Exhibit 2.3
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Hold Back Agreement
This Hold Back Agreement, dated as of December 22, 2003, is between Devon
Energy Production Company, L.P. ("Seller") and Quest Cherokee, LLC ("Buyer"),
successor in interest to all of Quest Resource Corporation's right, title, and
interest in and to the Agreement (hereafter defined), regarding the "hold back"
of a portion of the Sale Price under, and as defined in, that certain Purchase
and Sale Agreement dated December 10, 2003 (the "Agreement") by and among
Seller, Quest Resource Corporation and Tall Grass Gas Services, L.L.C.
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned such terms in the Agreement.
1. Seller has solicited the necessary consents to assign required under
Paragraph 11 of the Agreement, but has not received all such consents with
regard to certain Leases and Contracts as of Closing. The Leases and Contracts
for which such consents have not been obtained (each being a "Consent Lease"
and, collectively, the "Consent Leases") are listed in the attachment hereto,
together with their respective Allocated Values (which values have been
tabulated on "Exhibit A-2" to the Agreement). Buyer and Seller agree that,
notwithstanding the condition in Paragraph 16(d) of the Agreement, Seller shall
assign all Consent Leases to Buyer at Closing by delivering (at the request, and
with the authorization, of Buyer) to Bank One, NA, solely in its capacity as
Collateral Agent (in such capacity, "Collateral Agent") for the Lenders under
and as defined in that certain Collateral Agency and Intercreditor Agreement,
dated of even date herewith, by and among such Lenders, Collateral Agent, Buyer,
Revolver Agent (as hereinafter defined) and other parties thereto (the
"Collateral Agency Agreement"), an executed and acknowledged Deed, Assignment
and Xxxx of Sale, dated effective as the Closing Date (the "Holdback
Assignment"), covering all the Consent Leases, which assignment shall not be
recorded in the relevant county(ies) except as hereinafter provided.
2. Seller agrees to continue to pursue execution of consents for Consent
Leases with all due diligence, in good faith, and at its sole cost and expense,
and to deliver such obtained consents as soon as reasonably practicable.
3. Seller may, from time to time on or prior to 120 days after the Closing
Date, submit a request for payment with respect to one or more Consent Leases
for which all necessary consents to assign have been obtained thereunder (a
"Funding Request"). Seller shall submit each Funding Request to Buyer, with a
copy to Collateral Agent and Revolver Agent (as defined in the Collateral Agency
Agreement and herein so called), by notice given as set forth below, which
notice shall include (a) copies of all relevant executed consents, (b) a
statement specifying the Allocated Value of each applicable Consent Lease which
is the subject of such request, together with an aggregate total thereof (the
"Funding Request Amount"), (c) wire transfer or other instructions for payment
of the Funding Request Amount, and (d) with respect to the copy of the Funding
Request provided to Collateral Agent, two (2) counterpart originals of a valid
and fully
executed and acknowledged Holdback Assignment covering such Consent Leases and
all xxxxx situated thereon (a "Follow-up Assignment"). As soon as reasonably
practicable following notice of a Funding Request, Buyer shall (i) review the
consent(s) transmitted by Seller, (ii) verify that the consents are complete and
in form and substance reasonably acceptable to it, (iii) confirm that the
Funding Request Amount is correct, and (iv) provide notice (a "Payment Direction
Notice") to Collateral Agent and Revolver Agent containing all information,
including, without limitation, any required certificates and borrowing requests,
necessary to cause the funding of the Funding Request Amount and directing
Revolver Agent to pay the Funding Request Amount directly to Seller in
accordance with the instructions set forth in the Funding Request. Provided
Buyer, at the time of any payment hereunder, has satisfied all conditions to a
Borrowing (as defined in the Revolving Credit Agreement (as defined in the
Collateral Agency Agreement)) in the amount of the Funding Request Amount,
Revolver Agent shall, within 5 business days following it's receipt of the
Payment Direction Notice, cause such payment to be made to Seller.
Notwithstanding the foregoing, if Buyer shall reasonably object to any such
Funding Request, or receive notice from Collateral Agent or Revolver Agent of
any such objection, Buyer shall promptly notify Seller of such objection and
Buyer and Seller shall attempt to resolve such dispute as soon as reasonably
practical, acting diligently and in good faith. In no event shall Seller submit
a Funding Request if the Funding Request Amount is less than $5,000,000;
provided, that the final Funding Request submitted by Seller may be in a lesser
amount.
4. Buyer may at any time on or prior to 130 days after the Closing Date
waive the consent requirement as to any Consent Lease and, provided Seller is
reasonably satisfied with Buyer's method of funding to Seller of the Allocated
Value for such Consent Lease(s), Buyer shall notify Collateral Agent in writing
of such waiver, and shall instruct Collateral Agent to (a) revise Exhibit A to
the Holdback Assignment to include only those Consent Leases subject to such
waiver and (b) either deliver the revised Holdback Assignment to Buyer or record
same in the appropriate real property records, each of which actions are hereby
authorized by Seller. If Buyer shall fail to so waive required consents, or
Seller is not so satisfied, Buyer shall instruct Collateral Agent to return the
Holdback Assignment to Seller; provided that such action shall not vest in
Seller title to any Consent Lease that is the subject of a prior Follow-up
Assignment. Buyer and Seller acknowledge that Funding Request Amounts may not be
available with respect to any of the hold back based upon leases or agreements
for which (i) consent requirements were waived by Buyer, or (ii) evidence of
obtained consents was delivered to Collateral Agent and Revolver Agent after May
1, 2004.
5. All notices, requests and other communications to Buyer, Seller,
Collateral Agent or Revolver Agent shall be in writing (including, without
limitation, telecopy or similar writing) and shall be given to the recipient
thereof at its address or telecopier number set forth below. Each such notice,
request or other communication shall be effective (a) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified below and the
appropriate answerback is received or receipt is otherwise confirmed, (b) if
given by mail, three (3) business days after deposit in the mails with first
class postage prepaid, addressed as aforesaid, or (c) if given by any other
means, when delivered at the address specified below; provided, that, Buyer and
Seller acknowledge that all notices, requests and other communications to
Collateral Agent or Revolver Agent shall not be effective until received. A
party's notice information set forth below may be changed at any time by such
party by notice given to the other parties as herein provided.
BUYER:
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Quest Cherokee, LLC
0000 X. Xxxxxxx
Xxxxx 000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxx
Tel. No. (000) 000-0000
Fax No. (000) 000-0000
SELLER:
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Devon Energy Production Company, L.P.
00 Xxxxx Xxxxxxxx
Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxx
Tel. No. (000) 000-0000
Fax No. (000) 000-0000
COLLATERAL AGENT AND REVOLVER AGENT:
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Bank One, NA,
in its capacity as Collateral Agent (or, as applicable, Revolver Agent)
0000 Xxxx Xxxxxx
4th Floor
Mail Code TX1-2448
Xxxxxx, Xxxxx 00000
Attn: J. Xxxxx Xxxxxx
Tel. No. (000) 000-0000
Fax No. (000) 000-0000
[Signature Pages to Follow]
Agreed and accepted this 22nd day of December, 2003.
Devon Energy Production Company, L.P. Quest Cherokee, LLC
By: /s/ X.X. XxXxxxx, By: /s/ Xxxxx Xxxx
------------------- Name: Xxxxx X. Xxxx
its general partner Title: Manager
By: Xxx X. XxXxxxx
Name:
Title: Vice President
[Signature Page]
Acknowledged as of this 22nd day of December, 2003.
Bank One, NA, solely in its
capacity as Collateral Agent and
Revolver Agent
By: /s/ J. Xxxxx Xxxxxx
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J. Xxxxx Xxxxxx,
Director, Capital Markets
[Signature Page]
