WARRANT PURCHASE AGREEMENT
by and between
Quest Resource Corporation
a Nevada Corporation
(the "Company")
and
▇▇▇▇▇ Fargo Energy Capital, Inc.
a Texas Corporation
("Purchaser")
Concerning the
Purchase of Warrant to Purchase 1,600,000
Shares of the Company's Common Stock
November 7, 2002
1
TABLE OF CONTENTS
ARTICLE I. PURCHASE AND SALE OF WARRANT
Section 1.1. Sale and Issuance
Section 1.2. Purchase; Purchase Price
ARTICLE II. CLOSING DATE; DELIVERY
Section 2.1. Closing Date
Section 2.2. Payment; Delivery
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Company
(a) Organization and Standing: Certificate and By-Laws
(b) Corporate Power
(c) Authorization
(d) Capitalization
(e) Governmental Consent, etc.
(f) Offering
(g) Brokers or Finders
Section 3.2. Representations and Warranties of Purchaser
(a) Investment Intent
(b) Accredited Investor
ARTICLE IV. CONDITIONS TO CLOSING
Section 4.1. Purchaser's Conditions
(a) Representations and Warranties Correct
(b) Covenants
(c) Compliance Certificate
(d) Consents
(e) Consummation of Loan Agreement
Section 4.2 Company's Conditions
(a) Representations
(b) Closing of Loan Agreement
ARTICLE V. AFFIRMATIVE COVENANTS OF THE COMPANY
Section 5.1. Financial Information
(a) SEC Reports
(b) Other Reports
Section 5.2. Transactions with Affiliates
Section 5.3. Restrictions on Dividend Payments
(a) Restriction
(b) Permitted Dividends
2
Section 5.4. Access
Section 5.5. Rule 144 Reporting
ARTICLE VI. THE COMPANY'S INDEMNIFICATION
Section 6.1. Indemnification
ARTICLE VII. PUT OPTION
Section 7.1. Purchaser's Option to Cause Purchase
(a) Exercise Notice
(b) Purchase Price
(c) Closing
(d) Purchaser's Representations and Warranties
(e) Company's Representations and Warranties
Section 7.2. Restrictions on Company's Ability to Purchase
(a) Dividend Restriction
(b) Restrictions on Certain Capital Transactions
(c) Continuing Obligation
ARTICLE VIII. MISCELLANEOUS
Section 8.1. Governing Law
Section 8.2. Survival
Section 8.3. Successors and Assigns
Section 8.4. Entire Agreement, Amendment
Section 8.5. Notices etc.
Section 8.6. Delays or Omissions
Section 8.7. Counterparts
Section 8.8. Severability
Section 8.9. Titles and Subtitles
Section 8.10 Specific Performance
Section 8.11 Limitation of Liability
Form of Warrant Exhibit A
3
WARRANT PURCHASE AGREEMENT
This Warrant Purchase Agreement (the "Agreement") is made and entered into
as of November 7, 2002 by and between Quest Resource Corporation, a Nevada
corporation (the "Company"), and ▇▇▇▇▇ Fargo Energy Capital, Inc., a Texas
corporation ("Purchaser").
WHEREAS, Purchaser and the Company have entered into a mezzanine revolving
credit agreement, as amended from time to time, (the "Loan Agreement") of even
date herewith pursuant to which Purchaser is lending (the "Loan") up to
$20,000,000 to the Company in exchange for a Subordinated Note in such amount
(the "Note"); and
WHEREAS, as a condition to making the Loan, Purchaser has required the
Company to enter into this Agreement;
NOW; THEREFORE, for and in consideration of the mutual covenants and
promises herein contained, as well as for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, contract and agree as follows:
ARTICLE I. PURCHASE AND SALE OF WARRANT
Section 1.1. Sale and Issuance. The Company shall sell and issue to
Purchaser at the Closing (as hereinafter defined) a warrant ("Warrant") to
purchase 1,600,000 shares of its Common Stock, $.001 par value ("Common Stock"),
subject to adjustment as provided in the Warrant. The Warrant shall be in the
form of Exhibit A attached hereto and incorporated herein. The shares of Common
Stock or Other Securities (as defined in the Warrant) into which the Warrant
will be exercisable upon payment of the purchase price as set forth in the
Warrant are referred to herein as the "Shares."
Section 1.2. Purchase: Purchase Price. Subject to the terms and conditions
set forth herein, for and in consideration of the sale and issuance of the
Warrant, Purchaser hereby agrees to enter into the Loan Agreement and consummate
the transactions contemplated thereby concurrently with the Closing.
ARTICLE II. CLOSING DATE; DELIVERY
Section 2.1. Closing Date. The closing ("Closing") of the purchase and sale
of the Warrant hereunder shall be held simultaneously with the closing of the
transactions contemplated by the Loan Agreement (the "Closing Date") or at such
other time and place upon which the Company and Purchaser shall agree.
Section 2.2. Payment: Delivery. At the Closing, the Company will deliver
to Purchaser the duly executed Warrant registered in the name of Purchaser,
against receipt of the Loan, together with delivery by the Company of such other
documents, certificates and opinions of counsel (as to authority only) as may be
required to be delivered by the Company to Purchaser as a condition to
Purchaser's consummation of this Agreement.
1
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of the Company. In order to
induce Purchaser to enter into this Agreement and to extend the Loan
contemplated by the Loan Agreement, the Company hereby represents and warrants
to Purchaser and each subsequent holder of the Warrant, as follows:
(a) Organization and Standing: Certificate and By-Laws. The Company
is a corporation legally incorporated, duly organized, validly existing,
and in good standing under the laws of the State of Nevada. The Company
has all requisite corporate power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted
and as proposed to be conducted. The Company is qualified to do business
as a foreign corporation and is in good standing in all jurisdictions in
which the Company owns or leases property or in which the failure to be so
qualified would not have a material adverse affect on the Company's
business as currently conducted.
(b) Corporate Power. The Company has, and will have at the Closing
and at all times during which the Warrant is exercisable, all requisite
corporate power and authority to execute and deliver this Agreement, to
sell and issue the Warrant hereunder, to issue the Shares upon exercise of
the Warrant and to carry out and perform its obligations under the terms
of this Agreement and the Warrant.
(c) Authorization. All corporate action necessary for the
authorization, execution, delivery and performance of this Agreement by
the Company, the authorization, sale, issuance and delivery of the Warrant
and (upon exercise of the Warrant) the Shares and the performance of all
of the Company's obligations hereunder and under the Warrant have been
taken. This Agreement and the Warrant each constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms,
except as may be limited by insolvency, bankruptcy, moratorium or other
laws affecting the rights of creditors in general. The Shares have been
duly and validly reserved and, when issued in compliance with the
provisions of this Agreement and the Warrant, will be validly issued,
fully paid and non-assessable. Upon issuance pursuant to the Warrant, the
Shares will be free of any liens, claims or encumbrances. The Shares are
not subject to any preemptive rights or rights of first refusal.
(d) Capitalization. The authorized capital stock of the Company
consists of (i) 950,000,000 shares of common stock, $.001 par value, of
which 12,799,984 shares are issued and outstanding, and (ii) 50,000,000
shares of preferred stock, $.001 par value, of which 10,000,000 shares of
Common Stock, $.001 par value, are issued and outstanding as of the date
hereof. The outstanding shares have been duly authorized and validly
issued, and are fully paid and non-assessable. All outstanding securities
of the Company were issued in compliance with applicable federal and state
securities laws. The Company has reserved 1,600,000 shares of Common Stock
for issuance upon exercise of the Warrant. Other than the Warrant, and
except as described in the Quest Disclosure Schedule to the Agreement and
Plan of Reorganization by and among Quest Resources Corporation, STP
Cherokee, Inc. and
2
the Sole Stockholder of STP Cherokee, Inc., dated November 7, 2002, the
Company does not have any outstanding capital stock or securities
convertible into or exchangeable for any shares of its capital stock, or
any outstanding rights (either preemptive or other) to subscribe for or to
purchase, or any outstanding rights or options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
outstanding calls, commitments or claims of any character relating to, any
capital stock or any stock or securities convertible into or exchangeable
for any capital stock of the Company. Except as provided in the Warrant and
as described in the Quest Disclosure Schedule to the Agreement and Plan of
Reorganization by and among Quest Resources Corporation, STP Cherokee, Inc.
and the Sole Stockholder of STP Cherokee, Inc. dated November 7, 2002, the
Company is not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock
or any convertible securities, rights or options of the type described in
the preceding sentence. The Company is not a party to any agreement (except
as set forth in this Agreement) restricting the transfer of any shares of
the Company's capital stock.
(e) Governmental Consent, etc. No consent, approval or authorization
of (or designation, declaration or filing with) any governmental authority
or the National Association' of Securities Dealers, Inc., on the part of
the Company is required in connection with the valid execution, delivery or
performance of this Agreement, or the offer, sale or issuance of the
Warrant and the Shares pursuant hereto, or the consummation of any other
transaction contemplated hereby.
(f) Offering. The offer, sale and issuance of the Warrant, and the
issuance of the Shares upon exercise of the Warrant, constitute
transactions exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933 (the "Securities Act") and any
applicable state securities laws.
(g) Brokers or Finders. The Company has not incurred, and will not
incur, directly or indirectly, as a result of any action taken by the
Company, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement.
Section 3.2. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to the Company as follows:
(a) Investment Intent. Purchaser is acquiring the Warrant for
investment for its own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution thereof.
Purchaser understands and agrees that the Warrant and (upon exercise of the
Warrant) the Shares have not been registered under the Securities Act.
(b) Accredited Investor. Purchaser is an "accredited investor" as
defined under Regulation D promulgated under the Securities Act.
3
ARTICLE IV. CONDITIONS TO CLOSING
Section 4.1. Purchaser's Conditions. Purchaser's obligations to purchase
the Warrant at the Closing are subject to the fulfillment of the following
conditions, the waiver of which shall not be effective against Purchaser unless
specifically consented to in writing:
(a) Representations and Warranties Correct. The representations and
warranties made by the Company in Section 3.1 hereof (including any
representations of the Company incorporated by reference) shall be true and
correct when made, and shall be true and correct on the Closing Date.
(b) Covenants. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing
Date shall have been performed or complied with in all respects.
(c) Compliance Certificate. The Company shall have delivered to
Purchaser a certificate of the Company, executed by the President and
Secretary of the Company, dated the Closing Date, and certifying, that all
representations and warranties of the Company contained in the Agreement
are true and correct on the Closing Date as if made on such date, that all
conditions to the obligations of Purchaser to close the transactions
contemplated by this Agreement have been satisfied or waived in writing by
Purchaser and that the Company has complied with all covenants or
obligations set forth in this Agreement.
(d) Consents. Any consent, approval, authorization or order of any
court or governmental agency or administrative body required for the
consummation of the transactions contemplated by this Agreement, shall have
been obtained and shall be in effect on the Closing Date.
(e) Consummation of Loan Agreement. The Company shall have satisfied
all conditions precedent to the obligation of the Purchaser to advance
funds under the Loan Agreement in compliance with all applicable laws.
Section 4.2. Company's Conditions. The Company's obligation to sell and
issue the Warrant at the Closing is, at the option of the Company, subject to
the fulfillment as of the Closing Date of the following conditions:
(a) Representations. The representations made by Purchaser in Section
3.2 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date.
(b) Closing of Loan Agreement. The Loan contemplated by the Loan
Agreement shall have been consummated in accordance with the terms of such
commitment.
ARTICLE V. AFFIRMATIVE COVENANTS OF THE COMPANY
Section 5.1. Financial Information. The Company will mail to the holder of
the Warrant or Shares:
4
(a) SEC Reports. The Company shall promptly mail copies of all
quarterly and annual reports and of the information, documents and other
reports which the Company is required to file with the Securities and
Exchange Commission (the "Commission"), exclusive of any exhibits to such
reports and exclusive of registration statements on Form S-8.
(b) Other Reports. If at any time after the date hereof the Company
is not subject to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), the Company shall
provide or cause to be provided to the holder all of the following, in
form and detail satisfactory to the holder:
(i) not later than 90 days after and as of the end of each
fiscal year, an audited financial statement of the Company, prepared
by a recognized independent accounting firm acceptable to the holder,
to include consolidated balance sheets and consolidated statements of
income, retained earnings and cash flow, in accordance with generally
accepted accounting principles, together with an unqualified opinion;
(ii) not later than 45 days after and as of the end of each
calendar quarter, a financial statement of the Company, prepared by
the Company, to include consolidated balance sheets and consolidated
statements of income, retained earnings and cash flow, in accordance
with generally accepted accounting principles, certified by a senior
financial officer; and
(iii) from time to time such other information as the holder may
reasonably request.
Section 5.2. Transactions with Affiliates. The Company will not, and will
not permit any of its Subsidiaries to, (i) enter into any transaction, including
without limitation, any purchase, sale, lease or exchange of property or the
rendering of any service, with any Affiliate of the Company unless such
transactions are in the ordinary course of its business and are upon fair and
reasonable terms no less favorable to it than the Company would obtain in a
comparable arm's-length transaction with a person not an Affiliate, or (ii)
issue, or agree to issue, any shares of capital stock (including rights or
warrants with respect thereto) or stock appreciation rights, stock benefit
plans, phantom stock rights or plans or any similar plans or rights or other
rights measured by earnings, profits, or revenues of the Company or its
Subsidiaries to any Affiliate including shareholders, directors and officers and
their respective Affiliates, unless such transaction is fair to the Company and
is not materially adverse to the rights to the holder of the Warrant. If a
transaction referred to in subsection (i) or (ii) hereof is approved by a
majority of Independent Directors (for example, if the Company has four
directors - two of which are Independent Directors and two of which are not -
and a transaction is approved by a majority of the directors including both
Independent Directors, that approval constitutes a majority of Independent
Directors), such approval shall be presumptive evidence that such transaction
complies with the provisions of this Section. As used herein, an Independent
Director shall mean any director who is not an officer or employee of the
Company and who does not beneficially own more than 5% of any outstanding class
or series of capital stock of the Company and who is not related by blood or
marriage to any of the foregoing. As used herein, "Affiliate" has the meaning
set forth in Article VII of the Warrant, except that as long as any of the
5
Shareholders are stockholders of the Company, such Shareholders and each of
their respective Affiliates shall be deemed Affiliates of the Company, and
Purchaser and its direct and indirect wholly-owned subsidiaries and the Persons
that directly or indirectly own Purchaser shall not be deemed Affiliates of the
Company.
Section 5.3. Restrictions on Dividend Payments.
(a) Restriction. For so long as the Warrant is outstanding and except
as provided in 5.3(b), the Company shall not pay any dividends with
respect to its Common Stock (other than dividends payable in shares of its
Common Stock) out of its surplus or otherwise or return any capital to its
stockholders as such or authorize or make any other distribution, payment
or delivery of property or cash to its holders of Common Stock as such, or
redeem, retire, purchase or otherwise acquire, directly or indirectly, for
a consideration (otherwise than in exchange for, or from the proceeds of
the substantially concurrent sale of, other shares of capital stock of the
Company), any shares of any class of its Common Stock now or hereafter
outstanding.
(b) Permitted Dividends. The Company may pay dividends to the holders
of its Common Stock, provided that (i) contemporaneously with the
declaration of any such dividend, the Company will set aside for payment
to the holder of the Warrant an amount equal to the total Dividend Amount
(as hereinafter defined) payable to the holder of the Warrant and (ii) on
the date of payment of such dividend, will pay to the holder of the
Warrant the Dividend Amount. Such payment shall be made by Company check
to the holder of the Warrant at the address of the holder as reflected on
the Warrant holders' List. As used herein, the Dividend Amount shall equal
the dividend declared or paid (as the case may be) with respect to one
share of Common Stock multiplied times the Dilution Factor (as defined in
the Warrant) on the date of declaration or payment.
Section 5.4. Access. The Company will allow, and will cause its
subsidiaries to allow, any holder of the Warrant or proposed Permitted
Transferee (as defined in the Warrant), and their respective representatives,
upon two Business Days prior telephonic notice, to visit and inspect any of its
property, to examine its books of record and account, and to discuss its
affairs, finances and accounts with its officers, provided, (i) such person
signs a customary confidentiality agreement if requested by the Company and (ii)
the examination will not unreasonably disrupt, in any material manner, the
operations of the Company.
Section 5.5. Rule 144 Reporting. The Company agrees that from and after
the date it registers any class of its securities under Section 12(b) or 12(g)
of the Exchange Act, it shall use its commercially reasonable efforts to:
(a) Make and keep "adequate public information" available, as those
terms are understood and defined in Rule 144 under the Securities Act, at
all times from and after the date hereof, and
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act.
6
ARTICLE VI. THE COMPANY'S INDEMNIFICATION
Section 6.1. Indemnification. The Company will indemnify and hold harmless
Purchaser, and its respective officers, directors, employees, agents,
representatives and affiliates (collectively "Indemnitees") from and against any
and all expenses, claims, charges, losses, damages, fines or penalties,
including without limitation reasonable attorneys' fees incurred in defending or
resisting any claims, actions or proceedings or in enforcing this indemnity
(hereinafter "Damages"), that an Indemnitee may suffer, sustain, incur or become
subject to, whether directly or indirectly, arising out of, based upon,
resulting from any violation or inaccuracy of any representations, warranties,
obligations or covenants of the Company set forth in this Agreement other than
with respect to Damages resulting from Purchaser's own gross negligence or
willful misconduct.
ARTICLE VII. PUT OPTION
Section 7.1. Purchaser's Option to Cause Purchase. From and after the
earlier to occur of the three-year anniversary of the Closing Date and the date
the Note is paid in full ("Commencement Date") but before the fifth anniversary
of the Closing, Purchaser shall have the right and option to cause the Company
to purchase all (and not any portion) of the Warrant, in the following manner:
(a) Put Exercise Notice. In order to exercise its right and option to
cause the Company to purchase the Warrant, the Purchaser desiring to cause
the Company to purchase the Warrant (a "Selling Holder"), shall notify
("Put Exercise Notice") the Company of its intent to sell the Warrant to
the Company. The Put Exercise Notice shall specify the proposed closing
date of such purchase which shall be a Business Day at least fifteen (15)
and no more than forty-five (45) Business Days from the date of such
notice.
(b) Purchase Price. The purchase price (the "Put Purchase Price") for
the Warrant shall be the lesser of (i) $2,500,000 or (ii) an amount equal
to the amount when aggregated with all amounts received by Purchaser as
interest (including, without limitation, interest on past due principal or
interest) on the Advances and all other Loans (as such terms are defined
in the Loan Agreement) made pursuant to the Loan Agreement and all other
amounts received by Purchaser pursuant to the terms of the Loan Agreement
and which constitutes interest pursuant to Chapter 305 of the Texas
Finance Code shall equal the amount of money Purchaser would have received
as interest if such Advances and other Loans had borne interest at the
rate of eighteen percent (18%) per annum calculated on the basis of a year
of 365 or 366 days, as the case may be, from the respective date of each
Advance or other Loan through the date of repayment thereof.
(c) Closing. The closing shall be held at the principal executive
offices of the Company at 10:00 a.m., local time on the date specified in
the Put Exercise Notice, or such other time and place as the Selling
Holder and the Company shall agree in writing. At the closing, the Company
shall pay the Selling Holder the purchase price by cashier's check or wire
transfer of immediately available funds. The Selling Holder shall deliver
the Warrant duly endorsed for transfer to the Company.
7
(d) Purchaser's Representations and Warranties. At the closing, the
Selling Holder shall make customary representations and warranties as to
the following, and shall not be required to make any additional
representations or warranties:
(i) That Selling Holder has the power and authority to transfer
the Warrant to the Company;
(ii) That the transfer of the Warrant has been duly authorized by
the Selling Holder; and
(iii) That the Warrant will be transferred to the Company free
and clear of any liens, claims, pledges, and encumbrances
(e) Company's Representations and Warranties. At the closing, the
Company shall make customary representations and warranties as to the
following, and shall not be required to make any additional representations
or warranties:
(i) That the Company has the power and authority to purchase the
Warrant from the Selling Holder;
(ii) That the purchase of the Warrant has been duly authorized by
the Company;
(iii) That the purchase of the Warrant is in compliance with
applicable state corporate laws governing the Company's repurchase of
its securities;
(iv) That the Warrant is not being purchased with a view toward
distribution in violation of applicable securities laws; and
(v) That purchase of the Warrant does not render the Company
insolvent.
Section 7 .2. Restrictions on Company's Ability to Purchase.
(a) Dividend Restriction. Whenever the Warrant is required to be
purchased by the Company pursuant to this Agreement, if the Company shall
not be able lawfully to purchase the entire Warrant on the closing date
under the provisions of applicable state corporate law dealing with
impairment of surplus, the Company shall purchase on the closing date so
much of the Warrant as it may lawfully purchase. In the event the Company
purchases less than all of the Warrant on the closing date, then the
Company shall not, without the written consent of the Selling Holder, pay
dividends, distributions or other payments to any stockholder or make any
loans to stockholders, other than reasonable salary and benefits payments,
until the remainder of the Warrant is purchased in accordance with the
terms of this Agreement.
(b) Restrictions on Certain Capital Transactions. The Company will
not, without the written consent of the holder of the Warrant, increase the
par value of any Shares or effect a transfer from the retained earnings
account of the Company to the capital or additional paid
8
in capital accounts of the Company if, at the time of such transfer and
after giving effect thereto and to any concurrent or then contemplated
transactions, the ability of the Company to lawfully discharge its
obligations to purchase the Warrant pursuant to this Agreement would be
materially or adversely impaired.
(c) Continuing Obligation. If the Company is unable on the closing
date lawfully to purchase all of the Warrant, the obligation of the
Company to purchase such portion of the Warrant that the Company could not
lawfu1ly purchase shall continue until such time as the Company may
lawfully discharge such obligation; provided, however, that the purchase
price shall be increased by an amount equal to interest on the purchase
price at the rate of 14% per annum.
ARTICLE VIII. MISCELLANEOUS
Section 8.1. Governing Law. This Agreement shall be governed in all
respects by the internal laws of the state of Texas.
Section 8.2. Survival. The representations., warranties, covenants and
agreements made herein shall survive any investigation made by Purchaser and the
closing of the transactions contemplated hereby.
Section 8.3. Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors and assigns of the parties hereto. Neither this Agreement nor the
Purchaser's rights hereunder may be transferred or assigned, except to a person
to whom the Warrant is transferred or assigned pursuant to Section 5.1 of the
Warrant.
Section 8.4. Entire Agreement, Amendment. This Agreement and the other
documents delivered pursuant hereto at the Closing constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge or termination is sought.
Section 8.5. Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to Purchaser, at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇: with a copy to ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, or at such other address
as Purchaser shall have furnished to the Company in writing, or (b) if to any
other holder of the Warrant or Shares, at such address as the holder shall have
furnished the Company in writing, or, until the holder so furnishes an address
to the Company, then to and at the address of the last holder of such Warrant or
Shares who has so furnished an address to the Company, or (c) if to the Company,
▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other address as the
Company shall have furnished to
9
Purchaser.
Section 8.6. Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any holder
of the Warrant or any Shares, upon any breach or default of the Company under
this Agreement, shall impair any such right, power or remedy of the holder nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
holder of any breach or default under this Agreement, or any waiver on the part
of any holder of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any holder, shall be cumulative and not alternative.
Section 8.7. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which together
shall constitute one agreement.
Section 8.8. Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
Section 8.9. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
Section 8.10 Specific Performance. The Company acknowledges that any
breaches of the agreements and covenants contained in of this Agreement would
cause irreparable injury to Purchaser for which Purchaser would have no adequate
remedy at law. In addition to any other remedy that Purchaser may be entitled
to, the parties agree that Purchaser shall be entitled to the remedy of specific
performance.
Section 8.11 Limitation of Liability. No provision hereof, in the absence
of affirmative action by Purchaser or holder of the Warrant to exercise the
Warrant and purchase the Registration Shares (as defined in the Warrant), and no
enumeration herein of the rights or privileges of Purchaser or the holder of the
Warrant shall give rise to any liability of Purchaser or the holder of the
Warrant as a shareholder of the Company whether such liability is asserted by
the Company, its creditors or others.
10
The foregoing Agreement is hereby executed as of the date first above
written.
QUEST RESOURCE CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
President
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
Treasurer/Chief Financial Officer
▇▇▇▇▇ FARGO ENERGY CAPITAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Assistant Vice President
11