EXHIBIT 10.2
AGREEMENT
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THIS AGREEMENT is executed effective the 29th day of June, 2006, by
and among QUEST MINERALS & MINING CORP., a Utah corporation ("Quest"), GWENCO,
INC., a Kentucky corporation ("Gwenco"), QUEST ENERGY, LTD., a Kentucky
corporation ("QEL"), and GREENWOOD PARTNERS, LP, a Pennsylvania limited
partnership ("Greenwood").
R E C I T A L S:
WHEREAS, pursuant to that certain Unit Purchase Agreement (the "Unit
Agreement") dated as of February 22, 2005, Quest issued to Greenwood (i) a 7%
senior secured convertible promissory note due March 31, 2006 in the aggregate
principal amount of $100,000 (the "Unit Note"), and (ii) a Series A Warrant (the
"Series A Warrant") to purchase (a) up to 600,000 shares of Quest common stock,
par value $0.001 per share ("Common Stock") and (b) a Series B Warrant (the
"Series B Warrant") to purchase up to an additional 600,000 shares of Common
Stock;
WHEREAS, on April 15, 2005, Quest and Greenwood entered into that
certain Financial Advisory Agreement (the "Advisory Agreement") pursuant to
which Greenwood agreed to provide Quest, on a best efforts basis, certain
financial advisory and consulting services in exchange for the issuance of 10
Units (the "Advisory Units");
WHEREAS, pursuant to the Advisory Agreement, Quest issued to Greenwood
(i) a series of 7% senior secured convertible promissory note due April 18, 2006
in the aggregate principal amount of $250,000 (the "Advisory Unit Notes"), and
(ii) Series A Warrant (the "Advisory Series A Warrants") to purchase (a) up to
1,500,000 shares of Common Stock and (b) a Series B Warrant to purchase up to an
additional 1,500,000 shares of Common Stock;
WHEREAS, pursuant to the Unit Agreement, Quest issued to Greenwood (i)
a series of 7% senior secured convertible promissory note due April 18, 2006 in
the aggregate principal amount of $100,000 (the "April Unit Notes"), and (ii)
Series A Warrant (the "April Series A Warrants") to purchase (a) up to 600,000
shares of Common Stock and (b) a Series B Warrant to purchase up to an
additional 600,000 shares of Common Stock;
WHEREAS, in connection with the Unit Agreement, Quest and Greenwood
entered into that certain Registration Rights Agreement dated as of February 22,
2005 (the "Unit Registration Rights Agreement") pursuant to which Quest agreed
to register the shares of Common Stock issuable to Greenwood upon conversion of
the Unit Notes, exercise of the Series A Warrants, and exercise of the Series B
Warrants;
WHEREAS, Greenwood contends that Quest is currently in default under
the Unit Agreement, the Unit Registration Rights Agreement, and the Advisory
Agreement;
WHEREAS, Quest contends that Greenwood is currently in default under
the Advisory Agreement;
WHEREAS, Quest and Greenwood wish to settle and resolve all disputes
arising under the Unit Agreement and the Advisory Agreement (collectively, the
"Prior Financings"), and any and all documents related thereto (collectively,
the "Prior Financing Documents").
NOW, THEREFORE, in consideration of the mutual agreements between the
parties, it is agreed as follows:
1. RESTRUCTURE. Pursuant to this Agreement, the parties agree to a
complete restructuring of the obligations under the Prior Financing Documents
thereunder, all to be effectuated through the issuance of amended and restated
instruments, new instruments, and common stock. This Agreement together with all
notes, security agreements, mortgages, guaranties, securities and other
documents and instruments executed to effectuate this Agreement shall be
referred to hereafter as the "Restructure Documents."
2. CLOSING. Subject to all of the terms and conditions set forth in this
Agreement being satisfied, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of the Quest's counsel
on such date, at such place and at such time (the "Closing Date") within two (2)
business days after the satisfaction or waiver of the last of the conditions set
forth in Sections 8 and 9 and hereof as shall be determined by the mutual
consent of the parties hereto.
3. UNIT AGREEMENT RESTRUCTURING. In accordance with the terms of this
Agreement, Quest and Greenwood shall restructure all obligations under the Unit
Agreement (and all related documentation) as follows:
3.1. Cancellation of Five Advisory Units. At Closing, five (5)
Advisory Units (which shall include (i) Advisory Unit Notes in
the aggregate principal amount of $125,000, and (ii) Advisory
Series A Warrants to purchase (a) up to 750,000 shares of
Common Stock and (b) Series B Warrants to purchase up to an
additional 750,000 shares of Common Stock) will be cancelled
and of no further force and effect. Subsequent to the
cancellation contemplated hereby, Greenwood will continue to
own five (5) Advisory Units.
3.2. Issuance of Quest Common Stock. Contemporaneously with the
execution of this Agreement, Quest will issue to Greenwood
share certificates representing: (i) 650,000 shares of Common
Stock per Greenwood's exercise of all remaining Series A
Warrants to purchase 1,950,000 shares of Common Stock in full
on a cashless basis (the "Series A Warrant Shares"), and (ii)
216,667 shares of Common Stock per Greenwood's exercise of all
remaining Series B Warrants to purchase 650,000 shares of
Quest Common Stock (the "Series B Warrant Shares"). The
issuances of Common Stock under this Section 3.2 will
constitute full and complete performance by Quest to Greenwood
under the remaining Series A and Series B Warrants.
3.3. Amended and Restated Unit Notes. At Closing, Quest will sign
an amended and restated Unit Note (the "Amended and Restated
Unit Notes") in form and substance and payable on the terms
approved by Greenwood in the aggregate principal amounts of
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$100,000, $125,000, and $100,000, respectively, in favor of
Greenwood, which notes shall be payable on or before February
22, April 15, and April 18, 2007, respectively. The Amended
and Restated Unit Notes will initially be convertible into
Common Stock ("Unit Conversion Shares") at a rate of $.075 per
share; provided, however, that, in the event that the Market
Price (as defined herein) of Common Stock is less than $0.10
for ten (10) consecutive trading days, the conversion price
will be reduced to $0.05 per share; provided, further, that if
the Market Price of Common Stock is less $0.05 for ten (10)
consecutive trading days, the conversion price will become the
lesser of (i) $0.05 per share and (ii) 70% of the average of
the 5 closing bid prices of Quest's common stock immediately
preceding such conversion date. In the event that the Market
Price of the Common Stock is less than $0.01 for ten (10)
consecutive trading days, the Amended and Restated Unit Notes
will become immediately due and payable. "Market Price" shall
mean the average of the closing bid prices of the Common Stock
as reported by Bloomberg LP for the principal securities
exchange or trading market for Common Stock. The conversion
price of the Amended and Restated Unit Note will be subject to
proportional adjustment for stock splits, stock dividends,
recapitalizations, and the like.
3.4. Termination of Advisory Agreement. Each of Greenwood and Quest
agree that as of Closing, all of the provisions contained in
the Advisory Agreement shall be terminated and of no further
force and effect, and no further obligation shall be owed by
Greenwood under that Agreement. In addition, each of Greenwood
and Quest hereby waive any and all right to any claims or
damages previously incurred under the Advisory Agreement due
to any default or breach of the other party thereunder.
3.5. Termination of Unit Agreement. Each of Greenwood and Quest
agree that as of Closing, all of the provisions contained in
the Unit Agreement shall, solely as to Greenwood, be
terminated and of no further force and effect. In addition,
Greenwood hereby waives any and all right to any claims or
damages previously incurred under the Unit Agreement due to
Quest's default thereunder, including any defaults under the
Unit Registration Rights Agreement.
3.6. Termination of Unit Registration Rights Agreement. Each of
Greenwood and Quest agree that as of Closing, all of the
provisions contained in the Unit Registration Rights Agreement
shall, solely as to Greenwood, be terminated and of no further
force and effect. In addition, Greenwood hereby waives any and
all right to any Liquidated Damages previously incurred under
the Unit Registration Rights Agreement due to Quest's default
thereunder.
4. Intentionally Omitted.
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5. SECURITY. The performance of all covenants and agreements contained in
this Agreement and in the other documents executed or delivered as a part of
this transaction and the payment of the notes and all renewals, amendments and
modifications thereof shall continue to be secured under the following
previously executed documents: (i) Amended and Restated Security Agreement,
dated as of May 16, 2005 by and between Quest, Gwenco, QEL and ANC Group, Inc.
(the "Security Agreement"); and (ii) Term Loan Guaranty and Leasehold Mortgage,
Assignment of Leases and Subleases, Security Agreement and Fixture Filing dated
as of May 16, 2005 by Gwenco, Inc. to ANC Group, Inc. (the "Mortgage").
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6. SALES PURSUANT TO RULE 144.
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6.1. Restrictions on Sale. Greenwood agrees that until February 14,
2008, Greenwood and its affiliates shall not make any Net
Sales (as defined below) of Common Stock held by it on any
single day during such period, a number of shares of Common
Stock in excess of 30% of the five day daily trading volume of
the Common Stock (as reported by Bloomberg Financial Markets
(or any successor thereto)) on each day immediately preceding
such sale. "Net Sales" means, with respect to any date of
determination, the difference of (A) the number of shares of
Common Stock sold, including by way of short sales, or
otherwise transferred or disposed of, directly or indirectly,
on such date of determination by Greenwood and its affiliates
minus (B) the number of shares of Common Stock purchased,
directly or indirectly, on such date of determination by
Greenwood and its affiliates.
6.2. Rule 144. Quest shall file the reports required to be filed by
it under the Securities Act of 1933, as amended and the
Securities Exchange Act of 1934, as amended and the rules and
regulations adopted by the Securities and Exchange Commission
thereunder, and will take such further action as Greenwood may
reasonably request, all to the extent required from time to
time to enable Greenwood to sell share of Common Stock held by
it without registration under the Securities Act within the
limitation of the exemption provided by Rule 144 or Rule 144A.
Upon the request by Greenwood, Quest shall deliver to such
holder a written statement as to whether Quest has complied
with such requirements. In addition, if any shares of Common
Stock issuable under this Agreement, the Series A Warrants,
the Series B Warrants, or the Amended and Restated Unit Note,
may be resold in the absence of an effective registration
thereof under the Securities Act pursuant to Rule 144, then
upon the request by Greenwood, Quest shall deliver, at no cost
to Greenwood, to such holder an opinion of Quest's counsel to
that effect; provided, however, that Quest's obligation to
deliver such an opinion shall be conditioned upon Quest's
receipt of such documentation as Quest reasonably requests,
which shall include, but not be limited to, Greenwood's
trading records and/or confirmations to confirm that Greenwood
has not violated sales volume restrictions set forth in
Section 6.1.
6.3. Holding Period. Quest agrees and stipulates that, for purposes
of Rule 144 of the Securities Act of 1933, as amended, any
shares of common stock issuable upon (i) conversion of
$100,000 in principal amount, and any accrued interest
thereon, under the Amended and Restated Unit Note are deemed
to have been acquired by Greenwood on February 22, 2005, the
date on which the Greenwood initially loaned $100,000 to Quest
pursuant to the Unit Note, pursuant to Rule 144(d)(3)(ii) of
the Securities Act; (ii) conversion of $125,000 in principal
amount, and any accrued interest thereon, under the Amended
and Restated Unit Note are deemed to have been acquired by
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Greenwood on April 15, 2005, the date on which the Greenwood
initially provided services under the Advisory Agreement,
pursuant to Rule 144(d)(3)(ii) of the Securities Act; (iii)
conversion of $100,000 in principal amount, and any accrued
interest thereon, under the Amended and Restated Unit Note are
deemed to have been acquired by Greenwood on April 18, 2005,
the date on which the Greenwood initially loaned $100,000 to
Quest pursuant to the Unit Note, pursuant to Rule
144(d)(3)(ii) of the Securities Act; (iv) upon cashless
exercise of the Series A Warrant or Series B Warrant are
deemed to have been acquired on February 22, 2005, the date on
which the Series A Warrant was issued, pursuant to Rule
144(d)(3)(ii) of the Securities Act; (v) upon cashless
exercise of the Advisory Series A Warrant or Advisory Series B
Warrant are deemed to have been acquired on April 15, 2005,
the date on which the Advisory Series A Warrant was issued,
pursuant to Rule 144(d)(3)(ii) of the Securities Act; and (vi)
upon cashless exercise of the April Series A Warrant or April
Series B Warrant are deemed to have been acquired on April 18,
2005, the date on which the Series A Warrant was issued,
pursuant to Rule 144(d)(3)(ii) of the Securities Act.
7. RELEASES. The parties agree that the following releases will be
delivered at the Closing of the transactions contemplated herein:
7.1. Greenwood. Greenwood, on behalf of it itself and its
subsidiaries, affiliates, officers, directors, shareholders,
agents, employees, servants, attorneys and representatives, as
well as any respective heirs, personal representatives,
successors and assigns of any and all of them (the "Greenwood
Parties"), hereby releases, acquits, and discharges Quest and
its subsidiaries (including, but not limited to, QEL and
Gwenco), affiliates, officers, directors, shareholders,
agents, employees, servants, attorneys and representatives, as
well as any respective heirs, personal representatives,
successors and assigns of any and all of them (the "Quest
Parties") from any and all claims, demands, debts, actions,
causes of action, suits, contracts, agreements, obligations,
accounts, defenses, offsets against indebtedness and
liabilities of any kind or character whatsoever, known or
unknown, suspected or unsuspected, in contract or in tort, at
law or in equity, including without implied limitation, such
claims and defenses as fraud, mistake, duress and usury, which
the Greenwood Parties ever had, now have, or might hereafter
have against the Quest Parties which arise out of or relate to
the Prior Financings, except to the extent that the Prior
Financings are specifically amended and restated herein and
provision for payment is specifically made herein, in the
Amended and Restated Unit Notes, or any other document,
instrument, agreement, or other papers issued, executed, or
delivered pursuant hereto.
7.2. QUEST. Quest, Gwenco, and QEL, on behalf of themselves and the
Quest Parties, hereby release, acquit, and discharge the
Greenwood Parties from any and all claims, demands, debts,
actions, causes of action, suits, contracts, agreements,
obligations, accounts, defenses, offsets against indebtedness
and liabilities of any kind or character whatsoever, known or
unknown, suspected or unsuspected, in contract or in tort, at
law or in equity, including without implied limitation, such
claims and defenses as fraud, mistake, duress and usury, which
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the Quest Parties ever had, now have, or might hereafter have
against the Greenwood Parties which arise out of or relate to
the Prior Financings, except to the extent that the Prior
Financings are specifically amended and restated herein and
provision for payment is specifically made herein, in the
Amended and Restated Unit Notes, or any other document,
instrument, agreement, or other papers issued, executed, or
delivered pursuant hereto.
8. CONDITIONS OF CLOSING BY INVESTOR. The obligation of Greenwood to
perform this Agreement is subject to the continued performance by Quest of the
following conditions subsequent:
8.1. Restructure Documents. The Restructure Documents and all other
instruments and documents incidental to the transactions
contemplated hereby shall have been duly executed,
acknowledged (where appropriate), and delivered to Greenwood
by Quest, all in form and substance satisfactory to Greenwood
on or before June 29, 2006.
8.2. Authority. Greenwood shall have received a certificate of
incorporation, certificate of good standing, a certified copy
of the bylaws and certified copies of corporate resolutions
and other documents reasonably required to authorize the
execution, delivery and performance of the Restructure
Documents by Quest, QEL, and Gwenco, all in form and substance
satisfactory to the Greenwood.
8.3. Representations and Warranties. The representations and
warranties of Quest set forth in this Agreement shall be true
and correct on and as of Closing.
8.4. Deliveries. Quest shall have delivered the following to
Greenwood:
8.4.1. Notes. The Amended and Restated Unit Notes;
8.4.2. Common Stock. The certificates representing the
Series A Warrant Shares and Series B Warrant Shares
in definitive form and registered in the name of
Investor pursuant to Section 3.3;
8.4.3. Resolutions. Copies of resolutions of the board of
directors of Quest authorizing the execution,
delivery and performance of the Restructure Documents
by Quest;
8.4.4. Articles and Certificate. A copy of the articles of
incorporation of Quest, QEL, and Gwenco, and a
certificate of good standing as to Quest issued by
the secretary of state of Utah;
8.4.5. Instruction Letter. An irrevocable letter of
instruction to Quest's transfer agent regarding the
issuance of Common Stock issuable under this
Agreement, the Series A Warrants, the Series B
Warrants, and the Amended and Restated Unit Notes, in
form and substance satisfactory to Greenwood.
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8.4.6. Current Report on Form 8-K. A form of current report
on Form 8-K disclosing the execution of this
Agreement and the terms hereof, which Quest shall
file with the SEC within four (4) business days of
the Closing.
9. CONDITIONS OF CLOSING BY QUEST. The obligations of Quest to perform
this Agreement and consummate the transactions contemplated hereby, is subject
to the performance by Greenwood of each of the following conditions subsequent:
9.1. Restructure Documents. The Restructure Documents and all other
instruments and documents incidental to the transactions
contemplated hereby shall have been duly executed,
acknowledged (where appropriate), and delivered to Quest by
Greenwood, all in form and substance satisfactory to Quest.
9.2. Authority. Quest shall have received certified copies of
corporate resolutions and other documents reasonably required
to authorize the execution, delivery and performance of the
Restructure Documents by Greenwood, all in form and substance
satisfactory to the Quest.
9.3. Representations and Warranties. The representations and
warranties of Greenwood set forth in this Agreement shall be
true and correct on and as of Closing.
9.4. Deliveries. Greenwood shall have delivered the following to
the Quest:
9.4.1. Notes. The original executed Unit Note(s).
9.4.2. Warrants. The original executed Advisory Series A
Warrants and Series B Warrants;
9.4.3. Resolutions. Copies of resolutions of the managing
partner of Greenwood authorizing the execution,
delivery and performance of the Restructure Documents
by Greenwood.
10. REPRESENTATIONS AND WARRANTIES OF QUEST COMPANIES. To induce Greenwood
to enter into this Agreement and, Quest, QEL, and Gwenco (collectively, the
"Quest Companies") represent and warrant to Greenwood that:
10.1. Existence and Power. Each Quest Company is a corporation duly
incorporated and validly existing in good standing under the
laws of its jurisdiction of incorporation and is authorized
and qualified to do business in each state where, because of
the nature of the activities or assets, such qualification is
required, except those states where failure to so qualify will
not have a material adverse effect; each Quest Company has
adequate authority, power and legal right to enter into,
execute, deliver and perform the terms of the Restructure
Documents, to borrow money and to give security for borrowings
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as contemplated by the Restructure Documents and to consummate
the transactions contemplated thereby, and in doing so, no
Quest Company will violate any law or the provisions of any
articles, charter or bylaws. The Restructure Documents, upon
their execution and delivery, will constitute valid, legal and
binding obligations of each Quest Company, enforceable in
accordance with their terms, subject only to applicable
bankruptcy, insolvency or similar laws generally affecting the
enforcement of creditor's rights.
10.2. Full Disclosure. Neither this Agreement, the other Restructure
Documents nor any statement or documents referred to herein or
delivered to Greenwood by the Quest Companies, or any other
party on their behalf contains any untrue statement or omits
to state a material fact necessary to make the statements
herein or therein not misleading.
10.3. SEC Reports and Financial Statements.
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10.3.1. Quest has delivered or made available to Greenwood
accurate and complete copies (excluding copies of
exhibits) of each report, registration statement, and
definitive proxy statement filed by the Company with
the United States Securities and Exchange Commission
("SEC") since January 1, 2004 (collectively, with all
information incorporated by reference therein or
deemed to be incorporated by reference therein, the
"SEC Reports"). All statements, reports, schedules,
forms and other documents required to have been filed
by Quest with the SEC have been so filed. As of the
time it was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each
of the SEC Reports complied in all material respects
with the applicable requirements of the Securities
Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended; and (ii) none of the SEC
Reports contained any untrue statement of a material
fact or omitted to state a material fact required to
be stated therein or necessary in order to make the
statements therein, in the light of the circumstances
under which they were made, not misleading.
10.3.2. Except for the pro forma financial statements, the
consolidated financial statements contained in the
SEC Reports: (i) complied as to form in all material
respects with the published rules and regulations of
the SEC applicable thereto; (ii) were prepared in
accordance with GAAP applied on a consistent basis
throughout the periods covered (except as may be
indicated in the notes to such financial statements
and, in the case of unaudited statements, as
permitted by Form 10-QSB of the SEC, and except that
unaudited financial statements may not contain
footnotes and are subject to normal and recurring
year-end audit adjustments which will not,
individually or in the aggregate, be material in
amount); and (iii) fairly present, in all material
respects, the consolidated financial position of the
Company and its consolidated subsidiaries as of the
respective dates thereof and the consolidated results
of operations of Quest and its consolidated
subsidiaries for the periods covered thereby. All
adjustments considered necessary for a fair
presentation of the financial statements have been
included.
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10.4. Liens. The Collateral (as defined in the Security Agreement)
has been duly and validly assigned, delivered and pledged by
Quest under the Security Agreement, and the Security
Agreement, together with such assignment, delivery and pledge,
creates a valid security interest in the Collateral.
10.5. Leases. Within thirty days of the Closing, Gwenco shall
deliver to Greenwood true and correct copies of all leases
described in the Mortgage (the "Leases"). Except as set forth
on Schedule 10.5 hereto (which the Quest Companies may
supplement or amend currently with the delivery of the
Leases), the Leases are legal, valid, binding, and in full
force and effect and enforceable by Gwenco in accordance with
their respective terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and by general equitable
principles.
10.6. Survival of Representations. All representations and
warranties made by Quest herein will survive the Closing, and
any investigation at any time made by or on behalf of
Greenwood will not diminish Greenwood's right to rely thereon.
All statements contained in any certificate or other
instrument delivered by or on behalf of Quest under or
pursuant to this Agreement or in connection with the
transactions contemplated hereby will constitute
representations and warranties made by Quest hereunder.
11. REPRESENTATIONS AND WARRANTIES OF GREENWOOD. To induce Quest to enter
into this Agreement, Greenwood represents and warrant to Quest that:
11.1. Existence and Power. Greenwood is and will continue to be a
limited partnership duly formed and validly existing in good
standing under the laws of Pennsylvania and is authorized and
qualified to do business in each state where, because of the
nature of the activities or assets, such qualification is
required, except those states where failure to so qualify will
not have a material adverse effect; Greenwood has adequate
authority, power and legal right to enter into, execute,
deliver and perform the terms of the Restructure Documents and
to consummate the transactions contemplated thereby. The
Restructure Documents, upon their execution and delivery, will
constitute valid, legal and binding obligations of Greenwood,
enforceable in accordance with their terms, subject only to
applicable bankruptcy, insolvency or similar laws generally
affecting the enforcement of creditor's rights.
11.2. Information on Subscriber. Greenwood is, and will be at the
time of the conversion of the Amended and Restated Unit Note,
an "accredited investor", as such term is defined in
Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, is
experienced in investments and business matters, has made
investments of a speculative nature and has purchased
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securities of United States publicly-owned companies in
private placements in the past and, with its representatives,
has such knowledge and experience in financial, tax and other
business matters as to enable Greenwood to utilize the
information made available by the Quest to evaluate the merits
and risks of and to make an informed investment decision with
respect to the proposed purchase, which represents a
speculative investment. Greenwood has the authority and is
duly and legally qualified to purchase and own the Amended and
Restated Unit Note, Series A Warrant Shares, the Series B
Warrant Shares, and the Unit Conversion Shares (collectively,
the "Securities"). Greenwood is able to bear the risk of such
investment for an indefinite period and to afford a complete
loss thereof.
11.3. Purchase of Securities. On the Closing Date, Greenwood will
acquire the Amended and Restated Unit Notes as principal for
its own account for investment only and not with a view
toward, or for resale in connection with, the public sale or
any distribution thereof.
11.4. Compliance with Securities Act. Greenwood understands and
agrees that the Securities have not been registered under the
Securities Act of 1933, as amended or any applicable state
securities laws, by reason of their issuance in a transaction
that does not require registration under the Securities Act of
1933, as amended (based in part on the accuracy of the
representations and warranties of Greenwood contained herein),
and that such Securities must be held indefinitely unless a
subsequent disposition is registered under the Securities Act
of 1933, as amended or any applicable state securities laws or
is exempt from such registration.
11.5. Shares Legend. The Series A Warrant Shares, the Series B
Warrant Shares, and the Unit Conversion Shares, shall bear the
following or similar legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE
SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH SECURITIES ACT OR ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED."
11.6. Intentionally Omitted.
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11.7. Note Legend. The Amended and Restated Unit Note shall bear the
following legend:
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"THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF
THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THIS NOTE AND THE COMMON SHARES ISSUABLE
UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED."
11.8. Communication of Offer. The offer to sell the Securities was
directly communicated to the Greenwood by Quest. At no time
was Greenwood presented with or solicited by any leaflet,
newspaper or magazine article, radio or television
advertisement, or any other form of general advertising or
solicited or invited to attend a promotional meeting otherwise
than in connection and concurrently with such communicated
offer.
11.9. Restricted Securities. Greenwood understands that the
Securities have not been registered under the Securities Act
of 1933, as amended and Greenwood will not sell, offer to
sell, assign, pledge, hypothecate or otherwise transfer any of
the Securities unless pursuant to an effective registration
statement under the Securities Act of 1933, as amended
11.10. No Governmental Review. Greenwood understands that no United
States federal or state agency or any other governmental or
state agency has passed on or made recommendations or
endorsement of the Securities or the suitability of the
investment in the Securities, nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.
12. MISCELLANEOUS. It is further agreed as follows:
12.1. Non-disparagement. The Quest Parties hereby agree not to
disparage, portray in a negative light, or take any action
that is intended to disparage or portray in a negative light
the Greenwood Parties, whether such disparagement, portrayal,
communication or action is made publicly or privately,
including without limitation, in any and all interviews, oral
statements, written materials, electronically-displayed
materials, and materials or information displayed on
Internet-related sites. Similarly, the Greenwood Parties will
not disparage, portray in a negative light, or take any action
that is intended to disparage or portray in a negative light
the Quest Parties, whether such disparagement, portrayal,
communication or action is made publicly or privately,
including without limitation, in any and all interviews, oral
statements, written materials, electronically-displayed
materials, and materials or information displayed on
Internet-related sites. Notwithstanding anything in this
Section 12.1 to the contrary, neither party to this Settlement
Agreement will be prevented from making statements required by
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law or that such person is advised by counsel should be made
or are appropriate to make in any proceeding to which such
person is a party and which such person believes are truthful
and are supportable by evidence, including complying with any
court order, subpoena, or government investigation, or from
complying with the requirements of any applicable law or
common law duty.
12.2. Remedies upon Default/Liquidated Damages. Notwithstanding
anything in the Amended and Restated Unit Note to the
contrary, the Amended and Restated Unit Note shall become
immediately due and payable upon material breach of any the
terms of this Agreement or any documents executed in
connection herewith. In addition, if any Quest Party should
unreasonably refuse to honor its obligations under this
Agreement or any of the related documents executed in
connection herewith, then Greenwood, and each other person
(each a "Settling Investor" and collectively the "Settling
Investor") who purchased Units and who enters into a
settlement agreement substantially identical in general terms
to this Agreement, shall be, in the aggregate, entitled to
$100,000, as liquidated damages ("Liquidated Damages"); such
Liquidated Damages to be in addition to the amounts payable
under the Amended and Restated Unit Notes (or if higher, the
value of the securities issuable upon conversion thereof). The
$100,000 shall be distributed pro-rata to the Settling
Investors based on the amounts of their respective investments
in the Units.
12.3. Recitals. The recitals are hereby acknowledged by the parties
to be true and correct and are adopted and incorporated herein
as material terms of this Agreement.
12.4. Hold Harmless. Each party hereby agrees to indemnify and hold
any other party to this Agreement harmless from all liability,
loss, damage or expense, including reasonable attorney's fees,
whether incurred under retainer, salary or otherwise, that
such party may incur in good faith in compliance with or the
enforcement of the terms of this Agreement or any of the
Restructure Documents.
12.5. Supersession. It is agreed and understood between Quest and
Greenwood that: (a) except to the extent the Prior Financing
Documents are amended hereby, at and after the Closing, the
Prior Financings will remain in full force and effect; and (b)
the execution of this Agreement will not discharge, interrupt,
impair, xxxxx or otherwise modify the priority or the validity
of any lien or security interest securing payment of the
indebtedness evidenced by the Prior Financing Documents.
12.6. Notices. All notices, requests and demands will be served by
first class or express mail, postage prepaid, or sent by
telex, telegram, telecopy or other similar form of rapid
transmission confirmed by mailing written confirmation at
substantially the same time as such rapid transmission, as
follows:
Quest- Quest Minerals & Mining Corp.
00X 0xx Xxxxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Attn: Xxxxxx Xxxxxxxxxxx, Xx.
Fax: (000) 000-0000
12
With a copy to- Spectrum Law Group, LLP
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
Xxxxxxxxx - Xxxxxxxxx Xxxxxxxx, XX
Xxx Xxxxxxxx, Xxxxx 000
000 Xxx Xxxx Xxxx
Xxxxxxxxxx XX 00000
Attn: Xxxx Xxxxxxxxx
Fax: (000) 000-0000
With a copy to - Cozen X'Xxxxxx
0000 X Xxxxxx, XX Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx XxXxxxxxx, Esq.
Fax: (000) 000-0000
or at such other address as any party designates for such
purpose in a written notice to the other parties. Notices will
be deemed to have been given on the date notice is sent by
rapid transmission or three business days after notice is
placed in the mail, properly addressed, postage prepaid.
12.7. Construction. Nothing contained in this Agreement will be
construed to constitute Greenwood as a joint venturer with
Quest or to constitute a partnership. The descriptive headings
of the paragraphs of this Agreement are for convenience only
and are not to be used in the construction of the content of
this Agreement. This Agreement may be executed in multiple
counterparts, each of which will be an original instrument,
but all of which will constitute one agreement.
12.8. Venue. This Agreement and the documents issued hereunder are
executed and delivered as an incident to a lending transaction
negotiated and to be performed in New York, New York. The
Restructure Documents are intended to constitute a contract
made under the laws of the State of New York and to be
construed in accordance with the internal laws of said state.
Quest and Greenwood hereby waive all objections and
irrevocably consent to the jurisdiction and venue of any state
or federal court sitting in New York, New York.
12.9. Attorney's Fees. The prevailing party in any proceeding
instituted to resolve any dispute between any of the parties
arising out of or relating to this Agreement shall be
13
entitled, in addition to any award rendered, to all reasonable
attorneys' fees, costs and expenses incurred in connection
with any such proceeding.
12.10. Severability. In case any one or more of the provisions
contained in the Restructure Documents should be invalid,
illegal or unenforceable in any respect in any jurisdiction,
the validity, legality and enforceability of such provision or
provisions will not in any way be affected or impaired thereby
in any other jurisdiction; and the validity, legality and
enforceability of the remaining provisions contained herein
and therein will not in any way be affected or impaired
thereby.
12.11. No Oral Modification. This Agreement may not be amended,
altered, modified or changed verbally, but only by an
agreement in writing signed by the party against whom
enforcement of any amendment, waiver, change, modification or
discharge is sought.
12.12. Exclusive Benefit. All provisions of the Restructure Documents
are for the sole and exclusive benefit of the Quest and
Greenwood, and no other person will have standing to require
satisfaction of the provisions thereof or be entitled to
assume that advances thereunder will not be made by the Lender
in the absence of strict compliance with the provisions of the
Restructure Documents. Any and all provisions of the
Restructure Documents may be waived by the Greenwood in whole
or in part at any time if, in the sole discretion of the
Greenwood, it is advisable to do so.
12.13. Binding Effect. This Agreement will be binding on Quest and
their successors and permitted assigns and will inure to the
benefit of the Greenwood, and Greenwood's successors and
assigns.
12.14. Counterparts. This Agreement may be executed in multiple
counterparts, each of which will be an original instrument,
but all of which will constitute one agreement. The parties to
this Agreement may rely upon original, fax, digital or scanned
signatures in the execution of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
--------------------------------------------
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IN WITNESS WHEREOF, Quest and Greenwood have duly executed this
Agreement effective the date first above written.
QUEST MINERALS & MINING CORP.,
a Utah corporation
By: /s/ XXXXXX XXXXXXXXXXX, XX.
-------------------------------------
Name: Xxxxxx Xxxxxxxxxxx, Xx.
Title: Vice President
GWENCO, INC., a Kentucky corporation
By: /s/ XXXXXX XXXXXXXXXXX, XX.
-------------------------------------
Name: Xxxxxx Xxxxxxxxxxx, Xx.
Title: Vice President
QUEST ENERGY, LTD., a Kentucky
corporation
By: /s/ XXXXXX XXXXXXXXXXX, XX.
-------------------------------------
Name: Xxxxxx Xxxxxxxxxxx, Xx.
Title: Vice President
GREENWOOD PARTNERS, LP, a Pennsylvania
limited partnership
By: /s/ XXXXXXX X. XXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Compliance Officer
15
