Document:

exv10w2

 

Exhibit 10.2

Execution Version

OMNIBUS AGREEMENT

     THIS OMNIBUS AGREEMENT is entered into on, and effective as of, November 15, 2007, by and
between QUEST ENERGY PARTNERS, L.P., a Delaware limited liability partnership (the
“Partnership”), QUEST ENERGY GP, LLC, a Delaware limited liability company (the
“General Partner”) and QUEST RESOURCE CORPORATION, a Nevada corporation (“QRC”).
The Partnership, the General Partner and QRC are sometimes referred to in this Agreement each as a
“Party” and collectively as the “Parties.”

RECITALS

     A. The Parties desire by their execution of this Agreement to evidence their understanding, as
more fully set forth in Article II of this Agreement, with respect to the Partnership’s
reimbursement obligations to QRC for operating expenses, general and administrative services and
insurance coverage and expenses.

     B. The Parties desire by their execution of this Agreement to evidence their understanding, as
more fully set forth in Article III of this Agreement, with respect to the non-competition
obligations of QRC and its subsidiaries.

     C. The Parties desire by their execution of this Agreement to evidence their understanding, as
more fully set forth in Article IV of this Agreement, with respect to certain indemnification
obligations of the Parties to each other.

     D. The Parties desire by their execution of this Agreement to evidence their understanding, as
more fully set forth in Article V of this Agreement, with respect to the granting of a license from
QRC to the Partnership Group and the General Partner.

     In consideration of the premises and the covenants, conditions and agreements contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereby agree as follows:

ARTICLE  I

DEFINITIONS

     As used in this Agreement, the following terms shall have the respective meanings set forth
below:

     “Affiliate” means, with respect to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is under common
control with, the Person in question. As used herein, the term “control” means the possession,
direct or indirect, of the power to direct or cause the direction of the management and policies of
a Person, whether through ownership of voting securities, by contract or otherwise.

     “Agreement” means this Omnibus Agreement, as it may be amended, supplemented or
restated from time to time in accordance with the terms hereof.

 

 

     “Assets” means the oil and gas properties and related assets conveyed, contributed or
otherwise transferred by the QRC Entities to the Partnership Group prior to or on the Closing Date,
including any such assets held by a Person whose ownership interests are transferred by the QRC
Entities to the Partnership Group prior to or on the Closing Date, by means of operation of law or
otherwise.

     “Business Opportunity” means an opportunity to acquire, directly or indirectly,
natural gas or oil wells or other natural gas or oil rights and related equipment and facilities,
but not including any midstream or downstream assets, located in the Cherokee Basin.

     “Cause” has the meaning assigned to such term in the Partnership Agreement.

     “Change of Control” means with respect to any Person (the “Applicable
Person”), any of the following events: (a) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of the Applicable
Person’s assets to any other Person, unless immediately following such sale, lease, exchange or
other transfer such assets are owned, directly or indirectly, by the Applicable Person; (b) the
amalgamation, combination, consolidation or merger of the Applicable Person with or into another
Person pursuant to a transaction, or series of related transactions, other than any such
transaction(s) where (i) the holders of the Voting Securities of the Applicable Person immediately
prior to such transaction own, directly or indirectly, not less than a majority of the outstanding
Voting Securities of the surviving Person or its parent immediately after such transaction and (ii)
the board of directors of the surviving Person is comprised of a majority of persons who were
directors of the Applicable Person immediately prior to such transaction; or (c) a “person” or
“group” (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act), other than QRC or
its Affiliates with respect to the General Partner, being or becoming the “beneficial owner” (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of all of the then
outstanding Voting Securities of the Applicable Person, except in a merger or consolidation which
would not constitute a Change of Control under clause (b) above.

     “Cherokee Basin” means the 13-county region in southeastern Kansas and northeastern
Oklahoma where the Assets are located.

     “Closing Date” means the date of the closing of the Initial Offering.

     “Commission” means the United States Securities and Exchange Commission.

     “Common Unit” has the meaning assigned to such term in the Partnership Agreement.

     “Conflicts Committee” has the meaning assigned to such term in the Partnership
Agreement.

     “Contribution Agreement” means the Contribution, Conveyance and Assumption Agreement,
dated as of the Closing Date, by and among the Partnership, Quest Cherokee, LLC, the General
Partner, QRC and Quest Energy Service, LLC, together with any additional conveyance documents and
instruments contemplated or referenced therein.

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     “Covered Environmental Losses” means all environmental losses, damages, liabilities,
claims, demands, causes of action, judgments, settlements, fines, penalties, costs and expenses
(including, without limitation, costs and expenses of any Environmental Activity, court costs and
reasonable attorney’s and experts’ fees) of any and every kind or character, by reason of or
arising out of:

     (i) any violation or correction of violation, including, without limitation, performance of
any Environmental Activity, of Environmental Laws; or

     (ii) any event, omission or condition associated with ownership or operation of the Assets
(including, without limitation, the exposure to or presence of Hazardous Substances on, under,
about or migrating to or from the Assets or the exposure to or Release of Hazardous Substances
arising out of operation of the Assets or at non-Asset locations) including, without limitation,
(A) the cost and expense of any Environmental Activities, (B) the cost and expense of the
preparation and implementation of any closure, remedial or corrective action or other plans
required or necessary under Environmental Laws and (C) the cost and expense for any
environmental or toxic tort pre-trial, trial or appellate legal or litigation support work;
provided, in the case of clauses (A) and (B), such cost and expense shall not include
the costs of and associated with project management and soil and ground water monitoring.

     “Environmental Activities” means any investigation, study, assessment, evaluation,
sampling, testing, monitoring, containment, removal, disposal, closure, corrective action,
remediation (regardless of whether active or passive), natural attenuation, restoration,
bioremediation, response, repair, corrective measure, cleanup, or abatement that is required or
necessary under any applicable Environmental Law, including, but not limited to, institutional or
engineering controls or participation in a governmental voluntary cleanup program to conduct
voluntary investigatory and remedial actions for the clean-up, removal or remediation of Hazardous
Substances that exceed actionable levels established pursuant to Environmental Laws, or
participation in a supplemental environmental project in partial or whole mitigation of a fine or
penalty.

     “Environmental Laws” means all federal, state, and local laws, statutes, rules,
regulations, orders, judgments, ordinances, codes, injunctions, decrees, Environmental Permits and
other legally enforceable requirements and rules of common law relating to (a) pollution or
protection of human health and the environment or natural resources, including, without limitation,
the federal Comprehensive Environmental Response, Compensation and Liability Act, the Superfund
Amendments and Reauthorization Act, the Resource Conservation and Recovery Act, the Clean Air Act,
the Clean Water Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the Oil
Pollution Act of 1990, the Hazardous Materials Transportation Act, the Marine Mammal Protection
Act, the Endangered Species Act, the National Environmental Policy Act, and other environmental
conservation and protection laws, each as amended through the Closing Date, (b) any Release or
threatened Release of, or any exposure of any Person or property to, any Hazardous Substances and
(c) the generation, manufacture, processing, distribution, use, treatment, storage, transport or
handling of any Hazardous Substances.

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     “Environmental Permit” means any permit, approval, identification number, license,
registration, consent, exemption, variance, or other authorization required under or issued
pursuant to any applicable Environmental Law.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “General Partner” has the meaning assigned to such term in the preamble.

     “Hazardous Substance” means (a) any substance that is designated, defined or
classified as a hazardous waste, solid waste, hazardous material, pollutant, contaminant or toxic
or hazardous substance, or terms of similar meaning, or that is otherwise regulated under any
Environmental Law, including, without limitation, any hazardous substance as defined under the
Comprehensive Environmental Response, Compensation and Liability Act, as amended, (b) oil as
defined in the Oil Pollution Act of 1990, as amended, including oil, gasoline, natural gas, fuel
oil, motor oil, waste oil, diesel fuel, jet fuel and other refined petroleum hydrocarbons and
petroleum products and (c) radioactive materials, asbestos containing materials or polychlorinated
biphenyls.

     “Indemnified Party” means either the Partnership Group or the QRC Entities, as the
case may be, in their capacity as the parties entitled to indemnification in accordance with
Article IV hereof.

     “Indemnifying Party” means either the Partnership Group or QRC, as the case may be, in
their capacity as the parties from whom indemnification may be required in accordance with
Article IV.

     “Initial Offering” has the meaning assigned to such term in the Partnership Agreement.

     “License” has the meaning assigned to such term in Section 5.01 of this Agreement.

     “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.

     “Name” has the meaning assigned to such term in Section 5.01 of this Agreement.

     “Offer” has the meaning assigned to such term in Section 3.01 of this Agreement.

     “Partnership” has the meaning assigned to such term in the preamble.

     “Partnership Agreement” means the First Amended and Restated Agreement of Limited
Partnership of Quest Energy Partners, L.P., as such agreement is in effect on the Closing Date, to
which reference is hereby made for all purposes of this Agreement. No amendment or modification to
the Partnership Agreement subsequent to the Closing Date shall be given effect for the purposes of
this Agreement unless consented to by each of the Parties to this Agreement.

     “Partnership Group” means the Partnership and any subsidiary of any such Person.

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     “Party” or “Parties” have the meaning assigned to such terms in the preamble.

     “Person” means an individual or a corporation, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, government agency or political
subdivision thereof or other entity.

     “QRC” has the meaning assigned to such term in the preamble. 

     “QRC Entities” means QRC and its subsidiaries, excluding the Partnership Group.

     “Release” means any depositing, spilling, leaking, pumping, pouring, placing,
emitting, discarding, abandoning, emptying, discharging, migrating, injecting, escaping, leaching,
dumping or disposing into the environment.

     “Retained Assets” means any upstream assets and investments owned by any of the QRC
Entities that were not conveyed, contributed or otherwise transferred, or required to be conveyed,
contributed or otherwise transferred, to the Partnership Group pursuant to the Contribution
Agreement and other documents relating to the transactions referred to in the Contribution
Agreement.

     “subsidiary” means, with respect to any Person, (a) a corporation of which more than
50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to
vote in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more subsidiaries of such
Person or a combination thereof, (b) a partnership (whether general or limited) in which such
Person or a subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such Person, by one or more
subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a
corporation or a partnership) in which such Person, one or more subsidiaries of such Person, or a
combination thereof, directly or indirectly, at the date of determination, has (i) at least a
majority ownership interest or (ii) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.

     “Voting Securities” means securities of any class of a Person entitling the holders
thereof to vote in the election of members of the board of directors or other similar governing
body of the Person.

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ARTICLE II

REIMBURSEMENT OBLIGATIONS

     Section 2.01 Reimbursement for Operating and General and Administrative Expenses.

     (a) QRC hereby agrees to continue to provide, or cause to be provided, the Partnership Group
with general and administrative services, such as legal, accounting, treasury, insurance
administration and claims processing, risk management, health, safety and environmental,
information technology, human resources, credit, payroll, taxes, land management, engineering and
senior management oversight, that are substantially identical in nature and quality to the services
of such type previously provided by QRC and its Affiliates in connection with its management and
operation of the Assets during the one (1) year period prior to the Closing Date. For the
avoidance of doubt, incremental public company expenses of the Partnership, such as in connection
with preparation and filing of Commission reports, registration statements and other filings,
external audit, internal audit, transfer agent and registrar, legal, printing, unitholder reports,
and other related costs and expenses shall not be deemed to be expenses and expenditures for
general and administrative services.

     (b) The Partnership Group hereby agrees to reimburse QRC and its Affiliates for all reasonable
expenses and expenditures QRC or its Affiliates incurs or payments it makes on behalf of the
Partnership Group for general and administrative services.

     (c) The Partnership Group hereby agrees to reimburse QRC and its Affiliates for all reasonable
expenses and expenditures QRC or its Affiliates incurs or payments it makes on behalf of the
Partnership Group in connection with the business and operations of the Partnership Group,
including, but not limited to, (i) salaries of operational personnel performing services on the
Partnership Group’s behalf and the cost of employee benefits for such personnel, (ii) capital
expenditures, (iii) maintenance and repair costs, (iv) taxes and (v) incremental public company
expenses of the Partnership.

     (d) The General Partner will be entitled to allocate any such expenses and expenditures
between the Partnership Group, on the one hand, and QRC, on the other hand, in accordance with the
foregoing provision on any reasonable basis.

     Section 2.02 Reimbursement for Insurance. The Partnership Group hereby agrees to
reimburse QRC for all expenses QRC incurs or payments it makes on behalf of the Partnership Group
for insurance coverage with respect to (i) the Assets, (ii) claims related to fiduciary obligations
of officers, directors and control persons of the Partnership Group and (iii) claims under federal
and state securities laws related to any of the Partnership Group and any of the officers,
directors or control persons thereof.

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ARTICLE III

BUSINESS OPPORTUNITIES

     Section 3.01 Business Opportunities. If a QRC Entity acquires a Business Opportunity,
then not later than ninety (90) days after the consummation of the acquisition by such QRC Entity
of the Business Opportunity, the QRC Entity shall notify the Partnership in writing of such
acquisition and offer the Partnership Group the opportunity to purchase such Business Opportunity
for its fair market value in accordance with this Section 3.01 (the “Offer”). The Offer
must set forth the QRC Entity’s proposed terms relating to the purchase of the Business Opportunity
by the Partnership Group. The QRC Entity will provide all information concerning the business,
operations and finances of such Business Opportunity as may be reasonably requested by the
Partnership. As soon as practicable, but in any event within sixty (60) days after receipt of such
written notification, the Partnership shall notify the QRC Entity in writing that either (i) the
Partnership has elected (with the approval of the Conflicts Committee) not to cause a member of the
Partnership Group to purchase the Business Opportunity, in which event the QRC Entity is forever
free to continue to own or operate such Business Opportunity; or (ii) the Partnership has elected
(with the approval of the Conflicts Committee) to cause a member of the Partnership Group to
purchase the Business Opportunity, in which event the following procedures will apply:

     (a) After the receipt of such Offer by the Partnership, the QRC Entity and the Partnership
shall negotiate in good faith the terms on which the Business Opportunity will be sold to a member
of the Partnership Group. If the QRC Entity and the Partnership (with the concurrence of the
Conflicts Committee) are able to agree on the fair market value of the Business Opportunity or the
other terms of the Offer within sixty (60) days after receipt by the Partnership of the Offer, a
member of the Partnership Group shall purchase the Business Opportunity for the agreed upon fair
market value as soon as commercially practicable after such agreement has been reached.

     (b) If the QRC Entity and the Partnership (with the approval of the Conflicts Committee) are
unable to agree on the fair market value of the Business Opportunity or the other terms of the
Offer within sixty (60) days after receipt by the Partnership of the Offer, the QRC Entity and the
Partnership will engage a mutually agreed upon, nationally recognized investment banking firm to
determine the fair market value of the Business Opportunity. Such investment banking firm will
determine the fair market value of the Business Opportunity within thirty (30) days of its
engagement and furnish the QRC Entity and the Partnership its determination. The fees and expenses
of the investment banking firm will be split equally between the QRC Entity and the Partnership
Group. Once the investment banking firm has submitted its determination of the fair market value
of the Business Opportunity, the Partnership shall notify the QRC Entity in writing that either (i)
the Partnership has elected (with the approval of the Conflicts Committee) not to cause a member of
the Partnership Group to purchase the Business Opportunity or (ii) the Partnership has elected
(with the approval of the Conflicts Committee) to cause a member of the Partnership Group to
purchase the Business Opportunity, pursuant to the Offer as modified by the determination of the
investment banking firm. If the Partnership elects to cause a member of

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the Partnership Group to purchase the Business Opportunity, then such member of the
Partnership Group will purchase the Business Opportunity pursuant to the Offer as modified by the
determination of the investment banking firm as soon as commercially practicable after such
determination. If the Partnership elects not to cause a member of the Partnership Group to
purchase the Business Opportunity, such QRC Entity is forever free to continue to own or operate
such Business Opportunity.

     Section 3.02 Scope of Prohibition. Except as provided in this Article III and the
Partnership Agreement, each QRC Entity is free to engage in any business activity whatsoever,
including those that may be in direct competition with any member of the Partnership Group.

     Section 3.03 Enforcement.

     (a) QRC agrees and acknowledges that the Partnership Group does not have an adequate remedy at
law for the breach by the QRC Entities of the covenants and agreements set forth in this Article
III, and that any breach by the QRC Entities of the covenants and agreements set forth in this
Article III would result in irreparable injury to the Partnership Group. QRC further agrees and
acknowledges that any member of the Partnership Group may, in addition to the other remedies that
may be available to the Partnership Group, file a suit in equity to enjoin the QRC Entities from
such breach, and consent to the issuance of injunctive relief under this Agreement.

     (b) If any court determines that any provision of this Article III is invalid or
unenforceable, the remainder of such provisions shall not thereby be affected and shall be given
full effect without regard to the invalid provision. If any court construes any provision of this
Article III, or any part thereof, to be unreasonable because of the duration of such provision or
the geographic scope thereof, such court shall have the power to reduce the duration or restrict
the geographic scope of such provision and to enforce such provision as so reduced or restricted.

ARTICLE IV

INDEMNIFICATION

     Section 4.01 Environmental Indemnification.

     (a) Subject to the provisions of Section 4.04 and Section 4.05 below, QRC shall indemnify,
defend and hold harmless the Partnership Group for a period of three (3) years from the Closing
Date from and against any Covered Environmental Losses suffered or incurred by the Partnership
Group relating to the Assets, but only to the extent that such violation, correction of violation,
event, omission or condition complained of under this Section 4.01(a) occurred or existed on or
before the date of this Agreement. Covered Environmental Losses shall not include any claim, loss
or expense arising from or related to the plugging and abandonment of wells associated with the
Assets upon the determination that such well or wells have reached its or their useful economic
life. As used herein, the term “plugging and abandonment” shall mean all plugging, replugging and
abandonment associated with the Assets, or any portion thereof, and including, but not limited to,
all plugging and abandonment, associated removal, disposal or restoration of the surface, site
clearance and disposal of the wells, structures and personal

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property located on or associated with the Assets, the removal or capping and burying of all
associated flowlines, the recontouring of the surface in accordance with applicable laws or the
terms and conditions of applicable leases, licenses, franchises or contracts, site clearance and
any disposal of related waste materials or Hazardous Substances of the type ordinarily encountered
in oil and gas operations, but “plugging and abandonment” shall not include investigation or
remediation of soil, groundwater, or surface water contamination (requiring remediation or response
action under applicable Environmental Laws) exceeding the level of site restoration typically
required for normal plugging and abandonment activities.

     (b) The Partnership Group shall jointly and severally indemnify, defend and hold harmless the
QRC Entities, other than any subsidiary constituting part of the Partnership Group, from and
against any Covered Environmental Losses suffered or incurred by the QRC Entities, other than any
subsidiary constituting part of the Partnership Group, relating to the Assets occurring after the
Closing Date, but only to the extent that such violation, correction of violation, event, omission
or condition complained of under this Section 4.01(b) occurred or existed after the date of this
Agreement, and to the extent that any of the foregoing are not Covered Environmental Losses for
which the Partnership Group is entitled to indemnification under Section 4.01(a) above.

     Section 4.02 Additional Indemnification by QRC. QRC shall indemnify, defend and hold
harmless the Partnership Group from and against any Losses suffered or incurred by reason of or
arising from:

     (a) all federal, state and local income tax liabilities attributable to the operation of the
Assets prior to the Closing Date, including any such income tax liabilities of the QRC Entities
that may result from the consummation of the formation transactions for the Partnership Group
occurring on or prior to the Closing Date, but excluding any federal, state and local income taxes
reserved on the books of the Partnership Group as of the Closing Date;

     (b) the failure to convey good and defensible title to the Assets to one or more members of
the Partnership Group, subject only to encumbrances arising out of the existing credit facility to
which members of the Partnership Group are subject and other encumbrances that do not materially
adversely affect the value of the Assets or the ability of the Partnership Group to operate the
Assets in substantially the same manner as they were operated immediately prior to the Closing
Date; and

     (c) events and conditions associated with the Retained Assets whether occurring before, on or
after the Closing Date;

provided, however, that in the case of clause (a) above, such indemnification
obligations shall terminate upon the expiration of any applicable statute of limitations and that
in the case of clause (b) above, such indemnification obligations shall survive for three (3) years
from the Closing Date.

     Section 4.03 Additional Indemnification by the Partnership. In addition to, and not
in limitation of, the indemnification provided under this Article IV, the Partnership Group shall
indemnify, defend, and hold harmless the QRC Entities, other than any subsidiary constituting

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part of the Partnership Group, from and against any Losses suffered or incurred by the QRC
Entities, other than any subsidiary constituting part of the Partnership Group, by reason of or
arising out of events and conditions associated with the operation of the Assets that occurs after
the Closing Date (other than Covered Environmental Losses, which are provided for under Section
4.01(b) above), unless such indemnification would not be permitted under the Partnership Agreement
by reason of one of the provisos contained in Section 7.7 of the Partnership Agreement.

     Section 4.04 Limitations Regarding Indemnification. The aggregate liability of QRC in
respect of all Covered Environmental Losses under Section 4.01(a) shall not exceed $5,000,000.
Additionally, QRC shall not have any obligation under either Section 4.01(a) or Section 4.02(b)
until such Covered Environmental Losses or Losses, as applicable, exceed $500,000, and then only to
the extent such aggregate Covered Environmental Losses or Losses, as applicable, exceed $500,000.
Notwithstanding anything herein to the contrary, in no event will QRC have any indemnification
obligations under this Agreement for claims made as a result of additions to, or modifications of,
Environmental Laws promulgated after the Closing Date.

     Section 4.05 Indemnification Procedures.

     (a) The Indemnified Party agrees that within a reasonable period of time after it becomes
aware of facts giving rise to a claim for indemnification pursuant to this Article IV, 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 not
submit claims more frequently than once a calendar quarter (or twice, in the case of the last
calendar quarter prior to the expiration of the applicable indemnity coverage under this
Agreement).

     (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 set forth in this Article IV, 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 (which consent shall not be unreasonably
withheld, conditioned or delayed) 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 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 set forth in this
Article IV, including, 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

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maintain the confidentiality of all files, records and other information furnished by the
Indemnified Party pursuant to this Section 4.05. 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 covered by the indemnification set
forth in this Article IV; 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 reasonably
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 loss, cost, damage or expense 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.

     (e) The date on which notification of a claim for indemnification is received by the
Indemnifying Party shall determine whether such claim is timely made.

ARTICLE V

LICENSE

     Section 5.01 Grant of License. Upon the terms and conditions set forth in this
Article V, QRC hereby grants and conveys to the Partnership Group and the General Partner, the
non-exclusive, worldwide right and license (“License”) to use the name “[Quest]”
(hereafter, the “Name”) and the Quest logo as set forth on Exhibit A (hereafter, the
“Mark”) on or in connection with the goods and services offered for sale by the Partnership Group;
provided, however, that neither the Partnership Group nor the General Partner shall
have the right to license the Name or Mark to any third Persons, but shall have the right to use
the Name and Mark solely in conjunction with goods and services provided by the Partnership Group.
Each of the GP and the Partnership Group agrees that it will not use the Name or Mark together with
the words “Resource” or “Midstream” in identifying any member of the Partnership Group or the GP.

     Section 5.02 Use of Mark. The Partnership Group and the General Partner agree to use
the Mark only in compliance with the standards, specifications, directions, information and
know-how supplied by QRC. The Partnership Group and the General Partner agree to comply with any
requirements established by QRC concerning the style, design, display and use of the Mark, to
correctly use the trademark symbol TM, the service mark symbol SM or registration symbol
® with every use of the Mark, to use the registration symbol ® upon receiving
notice of registration of the Mark from QRC and to submit in advance of its use all advertising
copy, brochures or other materials incorporating the Mark to QRC for approval.

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     Section 5.03 Royalties. The Partnership Group and the General Partner shall pay no
royalties under this License.

     Section 5.04 Duration; Termination.

     (a) This License shall remain in full force and effect until it is terminated. At such time
as the General Partner is no longer an Affiliate of QRC or there is a Change of Control of the
Partnership, the license granted hereunder shall immediately terminate without further action of
any party.

     (b) If the Partnership Group or the General Partner makes an assignment for the benefit of its
respective creditors or if the Partnership Group or the General Partner discontinues its business,
the License hereby granted shall automatically terminate forthwith without any notice whatsoever
being necessary. In the event this License is so terminated, the Partnership Group and the General
Partner, their respective representatives, trustees, agents, administrator, successors and/or
assigns shall immediately cease all further use of the Name and the Mark, including any use in
connection with any goods or services or any advertising, promotional or other materials pertaining
thereto, except with and under the special consent and instructions of QRC in writing, which
instructions it shall be obligated to follow.

     Section 5.05 Right To Inspect; Quality Control. The Partnership Group and the General
Partner agree to submit to QRC from time to time and to permit QRC or its duly authorized
representative the right to inspect the use by the Partnership Group and the General Partner of the
Name and the Mark. When requested by QRC, each of the Partnership Group and the General Partner
agree to send samples of advertising and promotional materials utilizing the Name or the Mark and
any other documents which may permit QRC to determine whether its uses meet the standards,
specifications and directions approved by QRC. QRC shall have the right, at all reasonable times,
to monitor the use by the Partnership Group and the General Partner of the Name and the Mark,
including its use in connection with the goods and services of the Partnership Group identified by
the Name and the Mark to determine that they are of the proper quality.

     Section 5.06 Ownership. The Partnership Group and the General Partner agree that
ownership of the Name and the Mark and the goodwill relating thereto shall remain vested in QRC
both during the term of this License and thereafter, and the Partnership Group and the General
Partner further agree never to challenge, contest or question the validity of QRC’s ownership of
the Name and the Mark or any registrations thereof by QRC. In connection with the use of the Name
and the Mark, the Partnership Group shall not in any manner represent that it has any ownership in
the Name and the Mark or registration thereof except as set forth herein, and the Partnership Group
acknowledges that the use of the Name and the Mark shall not create in the Partnership Group’s
favor any right, title or interest in or to the Name and the Mark, but all uses of the Name and the
Mark by the Partnership Group, and the goodwill derived therefrom, shall inure to benefit of QRC.

     Section 5.07 Litigation. In the event the Partnership or any subsidiary thereof is
named as defendant in any action based on its use of the Name or the Mark, the Partnership Group

12

 

agrees to immediately notify QRC, and QRC shall have the right to intervene in any such action
and to control and direct the defense thereof, including the right to select defense counsel;
provided that, in the event QRC chooses to exercise control and if the Partnership Group
has complied with all of its obligations under this License, QRC shall reimburse Partnership for
the cost of its defense and to indemnify it against all damages arising therefrom.

     Section 5.08 Indemnification By Partnership. 

     (a) The Partnership hereby assumes all responsibility for and agrees to indemnify QRC against
any and all damages, losses, claims, suits or other expenses whatsoever arising out of the
Partnership Group’s promotion, advertising, use or sale of any services under the Name or the Mark,
including QRC’s reasonable attorneys’ fees incurred in the defense of any action against QRC.

     (b) As used in this Section 5.08, and for purposes of determining liability to QRC, QRC shall
include all of the QRC Entities and their owners, directors, officers, employees, agents,
representatives, successors and assigns of QRC.

     Section 5.09 Effect of Termination or Expiration. Upon and after the expiration or
termination of this License, all rights granted to the Partnership Group hereunder shall forthwith
revert to QRC. The Partnership Group will refrain from further use of the Name or any name deemed
by QRC to be similar to the Name or any further reference to it, direct or indirect, or use of any
mark deemed by QRC to be similar to the Mark, in connection with the Partnership Group’s goods and
services.

     Section 5.10 QRC’s Remedies.

     (a) The Partnership Group acknowledges that its failure to cease the use of the Name and the
Mark at the termination or expiration of this License will result in immediate and irremediable
damage to QRC and to the rights of any subsequent licensee of the Name and the Mark. The
Partnership Group acknowledges and admits that there is no adequate remedy at law for such failure
to cease manufacture, sale or distribution, and the Partnership Group agrees that in the event of
such failure QRC shall be entitled to equitable relief by way of temporary and permanent
injunctions and such other further relief as any court with jurisdiction may deem just and proper,
without being required to post a bond or other security.

     (b) Resort to any remedies referred to herein shall not be construed as a waiver of any other
rights and remedies to which QRC may be entitled under this License or otherwise.

     Section 5.11 Assignment. The rights and license granted under this License shall not
be assignable in any manner by the Partnership Group without QRC’s prior written consent. The
Partnership Group may not sublicense any of the rights granted herein. QRC may assign this License
and/or the Name or the Mark, but shall furnish written notice of such assignment to the
Partnership. This License will inure to the benefit of the parties and their respective heirs,
personal representatives, and permitted successors and assigns.

13

 

ARTICLE VI

MISCELLANEOUS

     Section 6.01 Choice of Law. This Agreement is subject to and governed by the laws of
the State of Kansas, excluding any conflicts-of-law rule or principle that might refer the
construction or interpretation of this Agreement to the laws of another state.

     Section 6.02 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 6.02.

	 	(a)	 	For notices to QRC:

Quest Resource Corporation

Oklahoma Tower

210 Park Avenue, Suite 2750

Oklahoma City, Oklahoma 73102

Attn: Chief Executive Officer

	 	(b)	 	For notices to the Partnership:
	 
	 	 	 	Quest Energy Partners, L.P.

c/o Quest Energy GP, LLC

Oklahoma Tower

210 Park Avenue, Suite 2750

Oklahoma City, Oklahoma 73102

Attn: Chief Executive Officer

     Section 6.03 Entire Agreement. This Agreement constitutes the entire agreement of the
Parties relating to the matters contained herein, superseding all prior contracts or agreements,
whether oral or written, relating to the matters contained herein.

     Section 6.04 Effect of Waiver or Consent. No waiver or consent, express or implied,
by any Party to or of any breach or default by any Person in the performance by such Person of its
obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other
breach or default in the performance by such Person of the same or any other obligations of such
Person hereunder. Failure on the part of a Party to complain of any act of any Person or to
declare any Person in default, irrespective of how long such failure continues, shall not
constitute a waiver by such Party of its rights hereunder until the applicable statute of
limitations period has run.

14

 

     Section 6.05 Termination. Notwithstanding any other provision of this Agreement, if
the General Partner is removed as general partner of the Partnership under circumstances where
Cause does not exist and Common Units held by the General Partner and its Affiliates are not voted
in favor of such removal or if there is a Change of Control of the Partnership or of the General
Partner (excluding any such Change of Control which occurs solely as a result of a Change of
Control of QRC), this Agreement, other than the provisions set forth in Article IV hereof (together
with any corresponding definition contained in Article I hereof), may immediately thereupon be
terminated by QRC or the Partnership.

     Section 6.06 Amendment or Modification. This Agreement may be amended, restated or
modified from time to time only by the written agreement of all the Parties; provided,
however, that no member of the Partnership Group may, without the prior approval of the
Conflicts Committee, agree to any amendment or modification of this Agreement that will adversely
affect the holders of Common Units. Each such instrument shall be reduced to writing and shall be
designated on its face an “Amendment,” “Addendum” or a “Restatement” to this Agreement.

     Section 6.07 Assignment. Except as provided in section 5.11, 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. This Agreement will bind and inure to the benefit of the Parties and to
their respective successors and assigns.

     Section 6.08 Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all signatory Parties had signed the same document. All
counterparts shall be construed together and shall constitute one and the same instrument.

     Section 6.09 Severability. If any provision of this Agreement or the application
thereof to any Person or circumstance shall be held invalid or unenforceable to any extent by a
court or regulatory body of competent jurisdiction, the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be affected thereby and
shall be enforced to the greatest extent permitted by law. Upon such determination, the Parties
shall negotiate in good faith in an effort to agree upon a suitable and equitable provision to
effect the original intent of the Parties.

     Section 6.10 Further Assurances. In connection with this Agreement and all
transactions contemplated by this Agreement, each Party agrees to execute and deliver such
additional documents and instruments and to perform such additional acts as may be necessary or
appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of
this Agreement and all such transactions.

     Section 6.11 Third Party Beneficiaries. Each of the Parties hereto specifically
intends that QRC and each member comprising the Partnership Group, as applicable, whether or not a
Party to this Agreement, will be entitled to assert rights and remedies hereunder as third party
beneficiaries hereto with respect to those provisions of this Agreement affording a right, benefit
or privilege to any such entity. Except as provided in the preceding sentence, the provisions of
this Agreement are enforceable solely by the Parties to it, and no Common Unit holder or its
assignee or any other Person will have the right, separate and apart from the Partnership, to

15

 

enforce any provision of this Agreement or to compel any Party to this Agreement to comply
with its terms.

     Section 6.12 Withholding or Granting of Consent. Except as expressly provided to the
contrary in this Agreement, each Party may, with respect to any consent or approval that it is
entitled to grant pursuant to this Agreement, grant or withhold such consent or approval in its
sole and uncontrolled discretion, with or without cause, and subject to such conditions as it shall
deem appropriate.

     Section 6.13 Laws and Regulations. Notwithstanding any provision of this Agreement to
the contrary, no Party shall be required to take any act, or fail to take any act, under this
Agreement if the effect thereof would be to cause such Party to be in violation of any applicable
law, statute, rule or regulation.

     Section 6.14 No Recourse Against Officers or Directors. For the avoidance of doubt,
the provisions of this Agreement shall not give rise to any right of recourse against any officer
or director of any QRC Entity or any of the Partnership Group.

     Section 6.15 Construction. Unless the context requires otherwise: (a) any pronoun
used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references
to Articles and Sections refer to Articles and Sections of this Agreement; and (c) the term
“include” or “includes” means includes, without limitation, and “including” means including,
without limitation.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

16

 

     IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the date
first above written.

	 	 	 	 	 	 	 	 	 
	 	 	QUEST ENERGY PARTNERS, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By: QUEST ENERGY GP, LLC, its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Jerry D. Cash	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Jerry D. Cash	 	 
	 

	 	 	 	Title:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	QUEST ENERGY GP, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jerry D. Cash	 	 
	 	 	 	 	 	 	 
	 	 	Name	 	: Jerry D. Cash	 	 
	 	 	Title:	 	 Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	QUEST RESOURCE CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jerry D. Cash	 	 
	 	 	 	 	 	 	 
	 	 	Name	 	: Jerry D. Cash	 	 
	 	 	Title:	 	 Chief Executive Officer	 	 

17

 

Exhibit A

Quest Logo

18exv10w3

 

Exhibit 10.3

Execution Version

MANAGEMENT SERVICES AGREEMENT

BY AND AMONG

QUEST ENERGY GP, LLC,

QUEST ENERGY PARTNERS, L.P.

AND

QUEST ENERGY SERVICE, LLC

November 15, 2007

 

 

Execution Version

MANAGEMENT SERVICES AGREEMENT 

     THIS MANAGEMENT SERVICES AGREEMENT is made and entered into on, and effective as of, November
15, 2007 (the “Agreement”), by and among Quest Energy GP, LLC, a Delaware limited liability
company (the “General Partner”), Quest Energy Partners, L.P., a Delaware limited
partnership (the “Partnership”), and Quest Energy Service, LLC, a Delaware limited
liability company (together with its permitted assignees, the “Manager” and, collectively
with the General Partner and the Partnership, the “Parties” and each, a “Party”).

RECITALS

     WHEREAS, the Partnership is the owner, directly or indirectly, of interests in the Business
(as hereinafter defined);

     WHEREAS, the Partnership Group (as hereinafter defined) requires certain services to operate
the Business and to fulfill other general and administrative functions relating to the management
of the Business; and

     WHEREAS, the Partnership Group desires to engage the Manager to provide such services and the
Manager is willing to undertake such engagement, subject to the terms and conditions of this
Agreement.

     NOW THEREFORE, in consideration of the mutual covenants herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:

ARTICLE I

DEFINITIONS

     SECTION 1.01 DEFINITIONS. Capitalized terms used, but not defined herein, shall have
the meanings given them in the Partnership Agreement. The following terms shall have the
respective meanings set forth below:

     “Acquisition” means any acquisition or series of acquisitions by the Partnership Group
of (i) all or substantially all of the interest in any company or business (whether by a purchase
of assets, purchase of stock, merger or otherwise) or (ii) any gas or oil properties or interests,
including any related assets, acquired after the date of this Agreement.

     “Acquisition Information” means any and all information provided by or on behalf of
the Manager to the Partnership in the performance of Acquisition Services.

     “Acquisition Services” means those Services in respect of potential and consummated
Acquisitions.

 

 

     “Affiliate” means, with respect to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is under common
control with, the Person in question. As used herein, the term “control” means the possession,
directly or indirectly, of the power to direct, or cause the direction of, the management and
policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

     “Agreement” is defined in the preamble.

     “Audit Right” is defined in Section 4.02 hereof.

     “Bankrupt” with respect to any Person means such Person shall generally be unable to
pay its debts as such debts become due, or shall so admit in writing or shall make a general
assignment for the benefit of creditors; or any Proceeding shall be instituted by or against such
Person seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other similar official
for it or for any substantial part of its property and, in the case of any such Proceeding
instituted against it (but not instituted by it), shall remain undismissed or unstayed for a period
of 30 days; or such Person shall take any action to authorize any of the actions set forth above.

     “Board” means the Board of Managers of the General Partner.

     “Business” means the business of the Partnership Group, as now or hereafter conducted.

     “Business Day” means any day that is not a Saturday, Sunday or day on which banks are
authorized by law to close in the States of Oklahoma or New York.

     “Closing Date” means the date of the closing of the initial public offering, pursuant
to the Prospectus, of common units representing limited partnership interests in the Partnership.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Confidential Information” means information and records furnished by the Partnership
or the General Partner with respect to the Partnership Group, the Business and/or the Properties,
together with any reports, analyses, summaries, spreadsheets, evaluations, memoranda or other
documents prepared or generated by Manager or its consultants or agents on the basis of such
information, whether in written, graphic, electronic or any other format, to the extent such
information is of a nature that is customarily maintained as confidential and not disclosed by
publicly traded companies engaged in the oil and gas exploration and production business. Such
information includes, but is not limited to, seismic data, reserve reports, prospect analyses, and
privileged attorney-client communications. Confidential Information includes not only written or
other tangible information, but also information transferred orally, visually, electronically or by
any other means. Confidential Information does not include information that (i) is in or enters
the public domain without breach of this Agreement or (ii) the receiving Party lawfully receives
from a third party without restriction on disclosure and to the receiving Party’s knowledge without
breach of a nondisclosure obligation.

2

 

     “Damages” is defined in Section 9.01 hereof.

     “Force Majeure” means any cause beyond the reasonable control of a Party, including
the following causes (unless they are within such Party’s reasonable control): acts of God,
strikes, lockouts, acts of the public enemy, wars or warlike action (whether actual or impending),
arrests and other restraints of government (civil or military), blockades, embargoes,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires, sabotage, tornadoes,
named tropical storms and hurricanes, floods, civil disturbances, terrorism, mechanical breakdown
of machinery or equipment, explosions, confiscation or seizure by any Governmental Authority and
any order of any Governmental Authority having jurisdiction.

     “G&A Services” means those general and administrative services necessary or useful for
the conduct of the business of the Partnership Group, including, but not limited to, accounting,
finance, tax, property management, risk management, land, marketing, legal and engineering.

     “General Partner” is defined in the preamble.

     “Governmental Authority” means any court or tribunal in any jurisdiction or any
federal, state, tribal, county, municipal or local government or other governmental body, agency,
authority, department, commission, board, bureau, instrumentality, arbitrator or arbitral body or
any quasi-governmental or private body lawfully exercising any regulatory or taxing authority.

     “Laws” means any applicable statute, common law, rule, regulation, code, judgment,
order, ordinance, writ, injunction or decree issued or promulgated by any Governmental Authority.

     “Manager” is defined in the preamble.

     “Manager Expenses” is defined in Section 5.01 hereof.

     “Manager Operating Party” is defined in Section 9.01 hereof.

     “Party” and “Parties” is defined in the preamble.

     “Partnership” is defined in the preamble.

     “Partnership Agreement” means the First Amended and Restated Agreement of Limited
Partnership of the Partnership, as it may be amended, supplemented or restated from time to time.

     “Partnership Group” means the General Partner, the Partnership and all of their
respective Subsidiaries.

     “Person” means an individual or a corporation, limited liability company, partnership,
joint venture, trust, unincorporated organization, association, government agency or political
subdivision thereof or other entity.

3

 

     “Proceedings” means all proceedings, actions, claims, suits and notices of
investigations by or before any arbitrator or Governmental Authority.

     “Properties” means the oil and gas properties now owned or hereafter acquired by the
Partnership or its Subsidiaries, including oil and gas leases, mineral interests, royalty
interests, overriding royalty interests, pipelines, flow lines, gathering lines, gathering systems,
pumps, compressors, dehydration units, separators, meters, injection facilities, salt water
disposal wells and facilities, plants, wells, downhole and surface equipment, fixtures,
improvements, easements, rights-of-way, surface leases, licenses, permits and other surface rights,
and other real or personal property appurtenant thereto or used in conjunction therewith.

     “Prospectus” means the final prospectus, dated November 8, 2007, relating to the
initial public offering of common units representing limited partnership interests in the
Partnership, as filed with Securities and Exchange Commission pursuant to Rule 424(b) under the
Securities Act of 1933.

     “QRC” has the meaning set forth in the Partnership Agreement.

     “Services” is defined in Section 2.02 hereof.

     “Subsidiary” means, with respect to any Person, (i) a corporation of which more than
50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to
vote in the election of directors or other governing body of such corporation is owned, directly or
indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such
Person or a combination thereof; (ii) a partnership (whether general or limited) in which such
Person or a Subsidiary of such Person is, at the date of determination, a general or limited
partner of such partnership, but only if more than 50% of the partnership interests of such
partnership (considering all of the partnership interests of the partnership as a single class) is
owned, directly or indirectly, at the date of determination, by such Person, by one or more
Subsidiaries of such Person, or a combination thereof; or (iii) any other Person (other than a
corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a
combination thereof, directly or indirectly, at the date of determination, has (a) at least a
majority ownership interest or (b) the power to elect or direct the election of a majority of the
directors or other governing body of such Person.

     “Tax Authority” means any Governmental Authority having jurisdiction over the
assessment, determination, collection or imposition of any Tax.

     “Tax Return” means any report, return, election, document, estimated tax filing,
declaration or other filing provided to any Tax Authority, including any amendments thereto.

     “Taxes” means (i) all taxes, assessments, charges, duties, levies, imposts or other
similar charges imposed by a Governmental Authority, including all income, franchise, profits,
capital gains, capital stock, transfer, gross receipts, sales, use, transfer, service, occupation,
excise, severance, ad valorem, windfall profits, premium, stamp, license, payroll, employment,
social security, unemployment, disability, environmental (including taxes under Code section 59A),
alternative minimum, add-on, value-added, withholding and other taxes, assessments, charges,

4

 

duties, levies, imposts or other similar charges of any kind whatsoever (whether payable directly
or by withholding and whether or not requiring the filing of a Tax Return), and all estimated
taxes, deficiency assessments, additions to tax, additional amounts imposed by any Governmental
Authority, penalties and interest, but excluding any and all taxes based on net income, net worth,
capital or profit; (ii) any liability for the payment of any amount of the type described in the
immediately preceding clause (i) as a result of being a member of a consolidated, affiliated,
unitary, combined, or similar group with any other corporation or entity at any time on or prior to
the Closing Date and (iii) any liability for the payment of any amount of the type described in the
preceding clauses (i) or (ii) whether as a result of contractual obligations to any other Person or
operation of law.

     “Third Party” means any Person other than the Partnership or the Manager, or any of
their respective Affiliates, or any partner of the Partnership.

     SECTION 1.02 OTHER DEFINITIONS. Other terms defined herein have the meanings so given
them.

     SECTION 1.03 CONSTRUCTION. Unless the context requires otherwise: (i) the singular
form of nouns, pronouns and verbs include the plural and vice-versa; (ii) the terms “include,”
“includes” and “including” and words of like import will be deemed to be followed by the words
“without limitation”; and (iii) the terms “hereof,” “herein” and “hereunder” refer to this
Agreement as a whole and not to any particular provision of this Agreement.

ARTICLE II

RETENTION OF THE MANAGER; SCOPE OF SERVICES

     SECTION 2.01 RETENTION OF THE MANAGER. The Partnership hereby engages the Manager to
perform the Services, as directed by the General Partner, and to provide all personnel and any
facilities, goods and equipment not otherwise provided by the Partnership Group necessary to
perform the Services. The Manager hereby accepts such engagement and agrees to perform the
Services requested by the General Partner and to provide any personnel, facilities, goods and
equipment not otherwise provided by the Partnership Group, and to provide all employees as may be
reasonable and necessary to perform the Services, it being understood that the Partnership shall
provide all field-level personnel and first line supervisors.

     SECTION 2.02 SCOPE OF SERVICES. The services shall consist of such services as the
General Partner determines may be reasonable and necessary to operate the Business, including,
without limitation, any G&A Services, those services described on Schedule I hereto and such other
services as the Parties may agree upon from time to time (the “Services”).

     SECTION 2.03 EXCLUSION OF SERVICES. The General Partner may temporarily or
permanently exclude any particular service from the scope of the Services upon 90 days’ notice to
the Manager.

5

 

ARTICLE III

STANDARD OF CARE

     SECTION 3.01 STANDARD OF CARE. The Manager shall perform the Services in an honest
and good faith manner, with that degree of care, diligence and skill that a reasonably prudent
advisor and manager would exercise in comparable circumstances, and in compliance with applicable
Laws, contracts, leases, orders, security instruments and other agreements to which the Partnership
is a party or by which the Partnership or any of its Properties are bound.

     SECTION 3.02 PROTECTION FROM LIENS. In the course of providing the Services, the
Manager shall not permit any liens, encumbrances or charges upon any of the Properties arising from
the provision of Services or materials under this Agreement except as approved, or consented to, by
the Partnership.

     SECTION 3.03 PROCUREMENT OF GOODS AND SERVICES BY AFFILIATES AND THIRD PARTIES.

     (a) The Parties hereby agree that in discharging its obligations hereunder, the Manager may
engage any of its Affiliates or any qualified Third Party to perform the Services (or any part of
the Services) on its behalf and that the performance of the Services (or any part of the Services)
by any such Affiliate or Third Party shall be treated as if the Manager performed such Services
itself. Notwithstanding the foregoing, nothing contained herein shall relieve the Manager of its
obligations hereunder.

     (b) The Parties hereby agree that the Manager shall be entitled to arrange for contracts with
Third Parties for goods in connection with the provision of the Services; provided, that
the Manager shall use commercially reasonable efforts (i) to obtain such goods at rates competitive
with those otherwise generally available in the area in which materials are to be furnished and
(ii) to obtain from such Third Parties such customary warranties and guarantees as may be
reasonably required with respect to the goods so furnished.

     SECTION 3.04 INTELLECTUAL PROPERTY.

     (a) Any (i) inventions, whether patentable or not, developed or invented, or (ii)
copyrightable material (and the intangible rights of copyright therein) developed, by the Manager,
its Affiliates or its or their employees in connection with the performance of the Services shall
be the property of the Manager; provided, however, that the Partnership Group shall
be granted an irrevocable, royalty-free, non-exclusive and non-transferable right and license to
use such inventions or material; and further provided, however, that the
Partnership Group shall only be granted such a right and license to the extent such grant does not
conflict with, or result in a breach, default, or violation of a right or license to use such
inventions or material granted to the Manager by any Person other than an Affiliate of the Manager.
Notwithstanding the foregoing, the Manager will use all commercially reasonable efforts to grant
such right and license to the Partnership Group.

6

 

     (b) The General Partner and the Partnership hereby grant to the Manager and its Affiliates an
irrevocable, royalty-free, non-exclusive and non-transferable right and license to use, during the
term of this Agreement, any intellectual property provided by the Partnership Group to the Manager
or its Affiliates, but only to the extent such use is necessary for the performance of the
Services. The Manager agrees that it and its Affiliates will utilize such intellectual property
solely in connection with the performance of the Services.

     (c) If the Manager uses or licenses intellectual property owned by Third Parties in the
performance of the Services, the Manager shall obtain and maintain any such licenses and
authorizations necessary to authorize its use of such intellectual property in connection with the
Services.

     SECTION 3.05 MANAGER INFORMATION. It is contemplated by the Parties that, during the
term of this Agreement, the Partnership Group will be required to provide certain notices,
information and data necessary for the Manager to perform the Services and its obligations under
this Agreement. The Manager shall be permitted to rely on any information or data provided by the
Partnership Group to the Manager in connection with the performance of its duties and provision of
Services under this Agreement, except to the extent that the Manager has actual knowledge that such
information or data is inaccurate or incomplete.

     SECTION 3.06 APPOINTMENT OF INDEPENDENT ACCOUNTING FIRM AND INDEPENDENT PETROLEUM
ENGINEER. Notwithstanding anything to the contrary in this Agreement, the Parties hereby
recognize and agree that the General Partner shall have the exclusive authority to appoint an
independent accounting firm to audit the financial statements of the Partnership and an independent
petroleum engineer to provide reports to the Partnership relating to estimates of proved reserves
for Securities and Exchange Commission and other reporting purposes.

     SECTION 3.07 COMMINGLING OF ASSETS. To the extent the Manager shall have charge or
possession of any of the Partnership’s assets in connection with the provision of the Services, the
Manager shall separately maintain, and not commingle, the assets of the Partnership with those of
the Manager or any other Person.

     SECTION 3.08 INSURANCE. The Manager shall obtain and maintain during the term of
this Agreement, from insurers who are reliable and acceptable to the Partnership and authorized to
do business in the state or states or jurisdictions in which Services are to be performed by the
Manager, insurance coverages in the types and minimum limits as the Parties determine to be
appropriate and as is consistent with standard industry practice. The Manager agrees upon the
Partnership’s request from time to time or at any time to provide the Partnership with certificates
of insurance evidencing such insurance coverage and, upon request of the Partnership, shall furnish
copies
of such policies. Except with respect to workers’ compensation coverage, the policies shall
name the Partnership as an additional insured and shall contain waivers by the insurers of any and
all rights of subrogation to pursue any claims or causes of action against the Partnership. The
policies shall provide that they will not be cancelled or reduced without giving the Partnership at
least 30 days’ prior written notice of such cancellation or reduction.

7

 

ARTICLE IV

BOOKS, RECORDS AND REPORTING

     SECTION 4.01 BOOKS AND RECORDS. The Manager shall maintain accurate books and records
regarding the performance of the Services and its calculation of the Manager Expenses, and shall
maintain such books and records for the period required by applicable accounting practices or Law.

     SECTION 4.02 AUDITS. At any time during the term of this Agreement, the Partnership
shall have the right to review and, at the Partnership’s expense, to copy the books and records
maintained by the Manager relating to the Services. In addition, to the extent necessary to verify
the performance by the Manager of its obligations under this Agreement, the Partnership shall have
the right, at the Partnership’s expense, to audit, examine and make copies of or extracts from the
books and records of Partnership’s (the “Audit Right”). The Partnership may exercise the
Audit Right through such auditors as the Partnership may determine in its sole discretion. The
Partnership shall (i) exercise the Audit Right only upon reasonable written notice to the Manager
and during normal business hours and (ii) use its reasonable efforts to conduct the Audit Right in
such a manner as to minimize the inconvenience and disruption to the Manager.

     SECTION 4.03 REPORTS. The Manager shall prepare and deliver to the Partnership any
reports provided for in this Agreement and such other reports as the Partnership may reasonably
request from time to time regarding the performance of the Services.

ARTICLE V

MANAGER REIMBURSEMENT; CONTINUING OBLIGATIONS

     SECTION 5.01 MANAGER EXPENDITURES. The Manager shall on a monthly basis invoice the
Partnership with respect to any Services provided by the Manager hereunder during such month, plus
or minus any adjustment necessary to correct prior estimated billings to actual billings, the
general, administrative and similar allocable overhead costs, as well as any costs of services or
goods purchased from Third Parties, incurred by the Manager in the performance of such Services
(the “Manager Expenses”). Subject to Section 5.05 hereof, all invoices shall be due and
payable, in the manner provided in Section 5.03 below, within three days after receipt of each
invoice. The Manager Expenses shall be charged to the Partnership without mark-up, interest or
other profit to the Manager or its Affiliates. Should the Manager commence providing Acquisition
Services with respect to a particular project, the Partnership shall reimburse the Manager for all
Manager Expenses incurred in connection with such Acquisition Services to the extent related to
such project regardless of whether the Partnership completes such Acquisition. As used herein,
“Manager Expenses” include all costs and expenses which are expressly designated elsewhere in this
Agreement as the Partnership’s, together with the following:

     (a) costs of legal, tax, accounting, consulting, auditing, administrative and other similar
services rendered for the Partnership by providers retained by the Manager or provided by the
employees of the Manager or its Affiliates;

8

 

     (b) the compensation and expenses of the Board and the cost of liability insurance to
indemnify the General Partner’s directors and officers;

     (c) costs associated with the establishment and maintenance of any credit facilities and other
indebtedness of the Partnership or its Subsidiaries (including commitment fees, accounting fees,
legal fees, closing and other costs) or any securities offerings of the Partnership or its
Subsidiaries;

     (d) expenses connected with communications to holders of securities of the Partnership or its
Subsidiaries and other bookkeeping and clerical work necessary in maintaining relations with
holders of such securities and in complying with the continuous reporting and other requirements of
governmental bodies or agencies, including, without limitation, all costs of preparing and filing
required reports with the Securities and Exchange Commission, the costs (including transfer agent
and registrar costs) in connection with the listing and/or trading of the Partnership’s securities
on any exchange or inter-dealer quotation system, the fees to any such exchange or inter-dealer
quotation system in connection with its listing, costs of complying with the rules, regulations or
policies of such exchange or inter-dealer quotation system, costs of preparing, printing and
mailing the Partnership’s annual report to its unitholders and proxy materials with respect to any
meeting of the unitholders of the Partnership;

     (e) the allocable costs associated with any computer software or hardware, electronic
equipment or purchased information technology services from Third Party vendors that is used for
the Partnership;

     (f) expenses incurred by managers, officers, employees and agents of the Manager and its
Affiliates for travel on the Partnership’s behalf and other out-of-pocket expenses;

     (g) the costs of maintaining compliance with all applicable Laws;

     (h) all Taxes and license fees;

     (i) all insurance costs incurred in connection with the operation of the Business;

     (j) expenses relating to any office(s) or office facilities, including but not limited to
disaster backup recovery sites and facilities, maintained for the Partnership separate from the
office or offices of the Manager;

     (k) expenses connected with the payments of interest, dividends or distributions in cash or
any other form authorized or caused to be made by the Board to or on account of the holders of
securities of the Partnership or its Subsidiaries, including, without limitation, in connection
with any dividend reinvestment plan;

     (l) any judgment or settlement of pending or threatened Proceedings (whether civil, criminal
or otherwise) against the Partnership or any Subsidiary, or against any trustee, director, manager
or officer of the Partnership or of any Subsidiary in his or her capacity as such for which the
Partnership or any Subsidiary is required to indemnify such trustee, director, manager or officer
by any Governmental Authority, or settlement of pending or threatened Proceedings or by the
Partnership Agreement;

9

 

     (m) the allocable portion of salaries and other compensation, rent, telephone, utilities,
office furniture, equipment, machinery and other office, internal and overhead expenses of the
Manager and its Affiliates required for, and based on the percentage of time spent by personnel of
the Manager and its Affiliates on, the Partnership’s operations (provided, that the allocation of
compensation expense shall be determined based on the Manager’s good faith estimate of the value of
each Person’s services performed on the Partnership’s business and affairs, subject to the periodic
review and approval of the Board); and

     (n) all other expenses actually incurred by the Manager or its Affiliates which are reasonably
necessary for the performance by the Manager of its duties and functions under this Agreement.

     The provisions of this Section 5.01 shall survive the expiration or earlier termination of
this Agreement to the extent such expenses have previously been incurred or are incurred in
connection with such expiration or termination.

     SECTION 5.02 REPORTING. On or before the 15th day following each month during the
term hereunder, the Manager shall provide the Partnership with a summary of the invoices for the
aggregate Manager Expenses relating to such month. The Manager’s summary shall also provide
reasonably detailed documentation supporting such Manager Expenses.

     SECTION 5.03 MANNER OF PAYMENT. All payments required under this Article V shall be
made (i) by wire of immediately available funds (such designation to be made by the Manager at
least two Business Days prior to the date the Manager Expenses become payable under Section 5.01
hereof) or (ii) by check pursuant to the address set forth in Section 12.01(b) hereof.

     SECTION 5.04 TAXES. The Partnership shall be responsible for all applicable Taxes
levied on items, goods or services that are sold, purchased or obtained pursuant to this Agreement,
including the Services.

     SECTION 5.05 DISPUTED CHARGES. THE PARTNERSHIP MAY, WITHIN 60 DAYS AFTER RECEIPT OF A
CHARGE FROM THE MANAGER, TAKE WRITTEN EXCEPTION TO SUCH CHARGE, ON THE GROUND THAT THE SAME WAS NOT
A REASONABLE COST INCURRED BY THE MANAGER IN CONNECTION WITH THE SERVICES. THE PARTNERSHIP SHALL
NEVERTHELESS PAY THE MANAGER IN FULL WHEN DUE THE FULL INVOICED AMOUNT. SUCH PAYMENT SHALL NOT BE
DEEMED A WAIVER OF THE RIGHT OF THE PARTNERSHIP TO RECOUP ANY CONTESTED PORTION OF ANY AMOUNT SO
PAID. HOWEVER, IF THE AMOUNT AS TO WHICH SUCH WRITTEN EXCEPTION IS TAKEN, OR ANY PART THEREOF, IS
ULTIMATELY DETERMINED NOT TO BE A REASONABLE COST INCURRED BY THE MANAGER IN CONNECTION WITH ITS
PROVIDING THE SERVICES HEREUNDER, SUCH AMOUNT OR PORTION THEREOF (AS THE CASE MAY BE) SHALL BE
REFUNDED BY THE MANAGER TO THE PARTNERSHIP TOGETHER WITH INTEREST THEREON AT THE LESSER OF THE
PRIME RATE PER ANNUM APPEARING IN THE “MONEY RATES” SECTION OF THE WALL STREET JOURNAL FROM TIME TO
TIME OR THE MAXIMUM LAWFUL RATE DURING THE PERIOD FROM THE DATE OF PAYMENT BY THE PARTNERSHIP TO
THE DATE OF REFUND BY THE MANAGER.

10

 

     SECTION 5.06 SET OFF. In the event that the Manager owes the Partnership a sum
certain in an uncontested amount under any other agreement, then any such amounts may be aggregated
and the Partnership and the Manager may discharge their obligations by netting those amounts
against any amounts owed by the Partnership to the Manager under this Agreement. If the
Partnership or the Manager owes the other Party a greater aggregate amount, that Party may pay to
the other Party the difference between the amounts owed.

     SECTION 5.07 MANAGER EMPLOYEES. The obligations under Sections 5.01 and 5.03, to the
extent they relate to Services provided by employees of the Manager or its Affiliates, shall be
limited to payment to the Manager for expenses in connection with its or its Affiliates’ employees
engaged in the provision of Services hereunder, and the Partnership shall not be obligated to pay
to the Manager’s or its Affiliates’ employees directly any compensation, salaries, wages, bonuses,
benefits, social security taxes, workers’ compensation insurance, retirement and insurance
benefits, training and other such expenses; provided, however, that the Partnership
may, at its option, compensate such employees under one or more equity-based incentive compensation
plans for the provision of Services hereunder; and provided further,
however, that if the Manager fails to pay any employee, with the exception of
employee claims for amounts owed that the Manager disputes in good faith, within 30 days of
the date such employee’s payment is due:

     (a) the Partnership may (i) pay such employee directly, (ii) employ such employee directly,
(iii) notify the Manager and begin to pay all employees providing service to the Partnership
directly or (iv) notify the Manager that this Agreement is terminated and employ all employees
directly; and

     (b) the Manager shall reimburse the Partnership, as the case may be, the amount the
Partnership paid to the Manager for employee services that the Manager did not pay to any such
employee.

ARTICLE VI

FORCE MAJEURE

     A Party’s obligation under this Agreement shall be excused when and to the extent its
performance of that obligation is prevented due to Force Majeure; provided,
however, that a Party shall not be excused by Force Majeure from any obligation to pay
money. The Party that is prevented from performing its obligation by reason of Force Majeure shall
promptly notify the other Parties of that fact and shall exercise due diligence to end its
inability to perform as promptly as practicable. Notwithstanding the foregoing, a Party is not
required to settle any strike, lockout or other labor dispute in which it may be involved;
provided, however, that, in the event of a strike, lockout or other labor dispute
affecting the Manager, the Manager shall use reasonable efforts to continue to perform all
obligations hereunder by utilizing its management personnel and that of its Affiliates.

11

 

ARTICLE VII

ASSIGNMENTS AND SUBCONTRACTS

     SECTION 7.01 ASSIGNMENTS.

     (a) Without the prior consent of the Manager, none of the Partnership or the other members or
the Partnership Group may sell, transfer or convey any of its rights, or delegate any of its
obligations, under this Agreement to any Person; provided, however, that the
Partnership, without the consent of the Manager, may assign this Agreement to a Person which is a
successor to the Partnership (by merger, consolidation or purchase of all or substantially all of
its assets), in which case such successor organization shall be bound under this Agreement and by
the terms of such assignment in the same manner as the Partnership is bound under this Agreement.
The Partnership shall notify the Manager of any such assignment, but the failure to give such
notice will not affect the validity of the assignment.

     (b) Without the prior consent of the Partnership, the Manager may not sell, assign, transfer
or convey any of its rights, or delegate any of its obligations, under this Agreement to any
Person, other than the delegation of performance of Services to an Affiliate of the Manager or a
qualified Third Party as permitted by Section 3.03(a) hereof and the sale, assignment, transfer or
conveyance of its rights hereunder to any such Affiliate.

     Any attempted assignment in violation of this Section 7.01 shall be void.

     SECTION 7.02 OTHER REQUIREMENTS. Subject to the other provisions hereof:

     (a) in rendering the Services, the Manager shall not discriminate against any employee or
applicant for employment because of race, creed, color, religion, sex, national origin, age or
handicap, and shall comply with all applicable provisions of Executive Order 11246 of September 24,
1965, and any successor order thereto; and

     (b) the Manager agrees to exercise reasonable diligence to ensure that, during the term of
this Agreement, it shall not employ unauthorized aliens as defined in the Immigration Reform and
Control Act of 1986, or any successor law.

ARTICLE VIII

CONFIDENTIAL INFORMATION

     SECTION 8.01 NONDISCLOSURE. The Manager shall maintain the confidentiality of all
Confidential Information; provided, however, that the Manager may disclose such
Confidential Information (i) to its Affiliates to the extent deemed by the Manager to be reasonably
necessary or desirable to enable such Affiliates to perform the Services; (ii) in any judicial or
alternative dispute resolution Proceeding to resolve disputes between the Manager and the
Partnership arising hereunder; (iii) to the extent disclosure is legally required under

12

 

applicable
Laws or any agreement to which the Manager is a party or by which it is bound; provided,
however, that prior to making any legally required disclosures in any judicial, regulatory
or dispute resolution Proceeding, the Manager shall, if requested by the Partnership, seek a
protective order or other relief to prevent or reduce the scope of such disclosure; (iv) to the
Manager’s existing or potential lenders, investors, joint interest owners, purchasers or other
parties with whom the Manager may enter into contractual relationships, to the extent deemed by the
Manager to be reasonably necessary or desirable to enable it to perform the Services;
provided, however, that the Manager shall require such Third Parties to agree to
maintain the confidentiality of the Confidential Information so disclosed; (v) if authorized by the
Partnership and (vi) to the extent such Confidential Information becomes publicly available other
than through a breach by the Manager of its obligation arising under this Section 8.01. The
Manager acknowledges and agrees that the Confidential Information is being furnished to the Manager
for the sole and exclusive purpose of enabling it to perform the Services, and the Confidential
Information may not be used by it for any other purpose.

     SECTION 8.02 PERMITTED DISCLOSURE. Notwithstanding the foregoing, each Party may
disclose Confidential Information (i) to the extent required by a court of competent jurisdiction
or other governmental authority or otherwise as required by law, including, without limitation,
disclosure obligations imposed under the federal securities laws, provided that such Party has
given such other Party prior notice of such requirement when legally permissible to permit such
other Party to take such legal action to prevent the disclosure as it deems reasonable, appropriate
or necessary or (ii) to its consultants, legal counsel, Affiliates, accountants, banks and other
financing sources and their advisors, provided that it shall require such Third Parties to agree to
maintain the confidentiality of the Confidential Information so disclosed.

     SECTION 8.03 ACQUISITION INFORMATION.

     (a) Except as provided in Section 8.03(b) below, the Partnership shall maintain the
confidentiality of all Acquisition Information. The Partnership acknowledges and agrees that the
Acquisition Information is being furnished to the Partnership for the sole and exclusive purpose of
enabling it to make Acquisitions, and the Acquisition Information may not be used by it for any
other purpose.

     (b) The Partnership may disclose such Acquisition Information (i) to third party advisors of
the Partnership to the extent deemed by the Partnership to be reasonably necessary or desirable to
enable it to evaluate or consummate an Acquisition; (ii) in any judicial or alternative dispute
resolution Proceeding to resolve disputes between the Partnership and the Manager arising
hereunder; (iii) to the extent disclosure is legally required under applicable Laws or any
agreement to which the Partnership is a party or by which it is bound; provided,
however, that prior to making any legally required disclosures in any judicial, regulatory
or dispute resolution Proceeding, the Partnership shall, if requested by the Manager, seek a
protective order or other relief to prevent or reduce the scope of such disclosure; (iv) to the
Partnership’s existing or potential lenders, investors, joint interest owners, purchasers or other
parties with whom the Partnership may enter into contractual relationships, to the extent deemed by
the Partnership to be reasonably necessary or desirable to enable it to evaluate or consummate the
related

13

 

Acquisition; provided, however, that the Partnership shall require such
Person to agree to maintain the confidentiality of the Acquisition Information so disclosed; (v) if
authorized by the Manager and (vi) to the extent such Acquisition Information becomes publicly
available other than through a breach by the Partnership of its obligation arising under Section
8.03(a) above.

     SECTION 8.04 REMEDIES AND ENFORCEMENT. Each of the Manager and the Partnership Group
acknowledges and agrees that a breach by it of its respective obligations under this Article VIII
would cause irreparable harm to the Party whose Confidential Information is disclosed and that
monetary damages would not be adequate to compensate such Party. Accordingly, each of the Manager
and the Partnership Group agrees that the Party whose Confidential Information is disclosed shall
be entitled to immediate equitable relief, including a temporary or permanent injunction, to
prevent any threatened, likely or ongoing breach of this Article VIII, without the necessity of
posting bond or other security. The right to equitable relief shall be in addition to other rights
and remedies available to the Party whose Confidential Information is disclosed, for monetary
damages or otherwise.

ARTICLE IX

INDEMNIFICATION; LIMITATIONS

     SECTION 9.01 LIMITATION OF THE MANAGER’S LIABILITY; INDEMNIFICATION. Neither the
Manager nor any of its controlling persons, directors, managers, officers, employees, agents and
permitted assigns (each, a “Manager Operating Party”) shall have any liability to the
Partnership Group for any losses, damages (including, but not limited to, special, indirect,
punitive and/or consequential damages), claims, injury, liability, cost or expense
(“Damages”) arising out of this Agreement, whether such Damages arise on account of the
furnishing of Services hereunder, the failure to furnish Services hereunder, or otherwise, and
whether or not such Damages were caused by the negligence of the Manager Operating Party, including
the Manager Operating Party’s sole negligence; provided, however, that the
foregoing limitation shall not apply to Damages caused by the Manager Operating Party’s gross
negligence or willful misconduct.

     SECTION 9.02 PARTNERSHIP’S INDEMNITY. The Partnership agrees to indemnify, defend and
hold harmless each Manager Operating Party from and against any and all Damages arising out of this
Agreement, whether such Damages arise on account of the furnishing of Services hereunder, the
failure to furnish Services hereunder, or otherwise, and whether or not such Damages were caused by
the negligence of any Manager Operating Party, including the Manager Operating Party’s sole
negligence; provided, however, that the foregoing limitation shall not apply to
Damages caused by the Manager Operating Party’s gross negligence or willful misconduct.

     SECTION 9.03 LIMITATION OF DAMAGES. If the Partnership Group suffers Damages arising
out of this Agreement, which Damages were caused by the gross negligence or willful misconduct of
the Manager, the
Manager’s sole liability to the Partnership Group shall be to properly perform the Services in
question at no additional cost to the Partnership Group and to pay the Partnership Group for any
and all direct damages suffered by the Partnership Group.

14

 

Notwithstanding anything to the contrary
contained herein or at Law and in equity, in no event shall the Manager be liable for punitive,
special, indirect, incidental or consequential damages (including, without limitation, damages for
loss of business profits, business interruption or any other loss) arising from or relating to any
claim made under this Agreement or regarding the provision of or the failure to provide Services,
even if the Manager had been advised or was aware of the possibility of such damages.

     SECTION 9.04 AFFILIATE; THIRD PARTIES. If the Manager uses the personnel of its
Affiliates or Third Parties to provide Services, the Manager shall be responsible for the acts and
omissions of such personnel and Third Parties to the extent provided in this Agreement, and no
Affiliate of the Manager or Third Party shall have any liability to the Partnership Group on
account of any Damages suffered by the Partnership Group arising out of this Agreement, whether or
not such Damages were caused by their negligence and/or gross negligence, including their sole
negligence and/or sole gross negligence, or their willful misconduct.

ARTICLE X

TERMINATION

     SECTION 10.01 TERMINATION BY THE PARTNERSHIP ON BEHALF OF THE PARTNERSHIP GROUP.

     (a) The Partnership, on behalf of the Partnership Group, may terminate this Agreement, upon
any of the following:

     (i) without cause, upon 180 days’ prior written notice to the Manager; provided,
however, that the Partnership shall not have the right to terminate this Agreement
pursuant to this Section 10.01(a)(i) so long as QRC or its Affiliates maintains a direct or
indirect controlling interest in the General Partner; or

     (ii) upon the Manager’s material breach of this Agreement, if (a) such breach is not
remedied within 60 days after the Manager’s receipt of the Partnership’s written notice
thereof, or such longer period as is reasonably required to cure such breach, provided that
the Manager commences to cure such breach within such 60-day period and proceeds with due
diligence to cure such breach and (b) such breach is continuing at the time notice of
termination is delivered to the Manager.

     (b) In the event that the Manager becomes Bankrupt or dissolves and commences liquidation or
winding-up, this Agreement shall automatically terminate without notice to the Manager.

     SECTION 10.02 TERMINATION BY THE MANAGER. The Manager may terminate this Agreement
upon any of the following:

     (a) without cause, upon 180 days’ prior written notice to the Partnership; provided,
however, that the Manager shall not have the right to terminate this Agreement pursuant to
this

15

 

Section 10.02(a) so long as QRC or its Affiliates maintains a direct or indirect controlling
interest in the General Partner; or

     (b) upon the Partnership’s material breach of this Agreement, if such (a) breach is not
remedied within 60 days (or 30 days in the event of material breach arising out of a failure to
make payment hereunder) after the
Partnership’s receipt of the Manager’s written notice thereof, or such longer period as is
reasonably required to cure such breach, provided that the Partnership commences to cure such
breach within such 60-day or 30-day period, as applicable, and proceeds with due diligence to cure
such breach and (b) such breach is continuing at the time notice of termination is delivered to the
Partnership.

     SECTION 10.03 EFFECT OF TERMINATION. If this Agreement is terminated in accordance
with Section 10.01 or 10.02 above, all rights and obligations under this Agreement shall cease
except for (a) obligations that expressly survive termination of this Agreement; (b) liabilities
and obligations that have accrued prior to such termination, including the obligation to pay any
amounts that have become due and payable prior to such termination and (c) the obligation to pay
any portion of the Manager Expenses that has accrued prior to such termination, even if such
portion has not become due and payable at that time.

ARTICLE XI

DISPUTE RESOLUTION

     If the Parties are unable to resolve any dispute regarding the validity or terms of this
Agreement or its termination, service or performance issues, there is a material breach of this
Agreement that has not been corrected within 30 days of receipt of notice of such breach or any
other dispute among the Parties related to this Agreement, any Party hereto may refer the matter to
an arbitrator selected in accordance with the rules of the American Arbitration Association in
Dallas, Texas as the exclusive remedy for any such dispute, and in lieu of any court action, which
is hereby waived. The only exception shall be a claim by any Party for injunctive relief pending
arbitration.

ARTICLE XII

MISCELLANEOUS

     SECTION 12.01 NOTICES. All notices or other communications required or permitted to
be given hereunder shall be in writing and shall be given by (i) personal delivery; (ii) delivery
by reputable overnight courier; (iii) delivery by confirmed facsimile transmission or (iv) delivery
by registered or certified mail, postage prepaid, with return receipt requested. Notice given by
mail, overnight courier or personal delivery shall be effective upon actual receipt. Notice given
by facsimile shall be effective upon confirmation of a successful transmission. All notices to be
sent to a Party pursuant to this Agreement shall be sent to or made at the address, in each case as
follows:

16

 

	 	(a)	 	If to the General Partner or the Partnership:

Quest Energy GP, LLC

Oklahoma Tower

210 Park Avenue, Suite 2750

Oklahoma City, OK 73102

Attention: Chief Executive Officer

Telecopy: (405) 600-7756

	 	(b)	 	If to the Manager:

Quest Energy Service, LLC

Oklahoma Tower

210 Park Avenue, Suite 2750

Oklahoma City, OK 73102

Attention: Chief Executive Officer

Telecopy: (405) 600-7756

     Any Party may alter the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this Section 12.01 for the
giving of notice.

     SECTION 12.02 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the Parties hereto and their respective successors and permitted assigns as
provided in this Agreement.

     SECTION 12.03 ENTIRE AGREEMENT; AMENDMENT. This Agreement, along with the Schedule
hereto, contains the entire agreement and understanding among the Parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings relating to such
subject matter. This Agreement may not be modified or amended except by an instrument in writing
signed on behalf of each of the Parties hereto.

     SECTION 12.04 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF DELAWARE.

     SECTION 12.05 WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay in
exercising, on the part of any Party hereto, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law. No
waiver of any provision hereto shall be effective unless it is in writing and is signed by the
Party asserted to have granted such waiver.

17

 

     SECTION 12.06 NO JOINT VENTURE. Nothing in this Agreement shall be construed to
create a partnership or joint venture, nor to authorize any Party to act as agent for, or
representative of, another Party. Each Party shall be deemed an independent contractor and no
Party shall act as, or hold itself out as acting as, agent for another Party.

     SECTION 12.07 COSTS AND EXPENSES. Each Party hereto shall bear its own costs and
expenses (including the fees and disbursements of counsel and accountants) incurred in connection
with the negotiations and preparation of and the closing under this Agreement and all matters
incident thereto.

     SECTION 12.08 HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed part of this Agreement.

     SECTION 12.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any Party whose signature
appears thereon, and all of which shall together constitute one and the same instrument. This
Agreement shall become binding when one or more counterparts of this Agreement, individually or
taken together, shall bear the signatures of all of the Parties reflected hereon as the
signatories.

     SECTION 12.10 SEVERABILITY. In the event any provision of this Agreement, or the
application of such provision to any person or set of circumstances, shall be determined to be
invalid, unlawful or unenforceable to any extent for any reason, the remainder of this Agreement,
and the application of such provision to Persons or circumstances other than those as to which it
is determined to be invalid, unlawful or unenforceable, shall not be affected and shall continue to
be enforceable to the fullest extent permitted by Law.

     SECTION 12.11 JOINTLY DRAFTED. This Agreement, and all the provisions of this
Agreement, shall be deemed drafted by each of the Parties hereto and shall not be construed against
any Party on the basis of that Party’s role in drafting this Agreement.

     SECTION 12.12 NO THIRD-PARTY BENEFICIARIES. Except as provided in Article VIII, this
Agreement is for the sole benefit of the Parties hereto and their permitted assigns and nothing
herein expressed or implied shall provide any benefit to any Third Party or entitle any Third Party
to any claim, cause of action, remedy or right of any kind, it being the intent of the Parties
hereto that this Agreement shall not be construed as a Third Party beneficiary contract.

     SECTION 12.13 FURTHER ASSURANCES. In connection with this Agreement, each Party
hereto shall execute and deliver any additional documents and instruments and perform any
additional acts that may be necessary or appropriate to effectuate and perform the provisions of
this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first
written above.

	 	 	 	 	 	 	 	 	 
	 	 	QUEST ENERGY GP, LLC,	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jerry D. Cash	 	 
	 	 	 	 	 	 	 
	 	 	Name:	 	Jerry D. Cash	 	 
	 	 	Title:	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	QUEST ENERGY PARTNERS, L.P.,	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	 QUEST ENERGY GP, LLC, its general
partner,	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Jerry D. Cash	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 		Name: Jerry D. Cash
	 	 
	 

	 	 	 	 		Title: Chief Executive Officer
	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	QUEST ENERGY SERVICE, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jerry D. Cash	 	 
	 	 	 	 	 	 	 
	 	 	Name:	 	Jerry D. Cash	 	 
	 	 	Title:	 	Chief Executive Officer	 	 

 

 

SCHEDULE I

SERVICES PROVIDED BY THE MANAGER

TO THE PARTNERSHIP GROUP

	 	 	 
	 
	 	 
	1.

	 	Accounting
	 
	 	 
	2.

	 	Information Technology/Communications Equipment and Services
	 
	 	 
	3.

	 	Real Property/Land
	 
	 	 
	4.

	 	Legal
	 
	 	 
	5.

	 	Securities and Exchange Commission Reporting and Filings
	 
	 	 
	6.

	 	Operations/Reservoir Engineering/Geology/Geophysics
	 
	 	 
	7.

	 	Administrative Services
	 
	 	 
	8.

	 	Financial Services
	 
	 	 
	9.

	 	Insurance Services
	 
	 	 
	10.

	 	Risk Management
	 
	 	 
	11.

	 	Corporate Development
	 
	 	 
	12.

	 	Commercial and Marketing
	 
	 	 
	13.

	 	Treasury
	 
	 	 
	14.

	 	Tax
	 
	 	 
	15.

	 	Audit
	 
	 	 
	16.

	 	Sarbanes-Oxley Compliance
	 
	 	 
	17.

	 	Investor Relations
	 
	 	 
	18.

	 	Benefits, Compensation and Human Resources Administration
	 
	 	 
	19.

	 	Acquisition Services

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00133-of-00352.parquet"}]]