SUPPORT AGREEMENT
Exhibit 10.3
THIS SUPPORT AGREEMENT (this “Agreement”), dated as of February 5, 2008 is by and
between Pinnacle Gas Resources, Inc., a Delaware corporation (“Pinnacle”), and certain
stockholders of Quest Resource Corporation, a Nevada corporation (“Quest” or the
“Company”), set forth on Schedule I hereto (each a “Stockholder” and
collectively the “Stockholders”).
WHEREAS, Quest and Pinnacle have entered into an Amended and Restated Agreement and Plan of
Merger, dated as of February 5, 2008, by and among Pinnacle, Quest, and a wholly-owned subsidiary
of Quest (the “Merger Agreement”); and
WHEREAS, each Stockholder is the beneficial owner, for itself or the benefit of certain funds
and/or accounts managed by it, of that number of shares of common stock, par value $0.001 per
share, of the Company (the “Shares”) set forth below the Stockholder’s name on the
signature page hereto (the Shares owned by such Stockholder, together with any additional Shares of
the Company acquired after the date hereof, being collectively referred to herein as the
Stockholder’s “Subject Shares”); and
WHEREAS, as a condition to the willingness of Pinnacle to enter into the Merger Agreement, and
as an inducement to it to do so, the Stockholders have agreed for the benefit of Pinnacle as set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained in
this Agreement, the parties hereto hereby severally, and not jointly, agree as follows:
ARTICLE I
VOTING AGREEMENT AND PROXY
VOTING AGREEMENT AND PROXY
Section 1.1 Agreement to Vote. At any meeting of the holders of the Company’s Shares
held prior to the termination of Article I of this Agreement pursuant to Section 2.11 hereof (the
“Article I Termination Date”), however called, and at every adjournment or postponement
thereof prior to the Article I Termination Date, each Stockholder shall vote or cause to be voted
the Subject Shares (a) in favor of (i) the issuance of Quest common stock to Pinnacle’s
stockholders pursuant to the merger, (ii) the merger (the “Merger”) and other transactions
contemplated by the Merger Agreement, and (iii) any actions required in furtherance of the Merger
and the other transactions contemplated by the Merger Agreement, and (b) against (i) any Quest
Takeover Proposal (as defined in the Merger Agreement) in the absence of a Quest Adverse
Recommendation Change (as defined in the Merger Agreement), (ii) any proposal for action or
agreement that is reasonably likely to result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the Merger Agreement or that is
reasonably likely to result in any of the conditions to the obligations of the Company under the
Merger Agreement not being fulfilled, or (iii) any other action which could reasonably be expected
to impede, interfere with, delay, postpone or materially affect the transactions contemplated by
the Merger Agreement or the likelihood of such transactions being consummated (clauses (a) and (b)
together, the “Proxy Matters”).
Section 1.2 Proxies and Voting Agreements. Each Stockholder hereby revokes any and
all previous proxies granted with respect to the Subject Shares with respect to the Proxy Matters.
Prior to the Article I Termination Date, each Stockholder agrees not to, directly or indirectly,
with respect to the Subject Shares (a) grant any proxies or powers of attorney (other than pursuant
to the Merger proxy statement), (b) deposit any of such Shares into any voting trust or (c) enter
into any other voting agreement or understanding, in each case relating to the Proxy Matters.
Section 1.3 Transfer of Shares by the Stockholder. Prior to the Article I Termination
Date, each Stockholder agrees not to sell, transfer, assign, convey or otherwise dispose of,
directly or indirectly, any of the Subject Shares held by the Stockholder to any persons
controlling, controlled by or under common control with the Stockholder who do not agree to become
bound by the terms of this Agreement or to any other Person for the primary purpose of the
circumvention of the obligations under this Agreement.
Section 1.4 Stockholder Representations and Warranties. Each Stockholder represents
and warrants to Pinnacle that (i) the Stockholder has duly authorized, executed and delivered this
Agreement and that this Agreement constitutes a valid and binding agreement, (ii) the consummation
by the Stockholder of the transactions contemplated hereby will not violate, or require any
consent, approval or notice under, any provision of law applicable to the Stockholder, other than
notice filings or other information required to be included in filings pursuant to the Securities
Exchange Act of 1934, as amended, and, if applicable, filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, (iii) there are no outstanding options, warrants or rights to
purchase or acquire, or proxies, powers-of-attorney or voting agreements relating to, the Subject
Shares, other than this Agreement, (iv) the Shares set forth below the Stockholder ’s name on the
signature page hereto constitute all of the securities of the Company owned of record by the
Stockholder on the date hereof and (v) the Stockholder has the present power and right to direct,
as to the voting of all of the issued and outstanding Shares set forth below the Stockholder ’s
name on the signature page hereto, the record owner thereof as contemplated herein.
ARTICLE II
MISCELLANEOUS
MISCELLANEOUS
Section 2.1 Further Assurances. From time to time, at the reasonable request of
Pinnacle, each Stockholder shall execute and deliver or cause to be executed and delivered such
additional documents and instruments and take all such further action as may be reasonably
necessary or desirable to consummate the transactions contemplated by this Agreement.
Section 2.2 Specific Performance. Each Stockholder agrees that Pinnacle would be
irreparably damaged if for any reason the Stockholder fails to perform any of its obligations under
this Agreement, and that Pinnacle
would not have an adequate remedy at law for money damages in such event. Accordingly,
Pinnacle shall be entitled to seek specific performance and injunctive and other equitable relief
to enforce the performance of this Agreement by the Stockholder. This provision is without
prejudice to any other rights that Pinnacle may have against the Stockholder for any failure to
perform its obligations under this Agreement.
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Section 2.3 Notices. All notices to be given pursuant hereto shall be given in
accordance with Section 10.2 of the Merger Agreement, with the address for the Stockholder as set
forth on the signature page hereof.
Section 2.4 Definitions and Interpretation. Capitalized terms that are used but not
defined herein shall have the meanings ascribed to them in the Merger Agreement. Section 10.9 of
the Merger Agreement shall govern the interpretation hereof.
Section 2.5 Counterparts. This Agreement may be executed in two or more counterparts,
all of which shall be considered one and the same agreement.
Section 2.6 Binding Effect and Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective permitted successors and assigns and
any transferee of the Stockholder ’s Subject Shares. This Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto; provided that Pinnacle
may assign its rights under this Agreement to a wholly owned subsidiary of Pinnacle, but any such
assignment shall not relieve Pinnacle of its obligations hereunder. Nothing in this Agreement,
express or implied, is intended to confer upon any person other than the parties hereto and their
respective permitted successors and assigns, any rights, benefits or obligations hereunder. No
person other than the parties hereto is an intended beneficiary of this Agreement or any portion
hereof.
Section 2.7 Governing Law; Jurisdiction; Waiver of Jury Trial. To the maximum extent
permitted by Applicable Law, the provisions of this Agreement shall be governed by and construed
and enforced in accordance with the Applicable Laws of the State of Delaware, without regard to
principles of conflicts of law. Each of the parties hereto agrees that this Agreement involves at
least U.S. $100,000 and that this Agreement has been entered into in express reliance upon 6
Del. C. § 2708. Each of the parties hereto irrevocably and unconditionally confirms and
agrees that it is and shall continue to be (i) subject to the jurisdiction of the courts of the
State of Delaware and of the federal courts sitting in the State of Delaware, and (ii) subject to
service of process in the State of Delaware. Each party hereto hereby irrevocably and
unconditionally (a) consents and submits to the exclusive jurisdiction of any federal or state
court located in the State of Delaware (the “Delaware Courts”), including the Delaware
Court of Chancery in and for New Castle County, for any actions, suits or proceedings
arising out of or relating to this Agreement or the transactions contemplated by this
Agreement (and agrees not to commence any litigation relating thereto except in such courts), (b)
waives any objection to the laying of venue of any such litigation in the Delaware Courts and
agrees not to plead or claim in any Delaware Court that such litigation brought therein has been
brought in any inconvenient forum and (c) acknowledges and agrees that any controversy that may
arise under this Agreement is likely to involve complicated and difficult issues, and therefore
each such party hereby irrevocably and unconditionally waives any right such party may have to a
trial by jury in respect of any litigation directly or indirectly arising or relating to this
Agreement or the transactions contemplated by this Agreement.
Section 2.8 Entire Agreement; Amendments and Waivers. This Agreement constitutes the
entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes
all prior agreements, understandings, negotiations and discussions, whether oral
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or written, of the
parties, and there are no other agreements between the parties in connection with the subject
matter hereof except as set forth specifically herein or contemplated hereby. No supplement,
modification or waiver of this Agreement shall be binding unless executed in writing by the party
to be bound thereby. The failure of a party to exercise any right or remedy shall not be deemed or
constitute a waiver of such right or remedy in the future. No waiver of any of the provisions of
this Agreement shall be deemed to or shall constitute a waiver of any other provision hereof
(regardless of whether similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
Section 2.9 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be effective and valid but if
any provision or portion of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any
other provision or portion of any provision, and this Agreement will be reformed, construed and
enforced as if such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein. The parties shall endeavor in good faith negotiations to replace any
invalid, illegal or unenforceable provision with a valid provision the effects of which come as
close as possible to those of such invalid, illegal or unenforceable provision.
Section 2.10 Attorneys’ Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys’ fees, costs and necessary disbursements, in addition to any other relief to
which such party may be entitled.
Section 2.11 Termination. This Agreement shall terminate and be of no further force
and effect upon the first to occur of (i) the termination of the Merger Agreement in accordance
with its terms, (ii) the Effective Time (as defined in the Merger Agreement) or (iii) at such time
as the Board of Directors of Quest determines in accordance with Section 7.2 of the Merger
Agreement to make a Quest Adverse Recommendation Change (as defined in the Merger Agreement).
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
| Pinnacle Gas Resources, Inc. |
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| By: | /s/ Xxxxx X. Xxxxxxxxxxx | |||
| Xxxxx X. Xxxxxxxxxxx | ||||
| Chief Executive Officer | ||||
| XXXXX X. XXXX | ||||||
| /s/ Xxxxx X. Xxxx
|
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| XXXXX X. XXXX, XX. | ||||||
| /s/ Xxxxx X. Xxxx, Xx.
|
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| XXXX X. XXXXXXXX | ||||||
| /s/ Xxxx X. Xxxxxxxx
|
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| XXXX X. XXXXXX | ||||||
| /s/ Xxxx X. Xxxxxx
|
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| N. XXXXXX XXXXXXXX III | ||||||
| /s/ N. Xxxxxx Xxxxxxxx III
|
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| XXXXXXX X. XXXXX III | ||||||
| /s/ Xxxxxxx X. Xxxxx III
|
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S-1
Address for Notice for each of the above
Stockholders:
Stockholders:
Quest Resource Corporation
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxx
Facsimile: (000) 000-0000
S-2
Schedule I
| Stockholder | Number of Shares | |||
Xxxxx X. Xxxx |
1,790,245 | |||
Xxxxx X. Xxxx, Xx. |
946,157 | |||
Xxxx X. Xxxxxxxx |
96,053 | |||
Xxx X. Xxxxxx |
30,000 | |||
N. Xxxxxx Xxxxxxxx III |
13,220 | |||
Xxxxxxx X. Xxxxx III |
10,000 | |||
TOTAL: |
2,885,675 | |||
S-3
