 2009.

                  QUEST ENERGY PARTNERS, L.P.    
 
           
 
           
 
  By:   /s/ David C. Lawler    
 
           
 
  Its:   President    
 
           

     EXECUTED this 30th day of March, 2009.

                  QUEST MIDSTREAM PARTNERS, L.P.    
 
           
 
           
 
  By:   /s/ David C. Lawler    
 
           
 
  Its:   President    
 
           

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