exv10w4



 





Exhibit 10.4




CONTRIBUTION, CONVEYANCE

AND ASSUMPTION AGREEMENT




     THIS CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT, dated as of [•], 2007, is entered into
by and among Quest Resource Corporation, a Nevada corporation (“QRC”), Quest Energy
Partners, L.P., a Delaware limited liability partnership (“MLP”), Quest Energy GP, LLC, a
Delaware limited liability company (“GP”), Quest Cherokee, LLC, a Delaware limited
liability company (the “Operating Company”), Quest Oil & Gas, LLC, a Kansas limited
liability company wholly-owned by QRC (“Quest O&G”), and Quest Energy Service, LLC, a
Kansas limited liability company wholly-owned by QRC (“Energy Service”). The parties to
this agreement are collectively referred to herein as the “Parties.”



RECITALS




     WHEREAS, QRC and GP have formed MLP, pursuant to the Delaware Revised Uniform Limited
Partnership Act (the “Delaware LP Act”), for the purpose of engaging in any business
activity that is approved by GP and that lawfully may be conducted by a limited partnership
organized pursuant to the Delaware LP Act;



     WHEREAS, in order to accomplish the objectives and purposes in the preceding recital, the
following actions have been taken prior to the date hereof:




	 	1.	 	QRC formed GP, under the terms of the Delaware Limited Liability Company Act,
and contributed $1,000 in exchange for all of the membership interests in GP.
	 
	 	2.	 	QRC and GP formed MLP, under the terms of the Delaware LP Act, to which QRC
contributed $980 in exchange for a 98% limited partner interest in MLP, and GP
contributed $20 in exchange for a 2% general partner interest in MLP.
	 
	 	3.	 	STP Cherokee, LLC, an Oklahoma limited liability company wholly-owned by QRC
and which owned a 37.26% membership interest in the Operating Company, merged with and
into QRC, with QRC as the surviving entity in such merger.
	 
	 	4.	 	J-W Gas Gathering, L.L.C., a Kansas limited liability company, the sole member
of which was Producers Service, LLC, a Kansas limited liability company
(“Producers”), the sole member of which was Ponderosa Gas Pipeline Company,
LLC, a Kansas limited liability company wholly-owned by QRC (“Ponderosa”), and
which owned an 8.82% membership interest in the Operating Company, was merged with and
into Producers, with Producers as the surviving entity in such merger.
	 
	 	5.	 	Producers, which owned a 0.71% membership interest in the Operating Company
prior to the merger described above, was merged with and into Ponderosa, with Ponderosa
as the surviving entity in such merger.





 









 






	 	6.	 	Ponderosa, which owned a 3.35% membership interest in the Operating Company
prior to the mergers described above, was merged with and into QRC, with QRC as the
surviving entity in such merger.
	 
	 	7.	 	Operating Company conveyed all of the Retained Assets to Quest O&G.





     WHEREAS, concurrently with the consummation of the transactions contemplated hereby, each of
the following matters shall occur:




	 	1.	 	Each of Energy Service and Quest O&G will convey its entire membership
interests in the Operating Company, which owns the E&P Assets, to QRC, after which QRC
will own all of the membership interests in the Operating Company.
	 
	 	2.	 	QRC will convey a membership interest in the Operating Company to GP with a
value equal to 2% of the equity value of MLP on the closing date of the Offering (the
“Interest”) as an additional capital contribution.
	 
	 	3.	 	GP will convey the Interest in the Operating Company to MLP in exchange for (a)
a continuation of its 2% general partner interest (which is equal to 431,827 General
Partner Units) in MLP and (b) the issuance of IDRs in MLP.
	 
	 	4.	 	QRC will convey to MLP its remaining membership interest in the Operating
Company in exchange for (a) 3,551,521 Common Units in the MLP and (b) 8,857,981
Subordinated Units in the MLP.
	 
	 	5.	 	Existing lenders under the Credit Facilities will assign such facilities to a
new group of lenders (the “New Lenders”).
	 
	 	6.	 	QRC, the Operating Company and the New Lenders will amend and restate the
Credit Facilities into an Amended and Restated Credit Agreement (the “Amended
Credit Agreement”) that will include a $250.0 million revolving credit facility.
MLP will be a guarantor under the Amended Credit Agreement.
	 
	 	7.	 	QRC will enter into a new $50.0 million credit facility (the “QRC Credit
Agreement”).
	 
	 	8.	 	The public, through the Underwriters, will purchase 8,750,000 Common Units from
MLP in the Offering, representing a 40.5% limited partner interest in MLP, for $[•]
million in cash, less the net amount of $[•] million payable to the Underwriters after
taking into account the Underwriters’ discount and a structuring fee payable to
Wachovia Capital Markets, LLC.
	 
	 	9.	 	MLP will use the net proceeds the Offering to (a) pay transaction expenses
related to the transactions contemplated by this Agreement and the Offering (exclusive
of the Underwriters’ discount and structuring fee) and (b) contribute the remaining net
proceeds of the Offering to the Operating Company, which will use the net proceeds to
repay a portion of the indebtedness under the Amended Credit Agreement.





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	 	10.	 	QRC will borrow an amount under the QRC Credit Agreement to repay a portion of
the outstanding indebtedness under the Amended Credit Agreement to reduce the principal
amount of indebtedness under the Amended Credit Agreement to $75.0 million, at which
time QRC will be released as an obligor under the Amended Credit Agreement.
	 
	 	11.	 	To the extent that the Underwriters exercise their over-allotment option to
purchase up to 1,312,500 Common Units (the “Over-Allotment Option”), MLP will
use the net proceeds therefrom to redeem from QRC the number of Common Units equal to
the number of Common Units issued upon the exercise of the Over-Allotment Option.
	 
	 	12.	 	The organizational documents of the Parties will be amended and restated to the
extent necessary to reflect the applicable matters set forth above and as contained in
this Agreement.





     NOW, THEREFORE, in consideration of their mutual undertakings and agreements hereunder, the
Parties undertake and agree as follows:



ARTICLE I




DEFINITIONS




     SECTION 1.01. The following capitalized terms shall have the meanings given below.




	 	(a)	 	“Affiliate” has the meaning assigned to such term in the Partnership
Agreement.
	 
	 	(b)	 	“Agreement” means this Contribution, Conveyance and Assumption
Agreement.
	 
	 	(c)	 	“Amended Credit Agreement” has the meaning assigned to such term in the
Recitals.
	 
	 	(d)	 	“Assets” has the meaning assigned to such term in Section 4.01(a) of
this Agreement.
	 
	 	(e)	 	“Common Unit” has the meaning assigned to such term in the Partnership
Agreement.
	 
	 	(f)	 	“Credit Facilities” means each of the following (i) that certain
Amended and Restated Senior Credit Agreement, dated as of February 7, 2006, by and
among QRC, the Operating Company, Guggenheim Corporate Funding, LLC, and the lenders
party thereto, as amended by that certain Amendment No. 1 to Amended and Restated
Senior Credit Agreement, dated as of June 9, 2006, as further amended by that certain
Waiver and Amendment No. 2, dated as of December 22, 2006, and as further amended by
that certain Waiver and Amendment No. 3, dated as of April 25, 2007; (ii) that certain
Amended and Restated Second Lien Term Loan Agreement, dated as of June 9, 2006, by and
among the Operating Company, QRC, Guggenheim Corporate Funding, LLC, and the lenders
party





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	 	 	 	thereto, as amended by that certain Waiver and Amendment No. 1, dated as of December
22, 2006, and as further amended by that certain Waiver and Amendment No. 2, dated
as of April 25, 2007; and (iii) that certain Third Lien Term Loan Agreement, dated
as of June 9, 2006, by and among the Operating Company, QRC, Guggenheim Corporate
Funding, and the lenders party thereto, as amended by that certain Waiver and
Amendment No. 1, dated as of December 22, 2006, and as further amended by that
certain Waiver and Amendment No. 2, dated as of April 25, 2007.
	 
	 	(g)	 	“Delaware LP Act” has the meaning assigned to such term in the
Recitals.
	 
	 	(h)	 	“E&P Assets” means all of the gas and oil properties in the Cherokee
Basin, a 13-county region in southeastern Kansas and northeastern Oklahoma, and related
assets owned by the Operating Company as of the Effective Time, and 100% of the
outstanding membership interests of Quest Cherokee Oilfield Service, LLC.
	 
	 	(i)	 	“Effective Time” means 12:01 a.m. Central Time on [•], 2007.
	 
	 	(j)	 	“Energy Service” has the meaning assigned to such term in the opening
paragraph of this Agreement.
	 
	 	(k)	 	“GP” has the meaning assigned to such term in the opening paragraph of
this Agreement.
	 
	 	(l)	 	“General Partner Unit” has the meaning assigned to such term in the
Partnership Agreement.
	 
	 	(m)	 	“IDR” means “Incentive Distribution Right” as such term is
defined in the Partnership Agreement.
	 
	 	(n)	 	“Indemnified Party” means either the Operating Company and MLP or QRC
and its Affiliates (other than members of the Partnership Group), as the case may be,
in their capacities as parties entitled to indemnification in accordance with Article
III hereof.
	 
	 	(o)	 	“Indemnifying Party” means either the Operating Company and MLP or QRC,
as the case may be, in their capacity as the parties from whom indemnification may be
required in accordance with Article III hereof.
	 
	 	(p)	 	“Interest” has the meaning assigned to such term in the Recitals.
	 
	 	(q)	 	“Losses” means any losses, damages, liabilities, claims, demands,
causes of action, judgments, settlements, fines, penalties, costs and expenses
(including, without limitation, court costs and reasonable attorney’s and experts’
fees) of any and every kind or character.
	 
	 	(r)	 	“MLP” has the meaning assigned to such term in the opening paragraph of
this Agreement.





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	 	(s)	 	“New Lenders” has the meaning assigned to such term in the Recitals.
	 
	 	(t)	 	“Offering” means the offering by the MLP of Common Units to the public
in an underwritten public offering.
	 
	 	(u)	 	“Operating Company” has the meaning assigned to such term in the
opening paragraph of this Agreement.
	 
	 	(v)	 	“Over-Allotment Option” has the meaning assigned to such term in the
Recitals.
	 
	 	(w)	 	“Parties” has the meaning assigned to such term in the opening
paragraph of this Agreement.
	 
	 	(x)	 	“Partnership Agreement” means the Amended and Restated Agreement of
Limited Partnership of Quest Energy Partners, L.P. dated as of the date hereof.
	 
	 	(y)	 	“Partnership Group” has the same meaning assigned to such term in the
Partnership Agreement.
	 
	 	(z)	 	“Ponderosa” has the meaning assigned to such term in the Recitals.
	 
	 	(aa)	 	“Producers” has the meaning assigned to such term in the Recitals.
	 
	 	(bb)	 	“QRC” has the meaning assigned to such term in the opening paragraph of
this Agreement.
	 
	 	(cc)	 	“QRC Credit Agreement” has the meaning assigned to such term in the
Recitals.
	 
	 	(dd)	 	“Quest O&G” has the meaning assigned to such term in the opening
paragraph of this Agreement.
	 
	 	(ee)	 	“Registration Statement” means the registration statement on Form S-1
(file number 333-144716) filed by MLP relating to the Offering.
	 
	 	(ff)	 	“Retained Assets” means any assets owned by the Operating Company other
than E&P Assets, including without limitation undeveloped property located in the
States of Texas, New Mexico and Pennsylvania and related assets.
	 
	 	(gg)	 	“Subordinated Unit” has the meaning assigned to such term in the
Partnership Agreement.
	 
	 	(hh)	 	“Underwriters” means Wachovia Capital Markets, LLC, RBC Capital Markets
Corporation, Friedman, Billings, Ramsey & Co., Inc., Oppenheimer & Co. Inc., Stifel,
Nicolaus & Company, Incorporated and Wells Fargo Securities, LLC.





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ARTICLE II




CONTRIBUTIONS, ACKNOWLEDGMENTS AND DISTRIBUTIONS




     SECTION 2.01. Merger of QRC Subsidiaries. The Parties acknowledge that (a) STP
Cherokee, LLC merged with and into QRC and pursuant thereto the surviving entity was QRC, a Nevada
corporation, (b) J-W Gas Gathering, L.L.C. merged with and into Ponderosa and pursuant thereto the
surviving entity was Ponderosa, a Kansas limited liability company, (c) Producers merged with and
into Ponderosa and pursuant thereto the surviving entity was Ponderosa, a Kansas limited liability
company, and (d) Ponderosa merged with and into QRC and pursuant thereto the surviving entity was
QRC, a Nevada corporation.



     SECTION 2.02. Assignment of Credit Facilities to New Lenders. The Parties
acknowledge the assignment of the Credit Facilities to the New Lenders.



     SECTION 2.03. Amendment and Restatement of Credit Facilities. The Parties
acknowledge the amendment and restatement of the Credit Facilities into the Amended Credit
Agreement. MLP further acknowledges that it is a guarantor pursuant to the Amended Credit
Agreement. QRC will be released as an obligor under such Amended Credit Agreement pursuant to
Section 2.04 below.



     SECTION 2.04. Refinancing by QRC. The Parties acknowledge that QRC will enter into
the QRC Credit Agreement. Proceeds of $[•] million under the QRC Credit Agreement will be used by
QRC to repay a portion of the outstanding indebtedness under the Amended Credit Agreement, at which
time QRC will be released as an obligor under the Amended Credit Agreement.



     SECTION 2.05. Distribution of the Operating Company Interest by Energy Service to
QRC. Energy Service hereby grants, distributes, bargains, conveys, assigns, transfers, sets
over and delivers to QRC, its successors and assigns, for its and their own use forever, all of
Energy Service’s right, title and interest in and to Energy Service’s entire membership interest in
the Operating Company, and QRC hereby accepts such membership interest.



     SECTION 2.06. Distribution of the Operating Company Interest by Quest O&G to QRC.
Quest O&G hereby grants, distributes, bargains, conveys, assigns, transfers, sets over and delivers
to QRC, its successors and assigns, for its and their own use forever, all of Quest O&G’s right,
title and interest in and to Quest O&G’s entire membership interest in the Operating Company, and
QRC hereby accepts such membership interest.



     SECTION 2.07. Distribution of the Retained Assets by the Operating Company to QRC.
The Operating Company hereby grants, distributes, bargains, conveys, assigns, transfers, sets over
and delivers to Quest O&G, its successors and assigns, for its and their own use forever, all of
the Operating Company’s right, title and interest in and to the Retained Assets, and Quest O&G
hereby accepts such assets.



     SECTION 2.08. Contribution of the Operating Company Interest by QRC to GP. QRC
hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to GP,
its



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successors and assigns, for its and their own use forever, all of QRC’s right, title and
interest in and to the Interest in the Operating Company, as a capital contribution, and GP hereby
accepts such Interest as a contribution to the capital of GP.



     SECTION 2.09. Contribution of the Operating Company Interest by GP to MLP. GP hereby
grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to MLP, its
successors and assigns, for its and their own use forever, all of GP’s right, title and interest in
and to the Interest in the Operating Company, as a capital contribution, in exchange for 431,827
General Partner Units representing a 2% general partner interest in MLP and the issuance of the
Incentive Distribution Rights, and MLP hereby accepts the Interest as a contribution to the capital
of MLP.



     SECTION 2.10. Contribution of the Operating Company Interest by QRC to MLP. QRC
hereby grants, contributes, bargains, conveys, assigns, transfers, sets over and delivers to MLP,
its successors and assigns, for its and their own use forever, all of QRC’s right, title and
interest in and to its remaining membership interest in the Operating Company, as a capital
contribution, in exchange for 3,551,521 Common Units, representing a 16.5% limited partner interest
in MLP, and 8,857,981 Subordinated Units, representing a 41.0% limited partner interest in MLP, and
MLP hereby accepts such membership interest as a contribution to the capital of MLP.



     SECTION 2.11. Public Cash Contribution. The Parties acknowledge a capital
contribution by the public through the Underwriters to MLP of $[•] million in cash ($[•] million
net to MLP after taking into account the Underwriters’ discount and the structuring fee payable to
Wachovia Capital Markets, LLC) in exchange for 8,750,000 Common Units representing a 40.5% limited
partner interest in MLP.



     SECTION 2.12. Payment of Transaction Expenses by MLP; Cash Contribution by MLP. The
Parties acknowledge (a) the payment by MLP, in connection with the Offering and the transactions
contemplated hereby, of transaction expenses in the amount of approximately $[•] million (exclusive
of the Underwriters’ discount and the structuring fee) and (b) the contribution by MLP of the net
proceeds of the Offering of approximately $[161.3] million to the Operating Company. MLP agrees to
cause the Operating Company to use the funds pursuant to clause (b) above to repay a portion of its
indebtedness outstanding under the Amended Credit Agreement.



     SECTION 2.13. Over-Allotment Option. The Parties acknowledge that in the event the
Underwriters exercise their Over-Allotment Option, MLP will use the net proceeds therefrom to
redeem from QRC the number of Common Units equal to the number of Common Units issued upon the
exercise of the Over-Allotment Option.



ARTICLE III




INDEMNIFICATION




     SECTION 3.01. Indemnification by the Operating Company. Subject to Section 3.03
below, the Operating Company and MLP shall indemnify, defend and hold harmless QRC and its
Affiliates (other than members of the Partnership Group) from and against all Losses suffered or
incurred by QRC or such Affiliates by reason of or arising out of the legal proceedings set forth
on Exhibit A hereto and any and all claims or legal proceedings arising out of or relating to



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substantially the same facts and circumstances as those which are the subject, in whole or in
part, of any such legal proceedings.




     SECTION 3.02. Indemnification by QRC. Subject to Section 3.03 below, QRC and its
Affiliates (other than members of the Partnership Group) shall indemnify, defend and hold harmless
the Operating Company or MLP from and against all Losses suffered or incurred by the Operating
Company or MLP by reason of or arising out of the legal proceeding set forth on Exhibit B hereto
and any and all claims or legal proceedings arising out of or relating to substantially the same
facts and circumstances as those which are the subject, in whole or in part, of such legal
proceeding.



     SECTION 3.03. Indemnification Procedures.




     (a) The Indemnified Party agrees that promptly after it becomes aware of facts giving
rise to a claim for indemnification under this Article III other than as to the existence of
the legal proceedings listed in Exhibits A and B, it will provide notice thereof in writing
to the Indemnifying Party, specifying the nature of and specific basis for such claim;
provided, however, that the Indemnified Party shall be under no obligation to provide notice
pursuant to this Section 3.03 in the event that the Indemnifying Party is a named
co-defendant in the litigation giving rise to the Indemnified Party’s right to
indemnification in accordance with this Article III.




     (b) The Indemnifying Party shall have the right to control all aspects of the defense
of (and any counterclaims with respect to) any claims brought against the Indemnified Party
that are covered by the indemnification under this Article III, including, without
limitation, the selection of counsel, determination of whether to appeal any decision of any
court and the settling of any such matter or any issues relating thereto; provided, however,
that no such settlement shall be entered into without the consent of the Indemnified Party
unless it includes a full release of the Indemnified Party from such matter or issues, as
the case may be, and does not include the admission of fault, culpability or a failure to
act, by or on behalf of such Indemnified Party.




     (c) The Indemnified Party agrees to cooperate fully with the Indemnifying Party, with
respect to all aspects of the defense of any claims covered by the indemnification under
this Article III, including, as applicable and without limitation, the prompt furnishing to
the Indemnifying Party of any correspondence or other notice relating thereto that the
Indemnified Party may receive, permitting the name of the Indemnified Party to be utilized
in connection with such defense, the making available to the Indemnifying Party of any
files, records or other information of the Indemnified Party that the Indemnifying Party
considers relevant to such defense and the making available to the Indemnifying Party of any
employees of the Indemnified Party; provided, however, that in connection therewith the
Indemnifying Party agrees to use reasonable efforts to minimize the impact thereof on the
operations of the Indemnified Party and further agrees to maintain the confidentiality of
all files, records or other information furnished by the Indemnified Party pursuant to this
Section 3.03. In no event shall the obligation of the Indemnified Party to cooperate with
the Indemnifying Party as set forth in the immediately preceding sentence be construed as
imposing upon the Indemnified Party an obligation to hire and pay for counsel in connection
with the defense of any claims



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covered by the indemnification set forth in this Article III; provided, however, that
the Indemnified Party may, at its own option, cost and expense, hire and pay for counsel in
connection with any such defense. The Indemnifying Party agrees to keep any such counsel
hired by the Indemnified Party informed as to the status of any such defense, but the
Indemnifying Party shall have the right to retain sole control over such defense.




     (d) In determining the amount of any Losses for which the Indemnified Party is entitled
to indemnification under this Agreement, the gross amount of the indemnification will be
reduced by (i) any insurance proceeds realized by the Indemnified Party, and such
correlative insurance benefit shall be net of any incremental insurance premium that becomes
due and payable by the Indemnified Party as a result of such claim and (ii) all amounts
recovered by the Indemnified Party under contractual indemnities from third Persons less the
costs incurred by the Indemnified Party in obtaining such recovery.



ARTICLE IV




TITLE MATTERS




     SECTION 4.01. Encumbrances.




     (a) Except to the extent provided in any other document executed in connection with
this Agreement or the Offering, the contribution and conveyance (by operation of law or
otherwise) of the membership interests in the Operating Company (including the E&P Assets
owned by or transferred to the Operating Company) (collectively, the “Assets”)
pursuant to this Agreement are made expressly subject to all recorded and unrecorded liens
(other than consensual liens), encumbrances, agreements, defects, restrictions, adverse
claims and all laws, rules, regulations, ordinances, judgments and orders of governmental
authorities or tribunals having or asserting jurisdictions over the Assets and operations
conducted thereon or in connection therewith, in each case to the extent the same are valid
and enforceable and affect the Assets, including all matters that a current survey or visual
inspection of the Assets would reflect.




     (b) To the extent that certain jurisdictions in which the Assets are located may
require that documents be recorded in order to evidence the transfers of title reflected in
this Agreement, then the provisions set forth in Section 4.01(a) immediately above shall
also be applicable to the conveyances under such documents.



     SECTION 4.02. Disclaimer of Warranties; Subrogation; Waiver of Bulk Sales Laws.




     (a) EXCEPT TO THE EXTENT PROVIDED IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION WITH THIS AGREEMENT OR THE OFFERING, INCLUDING, WITHOUT LIMITATION, THE OMNIBUS
AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT NONE OF THE PARTIES HAS MADE, DOES NOT
MAKE, AND EACH SUCH PARTY SPECIFICALLY NEGATES AND DISCLAIMS, ANY REPRESENTATIONS,
WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF



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ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR
WRITTEN, PAST OR PRESENT, REGARDING (A) THE VALUE, NATURE, QUALITY OR CONDITION OF THE
ASSETS OR THE RETAINED ASSETS INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL, GEOLOGY OR
ENVIRONMENTAL CONDITION OF THE ASSETS OR THE RETAINED ASSETS GENERALLY, INCLUDING THE
PRESENCE OR LACK OF HAZARDOUS SUBSTANCES OR OTHER MATTERS ON THE ASSETS OR THE RETAINED
ASSETS, (B) THE INCOME TO BE DERIVED FROM THE ASSETS OR THE RETAINED ASSETS, (C) THE
SUITABILITY OF THE ASSETS OR THE RETAINED ASSETS FOR ANY AND ALL ACTIVITIES AND USES THAT
MAY BE CONDUCTED THEREON, (D) THE COMPLIANCE OF OR BY THE ASSETS OR THE RETAINED ASSETS OR
THEIR OPERATION WITH ANY LAWS (INCLUDING WITHOUT LIMITATION ANY ZONING, ENVIRONMENTAL
PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS) OR (E)
THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF THE ASSETS OR THE RETAINED ASSETS. EXCEPT TO THE EXTENT PROVIDED IN ANY OTHER
DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE OFFERING, INCLUDING,
WITHOUT LIMITATION, THE OMNIBUS AGREEMENT, THE PARTIES ACKNOWLEDGE AND AGREE THAT EACH HAS
HAD THE OPPORTUNITY TO INSPECT THE ASSETS OR THE RETAINED ASSETS, AND EACH IS RELYING SOLELY
ON ITS OWN INVESTIGATION OF THE ASSETS OR THE RETAINED ASSETS AND NOT ON ANY INFORMATION
PROVIDED OR TO BE PROVIDED BY ANY OF THE PARTIES. EXCEPT TO THE EXTENT PROVIDED IN ANY
OTHER DOCUMENT EXECUTED OR DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE OFFERING,
INCLUDING, WITHOUT LIMITATION, THE OMNIBUS AGREEMENT, NONE OF THE PARTIES IS LIABLE OR BOUND
IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING
TO THE ASSETS OR THE RETAINED ASSETS FURNISHED BY ANY AGENT, EMPLOYEE, SERVANT OR THIRD
PARTY. EXCEPT TO THE EXTENT PROVIDED IN ANY OTHER DOCUMENT EXECUTED OR DELIVERED IN
CONNECTION WITH THIS AGREEMENT OR THE OFFERING, INCLUDING, WITHOUT LIMITATION, THE OMNIBUS
AGREEMENT, EACH OF THE PARTIES ACKNOWLEDGES THAT TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE
CONTRIBUTION OF THE ASSETS OR THE RETAINED ASSETS AS PROVIDED FOR HEREIN IS MADE IN AN “AS
IS”, “WHERE IS” CONDITION WITH ALL FAULTS, AND THE ASSETS OR THE RETAINED ASSETS ARE
CONTRIBUTED AND CONVEYED SUBJECT TO ALL OF THE MATTERS CONTAINED IN THIS SECTION. THIS
SECTION SHALL SURVIVE SUCH CONTRIBUTION AND CONVEYANCE OR THE TERMINATION OF THIS AGREEMENT.
THE PROVISIONS OF THIS SECTION HAVE BEEN NEGOTIATED BY THE PARTIES AFTER DUE CONSIDERATION
AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY REPRESENTATIONS OR
WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH



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RESPECT TO THE ASSETS THAT MAY ARISE PURSUANT TO ANY LAW NOW OR HEREAFTER IN EFFECT, OR
OTHERWISE, EXCEPT AS SET FORTH IN THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED OR DELIVERED
IN CONNECTION WITH THIS AGREEMENT OR THE OFFERING INCLUDING, WITHOUT LIMITATION, THE OMNIBUS
AGREEMENT.




     (b) The contribution and transfers of the Assets and Retained Assets made under this
Agreement are made with full rights of substitution and subrogation of the respective
parties receiving such transfers and contributions, and all persons claiming by, through and
under such parties, to the extent assignable, in and to all covenants and warranties by the
predecessors-in-title of the parties contributing or transferring the Assets or the Retained
Assets, as the case may be, and with full subrogation of all rights accruing under
applicable statutes of limitation and all rights of action of warranty against all former
owners of the Assets and Retained Assets, as the case may be.




     (c) Each of the Parties agrees that the disclaimers contained in this Section 4.02 are
“conspicuous” disclaimers. Any covenants implied by statute or law by the use of the words
“grant,” “convey,” “bargain,” “sell,” “assign,” “transfer,” “deliver” or “set over” or any
of them or any other words used in this Agreement or any exhibits hereto are hereby
expressly disclaimed, waived or negated.




     (d) Each of the Parties hereby waives compliance with any applicable bulk sales law or
any similar law in any applicable jurisdiction in respect of the transactions contemplated
by this Agreement.



ARTICLE V




FURTHER ASSURANCES




     SECTION 5.01. Further Assurances. From time to time after the Effective Time, and
without any further consideration, the Parties agree to execute, acknowledge and deliver all such
additional deeds, assignments, bills of sale, conveyances, instruments, notices, releases,
acquittances and other documents, and will do all such other acts and things, all in accordance
with applicable law, as may be necessary or appropriate (a) more fully to assure that the
applicable Parties own all of the properties, rights, titles, interests, estates, remedies, powers
and privileges granted by this Agreement, or which are intended to be so granted, or (b) more fully
and effectively to vest in the applicable Parties and their respective successors and assigns
beneficial and record title to the interests contributed and assigned by this Agreement or intended
so to be and to more fully and effectively carry out the purposes and intent of this Agreement.



     SECTION 5.02. Other Assurances. From time to time after the Effective Time, and
without any further consideration, each of the Parties shall execute, acknowledge and deliver all
such additional instruments, notices and other documents, and will do all such other acts and
things, all in accordance with applicable law, as may be necessary or appropriate to more fully and
effectively carry out the purposes and intent of this Agreement. Without limiting the generality
of the foregoing, the Parties acknowledge that the Parties have used their good faith efforts to
attempt to identify all of the assets being contributed to MLP as required in connection with the
Offering. However, it is possible that assets intended to be contributed to MLP were not



11









 







identified and therefore are not included in the Assets. It is the express intent of the
Parties that MLP own all assets necessary to operate the assets that are identified in this
Agreement and in the Registration Statement. To the extent any assets were not identified but are
necessary to the operation of assets that were identified, then the intent of the Parties is that
all such unidentified assets are intended to be conveyed to the appropriate members of the
Partnership Group. To the extent such assets are identified at a later date, the Parties shall
take the appropriate actions required in order to convey all such assets to the appropriate members
of the Partnership Group. Likewise, to the extent that assets are identified at a later date that
were not intended by the Parties to be conveyed as reflected in this Agreement, the Parties shall
take the appropriate actions required in order to convey all such assets to the appropriate party.
For the avoidance of doubt, the provisions of this Section shall apply to the Retained Assets as
well as the Assets.



ARTICLE VI




EFFECTIVE TIME




     Notwithstanding anything contained in this Agreement to the contrary, none of the provisions
of Article II or Article III of this Agreement shall be operative or have any effect until the
Effective Time, at which time all the provisions of Article II or Article III of this Agreement
shall be effective and operative in accordance with Section 7.01 and this Article VI, without
further action by any Party.



ARTICLE VII




MISCELLANEOUS




     SECTION 7.01. Order of Completion of Transactions. Except for the transactions
provided for in Section 2.01, which have been completed prior to the date hereof, the transactions
provided for in Article II of this Agreement shall be completed on the date hereof in the order set
forth therein.



     SECTION 7.02. Costs. MLP shall pay all expenses, fees and costs, including but not
limited to, all sales, use and similar taxes arising out of the contributions, conveyances and
deliveries to be made hereunder and shall pay all documentary, filing, recording, transfer, deed,
and conveyance taxes and fees required in connection therewith. In addition, MLP shall be
responsible for all costs, liabilities and expenses (including court costs and reasonable
attorneys’ fees) incurred in connection with the implementation of any conveyance or delivery
pursuant to Article V of this Agreement.



     SECTION 7.03. Headings; References; Interpretation. All Article and Section headings
in this Agreement are for convenience only and shall not be deemed to control or affect the meaning
or construction of any of the provisions hereof. The words “hereof,” “herein” and “hereunder” and
words of similar import, when used in this Agreement, shall refer to this Agreement as a whole,
including, without limitation, all Schedules and Exhibits attached hereto, and not to any
particular provision of this Agreement. All references herein to Articles, Sections, Schedules and
Exhibits shall, unless the context requires a different construction, be deemed to be references to
the Articles and Sections of this Agreement and the Schedules and Exhibits attached hereto, and all
such Schedules and Exhibits attached hereto are hereby incorporated herein and made a part hereof
for all purposes. All personal pronouns used in this Agreement,



12









 







whether used in the masculine, feminine or neuter gender, shall include all other genders, and
the singular shall include the plural and vice versa. The use herein of the word “including”
following any general statement, term or matter shall not be construed to limit such statement,
term or matter to the specific items or matters set forth immediately following such word or to
similar items or matters, whether or not non-limiting language (such as “without limitation”, “but
not limited to”, or words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that could reasonably fall within the broadest
possible scope of such general statement, term or matter.



     SECTION 7.04. Successors and Assigns. No Party shall have the right to assign its
rights or obligations under this Agreement without the prior written consent of all of the other
Parties. The Agreement shall be binding upon and inure to the benefit of the Parties and their
respective successors and assigns.



     SECTION 7.05. Third Party Rights. The provisions of this Agreement are intended to
bind the Parties as to each other and are not intended to and do not create rights in any other
person or confer upon any other person any benefits, rights or remedies and no other person is or
is intended to be a third party beneficiary of any of the provisions of this Agreement.



     SECTION 7.06. Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one agreement binding on the Parties.



     SECTION 7.07. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Kansas applicable to contracts made and to be performed
wholly within such state without giving effect to conflict of law principles thereof.



     SECTION 7.08. Severability. If any of the provisions of this Agreement are held by
any court of competent jurisdiction to contravene, or to be invalid under, the laws of any
political body having jurisdiction over the subject matter hereof, such contravention or invalidity
shall not invalidate the entire Agreement. Instead, this Agreement shall be construed as if it did
not contain the particular provision or provisions held to be invalid and an equitable adjustment
shall be made and necessary provision added so as to give effect to the intention of the Parties as
expressed in this Agreement at the time of execution of this Agreement.



     SECTION 7.09. Amendment or Modification. This Agreement may be amended or modified
from time to time only by the written agreement of all the Parties. Each such instrument shall be
reduced to writing and shall be designated on its face as an Amendment to this Agreement.



     SECTION 7.10 Notice. All notices or requests or consents provided for or permitted
to be given pursuant to this Agreement must be in writing and must be given by depositing same in
the United States mail, addressed to the Person to be notified, postpaid and registered or
certified with return receipt requested or by delivering such notice in person or by fax to such
Party. Notice given by personal delivery or mail shall be effective upon actual receipt. Notice
given by fax shall be effective upon actual receipt if received during the recipient’s normal
business hours, or at the beginning of the recipient’s next business day after receipt if not
received during the recipient’s normal business hours. All notices to be sent to a Party pursuant
to this Agreement shall be sent to or made at the address set forth below or at such other address
as such Party may provide to the other Parties in the manner provided in this Section 7.10.



13









 






	 	(a)	 	For notices to QRC, Energy Services or Quest O&G:




Quest Resource Corporation

[9520 North May Avenue, Suite 300]

Oklahoma City, Oklahoma [73120]

Attn: Chief Executive Officer




14









 






	 	(b)	 	For notices to the GP, MLP or Operating Company:




Quest Energy Partners, L.P.

c/o Quest Energy GP, LLC

[9520 North May Avenue, Suite 300]

Oklahoma City, Oklahoma [73120]

Attn: Chief Executive Officer




     SECTION 7.10. Integration. This Agreement and the instruments referenced herein
supersede all previous understandings or agreements among the Parties, whether oral or written,
with respect to their subject matter. This document and such instruments contain the entire
understanding of the Parties with respect to the subject matter hereof and thereof. No
understanding, representation, promise or agreement, whether oral or written, is intended to be or
shall be included in or form part of this Agreement unless it is contained in a written amendment
hereto executed by the Parties after the date of this Agreement.



     SECTION 7.11. Deed; Bill of Sale; Assignment. To the extent required and permitted
by applicable law, this Agreement shall also constitute a “deed,” “bill of sale” or “assignment” of
the assets and interests referenced herein.



[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]




15









 








     IN WITNESS WHEREOF, this Agreement has been duly executed by the Parties as of the date first
above written.



	 	 	 	 	 
	 	QUEST RESOURCE CORPORATION

 	 
	 	
 	 
	 	Name:  	Jerry D. Cash 	 
	 	Title:  	Chief Executive Officer 	 
	 
	 	QUEST ENERGY PARTNERS, L.P.



By: Quest Energy GP, LLC, its general partner

 	 
	 	
 	 
	 	Name:  	Jerry D. Cash 	 
	 	Title:  	Chief Executive Officer 	 
	 
	 	QUEST ENERGY GP, LLC

 	 
	 	
 	 
	 	Name:  	Jerry D. Cash 	 
	 	Title:  	Chief Executive Officer 	 
	 
	 	QUEST CHEROKEE, LLC

 	 
	 	
 	 
	 	Name:  	Jerry D. Cash 	 
	 	Title:  	Manager 	 
	 




16









 





	 	 	 	 	 
	 	QUEST ENERGY SERVICE, LLC

 	 
	 	
 	 
	 	Name:  	Jerry D. Cash 	 
	 	Title:  	Chief Executive Officer and President 	 
	 
	 	QUEST OIL & GAS, LLC

 	 
	 	
 	 
	 	Name:  	Jerry D. Cash 	 
	 	Title:  	Chief Executive Officer and President 	 
	 




17









 








EXHIBIT A




[State of Kansas]



1. Central Natural Resources, Inc. v. Quest Cherokee, LLC, Bluestem Pipeline, LLC, et al.,
Case No. 04-C-100-PA, Labette County District Court



2. Central Natural Resources, Inc. v. Quest Cherokee, LLC, Case No. CJ-06-07, Craig County,
Oklahoma District Court



3. Labette Energy, LLC v STP Cherokee and Quest Cherokee, LLC, Case No. 05 CV 41, Labette
County District Court



4. Endeavor Energy Resources, L.P., et al. v. Quest Cherokee LLC, Case No. 05-CV-39
Montgomery County District Court



5. Roger Dean Daniels v. Quest Cherokee LLC, Case No.06-CV-61, Montgomery County District
Court



6. Quest Cherokee, LLC v. Hinkles & Admiral Bay, Case No. 2006-CV-74, Labette County
District Court



7. Robert King, Trustee of Orville B. King and Juanita G. King Trust v. Quest Cherokee,
LLC, Case No. 06-CV-86, Labette County District Court



8. Russell Freeman, d/b/a Continental Energy v. Quest Oil & Gas Corporation, Quest Cherokee,
LLC, et al., Case No. 2006-CV-28, Chautauqua County District Court



9. Carol R. Knisely, et al. vs. Quest Cherokee, LLC, Case No. 07-CV-58I, Montgomery County
District Court



10. In the Matter to Show Cause on the Commission’s Own Motion Issued to Quest Cherokee,
LLC, KCC Docket No. 07-CONS-155-CSHO





18









 




11. In the Matter of the Complaint of Roger Daniels against Quest Cherokee, LLC, KCC Docket
No. 07-CONS-207-CMSC



12. Lakeview Golf Course, LLC v. Quest Cherokee, LLC, Case No. 07-CV-75I, Montgomery County
District Court



13. Thomas R. Erbe and Janet L. Erbe v. Quest Cherokee, LLC, Case No. 07-CV-32, Wilson
County District Court



14. Lawrence Lee Ranes and Marianne Ranes v, Quest Cherokee, LLC, Case No. 07-CV-86I,
Montgomery County District Court



15. Charles J. Fink and Rebecca A. Fink v. Quest Cherokee, LLC, Case No. 07-CV-73I,
Montgomery County District Court



16. Hugo Spieker, et al. v. Quest Cherokee, LLC, Case No. 07-1225-MLB, U.S. District Court,
District of Kansas



17. Well Refined Drilling Co. v. Quest Cherokee, LLC, Case No. 2007 CV 91, Neosho County
District Court



18. Housel v. Quest Cherokee, LLC, Case No. 06-CV-26-I, Montgomery County District Court



19. Scott Tomlinson, et al. v. Quest Cherokee, LLC, Case No. 2007 CV 45, Wilson County
District Court



20. Well Refined Drilling Co. v. Quest Cherokee, LLC, et al., Case No. 2007 CV 47, Wilson
County District Court




[State of Oklahoma]




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21. Hill v. Quest Resource Corporation, et al., Case No. CJ-2003-30, Craig County District
Court



22. Kirkpatrick v. STP, Inc., STP Cherokee, Inc. and Bluestem Pipeline, LLC, Case No.
CJ-2005-143, Craig County District Court





20









 








EXHIBIT B




[State of Kansas]



1. J.D. and Vickie Friess v. Quest Cherokee, L.L.C., Bluestem Pipeline, LLC, et al., Case
No. 06-CV-58, Labette County District Court