exv10w7



 





Exhibit 10.7




GUARANTY

(Subsidiary)




     THIS GUARANTY (this “Guaranty”), dated as of November 15, 2007, is made by the undersigned
(individually, a “Guarantor” and collectively, the “Guarantors”), in favor of ROYAL BANK OF CANADA,
as administrative agent for the “Secured Parties” as defined in the Credit Agreement (hereinafter
defined).



W I T N E S S E T H:




     WHEREAS, pursuant to that certain Credit Agreement dated November 15, 2007 (as the same may
hereafter be amended, supplemented and restated, the “Credit Agreement”), among QUEST RESOURCE
CORPORATION a Nevada corporation (the “Borrower”), the various financial institutions that are, or
may from time to time become, parties thereto (individually a “Lender” and collectively the
“Lenders”) and Royal Bank of Canada, as administrative agent and collateral agent (in its capacity
as administrative agent, the “Administrative Agent”), the Lenders have agreed to make Credit
Extensions for the account of the Borrower; and



     WHEREAS, as a condition precedent to the making of Credit Extensions under and as defined in
the Credit Agreement, each Guarantor is required to execute and deliver this Guaranty; and



     WHEREAS, each Guarantor has duly authorized the execution, delivery and performance of this
Guaranty; and



     WHEREAS, each Guarantor is a wholly owned direct or indirect subsidiary of the Borrower;
and



     WHEREAS, it is in the best interests of each Guarantor to execute this Guaranty inasmuch as
each Guarantor will derive substantial direct and indirect benefits from the extensions of credit
made from time to time to or for the account of the Borrower.



     NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, and in order to induce the Lenders to make Credit Extensions to the Borrower pursuant
to the Credit Agreement by fulfilling the requirements of the Credit Agreement, the Guarantor
agrees, for the benefit of each Lender, as follows:



ARTICLE I




DEFINITIONS




     SECTION 1.1 Certain Terms. The following capitalized terms when used in this Guaranty,
including its preamble and recitals, shall have the following meanings (such definitions to be
equally applicable to the singular and plural forms thereof):



     “Administrative Agent” is defined in the first recital.



     “Borrower” is defined in the first recital.



     “Commitments” means each Commitment as defined in the Credit Agreement.



     “Credit Extensions” means each Credit Extension as defined in the Credit Agreement.



Subsidiary Guaranty




Page 1









 





     “Guarantor” and “Guarantors” is defined in the preamble.



     “Guaranty” is defined in the preamble.



     “Lenders” is defined
in the first recital.



     “Loan Documents” means the Loan Documents as defined in the Credit Agreement.



     “Note”
means each Revolving Note as defined in the Credit Agreement.



     “Obligations” means the
Obligations as defined in the Credit Agreement.



     “Obligor” means the Borrower or any other Person (other than the Administrative Agent or any
Lender) obligated under any Loan Document.



     “Required Lenders” means the Required Lenders as defined in the Credit Agreement.



     “Subsidiary Guarantors” means Subsidiaries of Borrower that have guaranteed all or any part of
the Obligations, other than the Guarantors.



     “Taxes” is defined in clause (a) of Section 2.7.



     “UCC” means the Uniform Commercial Code as in effect in the State of New York.



     SECTION 1.2 Credit Agreement Definitions. Unless otherwise defined herein or the context
otherwise requires, capitalized terms used in this Guaranty, including its preamble and recitals,
have the meanings provided in the Credit Agreement,



     SECTION 1.3 UCC Definitions. Unless otherwise defined herein or the context otherwise
requires, terms for which meanings are provided in the UCC are used in this Guaranty, including its
preamble and recitals, with such meanings.



ARTICLE II




GUARANTY PROVISIONS




     SECTION 2.1 Guaranty. Each Guarantor hereby absolutely, unconditionally, and irrevocably (1)
guarantees the full and punctual payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise, of all Obligations of the Borrower and
each other Obligor now or hereafter existing under each of the Credit Agreement, the Notes and each
other Loan Document to which the Borrower or such other Obligor is or may become a party, whether
for principal, interest, fees, expenses or otherwise (including all such amounts which would become
due but for the operation of the automatic stay under Section 362(a) of the United States
Bankruptcy Code, 11 U.S.C. §362(a), and the operation of Sections 502(b) and 506(b) of the United
States Bankruptcy Code, 11 U.S.C. §502(b) and §506(b)), and
(2) indemnifies and holds harmless each Lender and each holder of a Note for any and all costs
and expenses (including reasonable attorney’s fees and expenses) incurred by such Lender or such
holder, as the case may be, in enforcing any rights under this Guaranty; provided however, that
each Guarantor shall be liable under this Guaranty for the maximum amount of such liability that
can be hereby incurred without rendering this Guaranty, as it relates to such Guarantor, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any
greater amount. This Guaranty constitutes a guaranty of payment when due and not of collection, and



Subsidiary Guaranty




Page 2









 







each Guarantor specifically agrees that it shall not be necessary or required that any Lender or
any holder of any Note exercise any right, assert any claim or demand or enforce any remedy
whatsoever against the Borrower or any other Obligor (or any other Person) before or as a condition
to the obligations of such Guarantor hereunder.




     SECTION 2.2 Acceleration of Guaranty. Each Guarantor agrees that, in the event of the
occurrence of any event of the type described in Section 8.01(f) of the Credit Agreement, with
respect to the Borrower, any other Obligor or any other Guarantor, and if such event shall occur at
a time when any of the Obligations may not then be due and payable, such Guarantor will pay to the
Lenders forthwith the full amount which would be payable hereunder by such Guarantor if all such
Obligations were then due and payable.



     SECTION
2.3 Guaranty Absolute, etc. This Guaranty shall in all respects be a continuing,
absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and
effect until all Obligations (other than contingent indemnity obligations) of the Borrower and each
other Obligor have been paid in full (or, in the case of L/C Obligations, Cash Collateralized), all
obligations of the Guarantors hereunder shall have been paid in full, all Commitments shall have
terminated and, except as provided in Section 10.01(e) of the Credit Agreement, all Lender Hedging
Agreements have terminated. No Guarantor may rescind or revoke its obligations hereunder. Each
Guarantor guarantees that the Obligations of the Borrower and each other Obligor will be paid
strictly in accordance with the terms of the Credit Agreement and each other Loan Document under
which they arise, regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of any Lender or any holder of any Note with
respect thereto. The liability of each Guarantor under this Guaranty shall be absolute,
unconditional and irrevocable irrespective of: (1) any lack of validity, legality or enforceability
of the Credit Agreement, any Note or any other Loan Document; (2) the failure of any Lender or any
holder of any Note (a) to assert any claim or demand or to enforce any right or remedy against the
Borrower, any other Obligor or any other Person (including any other guarantor) under the
provisions of the Credit Agreement, any Note, any other Loan Document or otherwise, or (b) to
exercise any right or remedy against any other guarantor of, or collateral securing, any
Obligations of the Borrower or any other Obligor; (3) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations of the Borrower or any other
Obligor, or any other extension, compromise or renewal of any Obligations of the Borrower or any
other Obligor; (4) any reduction, limitation, impairment or termination of any Obligations of the
Borrower or any other Obligor for any reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and each Guarantor hereby waives any right
to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or
any other event or occurrence affecting, any Obligations of the Borrower, any other Obligor or
otherwise; (5) any amendment to, rescission, waiver, or other modification of, or any consent to
departure from, any of the terms of the Credit Agreement, any Note or any other Loan Document; (6)
any addition, exchange, release, surrender or non-perfection of any collateral, or any amendment to
or waiver or release or addition of, or consent to departure from, any other guaranty, held by any
Lender or any holder of any Note securing any of the Obligations of the Borrower or any other
Obligor; (7) the insolvency or bankruptcy of, or similar event affecting, the Borrower or any other
Obligor; or (8) any other circumstance which might otherwise constitute a defense available to, or
a legal or equitable discharge of, the Borrower, any other Obligor, any surety or any guarantor.
Each Guarantor waives all rights and defenses which may arise with respect to any of the foregoing,
and each
Guarantor waives any right to revoke this Guaranty with respect to future indebtedness.



Subsidiary Guaranty




Page 3









 








     SECTION 2.4 Reinstatement. Each Guarantor agrees that this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of
any of the Obligations is rescinded or must otherwise be restored by any Lender or any holder of
any Note, upon the insolvency, bankruptcy or reorganization of the Borrower, any other Obligor or
otherwise, all as though such payment had not been made.



     SECTION 2.5 Waiver, etc. The Guarantors hereby waive promptness, diligence, notice of
acceptance and any other notice with respect to any of the Obligations of the Borrower or any other
Obligor and this Guaranty and any requirement that the Administrative Agent, any other Lender or
any holder of any Note protect, secure, perfect or insure any security interest or Lien, or any
property subject thereto, or exhaust any right or take any action against the Borrower, any other
Obligor or any other Person (including any other guarantor) or entity or any collateral securing
the Obligations of the Borrower or any other Obligor, as the case may be.



     SECTION 2.6 Waiver of Subrogation. Until the Obligations are paid in full, all Commitments
have terminated and all Lender Hedging Agreements have terminated (except as provided in Section
10.01(e) of the Credit Agreement), the Guarantors shall not enforce or exercise any claim or other
rights which they may now or hereafter acquire against the Borrower or any other Obligor that arise
from the existence, payment, performance or enforcement of any Guarantor’s obligations under this
Guaranty or any other Loan Document, including any right of subrogation, reimbursement,
exoneration, or indemnification, any right to participate in any claim or remedy of the Lenders
against the Borrower or any other Obligor or any collateral which the Administrative Agent now has
or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under
contract, statute or common law, including the right to take or receive from the Borrower or any
other Obligor, directly or indirectly, in cash or other property or by set-off or in any manner,
payment or security on account of such claim or other rights. If any amount shall be paid to any
Guarantor in violation of the preceding sentence, such amount shall be deemed to have been paid to
such Guarantor for the benefit of, and held in trust for, the Lenders, and shall forthwith be paid
to the Administrative Agent for the benefit of the Lenders by the Guarantor receiving such payment
to be credited and applied upon the Obligations, whether matured or unmatured. Each Guarantor
acknowledges that it will receive direct and indirect benefits from the financing arrangements
contemplated by the Credit Agreement and that the waiver set forth in this Section is knowingly
made in contemplation of such benefits.



     SECTION 2.7 Payments Free and Clear of Taxes, etc. Each Guarantor hereby agrees that:



     (a) All payments by such Guarantor hereunder shall be made in accordance with
Section 3.01 of the Credit Agreement free and clear of and without deduction for any
and all present or future taxes, duties, levies, imposts, deductions, assessments,
fees, withholdings or similar charges, and all liabilities with respect thereto;
excluding, in the case of the Administrative Agent and each Lender, taxes imposed on
or measured by its net income (including any franchise taxes imposed on or measured by
its net income), by the jurisdiction (or any political subdivision thereof) under the
Laws of which the Administrative Agent or such Lender, as the case may be, is
organized or maintains its Lending Office (all such non-
excluded taxes, duties, levies, imposts, deductions, assessments, fees,
withholdings or similar charges, and liabilities being hereinafter
referred to as “Taxes”). In the event that any withholding or deduction
from any payment to be made by such Guarantor hereunder is required in
respect of any Taxes pursuant to any applicable law, rule or regulation,
then such Guarantor will (i) pay directly to the relevant authority the
full amount required to be so withheld or deducted; (ii) promptly forward
to such Lender an official receipt or other documentation satisfactory to
such Lender evidencing such payment to such authority; and (iii) pay to
such Lender such additional amount or amounts as is necessary to ensure
that the net amount actually received by such Lender will equal the full
amount such Lender would have received had no such withholding or
deduction been required. Moreover, if any Taxes are directly



Subsidiary Guaranty





Page 4









 







asserted
against any Lender with respect to any payment received by such Lender hereunder, such
Lender may pay such Taxes and such Guarantor will promptly pay such additional amounts (including,
if incurred as a result of such Guarantor’s or the Borrower’s action, omission or delay, any
penalties, interest or expenses) as is necessary in order that the net amount received by such
Lender after the payment of such Taxes (including any Taxes on such additional amount) shall equal
the amount such Lender would have received had such Taxes not been asserted.




     (b) If a Guarantor fails to pay any Taxes when due to the appropriate taxing authority or
fails to remit to any Lender the required receipts or other required documentary evidence, such
Guarantor shall indemnify such Lender for any incremental Taxes, interest or penalties that may
become payable by such Lender as a result of any such failure.



     (c) Without prejudice to the survival of any other agreement of the Guarantors hereunder, the
agreements and obligations of the Guarantors contained in this Section 2.7 shall survive the
payment in full of the principal of and interest on the Revolving Loan.



     SECTION 2.8 Contribution Agreement. Upon full and final payment of the Obligations, each
Guarantor together with all other Subsidiary Guarantors which have made payments upon all or any
part of the Obligations shall be entitled to contribution from all of the other Guarantors and
Subsidiary Guarantors, to the end that all such payments upon the Obligations shall be shared among
all Guarantors and Subsidiary Guarantors who guaranteed such Obligations in proportion to their
respective Net Worths (defined below); provided that the contribution obligations of each of the
Guarantors and Subsidiary Guarantors shall be limited to the maximum amount that it can pay at such
time without rendering its contribution obligations voidable under applicable law relating to
fraudulent conveyances or fraudulent transfers. As used in this subsection, the “Net Worth” of each
of the Guarantors or Subsidiary Guarantors, as applicable, means at any time, the remainder of (i)
the fair value of such Guarantor’s assets (other than such right of contribution), minus (ii) the
fair value of such Guarantor’s liabilities (other than its liabilities under its guaranty of the
Obligations).



     SECTION 2.9 Subordination. Each Guarantor hereby subordinates and makes inferior to the
Obligations any and all indebtedness now or at any time hereafter owed by the Borrower or other
Obligor to such Guarantor. Each Guarantor agrees that if any Event of Default has occurred and is
continuing under the Credit Agreement, it will not permit the Borrower to repay such indebtedness
or any part thereof and it will not accept payment from the Borrower of such indebtedness or any
part thereof without the prior written consent of the Required Lenders. If a
Guarantor receives any such payment without the prior required written consent, the amount so
paid shall be held in trust for the benefit of the Lenders, shall be segregated from the other
funds of such Guarantor, and shall forthwith be paid over to the Administrative Agent to be held by
the Administrative Agent as collateral for, or then or at any time thereafter applied in whole or
in part by the Administrative Agent against, all or any portions of the Obligations, whether
matured or unmatured, in such order as the Administrative Agent shall elect.



ARTICLE III




MISCELLANEOUS PROVISIONS




     SECTION 3.1 Loan Document. This Guaranty is a Loan Document executed pursuant to the Credit
Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and
applied in accordance with the terms and provisions thereof.



     SECTION 3.2 Releases. At such time as the Revolving Loan shall have been paid in full (other
than contingent indemnity obligations and, with respect to L/C Obligations, if they have been Cash



Subsidiary Guaranty





Page 5









 







Collateralized), the Commitments have been terminated, and, subject to Section 10.01(e) of the
Credit Agreement, no Lender Hedging Agreements are outstanding, the Administrative Agent shall, at
the request and expense of the Guarantors following such termination, promptly execute and deliver
to the Guarantors such documents and instruments as the Guarantors shall reasonably request to
evidence termination and release of this Guaranty.




     SECTION 3.3 Administrative Agent and Lenders; Successors and Assigns.



     (a) The Administrative Agent is Administrative Agent for each Lender under the Credit
Agreement. All rights granted to Administrative Agent under or in connection with this Guaranty are
for each Lender’s ratable benefit. The Administrative Agent may, without the joinder of any Lender,
exercise any rights in Administrative Agent’s or Lenders’ favor under or in connection with this
Guaranty. The Administrative Agent’s and each Lender’s rights and obligations vis-a-vis each other
may be subject to one or more separate agreements between those parties. However, the Guarantors
are not required to inquire about any such agreement and are not subject to any terms of it unless
the Guarantors specifically enter into such agreement. Therefore, neither Guarantors nor any of
their successors or assigns are entitled to any benefits or provisions of any such separate
agreement nor are they entitled to rely upon or raise as a defense any party’s failure or refusal
to comply with the provisions of any such agreement.



     (b) This Guaranty benefits the Administrative Agent, the Lenders, and their respective
successors and assigns and binds each Guarantor and its successors and assigns. Upon appointment of
any successor Administrative Agent under the Credit Agreement, all of the rights of Administrative
Agent under this Guaranty automatically vest in that new Administrative Agent as successor
Administrative Agent on behalf of Lenders without any further act, deed, conveyance, or other
formality other than that appointment. The rights of the Administrative Agent and the Lenders under
this Guaranty may be transferred with any assignment of the obligations hereby guaranteed pursuant
to and in accordance with the terms of the Credit Agreement. The Credit Agreement contains
provisions governing assignments of the obligations guaranteed under this Guaranty.



     SECTION 3.4 Amendments, etc. No amendment to or waiver of any provision of this Guaranty,
nor consent to any departure by any Guarantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by or on behalf of the party against whom it is sought to be
enforced and is in conformity with the requirements of Section 10.01 of the Credit Agreement. Each
such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given.



     SECTION 3.5 Addresses for Notices to the Guarantors. All notices and other communications
hereunder to the Guarantors shall be in writing and mailed or delivered to it, addressed to it at
the address set forth below or at such other address as shall be designated by the Guarantor in a
written notice to the Administrative Agent at the address specified in the Credit Agreement
complying as to delivery with the terms of this Section. All such notices and other communications
shall, when mailed, be effective when deposited in the mail, addressed as aforesaid. Address for
notices:


210 Park Avenue, Suite 2750

Oklahoma City, Oklahoma 73102



Facsimile: (405) 840-9897

Telephone: (405) 488-1304




Subsidiary Guaranty




Page 6









 








     SECTION 3.6 No Waiver; Remedies. In addition to, and not in limitation of, Section 2.3 and
Section 2.5, no failure on the part of any Lender or any holder of a Note to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.



     SECTION 3.7 Section Captions. Section captions used in this Guaranty are for convenience of
reference only, and shall not affect the construction of this Guaranty.



     SECTION 3.8 Setoff. In addition to, and not in limitation of, any rights of any Lender or any
holder of a Note under applicable law, upon the occurrence and during the continuance of an Event
of Default under or as defined in the Credit Agreement, each Lender and each such holder shall be
entitled to exercise (for the benefit of all Lenders pursuant to Section 10.09 of the Credit
Agreement) any right of offset or banker’s lien against each and every account and other property
or interest that a Guarantor may now or hereafter have with, or which is now or hereafter in the
possession of, any such Lender, to the extent of the full amount of the Obligations.



     SECTION 3.9 Severability. Wherever possible, each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Guaranty shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Guaranty.



     SECTION 3.10 Governing Law.



     (a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE;
PROVIDED THAT THE ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER
UNITED STATES FEDERAL LAW.



     (b) EACH GUARANTOR AGREES ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY
OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF
NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND APPELLATE COURTS FROM
ANY THEREOF, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, EACH GUARANTOR CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GUARANTOR
(1) IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED
THERETO, AND (2) IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, POSTAGE PREPAID, AT ITS ADDRESS FOR NOTICES DESIGNATED HEREIN. EACH GUARANTOR
WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER
MEANS PERMITTED BY THE LAW OF SUCH STATE.



Subsidiary Guaranty




Page 7









 








     SECTION 3.11 Waiver of Jury Trial, Etc. EACH GUARANTOR HEREBY (a) EXPRESSLY AND IRREVOCABLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY
LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
TO THE LOAN DOCUMENTS OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR
TORT OR OTHERWISE; AND EACH GUARANTOR HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ADMINISTRATIVE
AGENT OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF EACH GUARANTOR TO THE WAIVER OF ITS RIGHT TO TRIAL BY JURY; AND
(b) EXPRESSLY AND IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER IN ANY SUCH ACTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; PROVIDED THAT THE WAIVER
CONTAINED IN THIS SECTION 3.11 SHALL NOT APPLY TO THE EXTENT THAT THE PARTY AGAINST WHOM DAMAGES
ARE SOUGHT HAS ENGAGED IN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.



     SECTION 3.12 Entire Agreement. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.



[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK

SIGNATURES BEGIN ON NEXT PAGE.]




Subsidiary Guaranty





Page 8









 








     IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed and delivered
by an officer duly authorized as of the date first above written.



	 	 	 	 	 
	 	QUEST OIL & GAS, LLC, 

a Kansas limited liability company, 

as Guarantor

 	 
	 	By:  	/s/ Jerry D. Cash
 	 
	 	 	Jerry D. Cash, Chief Executive Officer and President 	 
	 	 	 	 
	 
	 	QUEST ENERGY SERVICE, LLC, 

a Kansas limited liability company, 

as Guarantor

 	 
	 	By:  	/s/ Jerry D. Cash
 	 
	 	 	Jerry D. Cash, Chief Executive Officer and President 	 



Subsidiary  Guaranty


Signature Page- 1