Document:

DEED
      OF TRUST, MORTGAGE, ASSIGNMENT OF PRODUCTION,

    SECURITY
      AGREEMENT AND FINANCING STATEMENT

     

    from

    UNITED
      HERITAGE CORPORATION

    (Federal
      Income Tax Identification No. 87-0372826)

    (Grantor
      and Debtor)

     

    to

    MICHAEL
      H. ATNIPP, TRUSTEE

    for
      the
      benefit of

    LOTHIAN
      OIL INC.

    (Federal
      Income Tax Identification No. 26-0113270)

    (Lender/Mortgagee
      and Secured Party)

    

    A
      PHOTOGRAPHIC OR OTHER REPRODUCTION OF THIS INSTRUMENT IS SUFFICIENT AS A
      FINANCING STATEMENT. FOR PURPOSES OF FILING THIS INSTRUMENT AS A FINANCING
      STATEMENT, THE ADDRESS OF THE GRANTOR AND DEBTOR IS 405 N. MARIENFELD, SUITE
      200, MIDLAND, TX 79701, AND THE ADDRESS OF THE LENDER AND SECURED PARTY IS
      500
      5TH AVENUE, SUITE 2600, NEW YORK, NY 10110.

     

    THIS
      INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.

     

    THIS
      INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES.

     

    THIS
      INSTRUMENT COVERS PROCEEDS OF COLLATERAL.

     

    THIS
      INSTRUMENT COVERS PRODUCTS OF COLLATERAL.

     

    THIS
      INSTRUMENT COVERS FIXTURES.

     

    THIS
      INSTRUMENT COVERS MINERALS, AS-EXTRACTED COLLATERAL AND OTHER SUBSTANCES OF
      VALUE WHICH MAY BE EXTRACTED FROM THE EARTH (INCLUDING, WITHOUT LIMITATION,
      OIL
      AND GAS). THIS FINANCING STATEMENT IS TO BE FILED FOR RECORD, AMONG OTHER
      PLACES, IN THE REAL ESTATE RECORDS OF THE COUNTY RECORDERS OF THE COUNTIES
      LISTED ON EXHIBIT A HERETO. THE GRANTOR HAS AN INTEREST OF RECORD IN THE REAL
      ESTATE CONCERNED, WHICH INTEREST IS DESCRIBED IN EXHIBIT A ATTACHED
      HERETO.

     

    THIS
      INSTRUMENT, WHEN RECORDED OR FILED SHOULD BE RETURNED TO:

     

    MICHAEL
      H. ATNIPP

    214
      W.
      Texas Ave., Suite 100

    Midland,
      TX 79701

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    DEED
      OF TRUST, MORTGAGE, ASSIGNMENT OF PRODUCTION,

    SECURITY
      AGREEMENT AND FINANCING STATEMENT

     

    UNITED
      HERITAGE CORPORATION (referred to as “Grantor”), for and in consideration of the
      sum of TEN DOLLARS ($10.00) to Grantor in hand paid by MICHAEL H. ATNIPP, whose
      address is 601 W. Texas Ave., Suite 100, Midland, TX 79701 (“Trustee”), and
      LOTHIAN OIL INC. (“Lender”), to extend credit to Grantor, as evidenced by that
      certain $2,500,000 Secured Loan, dated as March 31, 2006, to Grantor (as
“Borrower”), from Lender, and by the promissory note hereinafter described, and
      of the loan as hereinafter recited, and in order to secure the payment of the
      indebtedness hereinafter referred to and the performance of the obligations,
      covenants, agreements and undertakings of Grantor hereinafter described, does
      hereby GRANT, BARGAIN, SELL, CONVEY, MORTGAGE, PLEDGE, TRANSFER, ASSIGN and
      SET
      OVER to the Trustee and Lender for each of them, with power of sale, the
      following property:

     

    (a)  70%
      of
      Grantor’s rights, titles, interests and estates whether now owned or hereafter
      acquired, in and to the oil, gas, Hydrocarbons (defined in paragraph (c) below)
      and/or other mineral leases which are described on Exhibit A attached hereto
      (all references herein to such Exhibit A shall include the introductory and
      explanatory comments thereto contained in the preamble to Exhibit A), including,
      without limitation, overriding royalty interests, production payments, net
      profits interests or other interests irrespective of whether such interests
      are
      cost bearing and of whatsoever nature or kind and however characterized,
      together with any and all mineral interests, royalty interests, fee interests
      or
      other interests derived from a landowner or landowners of the lands described
      on
      the attached Exhibit A or in the documents described on Exhibit A, all of which
      such rights, titles, interests and estates of Grantor and howsoever
      characterized being hereinafter collectively called the “Leases”;

     

    (b)  70%
      of
      all rights, titles, interests and estates now owned or hereafter acquired by
      Grantor in and to (i) the properties now or hereafter pooled or unitized with
      any of the Leases; (ii) all presently existing or future unitization,
      communitization, pooling agreements and declarations of pooled units and the
      units created thereby (including, without limitation, all units created under
      orders, regulations, rules or other official acts of any Federal, State or
      other
      governmental body or agency having jurisdiction and so called “working interest
      units” created under operating agreements or otherwise) which may affect all or
      any portion of the Leases including, without limitation, those units which
      may
      be described on Exhibit A (iii) all operating agreements, contracts, farmout
      agreements, farmin agreements, area of mutual interest agreements, equipment
      leases and other agreements which relate to any of the Leases or interests
      in
      the Leases described or referred to herein on Exhibit A or to the production,
      sale, purchase, exchange, processing, transporting or marketing of the
      Hydrocarbons (hereinafter defined) from or attributable to such Leases or
      interests; and (iv) the Leases described on Exhibit A and covered by this
      Mortgage (hereinafter defined) even though Grantor’s interest therein be
      incorrectly described or a description of a part or all of such Leases or
      Grantor’s interest therein be omitted; it being intended by Grantor, the Lender
      and the Noteholder (hereinafter defined) herein to cover and affect hereby
      all
      interests which Grantor may now own or may hereafter acquire in and to the
      Leases and lands described on Exhibit A notwithstanding that the interests
      as
      specified on Exhibit
      A
      be
      limited to particular lands, specified depths or particular types of property
      interests;

     

    
      
        
        

      

      
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    (c)  70%
      of
      all rights, titles, interests and estates now owned or hereafter acquired by
      Grantor in and to all oil, gas, casinghead gas, condensate, distillate, liquid
      hydrocarbons, gaseous hydrocarbons and all products refined therefrom and all
      other minerals (collectively called the “Hydrocarbons”) in and under which may
      be produced and saved from or attributable to the Leases, the lands covered
      thereby and Grantor’s interests therein, including all oil in tanks and all
      rents, issues, profits, proceeds, products, revenues and other income from
      or
      attributable to the Leases, the lands covered thereby, and Grantor’s interests
      therein which are subjected or required to be subjected to the liens and
      security interests of this Mortgage; and further including any and all liens
      and
      security interests in the Hydrocarbons and the proceeds therefrom securing
      payment of proceeds from the sale of Hydrocarbons;

     

    (d)  All
      tenements, hereditaments, appurtenances and properties in anywise appertaining,
      belonging, affixed or incidental to the Leases, properties, rights, titles,
      interests and estates described or referred to in subparagraphs (a) and (b)
      above, which are now owned or which may hereafter be acquired by Grantor,
      including, without limitation, any and all property, real or personal, now
      owned
      or hereafter acquired and situated upon, used, held for use, or useful in
      connection with the operating, working or development of any of such Leases
      or
      properties (excluding drilling rigs, trucks, automotive equipment or other
      personal property which may be taken to the premises for the purpose of drilling
      a well or for other similar temporary uses) and including any and all oil wells,
      gas wells, injection wells or other wells, buildings, structures, field
      separators, liquid extraction plants, plant compressors, pumps, pumping units,
      wellhead valves, field gathering systems, pipelines, salt water disposal
      facilities, tanks and tank batteries, fixtures, valves, fittings, machinery
      and
      parts, engines, boilers, meters, apparatus, equipment, appliances, tools,
      implements, cables, wires, towers, casing, tubing and rods, power, telephone
      and
      telegraph lines, surface leases, rights-of-way, easements, servitudes, licenses
      and other surface rights together with all additions, substitutions,
      replacements, accessions and attachments to any and all of the foregoing
      properties;

     

    (e)  Any
      property that may from time to time hereafter, by writing of any kind, be
      subjected to the lien and security interest hereof by Grantor or by anyone
      on
      Grantor’s behalf; and the Trustee, for itself and the Lender, is hereby
      authorized to receive the same at any time as additional security
      hereunder;

     

    (f)  70%
      of
      the rights, titles and interests of every nature whatsoever now owned or
      hereafter acquired by Grantor in and to the Leases, as the same may be enlarged
      by the discharge of any payments out of production or by the removal of any
      charges or Encumbrances (hereinafter defined) to which any Leases, properties,
      rights, titles, interests or estates are subject, or otherwise; together with
      any and all renewals and extensions of any of the Leases, properties, rights,
      titles, interests or estates; all contracts and agreements supplemental to
      or
      amendatory of or in substitution for the contracts and agreements described
      or
      mentioned above; and any and all additional interests of any kind hereafter
      acquired by Grantor in and to the Leases, properties, rights, titles, interests
      or estates;

     

    
      
        
        

      

      
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    (g)  70%
      of
      all accounts, goods that are or are to become fixtures, equipment, as-extracted
      collateral, inventory and contract rights and other general intangibles as
      such
      terms are defined in Article 9 of the Uniform Commercial Code from time to
      time
      in effect in the State of Texas (including, without limitation, all seismic
      data, geological data, geophysical data and interpretations of any of the
      foregoing to the extent a security interest therein may be granted) constituting
      a part of, relating to, or arising out of the property and collateral described
      or mentioned in paragraphs (a) through (t) above, and all proceeds and products
      of the property and collateral described or mentioned in this and said preceding
      paragraphs; and

     

    (h)  70%
      of
      all of Grantor’s rights, now owned or hereafter acquired, in and to all lease
      records, well records and production records which relate to any of the
      foregoing property;
      provided, however,
      the
      foregoing is made subject to the unit declarations, operating agreements,
      contracts, encumbrances, agreements, exceptions, limitations and other matters,
      if any, described or referred to in Exhibit
      A
      (all of
      the properties, interests and rights, subject as aforesaid, being hereinafter
      sometimes referred to as the “Mortgaged
      Properties”).

     

    Any
      fractions or percentages specified on Exhibit
      A
      referring to Grantor’s interest (whether working interest, net revenue interest
      or otherwise) are contained thereon solely for the purpose of the warranties
      made by Grantor under Article
      II
      hereof
      and shall not limit the quantum of interest granted hereunder with respect
      to
      any unit or well. If any Lease or unit described on Exhibit
      A
      respecting any well mentioned herein is incorrectly described, nevertheless
      this
      Mortgage shall cover all Grantor’s interest in the Leases allocable to and the
      unit for such well. If any of the lands covered by the Lease or other instrument
      mentioned on Exhibit
      A
      are
      incorrectly described, then nevertheless this Mortgage shall cover all Grantor’s
      interest in such Lease or other instrument as to all of the lands covered
      thereby, unless limited by express words to the contrary on Exhibit
      A.

     

    TO
      HAVE
      AND TO HOLD the Mortgaged Properties, together with all and singular the rights,
      estates, hereditaments, powers and privileges appurtenant or incident thereto,
      unto the Trustee and his successors or substitutes in this trust and to his
      or
      their successors and assigns, for itself and the ratable benefit of the Lender,
      forever.

     

    BUT
      IN
      TRUST, NEVERTHELESS, for the benefit and security of the holder of the
      indebtedness secured hereby and upon the trusts and subject to the terms and
      provisions herein set forth.

     

    ARTICLE
      I

    Secured
      Indebtedness

     

    1.1  This
      Mortgage is made to secure and enforce the payment of the
      following:

     

    (a)  the
      Credit Agreement and other Loan Documents, including that certain Note in the
      principal amount of $2,500,000 executed by Borrower and payable to the order
      of
      the Lender on or before a date which is ten (10) years from the date hereof
      and
      all other notes given in substitution for the foregoing promissory note, or
      in
      modification, renewal, or extension thereof, in whole or in part (the promissory
      note, as from time to time supplemented, amended or modified and all other
      notes
      given in substitution therefor or in modification, renewal or extension thereof,
      in whole or in part, being hereafter collectively called the “Notes”). The
      Credit Agreement, Note, and this Deed of Trust are executed by Borrower pursuant
      to and subject to the terms of a Development and Exploration Agreement between
      Borrower and Lender. The priority and duration of the lien created by this
      Deed
      of Trust is governed by the terms of that Agreement.

     

    
      
        
        

      

      
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    (b)  any
      sums
      which may be advanced or paid by the Lender under the terms hereof or of the
      Credit Agreement or other Loan Documents on account of the failure of the
      Grantor to comply with the covenants of the Grantor contained herein, or the
      failure of Borrower to comply with the covenants of Borrower or any other
      obligor contained in the Credit Agreement; and all indebtedness of the Grantor
      arising pursuant to the provisions of this Mortgage, including penalties,
      indemnities, legal and other fees, charges and expenses, and amounts advanced
      by
      and expenses incurred in order to preserve any collateral or security interest,
      whether due after acceleration or otherwise;

     

    (c)  all
      interest (including, without limitation, interest accruing at any post-default
      rate and interest accruing after the filing of any petition in bankruptcy,
      or
      the commencement of any insolvency, reorganization or like proceeding, whether
      or not a claim for post-filing or post-petition interest is allowed in such
      proceeding) in respect of all of the obligations described in this Section
      1.1
      and all costs of collection and attorneys’ fees, all as provided herein and
      therein;

     

    (d)  any
      additional loans or advances made by the Lender to or for the benefit of
      Borrower pursuant to the Credit Agreement or any other Loan Document (it being
      contemplated that the Lender may lend additional sums to Borrower pursuant
      to
      the Credit Agreement from time to time, but shall not be obligated to do so,
      and
      the Grantor agrees that the payment of any such additional loans shall be
      secured by this Mortgage); and

     

    (e)  punctual
      performance when due of all obligations of Borrower under any Loan Document
      to
      the Lender; and

     

    (f)  all
      renewals, extensions, amendments and changes of, or substitutions or
      replacements for, all or any part of the Secured Indebtedness described in
      clauses (a) through (e).

     

    1.2  The
      indebtedness referred to in clauses (a) through (e) of Section 1.1 and all
      renewals, extensions and rearrangements thereof are hereinafter sometimes
      referred to as the “Secured
      Indebtedness”.

     

    1.3  This
      Mortgage is executed and granted for the benefit and security of the Lender,
      any
      Person secured hereby and any and all future holders of an interest in the
      Secured Indebtedness and the interest thereon for so long as same remains unpaid
      and thereafter for so long as the Lender or any Person secured hereby (or any
      Affiliate) has any obligations under the Credit Agreement to lend money, or
      until the Liens hereby created are released by the Lender or such Person; it
      being understood and agreed that possession of any Note at any time by the
      Grantor shall not in any manner extinguish the Secured Indebtedness, such Notes
      or this Mortgage securing payment thereof, and the Grantor shall have the right
      to issue and reissue any of the Notes from time to time as its interest or
      as
      convenience may require, without in any manner extinguishing or affecting the
      Secured Indebtedness, the obligations under any of the Notes, or the security
      of
      this Mortgage.

     

    
      
        
        

      

      
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    1.4  Each
      capitalized term used in this Mortgage and not defined in this Mortgage shall
      have the meaning assigned such term in the Credit Agreement, and if not therein
      defined, such capitalized term shall have the meaning assigned such term in
      the
      Uniform Commercial Code. Uncapitalized terms used herein that are defined in
      the
      Uniform Commercial Code shall have the same meaning in this Mortgage. As used
      herein, “Uniform Commercial Code” means the Uniform
      Commercial Code
      presently in effect in the State of Texas as the same may be amended from time
      to time, and any successor statute thereto, except to the extent that the
      Uniform Commercial Code of some other jurisdiction applies
      mandatorily.

     

    ARTICLE
      II

    Representations,
      Warranties and Covenants

     

    2.1  Grantor
      represents, warrants and covenants to and with the Trustee, Lender and the
      Noteholder that Grantor is the lawful owner of the Mortgaged Properties and
      has
      good right and authority to grant, bargain, sell, transfer, assign and mortgage
      the same; that Grantor’s interests in each identified Mortgaged Property is no
      less than that Net Revenue Interest and no greater than the Working Interest
      set
      forth on Exhibit
      A
      that all
      oil, gas and/or mineral lease and leasehold estates, gas purchase and sales
      contracts, pipeline easements and rights-of-way, processing contracts,
      franchises, licenses and other agreements comprising or relating to the
      Mortgaged Properties or any portion thereof are valid and subsisting and are
      in
      full force and effect; that such leases are subject to no overriding royalties
      or other burdens or charges created after January 1, 2006, and that all rents,
      royalties and other payments due and payable by Grantor under each of the
      Mortgaged Properties have been properly and timely paid and all ad valorem,
      property, oil and gas production, excise and severance taxes payable by Grantor
      have been duly paid; that the Mortgaged Properties are free and clear from
      all
      liens and encumbrances except the lien evidenced by this Mortgage and except
      for
      the Permitted Encumbrances described herein or shown in Exhibit
      A
      that all
      producing wells located on the Mortgaged Properties or properties unitized
      therewith have been legally drilled and are not deviated from the vertical
      more
      than the maximum permitted by applicable laws, rules and regulations, and that
      such wells are in fact bottomed under and are producing from lands described
      in
      said Exhibit
      A
      or lands
      unitized therewith; and Grantor does hereby bind itself, its heirs, legal
      representatives, successors and assigns to forever warrant and defend the title
      to the Mortgaged Properties unto the said Trustee, his successors and assigns,
      against the claims of all persons whomsoever claiming or to claim the same
      or
      any part thereof. Any additional rights, title, or interest which Grantor may
      hereafter acquire or become entitled to in the properties aforesaid or in the
      oil, gas or other minerals in and under or produced therefrom shall inure to
      the
      benefit of this trust, the same as if expressly described and conveyed
      herein.

     

    2.2  So
      long
      as the Secured Indebtedness or any part thereof remains unpaid, Grantor
      covenants and agrees with the Noteholder as follows:

     

    (a)  That
      Grantor will continuously maintain Grantor’s existence as a corporation, with
      full power to own and operate the Mortgaged Properties and, if required by
      law,
      Grantor’s right to do business in each State where any part of the Mortgaged
      Properties is situated, and that Grantor will promptly pay, if applicable,
      all
      income, franchise and other taxes owing by Grantor and any stamp, documentary,
      or recording taxes which may be required to be paid with respect to this
      Mortgage or any other instrument evidencing or securing any of the Secured
      Indebtedness.

     

    
      
        
        

      

      
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    (b)  That
      Grantor will cause its interests in the oil, gas, Hydrocarbons and/or mineral
      leases included in or relating to the Mortgaged Properties (herein called
“Subject Leases”) to be maintained and operated for the production of
      Hydrocarbons in a good and workmanlike manner and in accordance with sound
      field
      practices and all applicable federal, state and local laws, rules and
      regulations and will not allow any of Subject Leases to be surrendered,
      abandoned, or terminated or impaired in any manner,

     

    (c)  That
      Grantor will cause all debts and liabilities of any character incurred in the
      operation, maintenance or development of the Mortgaged Properties (including,
      without limitation, all costs of the administration and development of each
      Subject Lease, and all leasehold costs attributable thereto, including, but
      not
      by way of limitation, all costs of completing, processing, storing, transporting
      and marketing Hydrocarbons which are allocated as leasehold expenses by
      customary industry account) to be paid punctually when due.

     

    (d)  That
      Grantor will cause the Mortgaged Properties and all related machinery,
      pipelines, equipment, improvements and personal property of any kind now or
      hereafter used or obtained in connection with the operation thereof to be kept
      in safe, good and effective operating condition and all necessary repairs,
      replacements, additions and improvements thereto to be made.

     

    (e)  That
      Grantor will observe and comply with all of the terms and provisions, express
      or
      implied, of the Subject Leases and assignments constituting a part of the
      Mortgaged Properties in order to keep the same in full force and effect. Grantor
      will also protect the Subject Leases against drainage of Hydrocarbons thereunder
      by reason of production on other properties.

     

    (f)  That
      Grantor will observe and comply with all of the terms and provisions of all
      easements, licenses, franchises, permits and contracts (both existing and
      future) which are part of the Mortgaged Properties or which are incident to
      the
      operation of any of the Mortgaged Properties. Without limiting the foregoing,
      Grantor agrees to fully comply with all covenants and make timely payments
      of
      all amounts payable under Hydrocarbons purchase and processing contracts held
      by
      Grantor and also to fully perform all obligations and covenants of the seller
      under all Hydrocarbons sales and processing contracts held by
      Grantor.

     

    (g)  That
      if
      the validity or priority of this Mortgage or of any right, titles, liens, or
      interests created or evidenced hereby with respect to the Mortgaged Properties
      or any part thereof shall be endangered or questioned or shall be attacked
      directly or indirectly, or if any legal proceedings are instituted against
      Grantor with respect thereto, Grantor will give written notice thereof to the
      Noteholder promptly and, at Grantor’s own cost and expense, Grantor will
      diligently endeavor to cure any defect that may be developed or claimed, and
      will take all necessary and proper steps for the defense of such legal
      proceedings, including, but not limited to, the employment of counsel agreeable
      to the Noteholder, the prosecution or defense of litigation and the release
      or
      discharge of all adverse claims. If Grantor fails or refuses to take such
      action, the Trustee and the Noteholder, or any of them (whether or not named
      as
      parties to legal proceedings with respect thereto), are hereby authorized and
      empowered to take such additional steps as in their judgment and discretion
      may
      be necessary or proper for the defense of any such legal proceedings, including,
      but not limited to, the employment of independent counsel, the prosecution
      or
      defense of litigation, and the compromise or discharge of any adverse claims
      made with respect to the Mortgaged Properties, and all expenses so incurred
      of
      every kind and character shall be a demand obligation owing by Grantor and
      shall
      bear interest at the Contract Rate (as defined in the Credit Agreement) from
      the
      date of expenditure until paid and shall be secured by the lien evidenced by
      this Mortgage and the party incurring such expenses shall be subrogated to
      all
      rights of the person receiving such payment.

     

    
      
        
        

      

      
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    (h)  That
      Grantor will not, without the prior written consent of the Noteholder, suffer
      or
      permit any lien other than Permitted Encumbrances (as defined herein or
      described in Exhibit
      A
      hereto)
      to be hereafter claimed or created on any of the Mortgaged Properties, and
      should a lien other than Permitted Encumbrances become attached hereafter in
      any
      manner to any part of the Mortgaged Properties without the prior written consent
      of the Noteholder, Grantor will cause such lien to be promptly
      discharged.

     

    (i)  That
      Grantor will pay all taxes and assessments of every kind and character charged,
      levied or assessed against the Mortgaged Properties, or any part thereof, and
      all franchise taxes, production, severance or other similar taxes or charges,
      before any such taxes and assessments shall become delinquent; but Grantor
      shall
      have the right to contest any such tax in good faith, and while any such contest
      is pending shall not be in default hereunder; and, in the event Grantor should
      fail or refuse to pay or discharge the same, the holder of said indebtedness
      hereunder shall have the right, but shall not be obligated, to pay off said
      charges against said property and shall be subrogated to the rights, liens
      and
      equities thereof, and the amount so paid, together with interest at the same
      rate as is provided in the Note for interest on past due principal from the
      date
      of payment, shall be added to said indebtedness and shall be part of the Secured
      Indebtedness.

     

    (j)  That
      none
      of the buildings, improvements and personal property constituting portions
      of
      the Mortgaged Properties will be removed or destroyed if to do so would have
      an
      adverse effect on the condition or operation of the Mortgaged Properties or
      on
      the business or financial condition of Grantor.

     

    (k)  That
      Grantor will keep accurate books and records in accordance with generally
      accepted accounting principles in which full, true and correct entries shall
      be
      promptly made as to all operations on the Mortgaged Properties, and all such
      books and records shall at all times during reasonable business hours be subject
      to inspection by the Noteholder and its duly accredited representatives, and
      if,
      and as often as, reasonably requested by the Noteholder, Grantor shall make
      reports of such income in such form as the Noteholder prescribes setting out
      full data as to production and revenues from the Mortgaged
      Properties.

     

    (l)  That
      Grantor will, on request of the Noteholder, promptly correct any defect, error
      or omission which may be discovered in the contents of this Mortgage, the Note,
      or other documents executed in connection herewith or in the execution or
      acknowledgment of any thereof, and will execute and deliver any and all
      additional instruments as may be requested by the Noteholder to correct such
      defect, error or omission or to identify any additional properties which are
      or
      become subject to this Mortgage and will execute, acknowledge and deliver such
      further assurances and instruments as shall be, in the opinion of the
      Noteholder, necessary or proper to convey and assign to the Trustee all of
      the
      Mortgaged Properties herein conveyed or assigned, or intended so to
      be.

     

    
      
        
        

      

      
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    (m)  That
      Grantor will indemnify and hold harmless the Trustee and the Noteholder from
      and
      against all claims, demands, liabilities and causes of action on account of
      any
      act performed or omitted to be performed hereunder or on account of any
      transaction arising out of or in any way connected with the Mortgaged Properties
      or with this Mortgage or any of the Secured Indebtedness, save and except for
      the gross negligence, willful misconduct or breach by Lender or Noteholder
      of
      the Security Documents or any document or instruments executed in connection
      with the Security Documents.

     

    (n)  That
      Grantor will proceed with reasonable diligence to correct any material defect
      in
      title to the Mortgaged Properties which, in the opinion of Lender or Noteholder,
      constitutes a material defect that is found to exist after the execution and
      delivery of this instrument; and in this connection, should it be found after
      the execution and delivery of this instrument that there exists upon the
      Mortgaged Properties any lien or encumbrance, equal or superior in rank to
      the
      lien created by this instrument, or should any such hereafter arise, Grantor
      will promptly discharge and remove any such lien or encumbrance from said
      property.

     

    (o)  That
      Grantor will keep such part of the Mortgaged Properties as is of an insurable
      nature and of a character usually insured by persons operating similar
      properties insured with companies of recognized responsibility satisfactory
      to
      the Noteholder against loss or damage by fire and against other hazards
      customarily insured against and in such amounts as provided in and as otherwise
      required under the Credit Agreement.

     

    (p)  That
      Grantor will promptly pay its share of all costs and expenses incurred under
      any
      joint operating agreement affecting the Mortgaged Properties or any portion
      thereof and will furnish the Noteholder as and when requested full information
      as to the status of any joint account maintained with others under any such
      operating agreement.

     

    (q)  That
      Grantor will, to the full extent of its own rights to do so, permit the
      Noteholder and its accredited agents, representatives and employees at all
      times
      to go upon, examine, inspect and remain on the Mortgaged Properties, and to
      go
      upon the derrick floor of any well at any time drilled or being drilled thereon,
      provided that such examination or inspection shall be at the risk of the
      Noteholder and its agents, representatives and employees and shall not
      unreasonably interfere with the business of Grantor or any operator or the
      operations on the Mortgaged Properties, and will furnish to the Noteholder
      on
      request all pertinent information in regard to the development and operation
      of
      the Mortgaged Properties or any part thereof.

     

    (r)  That
      the
      Noteholder at all times shall have the right to release any part of the property
      now or hereafter subject to the lien hereof or any part of the proceeds of
      production or other income herein or hereafter assigned or pledged or any other
      security it now has or may hereafter have securing said indebtedness, without
      releasing any other part of said property, proceeds or income, and without
      affecting the lien hereof as to the part or parts thereof not so released,
      or
      the right to receive future proceeds and income.

     

    
      
        
        

      

      
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          8

        
          

        

      

      
        
        

      

    

     

    (s)  That,
      promptly upon receipt of any written request from the Noteholder, Grantor will
      furnish and deliver, pursuant to such request, all title materials in the
      possession of Grantor or to which Grantor has access, including all title
      opinions and abstracts of title prepared by competent abstractors and covering
      title to the real property hereby mortgaged. Should Grantor fail to furnish
      such
      title opinions and abstracts upon such request, the Noteholder may proceed
      to
      obtain such title materials, and any and all costs so incurred shall be added
      to
      and included in the indebtedness secured hereby and shall be payable by Grantor
      upon demand, the obligation for such payment being secured by all liens and
      remedies granted in this Mortgage. Any abstracts furnished by Grantor or so
      acquired by the Noteholder shall be and constitute a part of the Mortgaged
      Properties, as above defined.

     

    (t)  That
      Grantor will, if requested by the Noteholder, furnish the Noteholder any
      information or data possessed by Grantor with respect to the Mortgaged
      Properties, and in the case of the Subject Leases full information, including
      independent engineering reports and seismic data and interpretation, subject
      to
      any and all restrictions upon the use, transfer or dissemination thereof, shall
      be furnished with regard to the wells drilled or reworked or drilling or
      reworking operations being conducted thereon, including, without limitation,
      electrical logs, core analyses and well pressure reports; provided, that Grantor
      shall not be obligated to disclose information subject to a valid and binding
      confidentiality agreement with a third party without first obtaining the consent
      of such third party, and Grantor, to the extent requested by the Noteholder,
      will use its reasonable efforts to obtain such consent.

     

    (u)  That
      Grantor shall make available to the Noteholder, or its engineers, attorneys
      or
      representatives, at any time requested, its complete files and contracts on
      the
      properties included in this instrument and the wells, pipelines and other
      property located thereon, or regarding the operations of (or the production
      from) the Mortgaged Properties, and in the event the Noteholder or the Trustee
      should take possession of the Mortgaged Properties under this Mortgage, the
      Noteholder shall be entitled to possession of all such files and contracts
      including seismic data and interpretation, subject to any and all restrictions
      upon the use, transfer or dissemination thereof. Should this Mortgage be
      foreclosed (howsoever such foreclosure may be effected), the purchaser at the
      foreclosure sale shall be entitled to all such files, subject to any and all
      restrictions upon the use, transfer or dissemination thereof.

     

    (v)  That
      Grantor will not enter into any new operating agreement or any material
      amendment of any existing operating agreement affecting the Mortgaged Properties
      without the prior written consent of the Noteholder.

     

    (w)  That
      Grantor will continuously maintain in good condition and operate, or cause
      to be
      maintained and operated, in a good and workmanlike manner any pipelines and
      pipeline systems owned by Grantor and included in the Mortgaged Properties
      in
      accordance with the valid rules and regulations of duly constituted
      authorities.

     

    2.3  Grantor
      agrees to take all such reasonable action and to exercise all rights and
      remedies as are reasonably available to Grantor to cause the owner or owners
      of
      the working interest in the Mortgaged Properties to comply with the covenants
      and agreements contained herein. With respect to those Subject Leases which
      are
      being operated by operators other than Grantor, Grantor shall not be obligated
      itself to perform any undertakings contemplated by the covenants and agreements
      contained herein which are performable only by such operators and are beyond
      the
      control of Grantor; however, Grantor agrees to promptly take all reasonable
      actions available to Grantor under any operating agreement or otherwise to
      bring
      about the performance of any such undertakings required to be performed by
      such
      operators.

     

    
      
        
        

      

      
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          9

        
          

        

      

      
        
        

      

    

     

    2.4  Grantor
      agrees that, if Grantor fails to perform any act or to take any action hereunder
      which Grantor is required to perform or take or to pay any money which hereunder
      Grantor is required to pay, the Noteholder, in Grantor’s name or its own name,
      may (but shall not he obligated to) perform or cause to be performed such act
      or
      take such action or pay such money, and any expenses so incurred by the
      Noteholder and any money so paid by the Noteholder shall be a part of the
      Obligations under the Credit Agreement owing by Borrower and shall bear interest
      from the date of making such payment until paid at the Contract Rate (as defined
      in the Credit Agreement) and shall be a part of the Secured Indebtedness and
      shall be secured by the lien evidenced by this Mortgage and by any other
      instrument securing the Secured Indebtedness, and the Noteholder, upon making
      such payment, shall be subrogated to all of the rights of the person,
      corporation or body politic receiving such payment.

     

    ARTICLE
      III

    Assignment
      of Production. Accounts,Contract Rights and Proceeds

     

    3.1  To
      facilitate the discharge of all such indebtedness and as cumulative of any
      and
      all rights and remedies herein provided for, Grantor hereby BARGAINS, SELLS,
      TRANSFERS, ASSIGNS, SETS OVER and DELIVERS to the Noteholder, its successors
      and
      assigns, all of the following which shall be applied by Noteholder as provided
      herein and in the Credit Agreement:

     

    (a)  70%
      of
      all Hydrocarbons, and the proceeds therefrom, produced and to be produced from
      the interests of Grantor in the Subject Leases, properties, processing plants
      and interests now or hereafter constituting a part of the Mortgaged Properties
      from and after the Effective Date (as hereafter defined), and Grantor hereby
      authorizes and empowers said Noteholder to demand, collect and receive said
      Hydrocarbons, and the proceeds therefrom, produced and to be produced from
      the
      interests of Grantor in said Mortgaged Properties, and to execute any release,
      receipt, division order, transfer order and relinquishment or other instrument
      that may be required or necessary to collect and receive such production or
      the
      proceeds therefrom and Grantor hereby authorizes and directs all pipeline
      companies, gathering companies and others purchasing Hydrocarbon production
      from
      said properties or having in their possession any production from said
      properties or the proceeds therefrom, to pay and deliver to the Noteholder
      all
      such production or proceeds therefrom accruing. Grantor agrees that all division
      orders, transfer orders, receipts and other instruments which the Noteholder
      may
      from time to time execute and deliver for the purpose of collecting or
      receipting for such production or the proceeds therefrom may be relied upon
      in
      all respects, and that the same shall be binding upon Grantor, and Grantor’s
      successors and assigns. Grantor agrees to execute and deliver all necessary
      and
      appropriate instruments, including transfer and division orders, which may
      be
      required by the Noteholder in connection with the receipt by the Noteholder
      of
      such production or the proceeds therefrom and to indemnify and keep and hold
      the
      Noteholder free and harmless from all parties whomsoever having or claiming
      an
      adverse interest in said leases, properties and interests and the production
      and
      proceeds therefrom, and in this respect agrees to pay all expenses, costs,
      charges and reasonable attorneys’ fees that may be incurred by the Noteholder as
      to any of said matters.

     

    
      
        
        

      

      
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          10

        
          

        

      

      
        
        

      

    

     

    (b)  70%
      of
      all amounts or proceeds hereafter payable to or to become payable to Grantor
      or
      to which Grantor is entitled under all Hydrocarbon sales contracts, all
      Hydrocarbon transportation contracts, and all Hydrocarbon treating and
      processing contracts relating to or now or hereafter to become a part of the
      Mortgaged Properties.

     

    (c)  70%
      of
      all amounts, sums, revenues and income which become payable to Grantor from
      any
      of the Mortgaged Properties (including after-acquired properties) or under
      any
      contract, present or future, relating to any Hydrocarbon pipeline system and
      processing plant or unit now or hereafter constituting a part of the Mortgaged
      Properties.

     

    Grantor
      hereby authorizes and directs that all such pipeline companies, purchasers,
      transporters and other parties owing monies to Grantor under contracts herein
      assigned, pay such amounts direct to the Noteholder as follows:

     

    If
      by
      wire transfer:

     

    If
      by
      check:

     

    Lothian
      Oil Inc.

    500
      5th Avenue, Suite 2600

    New
      York, NY 10110

    

    and
      such
      authorization shall continue until this Mortgage is released. The Noteholder
      is
      authorized to collect, receive and receipt for all such amounts and no party
      making payment shall have any responsibility to see to the application of any
      funds paid to the Noteholder, but shall be fully protected in making such
      payment to the Noteholder under the assignments herein contained. Should the
      Noteholder bring suit against any third party for collection of any amounts
      or
      sums included within this assignment (and the Noteholder shall have the right
      to
      bring any such suit) it may sue either in its own name or in the name of
      Grantor.

    

    The
      office where the records of Grantor with respect to the accounts and contract
      rights concerning the Mortgaged Properties are kept is located at the address
      shown opposite the signature of Grantor to this Mortgage, and Grantor agrees
      that the place at which such records are kept will not be changed without the
      prior written consent of the Noteholder.

     

    3.2  Independent
      of the foregoing provisions and authorities herein granted, Grantor agrees
      to
      execute and deliver any and all transfer orders, payment orders, division orders
      and other instruments that may be requested by the Noteholder or that may be
      required by any purchaser of the production from any of the Mortgaged Properties
      for the purpose of effectuating payment to the Noteholder of the proceeds of
      Hydrocarbon sales to the Noteholder. If under any existing sales agreements,
      other than division orders or transfer orders, any proceeds of Hydrocarbon
      sales
      are required to be paid by the purchaser to Grantor so that under such existing
      agreement payment of such proceeds of Hydrocarbon sales cannot be made to the
      Noteholder, Grantor’s interest in all proceeds of Hydrocarbon sales under such
      sales agreements and in all other proceeds of Hydrocarbon sales which for any
      reason may be paid to Grantor shall, when received by Grantor, constitute trust
      funds in Grantor’s hands and shall be immediately paid over to the
      Noteholder.

     

    
      
        
        

      

      
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          11

        
          

        

      

      
        
        

      

    

     

    3.3  Grantor
      authorizes and empowers the Noteholder to receive, hold and collect all sums
      of
      money paid to the Noteholder in accordance with this assignment and to apply
      the
      same as is hereinafter provided, all without any liability or responsibility
      on
      the part of the Noteholder, save as to good faith in so receiving and applying
      said sums. All payments provided for in this assignment shall be paid promptly
      to the Noteholder, and applied pursuant to the terms of the Credit Agreement.
      It
      is understood and agreed that should said payments provided for by this
      assignment be less than the sum or sums then due on said indebtedness, such
      sum
      or sums then due shall nevertheless be payable by Grantor in accordance with
      the
      provisions of the note or notes or other instrument or instruments evidencing
      said indebtedness and neither this assignment nor any provision herein contained
      shall in any manner be construed to affect the terms and provisions of said
      note
      or notes or other instrument or instruments. Likewise, neither this assignment
      nor any provision herein contained shall in any manner be construed to affect
      the lien, rights and remedies herein granted securing said indebtedness, nor
      Grantor’s liability therefor. The rights under this assignment are cumulative of
      the other rights, remedies and powers granted under this Mortgage and are
      cumulative of any other security which the Noteholder now holds or may hereafter
      hold to secure the payment of said indebtedness.

     

    3.4  If
      a
      default under Section 6.1 has occurred and is continuing, should any person
      now
      or hereafter purchasing or taking Hydrocarbons attributed to the Mortgaged
      Properties fail to make payment promptly to the Noteholder of the hereby
      assigned proceeds of Hydrocarbon sales, the Noteholder shall have the right
      to
      make, or to require Grantor to make, a change of connection and the right to
      designate or approve the purchaser with whose facilities a new connection shall
      be made, without liability or responsibility in connection therewith, so long
      as
      ordinary care is used in making such designation;
      provided, however,
      Noteholder shall only require the change of purchaser if such change would
      not
      cause a breach of Grantor’s obligation to an existing purchaser.

     

    3.5  The
      Lender and Noteholder and their successors and assigns are hereby absolved
      from
      all liability for failure to enforce collection of the proceeds of Hydrocarbon
      sales and from all other responsibility in connection therewith, except the
      responsibility to account to Grantor for funds actually received. Grantor agrees
      to indemnify and hold harmless the Lender, Noteholder and the Trustee against
      any and all liabilities, actions, claims, judgments, costs, charges and
      attorneys’ fees by reason of the assertion that Trustee, Lender or Noteholder
      received with respect to the Mortgaged Properties or for Grantor’s account
      either before or after payment in full of the Secured Indebtedness funds from
      the production of Hydrocarbons claimed by third persons, and if Grantor fails
      to
      do so, the Lender, Noteholder and the Trustee shall each have the right to
      defend against any such claims or actions, employing attorneys of their own
      selection, and if not furnished with indemnity satisfactory to them, they shall
      have the right to compromise and adjust any such claims, actions and judgments,
      and in addition to the rights to be indemnified as herein provided, all amounts
      paid by the Lender, Noteholder or the Trustee in compromise, satisfaction or
      discharge of any such claim, action or judgment, and all court costs, attorneys’
fees and other expenses of every character incurred by the Trustee, Lender
      or
      the Noteholder pursuant to the provisions of this section shall be part of
      the
      Obligations under the Credit Agreement owing by Borrower, shall bear interest
      from date of expenditure until paid at the Contract Rate (as defined in the
      Credit Agreement), and shall be a part of the Secured indebtedness.
      Notwithstanding the foregoing, nothing contained herein shall be deemed to
      require Grantor to indemnify Lender or Noteholder for its willful misconduct
      or
      gross negligence or material breach by Lender or Noteholder of the provisions
      of
      the Security Documents or any documents or instruments executed in connection
      with the Security Documents.

     

    
      
        
        

      

      
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          12

        
          

        

      

      
        
        

      

    

     

    3.6  Nothing
      herein contained shall detract from or limit the absolute obligation of Borrower
      to make prompt payment of the Note, of all amounts owing thereon, and of all
      amounts owing hereunder at the time and in the manner provided in the Note,
      the
      Credit Agreement or provided herein, regardless of whether the proceeds herein
      assigned are sufficient to pay the same, and the rights under this assignment
      shall be cumulative of all other security of any and every character now or
      hereafter existing to secure the payment of the Note and all other Secured
      indebtedness.

     

    ARTICLE
      IV

    Waiver
      and Partial Release

     

    4.1  The
      Noteholder may at any time and from time to time in writing:

     

    (a)  Waive
      compliance by Grantor with any covenant herein made by Grantor to the extent
      and
      in the manner specified in such writing;

     

    (b)  Consent
      to Grantor’s doing any act which hereunder Grantor is prohibited from doing, or
      to Grantor’s failing to do any act which hereunder Grantor is required to do, to
      the extent and in the manner specified in writing; or

     

    (c)  Release
      any part of the Mortgaged Properties, or any interest therein, or any proceeds
      of Hydrocarbon sales from the lien of this Mortgage, without the joinder of
      the
      Trustee.

     

    No
      such
      act by Noteholder shall in any way impair the rights of the Noteholder hereunder
      except to the extent specifically agreed to by the Noteholder in such
      writing.

     

    4.2  The
      lien
      and other security rights of the Noteholder hereunder shall not be impaired
      by
      any indulgence, including but not limited to:

     

    (a)  Any
      forbearance, renewal, extension or modification (whether one or more) which
      the
      Noteholder may grant with respect to any Secured Indebtedness; or

     

    (b)  Any
      surrender, compromise, release, renewal, extension, exchange or substitution
      which the Noteholder may grant in respect of any item of the Mortgaged
      Properties or any part thereof or any interest therein, or any of the proceeds
      of Hydrocarbon sales; or

     

    (c)  Any
      release or indulgence granted to any endorser, guarantor or surety of any
      Secured Indebtedness.

     

    
      
        
        

      

      
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          13

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      V

    Possession
      Until Default; Defeasance

     

    5.1  Unless
      a
      default specified in Section 6.1 hereof shall occur and be continuing, Grantor
      shall retain full right to the Mortgaged Properties (except the proceeds of
      Hydrocarbon sales assigned under Section 3.1 hereof), subject, however, to
      all
      of the terms and provisions of this Mortgage.

     

    5.2  If
      all of
      the Secured Indebtedness be paid as the same becomes due and payable and if
      the
      covenants, warranties, undertakings and agreements made in this Mortgage are
      kept and performed, then and in that event only all rights under this Mortgage
      shall terminate and the properties hereby conveyed shall become wholly clear
      of
      the liens, conveyances and assignments evidenced hereby, and such liens shall
      be
      released by the Noteholder in due form at Grantor’s cost.

     

    ARTICLE
      VI

    Remedies
      in Event of Default

     

    6.1  The
      term
“default” as used in this Mortgage shall mean the occurrence of an Event of
      Default under the Credit Agreement which shall remain unremedied for any
      applicable period of grace specified therein.

     

    6.2  Following
      and during the continuation of a default by Grantor under this Mortgage, the
      provisions of this Section 6.2 (and no other provision of this Mortgage) shall
      specify the effects of any such default, the remedies available to Noteholder
      following any such default and any limitations on the exercise of such
      remedies.

     

    (a)  Upon
      the
      occurrence of a default, all Secured Indebtedness in its entirety shall, at
      the
      option of the Noteholder and following two (2) business days prior written
      notice by Noteholder (except in the event of bankruptcy, insolvency of Grantor,
      appointment of a receiver for Grantor, and similar defaults in which event
      no
      prior written notice by Noteholder is required), become immediately due and
      payable without notice, presentation or demand of any kind including, without
      limitation, notice of intent to accelerate and notice of acceleration, all
      of
      which are hereby waived, and the liens evidenced hereby shall be subject to
      foreclosure in any manner provided for herein or provided for by law as the
      Noteholder may elect.

     

    (b)  Upon
      the
      occurrence of a default and following notice required under subsection 6.2(a)
      hereof, if any such notice is required with respect to such default, the
      Trustee, his successor or substitute, upon the written request of the
      Noteholder, shall be authorized and empowered and it shall be his special duty
      to sell the Mortgaged Properties or any part thereof. Such sale may be at one
      or
      more sales, as an entirety or in parcels, as the Trustee may elect, at such
      place or places and otherwise in such manner and upon such notice as may be
      required by law, or, in the absence of any such requirement as the Trustee
      may
      deem appropriate.

     

    Upon
      the
      occurrence of a default and following notice required under subsection 6.2(a)
      hereof, if any such notice is required with respect to such default, the
      Trustee, his successor or substitute, shall have the right and power to proceed
      by suit or suits in equity or at law, whether for the specific performance
      of
      any covenant or agreement of Grantor herein contained or in aid of the execution
      of any power herein granted, or for foreclosure or the sale of the Mortgaged
      Properties or any part thereof under the judgment or decree of any court of
      competent jurisdiction, or for the enforcement of any other appropriate legal
      or
      equitable remedy. In the event the Noteholder shall request the Trustee to
      sell
      the Mortgaged Properties or to proceed by suit as in this section provided,
      the
      Noteholder shall have the right to direct the time, method and place of
      conducting and proceeding for any remedy available to the Trustee or of
      exercising any trust or power conferred upon him; provided, however, that the
      Trustee shall have the power to decline to follow any such direction if the
      Trustee shall be advised by counsel that the action or proceeding so directed
      may not lawfully be taken. If and to the extent permitted by applicable
      law:

     

    
      
        
        

      

      
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          14

        
          

        

      

      
        
        

      

    

     

    (i)  Any
      foreclosure sale hereunder may be as an entirety or in such parcels as the
      Noteholder may request, and any sale may be adjourned by announcement at the
      time and place appointed for such sale without further notice except as may
      be
      required by law.

     

    (ii)  Any
      and
      all statements of fact or other recitals made by the Noteholder or by the
      Trustee or any substitute appointed hereunder as to nonpayment of the Secured
      Indebtedness or as to the occurrence of any default, or as to all of said
      indebtedness having become due and payable, or as to the refusal, failure or
      inability to act of the Trustee or any substitute or successor trustee, or
      as to
      any other act or thing having been duly done by Noteholder or by such Trustee,
      substitute or successor, shall be taken as prima facie evidence of the truth
      of
      the facts so stated and recited.

     

    (iii)  The
      Trustee, his successor or substitute, may appoint or delegate to any one or
      more
      persons as agent to perform any act or acts necessary or incident to any
      foreclosure proceeding instituted by the Trustee, but in the name and on behalf
      of the Trustee, his successor or substitute.

     

    (iv)  It
      shall
      not be necessary for the Trustee or any public officer acting under execution
      or
      order of the court to have physically present or constructively in his
      possession any of the Mortgaged Properties.

     

    (v)  Any
      sale
      or sales of the Mortgaged Properties pursuant to judicial proceedings shall
      operate to divest all right, title, interest, claim and demand whatsoever,
      either at law or in equity, of Grantor of, in and to the premises and property
      sold, and shall be a perpetual bar, both at law and in equity, against Grantor,
      its successors or assigns, and against any and all persons claiming or who
      shall
      thereafter claim all or any of the property sold from, through or under Grantor,
      its successors or assigns; nevertheless, Grantor, if requested by the Trustee
      or
      the Noteholder so to do, shall join in the execution and delivery of all proper
      conveyances, assignments and transfers of the properties so sold.

     

    (vi)  Upon
      any
      sale, whether made under the power of sale hereby given or by virtue of judicial
      proceedings, the receipt of the Trustee, or of the officer making a sale under
      judicial proceedings, shall be a sufficient discharge to the purchaser or
      purchasers at any sale for his or their purchase money, and such purchaser
      or
      purchasers, his or their assigns or personal representatives, shall not, after
      paying such purchase money and receiving such receipt of the Trustee or of
      such
      officer therefor, be obliged to see to the application of such purchase price,
      or be in anywise answerable for any loss, misapplication or nonapplication
      thereof.

     

    
      
        
        

      

      
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          15

        
          

        

      

      
        
        

      

    

     

    (vii)  The
      purchaser at any such sale shall not, nor shall his or its heirs, legal
      representatives, successors or assigns be deemed to have, by reason of the
      acquisition of property or rights mortgaged hereunder, assumed any liability
      or
      obligation of any lessee or operator of the Mortgaged Properties, or any part
      thereof, arising by reason of any occurrence taking place prior to such
      sale.

     

    (viii)  After
      each sale, the Trustee shall make to the purchaser or purchasers at such sale
      good and sufficient conveyances in the name of Grantor, conveying the property
      so sold to the purchaser or purchasers in fee simple with special warranty
      of
      title, and shall receive the proceeds of said sale or sales and apply the same
      as herein provided, and Grantor binds itself, its successors and assigns, to
      warrant and forever defend such title.

     

    (ix)  The
      power
      of sale granted herein shall not be exhausted by any sale held hereunder by
      the
      Trustee or his substitute or successor, and such power of sale shall exist
      and
      may be exercised in any manner provided by law or herein from time to time
      and
      as many times as the Noteholder may deem necessary until all of the Mortgaged
      Properties have been duly sold and all Secured Indebtedness has been fully
      paid.

     

    (c)  Upon
      the
      occurrence of a default and following notice as required under subsection 6.2(a)
      hereof if any notice is required with respect to such default, the Trustee,
      his
      successors or substitute, is authorized and empowered, and it shall be his
      special duty at the request of the Noteholder, to enforce this trust and to
      sell
      the Mortgaged Properties located in the State of Texas as an entirety or in
      parcels, as the acting Trustee may designate, at the courthouse of any county
      in
      the State of Texas in which a part of said Mortgaged Properties being sold
      may
      be situated at public auction to the highest bidder for cash, in the manner
      required by, and after having given notice of such sale in accordance with,
      the
      laws of the State of Texas governing sales of real estate under powers of sale
      conferred by deed of trust. Any sale made by the Trustee hereunder may be as
      an
      entirety or in such parcels as the Noteholder may request, and any sale may
      be
      adjourned by announcement at the time and place appointed for such sale without
      further notice except as may be required by law. After each sale, the Trustee
      shall make to the purchaser or purchasers at such sale good and sufficient
      conveyances in the name of Grantor, conveying the property so sold to the
      purchaser or purchasers in fee simple with special warranty of title binding
      upon Grantor, its successors and assigns, and shall receive the proceeds of
      said
      sale or sales and apply the same as herein provided. The power of sale granted
      herein shall not be exhausted by any sale held hereunder by the Trustee or
      his
      substitute or successor, and such power of sale may be exercised from time
      to
      time and as many times as the Noteholder may deem necessary until all of the
      Mortgaged Properties have been duly sold and all Secured Indebtedness has been
      duly paid. Any such sale shall be a perpetual bar against Grantor, and Grantor’s
      heirs, legal representatives or successors in interest, as the case may be,
      as
      to the property sold.

     

    
      
        
        

      

      
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          16

        
          

        

      

      
        
        

      

    

     

    (d)  This
      instrument shall be effective as a mortgage as well as a deed of trust and
      may
      be foreclosed as to any of the properties covered hereby (including non-judicial
      foreclosure) in any manner permitted by the laws of any state in which any
      part
      of the Mortgaged Properties is situated, and any foreclosure suit may be brought
      by the Trustee or by the Noteholder with respect to property located in
      jurisdictions where a mortgage is utilized to grant liens in real property.
      In
      addition to all other remedies herein provided for, Grantor agrees that after
      a
      default has occurred the Trustee or the Noteholder shall as a matter of right
      be
      entitled to the appointment of a receiver or receivers to be designated by
      the
      Noteholder for all or any part of the Mortgaged Properties, whether such
      receivership be incident to a proposed sale of such property or otherwise,
      and
      Grantor does hereby consent to the appointment of such receiver or receivers,
      agrees not to oppose any application therefor by the Trustee or the Noteholder,
      and agrees that such appointment shall in no manner affect the rights of the
      Noteholder.

     

    (e)  The
      proceeds of any sale held by the Trustee or any receiver or public officer
      in
      foreclosure of the liens evidenced hereby shall be applied:

     

    FIRST,
      to the
      payment of all necessary costs and expenses incident to such foreclosure sale
      (including reasonable attorneys’ fees), including but not limited to expenses of
      advertising, sale and conveyance and all court costs and charges of every
      character in the event foreclosed by it, and a reasonable fee to the Trustee
      acting under the provisions of this Section 6.2 if foreclosed by power of sale
      as provided in said section, not exceeding the lesser of (i) the actual fees
      of
      the Trustee and (ii) five percent (5%), to be estimated upon the amount realized
      at such sale.

     

    SECOND,
      to
the
      payment
      of the Secured Indebtedness in such order as the Noteholder may elect, which
      shall be cumulative of the trustee’s fee hereinabove provided for and shall be
      due and payable whether the lien of this Mortgage be foreclosed by sale or
      by
      judicial process; and

     

    THIRD,
      the
      remainder, if any there shall be, shall be paid to Grantor or to Grantor’s
      representative, successors or assigns.

     

    (f)  The
      Noteholder shall have the right to become the purchaser at any sale held by
      any
      Trustee or substitute or successor or by any receiver or public officer, and
      any
      Noteholder purchasing at any such sale shall have the right to credit upon
      the
      amount of the bid made therefor, to the extent necessary to satisfy such bid,
      the Secured Indebtedness owing to such Noteholder, or if such Noteholder holds
      less than all of such indebtedness the pro rata part thereof owing to such
      Noteholder, accounting to all such Noteholders not joining in such bid in cash
      for the portion of such bid or bids apportionable to such nonbidding Noteholder
      or Noteholders.

     

    (g)  All
      remedies herein expressly provided for are cumulative of any and all other
      remedies existing at law or in equity, and the Trustee and the Noteholder shall,
      in addition to the remedies herein provided, be entitled to avail themselves
      of
      all such other remedies as may now or hereafter exist at law or in equity for
      the collection of said indebtedness and the enforcement of the covenants herein
      and the foreclosure of the liens evidenced hereby, and the resort to any remedy
      provided for hereunder or provided for by law shall not prevent the concurrent
      or subsequent employment of any other appropriate remedy or
      remedies.

     

    
      
        
        

      

      
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          17

        
          

        

      

      
        
        

      

    

     

    (h)  The
      Noteholder may resort to any security given by this Mortgage or to any other
      security now existing or hereafter given to secure the payment of the Secured
      Indebtedness, in whole or in part, and in such portions and in such order as
      may
      seem best to the Noteholder in its sole and uncontrolled discretion, and any
      action shall not in anywise be considered as a waiver of any of the rights,
      benefits or liens evidenced by this instrument.

     

    (i)  To
      the
      full extent that Grantor may do so, Grantor agrees that Grantor will not at
      any
      time insist upon, plead, claim or take the benefit or advantage of any law
      now
      or hereafter in force providing for any appraisement, valuation, stay, extension
      or redemption, and Grantor, for Grantor, Grantor’s successors and assigns, and
      for any and all persons ever claiming any interest in the Mortgaged Properties,
      to the extent permitted by law, hereby waives and releases all rights of
      redemption, valuation, appraisement, stay of execution, notice of election
      to
      mature or declare due the whole of the Secured Indebtedness and marshaling
      in
      the event of foreclosure of the liens hereby created. If any law referred to
      in
      this section and now in force, of which Grantor or Grantor’s successors might
      take advantage despite this section, shall hereafter be repealed or cease to
      be
      in force, such law shall not thereafter be deemed to preclude the application
      of
      this section.

     

    (j)  Grantor
      hereby grants unto the Trustee or the Noteholder the powers of attorney to
      act
      for and on behalf of Grantor in all transactions of Grantor with any federal
      or
      state agency relating to any of the Mortgaged Properties. Without limiting
      the
      foregoing, this power of attorney specifically authorizes Lender to execute
      any
      documents required by the Minerals Management Service (MMS) in connection with
      the foreclosure and subsequent transfer to the Lender of the Mortgaged
      Properties. The foregoing power of attorney shall only be exercised upon the
      occurrence of a default.

     

    (k)  Upon
      the
      occurrence of a default, the Trustee and the Noteholder, or either of them,
      are
      authorized prior or subsequent to the institution of any foreclosure proceedings
      to enter upon the Mortgaged Properties, or any part thereof, and to exercise
      without interference from Grantor any and all rights which Grantor has with
      respect to the management, possession and operation of the Mortgaged Properties.
      All costs, expenses and liabilities of every character (including costs of
      unsuccessful workover operations or additional wells or dry holes) incurred
      by
      the Trustee or the Noteholder in managing, operating and maintaining such
      Mortgaged Properties, including, without limitation, costs of additional
      drilling and reworking, whether successful or unsuccessful, shall constitute
      a
      demand obligation owing by Borrower and shall draw interest at the Contract
      Rate
      (as defined in the Credit Agreement), all of which shall constitute a portion
      of
      the Secured Indebtedness.

     

    (l)  Upon
      the
      occurrence of a default, if Grantor should fail to comply with any of the
      covenants or obligations of Borrower hereunder, then the Noteholder or said
      Trustee may perform the same for the account and at the expense of Borrower
      but
      shall not be obligated so to do, and any and all expenses incurred or paid
      in so
      doing shall be payable by Borrower to the Noteholder with interest at the
      Contract Rate (as defined in the Credit Agreement), and the amount thereof
      shall
      be payable on demand, and shall be secured by and under this Mortgage, and
      the
      amount and nature of such expense and the time when paid shall be fully
      established by the affidavit of the Noteholder or any officer or agent thereof,
      or by the affidavit of any trustee acting hereunder; provided, however, that
      the
      exercise of the privileges granted in this paragraph shall in no wise be
      considered or constitute a waiver of the right of the Noteholder upon the
      happening of a default hereunder to declare the Secured Indebtedness to be
      at
      once due and payable but is cumulative of such right and all other rights herein
      given.

     

    
      
        
        

      

      
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          18

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      VII

    Security
      Agreement

     

    7.1  Without
      limiting any of the provisions of this instrument, Grantor (referred to in
      this
      Article as “Debtor”,
      whether one or more), expressly GRANTS unto the Noteholder (referred to in
      this
      Article as “Secured
      Party”,
      whether one or more), a security interest in all the Mortgaged Properties
      hereinabove described (including both those now and those hereafter existing)
      to
      the full extent that such properties may be subject to the Uniform Commercial
      Code of the state or states where such properties are situated. The security
      interest granted hereby also covers and includes all contract rights, equipment,
      inventory, general intangibles and accounts with respect to said properties
      and
      all products and proceeds of said properties (said properties, contract rights,
      equipment, inventory, general intangibles, accounts, products and proceeds
      thereof being hereinafter collectively referred to as the “Collateral”
for
      the
      purposes of this paragraph). Debtor covenants and with Secured Party
      that:

     

    (a)  In
      addition to and cumulative of any other remedies granted in this instrument
      to
      Secured Party or the Trustee, Secured Party may, in event of default, proceed
      under said Uniform Commercial Code as to all or any part of the Collateral
      and
      shall have and may exercise with respect to the Collateral all the rights,
      remedies and powers of a secured party after default under said Uniform
      Commercial Code, including, without limitation, the right and power to sell,
      at
      public or private sale or sales, or otherwise dispose of, lease or utilize
      the
      Collateral and any part or parts thereof in any manner authorized or permitted
      under said Uniform Commercial Code after default by a debtor, and to apply
      the
      proceeds thereof toward payment of any costs and expenses and attorneys’ fees
      and legal expenses thereby incurred by Secured Party, and toward payment of
      the
      Secured Indebtedness in such order or manner as Secured Party may
      elect.

     

    (b)  Upon
      a
      default, Secured Party shall have the right (without limitation) to take
      possession of the Collateral and to enter upon any premises where same may
      be
      situated for such purpose without being deemed guilty of trespass or otherwise
      incurring any liability for its entry upon those premises and to take any action
      deemed necessary or appropriate or desirable by Secured Party, at its option
      and
      in its discretion, to repair, refurbish or otherwise prepare the Collateral
      for
      sale, lease or other use or disposition as herein authorized.

     

    (c)  To
      the
      extent permitted by law, Debtor expressly waives any notice of sale or other
      disposition of the Collateral and any other right or remedies of a debtor or
      formalities prescribed by law relative to sale or disposition of the Collateral
      or exercise of any other right or remedy of Secured Party existing after default
      hereunder; and to the extent any such notice is required and cannot be waived,
      Debtor agrees that if such notice is mailed, postage prepaid, to Debtor at
      the
      address shown with debtor’s signature hereinbelow at least ten days before the
      time of the sale or disposition, such notice shall be deemed reasonable and
      shall fully satisfy any requirement for giving of said notice.

     

    
      
        
        

      

      
        Page
          19

        
          

        

      

      
        
        

      

    

     

    (d)  Secured
      Party is expressly granted the right, at its option, to transfer at any time
      to
      itself or to its nominee the Collateral, or any part thereof, and to receive
      the
      monies, income, proceeds or benefits attributable or accruing thereto and to
      hold the same as security for the Secured Indebtedness or to apply it on the
      principal and interest or other amounts owing on any of the Secured
      Indebtedness, whether or not then due, in such order or manner as Secured Party
      may elect. All rights to marshaling of assets of Debtor, including any such
      right with respect to the Collateral, are hereby waived.

     

    (e)  All
      recitals in any instrument of assignment or any other instrument executed by
      Secured Party incident to sale, transfer, assignment, lease or other disposition
      or utilization of the Collateral or any part thereof hereunder shall be prima
      facie evidence of the matter stated therein,, no other proof shall be required
      to establish full legal propriety of the sale or other action or of any fact,
      condition or thing incident thereto, and all prerequisites of such sale or
      other
      action and of any fact, condition or thing incident thereto shall be presumed
      to
      have been performed or to have occurred.

     

    (f)  Secured
      Party may require Debtor to assemble the Collateral and make it available to
      Secured Party at a place to be designated by Secured Party that is reasonably
      convenient to both parties. All expenses of retaking, holding, preparing for
      sale, lease or other use or disposition, selling, leasing or otherwise using
      or
      disposing of the Collateral and the like which are incurred or paid by Secured
      Party as authorized or permitted hereunder, including also all attorneys’ fees,
      legal expenses and costs, shall be added to the indebtedness secured by this
      instrument, and Debtor shall be liable therefor.

     

    (g)  Should
      Secured Party elect to exercise its right under said Uniform Commercial Code
      as
      to part of the personal property and fixtures described herein, this election
      shall not preclude Secured Party or the Trustee from exercising the rights
      and
      remedies granted by the preceding paragraphs of this instrument as to the
      remaining personal property and fixtures.

     

    (h)  Any
      copy
      of this instrument may also serve as a financing statement under said Uniform
      Commercial Code between the Debtor, whose address is designated with its
      signature, and the SECURED
      PARTY, WHOSE ADDRESS IS 500 5TH AVENUE, SUITE 2600, NEW YORK, NY
      10110.

     

    (i)  So
      long
      as any amount remains unpaid on the Secured Indebtedness, Debtor will not
      authorize for filing in any public office any financing statement or statements
      affecting the Collateral other than financing statements in favor of Secured
      Party hereunder, unless the prior written specific consent and approval of
      Secured Party shall have first been obtained.

     

    (j)  Secured
      Party is authorized to file, in any jurisdiction where Secured Party deems
      it
      necessary, one or more financing statements pursuant to the Uniform Commercial
      Code in form satisfactory to Secured Party, and Debtor will pay the cost of
      filing or recording those financing statements or this instrument as a financing
      statement in all public offices at any time and from time to time whenever
      filing or recording of any financing statement or of this instrument is deemed
      by Secured Party to be necessary or desirable.

     

    
      
        
        

      

      
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          20

        
          

        

      

      
        
        

      

    

     

    (k)  The
      office where the records of Debtor with respect to the Collateral and the
      Mortgaged Properties are kept is located at the address shown opposite the
      signature of Debtor to this Mortgage, and Debtor agrees that the place at which
      such records are kept will not be changed without the prior written consent
      of
      the Noteholder.

     

    Debtor
      further warrants and represents to Secured Party that, except for the security
      interest granted hereby in the Collateral and other claims previously disclosed
      in writing to Secured Party, Debtor is the owner and holder of the Collateral,
      free of any adverse claim, security interest or encumbrance, and Debtor agrees
      to defend the Collateral against all claims and demands of any person at any
      time claiming the same or any interest therein. Debtor further warrants and
      represents that it has not heretofore signed any financing statement and no
      financing statement signed by Debtor is now on file in any public office except
      those statements true and correct copies of which have been delivered to Secured
      Party.

     

    ARTICLE
      VIII

    Concerning
      the Trustee

     

    8.1  The
      Trustee may resign by an instrument in writing addressed to the Noteholder.
      The
      Trustee or any successor or substitute Trustee may be removed at any time with
      or without cause by an instrument in writing executed by the Noteholder and
      such
      power of removal may be exercised as frequently and at such times as the
      Noteholder may elect. In case of the absence, death, resignation or removal
      of
      the Trustee, or the inability, failure, or refusal of the Trustee to act, a
      successor or substitute Trustee may be appointed by the Noteholder by instrument
      complying with any applicable requirements of law, and in the absence of any
      such requirement, without other formality than appointment and designation
      in
      writing executed by the Noteholder. Such right to appoint a substitute Trustee
      shall exist and may be exercised as often and whenever the Noteholder may elect.
      Such appointment and designation shall be full evidence of the right and
      authority to make the same and of all facts therein required, and upon the
      making of any such appointment and designation, all of the estate and title
      of
      the Trustee in the Mortgaged Properties shall vest in the named successor
      Trustee and he shall thereupon succeed to, hold, possess and exercise all the
      rights, powers, privileges, immunities and duties herein conferred upon the
      Trustee. All references herein to the Trustee shall be deemed to refer to the
      Trustee (including any successor appointed and designated as herein provided)
      from time to time acting hereunder.

     

    If
      no
      successor Trustee shall have been appointed as contemplated by the foregoing
      provisions in this Section, or if appointed shall not have accepted the
      appointment, within thirty (30) days after the occurrence of a vacancy in the
      office of the Trustee, the Noteholder or such retiring Trustee may apply to
      any
      court of competent jurisdiction to appoint a successor Trustee or
      Trustees.

     

    8.2  Any
      Trustee from time to time serving hereunder shall have the absolute right,
      acting independently, to take any action and to exercise any right, remedy,
      power or privilege conferred upon the Trustee, and any action taken by any
      Trustee from time to time serving hereunder shall be binding upon all other
      Trustees and no person dealing with any Trustee from time to time serving
      hereunder shall be obligated to confirm the power and authority of such trustee
      to act without the concurrence of the other Trustees.

     

    
      
        
        

      

      
        Page
          21

        
          

        

      

      
        
        

      

    

     

    8.3  The
      Trustee shall not be required to take any action for the enforcement of this
      instrument or the exercise of any rights or remedies hereunder or to appear
      in
      or defend any action, suit or other proceeding in connection therewith, where,
      in the opinion of the Trustee, such action will be likely to involve him in
      expense or liability, unless the Trustee be tendered security and indemnity
      satisfactory to him, against cost, expense or liability in connection
      therewith.

     

    8.4  It
      shall
      be no part of the duty of the Trustee to see to any recording, filing or
      registration of this instrument or any other instrument supplemental hereto,
      or
      to see to the payment of or be under any duty in respect of any tax or
      assessment or other governmental charge which may be levied or assessed on
      the
      Mortgaged Properties or against Grantor or to see to the performance or
      observance by Grantor of any of the covenants or agreements herein contained.
      The Trustee shall not be responsible for the execution, acknowledgment or
      validity of this instrument or of any instrument supplemental hereto or of
      the
      Note, or for the sufficiency of the security purported to be created hereby,
      and
      makes no representation in respect thereof or in respect of the rights of the
      holder of the Note. The Trustee shall have the right to consult with counsel
      upon any matters arising hereunder, and shall be fully protected in relying
      as
      to legal matters on the advice of the counsel. The Trustee shall not incur
      any
      personal liability hereunder except for his own gross negligence or willful
      misconduct; and the Trustee shall have the right to rely on any instrument,
      document or signature authorizing or supporting any action taken or proposed
      to
      be taken by him hereunder, believed by him in good faith to be
      genuine.

     

    ARTICLE
      IX

    Miscellaneous

     

    9.1  This
      instrument is a deed of trust and mortgage of both real and personal property,
      a
      security agreement, a financing statement and an assignment, and also covers
      proceeds and fixtures.

     

    9.2  All
      options and rights of election herein provided for the benefit of the Noteholder
      are continuing, and the failure to exercise any such option or right of election
      upon a particular default or breach or upon any subsequent default or breach
      shall not be construed as waiving the right to exercise such option or election
      at any later date. By the acceptance of payment of any indebtedness secured
      hereby after its due date, the Noteholder does not waive the right either to
      require prompt payment when due of all other sums so secured or to regard as
      a
      default failure to pay any other sums due which are secured hereby. No exercise
      of the rights and powers herein granted and no delay or omission in the exercise
      of such rights and powers shall be held to exhaust the same or be construed
      as a
      waiver thereof, and every such right and power may be exercised at any time
      and
      from time to time.

     

    9.3  No
      release of any part of the Mortgaged Properties shall in any way alter, vary
      or
      diminish the force, effect or lien of this instrument on the balance of
      Mortgaged Properties.

     

    
      
        
        

      

      
        Page
          22

        
          

        

      

      
        
        

      

    

     

    9.4  Any
      provision contained herein or in the Note or in any other instrument evidencing
      or relating to any Secured Indebtedness to the contrary notwithstanding, neither
      Lender nor any Noteholder nor the holder of any other Secured Indebtedness
      shall
      be entitled to receive or collect, nor shall Grantor be obligated to pay,
      interest on any of the Secured Indebtedness in excess of the maximum rate of
      interest permitted by applicable law, and if any provision of the Note or of
      any
      other such instrument shall ever be construed or held to permit the collection
      or to require the payment of any amount of interest in excess of that permitted
      by applicable law, the provisions of this section shall control and shall
      override any contrary or inconsistent provision of the Note or other
      instrument.

     

    9.5  Any
      notice, request, demand or other instrument which may be required or permitted
      to be given or furnished to or served on Grantor shall be addressed to it at
      its
      address set forth below, or such other address as Grantor may furnish to the
      Trustee or the Noteholder in writing. Notices to the Trustee and the Noteholder
      shall be deemed to have been properly given if delivered in like fashion to
      them
      at 500
      5th Avenue, Suite 2600, New York, NY 10110, or
      at
      such other address as the Trustee or the Noteholder may furnish to Grantor
      in
      writing.

     

    9.6  Renewals
      and extensions of the Secured Indebtedness may be given at any time and
      amendments may be made to this Mortgage and other agreements relating to any
      of
      the Secured Indebtedness or the Mortgaged Properties and/or such properties
      may
      at any time be released or partially released and/or the Noteholder may take
      or
      hold other security for the Secured Indebtedness without notice to or joinder
      or
      consent of any persons hereafter acquiring any interest in the Mortgaged
      Properties. The Trustee or the Noteholder may resort first to such other
      security or any part thereof or first to the security herein given or any part
      thereof, or from time to time to either or both, even to the partial or complete
      abandonment of either security, and such action shall not be a waiver of any
      rights conferred by this instrument, which shall continue as a first lien upon
      all of the Mortgaged Properties not expressly released until the Secured
      Indebtedness is fully paid.

     

    9.7  If
      any
      provision hereof or of the Credit Agreement or the Note is invalid or
      unenforceable in any jurisdiction, the other provisions hereof or of the Note
      shall remain in full force and effect in such jurisdiction, and the remaining
      provisions hereof shall be liberally construed in favor of the Trustee, Lender
      and the Noteholder in order to effectuate the provisions hereof, and the
      invalidity or unenforceability of any provision hereof in any jurisdiction
      shall
      not affect the validity or enforceability of any such provision in any other
      jurisdiction.

     

    9.8  All
      of
      the terms, provisions, covenants and conditions hereof shall be binding upon
      Grantor, and the successors and assigns of Grantor arid the Noteholder and
      successors and assigns of Noteholder, and shall inure to the benefit of the
      Trustee and the Noteholder and their respective successors and assigns and
      Grantor’s covenants shall constitute covenants running with the lands covered by
      the Mortgaged Properties, but this provision shall not be construed to authorize
      any sale or other disposition of the Mortgaged Properties contrary to any other
      provisions hereof.

     

    9.9  The
      Mortgage may be executed in multiple counterparts, each of which is deemed
      to be
      an original for all purposes although all such executed copies shall evidence
      and constitute one and the same Mortgage; provided that it shall never be
      necessary for Noteholder or Trustee to produce more than one fully executed
      counterpart with all divisions to prove the existence of all such counterparts.
      The counterpart recorded in a particular jurisdiction may have attached to
      it
      only the division or subdivisions of the exhibit that contain descriptions
      of
      Mortgaged Properties located in such jurisdiction. Whenever a recorded
      counterpart of the Mortgage contains less than all of the divisions, the
      descriptions contained in the omitted divisions are hereby incorporated into
      said recorded counterpart by reference.

     

    
      
        
        

      

      
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          23

        
          

        

      

      
        
        

      

    

     

    9.10  The
      term
“Grantor”
herein
      used shall mean and include the corporation executing this instrument, and
      its
      successor in interest in the Mortgaged Properties. The number and gender of
      pronouns used in referring to Grantor shall be construed to mean and correspond
      with the number and gender of the individuals and/or entities executing this
      instrument as Grantor, and, further, the term “Grantor” herein used shall mean
      and include both all of the parties executing this instrument as Grantor as
      well
      as any single one or more of them.

     

    9.11  The
      “Effective
      Date”
of
      this
      instrument is 7:00 a.m. local time on March 31, 2006, at the location of the
      Mortgaged Properties, respectively.

     

    9.12  This
      Mortgage shall be governed by and construed and interpreted under the laws
      of
      the State of Texas (without giving effect to conflicts of laws principles),
      except to the extent that the laws of the State where the Mortgaged Properties
      are located shall be mandatorily applicable.

     

    9.13  TO
      THE
      MAXIMUM EXTENT NOT PROHIBITED BY LAW, EACH OF THE UNDERSIGNED HEREBY KNOWINGLY,
      VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT WHICH IT MAY HAVE TO A TRIAL
      BY
      JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING
      OUT
      OF, UNDER OR IN CONNECTION WITH THE REVOLVING NOTE, THIS AGREEMENT OR THE OTHER
      SECURITY DOCUMENTS, OR ANY TRANSACTION CONTEMPLATED THEREBY, BEFORE OR AFTER
      MATURITY.

     

    THIS
      WRITTEN AGREEMENT AND THE OTHER SECURITY DOCUMENTS DESCRIBED IN THE CREDIT
      AGREEMENT 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.

     

    9.14  (a)
      Grantor and Lender (singularly, the “Party”,
      and
      collectively, the “Parties”)
      will
      attempt in good faith to resolve any controversy or dispute arising out of
      or
      relating to this Agreement promptly by negotiations between themselves. The
      negotiation process may be started by the giving of written notice by any Party
      to the other Parties in accordance with the terms of Section 9.5 hereof, and
      the
      Parties agree to negotiate in good faith, and select an independent mediator
      to
      facilitate the negotiations and conduct up to eight (8) consecutive hours of
      mediated negotiations in Houston, Texas within 30 days after the notice is
      first
      sent. If, within 10 days after the initial notice, the Parties are not able
      to
      agree upon a mediator, the Party originally giving the notice shall promptly
      notify American Arbitration Association (“AAA”),
      140
      West 51st Street, New York, New York, 10020-1203 (telephone (212) 484-3266;
      fax
      (212) 307-4887). AAA will promptly designate a mediator who is independent
      and
      impartial, and AAA’s decision about the identity of the mediator will be final
      and binding.

     

    
      
        
        

      

      
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          24

        
          

        

      

      
        
        

      

    

     

    (b)  No
      arbitration may be commenced by any Party unless and until a negotiation
      complying with the foregoing paragraph has been completed, and no litigation
      or
      other proceeding may ever be instituted at any time in any court for the purpose
      of adjudicating, interpreting or, enforcing any rights or obligations of the
      Parties hereto or any rights or obligations relating to the subject matter
      hereof, whether or not covered by the express terms of this Mortgage, or for
      the
      purpose of adjudicating a breach or determination of the validity of this
      Mortgage, or for the purpose of appealing any decision of an arbitrator, except
      a proceeding instituted for the sole purpose of having the award or judgment
      of
      an arbitrator entered and enforced.

     

    (c)  If
      a
      controversy or dispute is not resolved after completion of the negotiation
      process described above, then, upon notice by any Party to the other Parties
      (an
“Arbitration
      Notice”)
      and to
      AAA, the controversy or dispute shall be submitted to a sole arbitrator who
      is
      independent and impartial, for binding arbitration in Houston, Texas, in
      accordance with AAA’s Commercial Arbitration Rules (the “Rules”). The Parties
      agree that they will faithfully observe this Mortgage and the Rules and that
      they will abide by and perform any award rendered by the arbitrator. The
      arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Section
      1-16 (or by the same principles enunciated by such Act in the event it may
      not
      be technically applicable). The award or judgment of the arbitrator shall be
      final and binding on all Parties and judgment upon the award or judgment of
      the
      arbitrator may be entered and enforced by any court having jurisdiction. If
      any
      Party becomes the subject of a bankruptcy, receivership or other similar
      proceeding under the laws of the United States of America, any state or
      commonwealth or any other nation or political subdivision thereof, then, to
      the
      extent permitted or not prohibited by applicable law, any factual or substantive
      legal issues arising in or during the pendency of any such proceeding shall
      be
      subject to all of the foregoing mandatory mediation and arbitration provisions
      and shall be resolved in accordance therewith. The agreements contained herein
      have been given for valuable consideration, are coupled with an interest and
      are
      not intended to be executory contracts. The fees and expenses of the arbitrator
      will be shared by all Parties engaged in the dispute or controversy on a basis
      determined to be fair and equitable by the arbitrator, taking into account
      the
      relative fault of each Party, the relative credibility and merit of all claims
      and defenses made by each Party and the cooperation, speed and efficiency of
      each Party in conducting the arbitration proceedings and complying with the
      Rules and with orders and requests of the arbitrator.

     

    (d)  Promptly
      after the Arbitration Notice is given, AAA will select three possible
      arbitrators with experience in the subject matter of the controversy, to whom
      AAA will give the identities of the Parties and the general nature of the
      controversy. If any of those arbitrators disqualifies himself or declines to
      serve, AAA shall continue to designate potential arbitrators until the Parties
      have three to select from. After the panel of three potential arbitrators has
      been completed, a two-page summary of the background of each of the potential
      arbitrators will be given to each of the Parties, and the Parties will have
      a
      period often (10) days after receiving the summaries in which to attempt to
      agree upon the arbitrator to conduct the arbitration. If the Parties are unable
      to agree upon an arbitrator, then one of the Parties shall notify AAA, and
      AAA
      shall select the arbitrator from one of the three, or less, if one or more
      has
      been found to be disqualified or removes himself from consideration (if all
      three are disqualified or remove themselves, then AAA shall start the
      arbitration-selection process over again). The decision of AAA with respect
      to
      the selection of the arbitrator will be final and binding in such
      case.

     

    
      
        
        

      

      
        Page
          25

        
          

        

      

      
        
        

      

    

     

    (e)  Within
      10
      days after the selection of the arbitrator, the Parties and their counsel will
      appear before the arbitrator at a place and time in Houston, Texas, as may
      be
      designated by the arbitrator for the purpose of each Party making a one hour
      or
      less presentation and summary of the case. Thereafter, the arbitrator will
      set
      dates and times for additional bearings until the proceeding is concluded.
      The
      desire and goal of the Parties is, and the arbitrator will be advised that
      his
      goal should be, to conduct and conclude the arbitration proceeding as
      expeditiously as possible. If any Party or its counsel fails to appear at any
      hearing, the arbitrator shall be entitled to reach a decision based on the
      evidence which has been presented to him by the Parties who did appear. Any
      arbitral award may be confirmed by a New York state court.

     

    (f)  Any
      arbitral award may be enforced in the courts of the state of New York or of
      the
      United States of America for the Southern District of Texas, and, by execution
      and delivery of this Mortgage, the Parties hereby accept for themselves and
      in
      respect of their property, generally and unconditionally, the nonexclusive
      jurisdiction of the aforesaid courts for said purpose and the Parties hereby
      irrevocably waive to the fullest extent permitted by law any objection,
      including without limitation, any objection to the laying of venue or based
      on
      the grounds of forum non conveniens, which they may now or hereafter have to
      the
      bringing of any such action or proceeding in such respective
      jurisdictions.

     

    (g)  The
      arbitrator will have no authority to award punitive or other damages not
      measured by the prevailing Party’s actual damages and may not, in any event,
      make any ruling, finding, or award that does not conform to the terms and
      conditions of the Credit Agreement and other Security Documents, including
      this
      Mortgage.

     

    (h)  The
      provisions of this Section 9.14 relating to arbitration of disputes shall not
      apply to the enforcement of any rights or obligations
      hereunder.

     

    The
      undersigned has caused this instrument to be executed by its duly authorized
      undersigned officer effective as of March 31, 2006.

     

    
      	 	 	 
	 	
              “GRANTOR”

            
	 	 
	ADDRESS OF GRANTOR:	UNITED HERITAGE CORPORATION
	 
 	 
 	 
 
	405
              N.
              Marienfeld, Suite 200	By:  	/s/ C.
              Scott
              Wilson
	Midland,
              TX 79701	
              
C.
              Scott Wilson
	 	
              President
                / Chief Executive Officer

            

    

     

     

    
      
        
        

      

      
        Page
          26

        
          

        

      

      
        
        

      

    

    

    State
      of Texas

    County
      of Midland

    

    This
      instrument was acknowledged before me on March 31, 2006, by C.
      Scott Wilson, the
      President / Chief Executive Officer of UNITED
      HERITAGE CORPORATION, a
      Utah
      corporation, on behalf of the corporation.

    
      	 	 	 
	 	 	/s/ Dorothy
              M. Munoz
	 	
              
                

              

              Notary
                Public - Signature

            
	 	 

    

     

    

    
      
        
        

      

      
        Page
          27

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    ATTACHED
      TO AND FORMING A PART OF THE

    DEED
      OF
      TRUST, MORTGAGE, ASSIGNMENT OF PRODUCTION,

    SECURITY
      AGREEMENT AND FINANCING STATEMENT

    DATED
      AS
      OF MARCH 1, 2006

     

    FROM

     

    UNITED
      HERITAGE CORPORATION

    TO

     

    MICHAEL
      H. ATNIPP,

     

    TRUSTEE
      FOR THE BENEFIT OF

     

    LOTHIAN
      OIL INC.

     

    PREAMBLE

     

    This
      Exhibit
      A
      contains
      this Preamble and the specific description of the “Leases” comprising a portion
      of the “Mortgaged Properties”, as those terms are defined in the Deed of Trust,
      Mortgage, Assignment of Production,. Security Agreement and Financing Statement
      (the ‘Mortgage”) to which this Exhibit A is attached.

     

    Divisions.
      This
      Exhibit A may be composed of several divisions and subdivisions--at least one
      for each state and county in each state in which any part of the Mortgaged
      Properties is located in more than one county, the division hereof containing
      the description of such Hydrocarbon (as defined in the Mortgage) lease will
      generally include the relevant portion of each of the counties in which any
      part
      of such oil, gas and mineral lease is located. Counties containing portions
      of
      such multi-county leases may therefore be covered by more than one division
      of
      this Exhibit A. Each subdivision is in turn composed of further
      subdivisions—each one covering one or more of the oil, gas and mineral leases
      included among the Mortgaged Properties.

     

    Counterparts.
      The
      Mortgage may be executed in multiple counterparts, each of which is deemed
      to be
      an original for all purposes although all such executed copies shall evidence
      and constitute one and the same Mortgage; provided that it shall never be
      necessary for Noteholder or Trustee to produce more than one fully executed
      counterpart with all divisions to prove the existence of all such counterparts.
      The counterpart recorded in a particular county may have attached to it only
      the
      division or subdivisions of this exhibit that contain descriptions of Mortgaged
      Properties located in such county or parish. Whenever a recorded counterpart
      of
      the Mortgage contains less than all of the divisions, the descriptions contained
      in the omitted divisions are hereby incorporated into said recorded counterpart
      by reference.

     

    Definitions.
      For all
      purposes of this Exhibit A, the following terms shall have indicated
      meanings:

     

    
      
        
        

      

      
        Page
          28

        
          

        

      

      
        
        

      

    

     

    “Block”
means
      several leases within an immediate vicinity.

     

    “Net
      Revenue Interest”
means
      with respect to any Property, the decimal or percentage share of production
      from
      or allocable to such property, after deduction of all overriding royalties
      and
      other burdens (including lessor royalties), that an owner of a Working Interest
      is entitled to receive

     

    “Working
      Interest”
means
      the property interest which entitles the owner thereof to explore and develop
      certain land for Hydrocarbon production purposes, whether under an oil and
      gas
      lease or unit, a compulsory pooling order or otherwise.

     

    “Overriding
      Royalty Interest”
means
      (i) with respect to a Unit for which an Overriding Royalty Interest is stated,
      that interest in the applicable Hydrocarbons produced, saved, and sold from
      such
      unitized area which is afforded to Grantor by virtue of its ownership of such
      expense-free interest in the Leases included in whole or in part in such area
      after deducting landowner royalties and any other burdens to which such interest
      may be subject, and (ii) with respect to a Well for which an Overriding Royalty
      Interest is stated, an expense-free interest in the applicable Hydrocarbons
      produced, saved and sold from a Well or Subject Lease which is afforded to
      Grantor by virtue of its ownership of such expense-free interest in the Lease
      (hereinafter defined) on which such Well is located after deducting landowner
      royalties and any other burdens to which such interest may be
      subject.

     

    “Well”
means
      any existing oil or gas well, salt water disposal well, injection well, water
      supply well or any other well located on or related to the Properties or any
      well which may hereafter be drilled and/or completed on the Properties, or
      any
      facility or equipment in addition to or replacement of any well, including
      a
      well producing or capable of producing oil and/or gas that is described or
      referred to in this Exhibit A.

     

    “Unit”
means
      a
      unit, pool, or communitized area described or referred to in this Exhibit A.

     

    “Permitted
      Encumbrances”
shall
      mean (i)
      minor
      irregularities in title which do not (a) materially interfere with the
      occupation, use and enjoyment by Grantor of any of the Mortgaged Properties
      in
      the normal course of business as presently conducted, or (b) materially impair
      the value thereof for such Mortgaged Properties, (ii)
      all
      interests in the Mortgaged Properties securing obligations owed to, or claimed
      by, any Person other than Noteholder, whether such interest is based on the
      common law, statute or contract, and whether such interest includes liens or
      security interests arising by virtue of mortgage, encumbrance, pledge, security
      agreement, conditional sale or trust receipt or lease, consignment or bailment
      for security purposes, so long as each said interest has been expressly
      consented to by Noteholder in writing, (iii)
      Liens
      of landlords, vendors, carriers, warehousemen, mechanics, laborers and
      materialmen arising by law, and of operators arising by contract, in the
      ordinary course of business for sums not yet due or being contested in good
      faith by appropriate action promptly initiated and diligently conducted, if
      such
      reserve as shall be required by generally accepted accounting principles shall
      have been made therefor; (iv)
      the
      specific exceptions and encumbrances affecting each of the Mortgaged Properties
      as described in this Exhibit, (v)
      any
      liens which are subordinate to the liens created hereby pursuant to a
      Subordination Agreement approved by Lender; and (vi)
      the
      agreements and matters set forth in Exhibit B INSOFAR ONLY as the foregoing
      exceptions, encumbrances and agreements are valid and subsisting and are
      enforceable against the particular Lease(s) which are made subject to said
      exceptions, encumbrances or agreements.

     

    
      
        
        

      

      
        Page
          29

        
          

        

      

      
        
        

      

    

     

    Scope
      and Format of Description.
      The
      Subject Interests are expressly limited to the Subject Leases insofar and only
      insofar as they cover lands and depth intervals in which Grantor owns an
      undivided interest and do not include lands and depth intervals in which Grantor
      owns no undivided interest even though such lands or depth intervals are covered
      by the Subject Leases; provided, however, that this provisions shall not impair
      Lender’s/Mortgagee’s rights under the warranty of title contained in the
      Mortgage. The format of the description is as follows:

     

    With
      respect to each Lease, the description includes the Lease, the date, the Lessor,
      the Lessee, the recording information, the governmental or state serial number
      assigned to the lease (if applicable), and a description of the lands covered
      by
      the Lease. If the recorded instrument is a short form of memorandum of a Lease,
      the term “Lease” shall be deemed to include all of the terms and provisions of
      the Lease referred to in such short form or memorandum. Certain property
      descriptions are in abbreviated to Sections, Townships, and Ranges. In such
      descriptions, the following terms may be abbreviated as follows:

    

      
        	
                Northwest
                  Quarter

              	
                NW,
                  NW/4, or NW/4;

              
	
                Southwest
                  Quarter

              	
                SW,
                  SW/4, or SW/4;

              
	
                Southeast
                  Quarter

              	
                SE,
                  SE/4, or SE/4;

              
	
                Northeast
                  Quarter

              	
                NE,
                  NE/4, or NE/4;

              
	
                North
                  Half

              	
                N/2
                  or N/2;

              
	
                South
                  Half

              	
                S/2
                  or S/2;

              
	
                East
                  Half

              	
                E/2
                  or E/2;

              
	
                West
                  Half

              	
                W/2
                  or W/2;

              

      

    

     

    The
      applicable Blocks are followed by an N, S, E, or W to indicate whether the
      Block
      is North, South, East, or West. Certain descriptions merely refer to the Block
      in which the property is located in whole or in part. In such cases, the
      recorded Leases and any amendments thereof and any other recorded instruments
      affecting Grantor’s title more particularly describe the land within such Block
      in which Grantor owns an interest, and the descriptions contained in such
      instruments are incorporated herein by this reference. In the case of certain
      federal and state leases, the interests set forth may be in the nature of either
      record, title or operating rights. The land description does not necessarily
      signify that Grantor owns the entire interest in such Lease as to all of such
      land or as to all depth intervals. The statement of a Working Interest and
      a Net
      Revenue Interest for a Well or Unit does not necessarily signify that Grantor
      owns the same applicable Lease or leases as to the areas or depth intervals
      not
      attributable to the Well or Unit.

     

    The
      statement of a Working Interest and a Net Revenue Interest with respect to
      a
      Well or Wells signifies that Grantor owns that Working Interest and Net Revenue
      Interest in the Well or Wells with respect to the intervals in which the Well
      or
      Wells are currently completed, and excludes a unitized area or formation, if
      any, included within a Unit which is also described in this Exhibit
      A.

     

    
      
        
        

      

      
        Page
          30

        
          

        

      

      
        
        

      

    

     

    Each
      Well
      or Unit with respect to which the Working Interest and Net Revenue Interest
      of
      Grantor is stated is described as follows: (i)
      each
      well is described by reference to the Well name given to the Well in Grantor’s
      records, which may or may not be the name stated in the records of the
      applicable state or federal regulatory authority, and (ii)
      each
      Unit is described by the name by which such Unit is referred to in Grantor’s
      records, which may or may not be the name used (if a name is used) in the
      instrument creating such Unit.

    

    
      
        
        

      

      
        Page
          31Unassociated Document

    DEVELOPMENT
      AND EXPLORATION AGREEMENT

    

    Lothian
      Oil Inc. (“Lothian”),
      whose address is 500 5th Avenue, Suite 2600, New York, NY 10110, and
UHC
      Petroleum Corporation, and
      UHC
      Petroleum Services Corporation, and
      ratified by United
      Heritage Corporation (collectively
      referred to in this Agreement as “UHC”),
      whose
      address is 405 N. Marienfeld, Suite 200, Midland, TX 79701, entered into a
      definitive agreement providing for Lothian to acquire shares of the common
      stock
      of United Heritage Corporation (the “Share Transaction”). The stock purchase
      agreement provides that it is contingent on Lothian and UHCP entering into
      a
      Development and Exploration Agreement (this “Agreement”) concerning the
      ownership, exploration, and development of UHCP’s Oil and Gas Leases in the Cato
      San Andres Unit, Chavez County, New Mexico; the Tom Tom Field, Chavez County,
      New Mexico; the Tomahawk Field, Roosevelt County, New Mexico (collectively
      referred to as the “New Mexico Properties”); and the Wardlaw Field, Edwards
      County, Texas (the “Wardlaw Property”).

    

    For
      valuable consideration, the receipt and sufficiency of which is acknowledged,
      and the mutual benefits to be derived by Lothian and UHC, Lothian and UHC enter
      into this Agreement and agree as follows:

    

    
      	
              1.

            	
              Lothian
                and UHC will enter into a secured loan agreement, to be dated March
                31,
                2006, providing for loan advances, by Lothian to UHC, of up to $2,500,000
                for the development of the Leases in the Wardlaw Property. The term
                of the
                loan shall be for ten (10) years from the date on which this Agreement
                is
                executed by the Parties. Loan advances shall be used by or on behalf
                of
                UHC to pay for one hundred percent (100%) of the capital cost of
                drilling
                and equipping new wells and establishing and improving production
                from
                existing wells in the Wardlaw Property. Advances under the loan shall
                be
                repayable, monthly, from 70% of UHC’s share of the oil and gas proceeds
                from the Wardlaw Property, with interest payable monthly at Citibank’s
                prime lending rate of interest plus 1%. The loan by Lothian to UHC
                shall
                be evidenced by a credit agreement providing for UHC to execute a
                promissory note to Lothian, secured by a deed of trust and mortgage
                on 70%
                of UHC’s interests in the leases it owns in the Wardlaw Property. As part
                consideration for granting this loan, UHC shall deliver to Lothian
                an
                assignment of 70% of UHC’s interest in the Wardlaw Property, which
                assignment shall become effective when the full amount of the loan,
                together with all accrued interest, has been repaid and paid in full
                to
                Lothian, as provided for in the Credit Agreement.
                

            

    

    

    
      	 	
              In
                the event UHC shall receive a bona fide offer to purchase its interest
                in
                the Wardlaw Property prior to the assignment to Lothian becoming
                effective, and UHC elects to accept the offer, Lothian is granted
                and
                shall have the right of first refusal to purchase the Wardlaw Property
                on
                the same terms and conditions provided for in that offer. Upon UHC
                accepting the offer (either from a third party, or Lothian electing
                to
                exercise its right of first refusal), the assignment to Lothian of
                the 70%
                interest shall become immediately effective, and the outstanding
                balance
                on the loan from Lothian to UHC shall be deemed paid in full. If
                the full
                amount of the loan has not been expended by or on behalf of UHC for
                the
                purposes stated above, Lothian shall remain obligated to expend that
                amount for the original purposes of the loan, as stated above.
                

            

    

     

    
      
        
        

      

      
        Page
          1 of
          3

        
          

        

      

      
        
        

      

    

     

    
      	
              2.

            	
              Lothian
                and UHC have entered into an Operating Agreement (the “OA”), naming
                Lothian as Operator, governing the operations of all of the Leases
                and
                interests in properties included in the Wardlaw Property. Any conflicts
                between the terms of the OA and this Agreement shall be governed
                by the
                terms of this Agreement.

            

    

    

    
      	
              3.

            	
              While
                the OA entered into by the parties provides for Lothian to be the
                designated Operator of the Wardlaw Property, UHC agrees to continue
                to
                serve as nominal operator for purposes of reporting to all state
                and
                federal agencies concerning the leases that are subject to this Agreement.
                At such time as Lothian elects to be the nominal operator and assumes
                all
                reporting obligations, UHC agrees to execute such forms and documents
                as
                may be necessary to allow Lothian to be recognized as the Operator
                of the
                properties.

            

    

    

    
      	
              4.

            	
              This
                Agreement contains all agreements and understandings of the parties
                with
                respect to its terms, and supersedes all prior understandings, agreements,
                both written and oral, which may have been discussed and previously
                agreed
                on. This Agreement may only be amended in writing by Lothian and
                UHC, if
                both parties agree to the terms of the
                amendment.

            

    

    

    
      	 	
              This
                Agreement shall be effective, for all purposes, as of March 31,
                2006.

            

    

     

    
      	 	 	 
	 	“Lothian”
	 	 
	 	Lothian
              Oil Inc.
	 
 	 
 	 
 
	Date:
              April __, 2006	By:  	/s/ Ken
              Levy
	 	
              
Ken
              Levy
	 	Secretary/Chief
              Financial Officer

    

     

    
      
        	 	 	 
	 	“UHC”
	 	 
	 	UHC
                Petroleum Corporation
	 
 	 
 	 
 
	Date:
                April __, 2006	By:  	/s/ C.
                Scott
                Wilson
	 	
                
C.
                Scott Wilson
	 	President/Chief
                Executive Officer

      

       

    

     

    
      
        
        

      

      
        Page
          2 of
          3

        
          

        

      

      
        
        

      

    

     

    
       

      
        
          	 	 	 
	 	United
                  Heritage Corporation
	 
 	 
 	 
 
	Date:
                  April __, 2006	By:  	/s/ C.
                  Scott
                  Wilson
	 	
                  
C.
                  Scott Wilson
	 	President/Chief
                  Executive Officer

        

         

      

    

    
      
         

        
          
            	 	 	 
	 	UHC
                    Petroleum Services Corporation
	 
 	 
 	 
 
	Date:
                    April __, 2006	By:  	/s/ C.
                    Scott
                    Wilson
	 	
                    
C.
                    Scott Wilson
	 	President/Chief
                    Executive Officer

          

           

        

      

    

     

    
      
        
        

      

      
        Page
          3 of
          3

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