Document:

Exhibit 4.2
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     THE SECURITY  REPRESENTED  HEREBY WAS ORIGINALLY  ISSUED AS OF DECEMBER 22,
     2003, HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED
     (THE  "ACT"),  AND  MAY NOT BE SOLD OR  TRANSFERRED  IN THE  ABSENCE  OF AN
     EFFECTIVE  REGISTRATION  STATEMENT  UNDER  THE  ACT  OR AN  EXEMPTION  FROM
     REGISTRATION THEREUNDER. THE SECURITY REPRESENTED HEREBY IS ALSO SUBJECT TO
     THE CONDITIONS  SPECIFIED IN THE NOTE PURCHASE  AGREEMENT AMONG THE COMPANY
     AND THE ORIGINAL HOLDER HEREOF AND CERTAIN INVESTORS,  DATED AS OF DECEMBER
     22, 2003 AND THE COMPANY  RESERVES THE RIGHT TO REFUSE THE TRANSFER OF THIS
     SECURITY UNTIL THE  CONDITIONS  THEREIN HAVE BEEN FULFILLED WITH RESPECT TO
     SUCH TRANSFER. A COPY OF SUCH SECURITIES PURCHASE AGREEMENT MAY BE OBTAINED
     BY THE HOLDER HEREOF AT THE COMPANY'S  PRINCIPAL PLACE OF BUSINESS  WITHOUT
     CHARGE.

     THIS INSTRUMENT AND THE OBLIGATIONS  EVIDENCED  HEREBY ARE  SUBORDINATED TO
     THE PRIOR PAYMENT IN FULL OF THE SUPERIOR DEBT (AS DEFINED HEREINAFTER).

                               JUNIOR SUBORDINATED
                                 PROMISSORY NOTE
                                 ---------------

December 22, 2003                                                    $51,000,000

     Quest Cherokee,  LLC, a Delaware limited liability company (the "Company"),
hereby  promises to pay to the order of Cherokee Energy Partners LLC, a Delaware
limited  liability  company,  the principal amount of $51,000,000  together with
interest  thereon  calculated  from the date hereof (the "Date of  Issuance") in
accordance with the provisions of this Junior Subordinated  Promissory Note (the
"Note").

     This Note was issued pursuant to a Note Purchase Agreement, dated as of the
date hereof (such  agreement to which the initial holder is a party,  as amended
and modified  from time to time,  the  "Purchase  Agreement"),  by and among the
Company and the initial holder of this Note. For purposes of this Note,  "Junior
Notes"  means this Note and all other notes  issued on the date hereof or at any
time hereafter in  substantially  the same form whether  issued  pursuant to the
Purchase  Agreement  or  otherwise  (including  any  PIK  Notes).  The  Purchase
Agreement  contains  terms  governing the rights of the holder of this Note, and
all  provisions  of the Purchase  Agreement  are hereby  incorporated  herein by
reference.

     1.  Payment  of  Interest.  Interest  shall  accrue at the rate of  fifteen
percent (15%) per annum on the unpaid principal amount of this Note from time to
time  outstanding.  Interest  shall be computed on the basis of a 365 or 366-day
year (as applicable) and the actual number of days elapsed, and shall be payable
on each Interest Payment Date (as defined in the Purchase  Agreement);  provided
that, except to the extent same is permitted to be paid in cash under the Senior
Revolving  Credit  Agreement  (as defined in Section 6 hereof) on each  Interest
Payment  Date  after the Senior  Term  Repayment  Date (as  defined in Section 6
hereof), the Company shall

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pay  interest  in kind by either (i) issuing a PIK Note (as defined in Section 6
hereof)  to the holder  hereof in  principal  amount  equal to the amount of the
interest due on such Interest Payment Date or (ii) deferring the interest due on
such Interest Payment Date and all interest so deferred  pursuant to this clause
(ii) shall be added to and become a part of the principal of this Note as of the
Interest  Payment Date upon which it was  deferred,  and shall  thereafter  earn
interest as  provided  herein.  Except as provided in the last  sentence of this
Section 1, in all events an amount of accrued and unpaid interest (including any
interest  represented by a PIK Note or otherwise  previously added to principal)
shall be paid by the Company in cash,  on each Interest  Payment Date  occurring
after the fifth  anniversary  of the date  hereof,  equal to the least amount of
such accrued and unpaid  interest  such that the Note shall not have at any time
"significant original issue discount" within the meaning of section 163(i)(2) of
the Internal Revenue Code of 1986. Any accrued interest which for any reason has
not  theretofore  been paid shall be paid in full on the date on which the final
principal payment on this Note is made. Except for interest paid by the issuance
of a PIK Note or deferred and  paid-in-kind in accordance with the terms hereof,
interest  shall be paid  only if the  Senior  Term Debt has been paid in full in
cash and such payment is permitted by the terms of the Senior  Revolving  Credit
Agreement  and  only to the  extent  therefor  pursuant  to  Section  5.4 of the
Company's Amended and Restated Limited Liability Company Agreement.

     2.   Payment of Principal on Note.

          (a) Maturity.  The Company shall pay the principal amount  outstanding
under this Note (including  interest  deferred and added to the principal amount
of this Note as  provided  in Section 1 above)  together  with all  accrued  and
unpaid  interest  on such  principal  amount,  to the holder of this Note on the
Final  Maturity  Date (as defined in the Purchase  Agreement as in effect on the
date hereof).

          (b) Prepayments.

               (i)   Upon notice given as provided in subsection (ii) below, the
     Company may at any time and from time to time prepay all or any  proportion
     of the outstanding  principal  amount of the Note, plus accrued interest on
     the  outstanding   principal  amount  of  the  Note  through  the  date  of
     prepayment; provided that (A) the Senior Term Debt has been paid in full in
     cash, (B) such prepayment is permitted by the terms of the Senior Revolving
     Credit  Agreement and (C) such prepayment  shall be made pro rata among the
     holders  of the  Junior  Notes on the  basis of the  outstanding  principal
     amount of the Junior Note held by each holder.

               (ii) The Company  shall send  written  notice of its  election to
     make a  prepayment  on the  Junior  Notes  to the  holder  of this  Note by
     registered or certified mail, return receipt requested,  at least three (3)
     Business  Days prior to the date of  prepayment.  Such notice shall specify
     the date fixed for prepayment,  the aggregate principal amount outstanding,
     the  aggregate  amount of  interest  accrued on the  outstanding  principal
     amount  of this  Note  through  the  date of  prepayment  specified  in the
     Company's notice.

          (c) Time of Payment. If any payment of principal,  interest or premium
shall become due on a day which is not a Business Day (as defined  below),  such
payment shall be made on the next succeeding  Business Day and such extension of
time shall in such case be

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<PAGE>

included  in  computing  interest  in  connection  with such  payment.  The term
"Business  Day" as used  herein  means any day other than  Saturday or Sunday or
public  holiday  under  the laws of the  State of New York or other day on which
banking  institutions  are  authorized  or obligated to close in the City of New
York in the State of New York.

          (d) Form of Payment. Unless otherwise indicated herein, any payment to
be made  hereunder  shall  be made at the  direction  of the  holder  hereof  by
cashier's  or  certified  check to or upon the  order of the  holder  or by wire
transfer of immediately available funds to an account designated by the holder.

     3.   Subordination: Restrictions on Payment.

          Anything  in  this  Note or the  Purchase  Agreement  to the  contrary
notwithstanding,  the  obligations  of the Company in respect of the  principal,
interest, fees and charges on this Note shall be subordinate and junior in right
of payment,  to the extent and in the manner hereinafter set forth, to the prior
payment in full in cash of all Superior  Debt.  By its  acceptance  hereof,  the
payee and each other present and future holder of this Note and beneficial owner
of any  interest  in this Note or any  other  Subordinated  Debt  (collectively,
including the payee, the "holders" of Subordinated  Debt) irrevocably agree, for
the directly intended and enforceable  benefit of each present and future holder
of Superior  Debt,  that the  Subordinated  Debt is hereby  subordinated  to the
Superior Debt on the following terms:

          (a) In the event that the Company makes a general  assignment  for the
benefit of creditors;  or an order,  judgment or decree is entered  adjudicating
the Company  bankrupt or insolvent;  or any order for relief with respect to the
Company is entered under the Federal  Bankruptcy Code; or the Company  petitions
or applies to any tribunal for the appointment of a custodian, trustee, receiver
or  liquidator  of the Company or of any  substantial  part of the assets of the
Company,  or  commences  any  proceeding  relating  to  the  Company  under  any
bankruptcy,  reorganization,  arrangement,  insolvency,  readjustment  of  debt,
dissolution  or  liquidation  law of any  jurisdiction;  or any such petition or
application is filed, or any such  proceeding is commenced,  against the Company
(collectively referred to as an "Insolvency Event"), or upon any acceleration of
Superior Debt, then:

               (i) the  holders of  Superior  Debt shall be  entitled to receive
     payment in full in cash of all principal,  premium, interest, fees, charges
     and other amounts then due on all Superior Debt (including interest,  fees,
     charges and other amounts  accruing  thereon after the  commencement of any
     such Insolvency  Event at the rate provided in the  documentation  for such
     Superior Debt  (irrespective  of whether such  interest,  fees,  charges or
     other  amounts  are  allowed  as a claim in such  proceedings))  before the
     holder of this Note is  entitled  to  receive  any  payment  of any kind or
     character on account of  principal,  interest or other amounts due (or past
     due) upon this Note,  and the holders of Superior Debt shall be entitled to
     receive for application in payment  thereof all payments and  distributions
     of any kind or  character,  whether in cash,  property or  securities or by
     set-off  or  otherwise,  which may be payable  or  deliverable  in any such
     proceedings in respect of this Note; and

               (ii) any payment or distribution of assets of the Company, of any
     kind or character,  whether in cash,  property or securities,  to which the
     holder of this Note

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<PAGE>

      would be entitled  except for the provisions of this Section 3(a) shall be
      paid or  delivered  by the  Company  (or any  receiver  or trustee in such
      proceedings)  directly to the Senior  Revolving  Agent (or the Senior Term
      Agent if the Senior  Revolving Debt has been paid in full) for the benefit
      of the  holders  of  Superior  Debt for  application  of such  payment  or
      distribution  among the  holders of the  Superior  Debt  according  to the
      priorities  of such debt,  until all Superior  Debt  (including  interest,
      fees,  charges  and  other  amounts  accrued  thereon  after  the  date of
      commencement of such proceedings at the rate provided in the documentation
      for such  Superior  Debt  (irrespective  of whether such  interest,  fees,
      charges or other  amounts  are  allowed  as a claim in such  proceedings))
      shall have been paid in full in cash.

          (b) In any  proceedings  with respect to any Insolvency  Event, or the
application of the assets of the Company to the payment or liquidation  thereof,
or upon the  dissolution  or other  winding up of the business of the Company or
upon the sale of all or  substantially  all of the assets of the Company,  then,
and in any such event, (A) each holder of the Superior Debt shall be entitled to
receive full and  indefeasible  payment and satisfaction in cash of the Superior
Debt  prior to the  payment of all or any part of the  Subordinated  Debt by the
Company, other than a distribution of Reorganization  Subordinated Securities if
each  Senior  Agent and the  holder of this Note shall  have  entered  into such
amendments to this Note as either Senior Agent may reasonably request to reflect
the continued subordination of the Reorganization Subordinated Securities to the
Superior Debt, and (B) any payment or distribution of any kind or character from
the Company of its assets, whether in cash, securities or other property,  which
shall  be  payable  or  deliverable  upon or with  respect  to any or all of the
Subordinated  Debt,  other than a distribution  of  Reorganization  Subordinated
Securities  if each Senior  Agent and the holder of this Note shall have entered
into such amendments to this Note as either Senior Agent may reasonably  request
to  reflect  the  continued  subordination  of the  Reorganization  Subordinated
Securities  to the Superior  Debt,  shall be paid or  delivered  directly to the
Senior  Revolving  Agent (or the Senior Term Agent if the Senior  Revolving Debt
has been paid in full) for the benefit of the holders of the  Superior  Debt for
application to the Superior Debt in accordance with the priorities thereof,  due
or  not  due,  until  such  Superior  Debt  shall  have  first  been  fully  and
indefeasibly  paid  in  cash  and  satisfied  and  all  financing   arrangements
terminated. The holder of this Note irrevocably authorizes, empowers and directs
all receivers, trustees, liquidators, custodians, conservators and others having
authority in the premises to effect all such payments and distributions, and the
holder of this Note also irrevocably authorizes, empowers and directs the Senior
Revolving Agent (or the Senior Term Agent if the Senior  Revolving Debt has been
paid in full in cash) to demand, sue for, collect and receive every such payment
or distribution for the benefit of the Senior Lenders.  Any amounts collected or
received by any Senior Agent pursuant to the authority granted hereby,  shall be
paid or delivered  directly to holders of the Superior Debt for  application  to
the Superior Debt in accordance  with the  priorities  thereof,  due or not due,
until such  Superior Debt shall have first been fully and  indefeasibly  paid in
cash and satisfied and all financing arrangements terminated. The holder of this
Note agrees to execute and deliver to the Senior  Revolving Agent (or the Senior
Term  Agent if the Senior  Revolving  Debt has been paid in full in cash) or its
representative  all  such  further  instruments   confirming  the  authorization
referred to in the  foregoing  clause and agrees not to initiate or prosecute or
encourage any other person to initiate or prosecute  any claim,  action or other
proceeding  challenging the enforceability of the Superior Debt or any liens and
security interests securing the Superior Debt. The holder of this Note agrees to
execute,  verify,  deliver  and file any  proofs  of  claim  in  respect  of the
Subordinated Debt

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<PAGE>

requested by the Senior  Revolving Agent (or the Senior Term Agent if the Senior
Revolving  Debt has  been  paid in full in  cash)  in  connection  with any such
proceeding and hereby irrevocably  authorizes,  empowers and appoints the Senior
Revolving Agent (or the Senior Term Agent if the Senior  Revolving Debt has been
paid in full in cash) its agent and  attorney-in-fact  to (i)  execute,  verify,
deliver  and file such  proofs of claim  upon the  failure of the holder of this
Note  promptly  to do so  (and,  in any  event,  prior  to 30  days  before  the
expiration  of the time to file any such  proof) and (ii) vote such claim in any
such proceeding upon the failure of the holder of this Note to do so prior to 15
days before the  expiration  of the time to vote any such claim;  provided  that
neither Senior Agent shall have any obligation to execute, verify, deliver, file
and/or vote any such proof of claim.  In the event that a Senior Agent votes any
claim in  accordance  with the  authority  granted  hereby,  no holder  shall be
entitled to change or withdraw such vote. The Superior Debt shall continue to be
treated as Superior Debt and the provisions of this Note shall continue to cover
the relative rights and priorities of the Senior  Lenders,  on the one hand, and
the holder of this Note, on the other hand,  even if all or part of the Superior
Debt or the security interests securing the Superior Debt are subordinated,  set
aside,  avoided or disallowed in connection  with any such  proceeding  and this
Note shall be  reinstated if at any time any payment of any of the Superior Debt
is rescinded or must otherwise be returned by any holder of Superior Debt or any
representative of such holder.

          (c) Except for  payments  of  interest  in kind,  and the  issuance of
Reorganization  Subordinated Securities expressly permitted herein, no holder of
the Subordinated  Debt will,  except as otherwise agreed to by each Senior Agent
and the  Required  Lenders  (as  defined  in  Section 6 hereof) or to the extent
permitted under the Senior  Revolving Credit Agreement after the payment in full
in cash of the Senior Term Debt, ask, demand,  sue for, take or receive from the
Company,  by set  off or in any  other  manner,  the  whole  or any  part of the
Subordinated  Debt (whether  such amounts  represent  principal or interest,  or
obligations  which are due or not due,  including costs,  fees and expenses with
respect  to the Junior  Notes,  direct or  indirect,  absolute  or  contingent),
including,   without  limitation,  the  taking  of  any  negotiable  instruments
evidencing such  Subordinated  Debt nor any security for any Subordinated  Debt,
unless and until all Superior  Debt,  whether now existing or hereafter  arising
directly  between the Company and any holder of the Superior  Debt,  or acquired
outright, conditionally or as collateral security from another by any holder the
Superior Debt, shall have been fully and  indefeasibly  paid in full in cash and
satisfied and all financing arrangements and commitments between the Company and
all holders of the Superior Debt have been terminated.

          (d) Any  amendment or  modification  of the terms of Section 3 of this
Note shall not be effective against any Person who was a holder of Superior Debt
prior to or at the time of such amendment or modification  unless such holder of
Superior Debt so consents in writing.

          (e)  The  holders  of  Superior  Debt  may,  at  any  time,  in  their
discretion,  renew, amend,  extend,  increase,  restate,  refinance or otherwise
modify the terms and  provisions  of the  Superior  Debt so held or  exercise or
release  any  of  their  rights  under  the  Superior  Debt  including,  without
limitation,  the waiver of defaults  thereunder  and the amendment of any of the
terms or provisions  thereof (or any notice evidencing or creating the same), or
the release of collateral  securing the Superior  Debt, all without notice to or
assent  from the  holder of this Note.  No  compromise,  alteration,  amendment,
renewal,  restatement,  refinancing  or other  change of, or waiver,  consent or
other action in respect of any liability or  obligation  under or in respect of,
any

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<PAGE>

terms,  covenants  or  conditions  of  the  Superior  Debt  (or  any  instrument
evidencing  or creating the same),  whether or not such release is in accordance
with the  provisions  of the  Superior  Debt (or any  instrument  evidencing  or
creating the same),  shall in any way alter or affect the  enforceability of the
subordination provisions of this Note against the holder hereof.

          (f) If,  notwithstanding the provisions of Section 3 of this Note, any
payment or distribution of any kind or character (whether in cash, securities or
other  property) or any security shall be received by the holder of this Note in
contravention of this Section 3 and before all the Superior Debt shall have been
paid in full in cash,  such payment,  distribution  or security shall be held in
trust for the benefit of, and shall be  immediately  paid over or  delivered  or
transferred  to the  Senior  Revolving  Agent (or the  Senior  Term Agent if the
Senior  Revolving  Debt has been paid in full) for the benefit of the holders of
Superior Debt or their duly  appointed  agents for  application of such payment,
distribution  or  security  among the  holders  of each class of  Superior  Debt
according to the priorities of such Superior Debt. Any such payments received by
the  holder of this Note and  delivered  to the Senior  Revolving  Agent (or the
Senior  Term Agent if the Senior  Revolving  Debt has been paid in full) for the
benefit of the holders of the Superior  Debt shall be deemed not to be a payment
on this Note for any  reason  whatsoever  and the  indebtedness  under this Note
shall remain as if such erroneous  payment had never been paid by the Company or
received  by the holder of this Note.  In the event of the failure of any holder
of this Note to endorse or assign any such  payment,  distribution  or security,
each  Senior  Agent is hereby  irrevocably  authorized  to endorse or assign the
same.

          (g) No present or future  holder of Superior  Debt shall be prejudiced
in its right to enforce the  provisions  of Section 3 of this Note by any act or
failure to act on the part of the Company or such holder or any other  holder of
Superior Debt.

          (h) The holder of this Note shall not take or continue any action,  or
exercise or continue to exercise any rights,  remedies or powers under the terms
of this Note,  or exercise or continue to exercise  any other right or remedy at
law or equity that such holder might  otherwise  possess,  to collect any amount
due and  payable in respect of this Note,  including,  without  limitation,  the
acceleration of this Note, the  commencement of any foreclosure on any Lien, the
filing of any  petition  in  bankruptcy  or the  taking  advantage  of any other
insolvency law of any jurisdiction.

          (i)  Subject  to the  indefeasible  payment  in  full  in  cash of all
Superior Debt and the  termination of all lending  commitments  under the Senior
Revolving Credit  Agreement,  the holder of this Note shall be subrogated to the
rights  of the  Senior  Agents  and  Senior  Lenders  to  receive  payments  and
distributions with respect to the Superior Debt until this Note is paid in full.
The  holder of this  Note  agrees  that in the  event  that all or any part of a
payment made with respect to the Superior Debt is recovered  from the holders of
the  Superior  Debt in a  proceeding  with  respect  to an  Insolvency  Event or
otherwise,  any payment or distribution received by the holder of this Note with
respect  to this  Note at any  time  after  the date of the  payment  that is so
recovered,  whether  pursuant to the right of  subrogation  provided for in this
Note or  otherwise,  shall be deemed to have been received by the holder of this
Note in trust as property of the holders of the Superior  Debt and the holder of
this Note shall forthwith deliver the same to the Senior Revolving Agent (or the
Senior  Term Agent if the Senior  Revolving  Debt has been paid in full) for the
benefit of the Senior  Revolving  Lenders  (or the  Senior  Term  Lenders if the
Senior  Revolving  Debt has been paid in full)  for  application  to the  Senior
Revolving Debt (or the Senior

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<PAGE>

Term Debt if the Senior Revolving Debt has been paid in full) until the Superior
Debt is paid in full. A payment or  distribution  made  pursuant to this Section
3(i) to any Senior Agent or any Senior  Lender which  otherwise  would have been
paid to or  retained  by the holder of this Note is not,  as between the Company
and the  holder of this Note,  a payment by the  Company to or on account of the
Superior Debt.

          (j) The  provisions  of this  Section 3 are solely for the  purpose of
defining the relative  rights of the holders of Superior  Debt, on the one hand,
and the holder of this Note on the other,  against  the  Company and its assets,
and nothing  herein is intended to or shall  impair,  as between the Company and
the holder of this Note, the  obligations of this Company which are absolute and
unconditional,  to pay to the holder of this Note the  principal and interest on
this Note as and when they  become  due and  payable  in  accordance  with their
terms,  or is intended to or will  affect the  relative  rights of the holder of
this Note and  creditors  of the Company  other than the holders of the Superior
Debt, nor, except as provided in this Section 3, will anything herein or therein
prevent the holder of this Note from exercising all remedies otherwise permitted
by applicable  law upon default  under this Note subject to the rights,  if any,
under  this  Section 3 of the  holders  of  Superior  Debt in  respect  of cash,
property or  securities  of the Company  received  upon the exercise of any such
remedy and subject to this Section 3.

          (k) Each holder of the Subordinated Debt has purchased or acquired the
Subordinated Debt held by it with the express understanding that:

               (i) the Subordinated Debt constitutes the liability solely of the
     Company;

               (ii) no member of the  Company  has  guaranteed  or is  otherwise
     liable for any Subordinated Debt;

               (iii) the Subordinated Debt is not secured by any mortgage, lien,
     pledge, charge,  financing statement,  security interest,  hypothecation or
     other security device of any type (a "Lien"), nor is such Subordinated Debt
     supported  directly or indirectly by any direct or indirect guaranty of any
     Person; and

               (iv) such  holder of  Subordinated  Debt will never ask,  demand,
     accept,  receive or retain any guarantee of any  Subordinated  Debt, or any
     collateral  security for the payment of any Subordinated Debt, or any other
     form of payment  assurance as to any Subordinated  Debt, from any member or
     Subsidiary of the Company, and will not initiate or prosecute, or encourage
     any other Person to initiate or prosecute any claim or other proceeding.

          (l) Except for the payment of interest in kind in accordance  with the
terms of this Note,  if by the terms of this Note any  payment  becomes  due and
payable on account of the  principal of or interest on this Note at any time (i)
prior to the Senior Term  Repayment Date or (ii) after the Senior Term Repayment
Date, and with respect to this clause (ii) payment hereon is not permitted under
the Senior  Revolving  Credit  Agreement,  then the  holder of this Note  hereby
agrees  that,  notwithstanding  the terms of this  Note,  the date on which such
payment would  otherwise be due shall  automatically  be deferred,  extended and
postponed  until the date (the  "Extension  Date") on which all Senior Term Debt
has been paid in full and such payment is

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<PAGE>

permitted  pursuant to the terms of said Senior Revolving Credit  Agreement,  as
fully  as if by the  terms of this  Note  such  payment  was not due  until  the
Extension  Date.  The Company  shall not be in any respect in default under this
Note by reason of any such deferral, extension and postponement to the Extension
Date, and such deferral,  extension and postponement shall not otherwise subject
the  Company to any claim of default or any  enforcement  remedy.  The holder of
this Note,  in its capacity as a creditor,  and by its  acceptance of this Note,
covenants  and  agrees  that it will  not,  and will  not  encourage  any  other
individual or entity to, at any time, contest the validity, perfection, priority
or  enforceability of any Superior Debt and the promissory notes issued pursuant
thereto or any  guarantees  thereof or any of the other  Superior Loan Documents
(as deferred in Section 6 hereof) (or the liens and security  interests  granted
to the Collateral Agent (as defined in Section 6 hereof) pursuant thereto.

          (m) Any and all  payments  and  distributions  on account of this Note
that are received by any Senior  Agent or any Senior  Lender as a result of this
Section 3 shall be  distributed to the holders of the Superior Debt according to
the priorities of such Superior Debt.

     4.  Transfer  of  Note.  This  Note  may  be  transferred  subject  to  the
restrictions set forth in the Purchase  Agreement.  Upon any such transfer,  the
holder shall send written notice to the Company specifying the new holder's name
and address.  The term "Note" as used herein includes this Note and any notes or
other  evidences  of  indebtedness  issued in exchange for or in respect of this
Note or any portion hereof.

     5. Events of Default.

          (a)  Definition.  For purposes of this Note, an Event of Default shall
be deemed to have occurred if:

               (i) the Company fails to pay (A) when due, the full amount of any
     principal  payment on any Junior  Note or (B) within  five days of the date
     when due, the full amount of any interest  then accrued on any Junior Note;
     or

               (ii) the Company or any  subsidiary  makes an assignment  for the
     benefit of  creditors  or admits in writing its  inability to pay its debts
     generally  as they become  due; or an order,  judgment or decree is entered
     adjudicating  the Company or any Subsidiary  bankrupt or insolvent;  or any
     order for relief with respect to the company or any  Subsidiary  is entered
     under  the  Federal  Bankruptcy  Code;  or the  Company  or any  Subsidiary
     petitions or applies to any tribunal  for the  appointment  of a custodian,
     trustee, receiver or liquidator of the Company or any Subsidiary, or of any
     substantial  part  of the  assets  of the  Company  or any  Subsidiary,  or
     commences  any  proceeding  (other  than a  proceeding  for  the  voluntary
     liquidation and  dissolution of any Subsidiary)  relating to the Company or
     any  Subsidiary   under  any   bankruptcy,   reorganization,   arrangement,
     insolvency,  readjustment  of debt,  dissolution or liquidation  law of any
     jurisdiction;  or any such petition or  application  is filed,  or any such
     proceeding is commenced,  against the Company or any  Subsidiary and either
     (A) the Company or any such  Subsidiary  by any act  indicates its approval
     thereof,  consent  thereto or  acquiescence  therein or (B) such  petition,
     application or proceeding is not dismissed within 60 days.

                                       8
<PAGE>

          (b)  Consequences  of Events of Default.  Subject to the provisions of
Section 3 hereof,  if an Event of Default has  occurred and is  continuing,  the
holder or holders of the Junior Notes  representing  a majority of the aggregate
principal  amount of the Junior  Notes then  outstanding  may declare all or any
portion of the outstanding  principal amount of the Junior Notes due and payable
and demand immediate payment of all or any portion of the outstanding  principal
amount of the Junior  Notes owned by such holder or holders.  The Company  shall
give prompt written notice of any such demand to the other holders of the Junior
Notes,  each of which may demand immediate payment of all or any portion of such
holder's Note.

     6. Definitions.  For purposes of this Note, the following capitalized terms
have the following meaning.

     "Bank One" means Bank One,  NA, a national  banking  association,  with its
main  office  in  Chicago,   Illinois,  in  its  individual  capacity,  and  its
successors.

     "Collateral  Agent" has the meaning  assigned to such term in the  Superior
Loan Documents.

     "paid  in  full",  "paid in full in  cash",  "payment  in full" or  similar
phrases  mean with  respect to the  Superior  Debt,  the final and  indefeasible
payment  in  full  in cash of such  Superior  Debt  and the  termination  of all
commitments  of the  Senior  Lenders  (as  applicable)  pursuant  to the  Senior
Revolving Credit Agreement and Senior Term Credit Agreement, as applicable.

     "Person" means an  individual,  a  partnership,  a  corporation,  a limited
liability  company,  an  association,  a joint stock  company,  a trust, a joint
venture,  an  unincorporated  organization  and a  governmental  entity  or  any
department, agency or political subdivision thereof.

     "PIK Note" means a junior subordinated  promissory note of the Company that
is  substantially  identical to this Note except for the stated principal amount
thereof.

     "Refinancing  Lender" means any Person which  provides  refinancing  to the
Company  of all or a portion  of the  Superior  Debt  outstanding  prior to such
refinancing.

     "Reorganization  Subordinated  Securities"  means (a) any equity securities
issued in substitution of all or any portion of the  Subordinated  Debt that are
subordinated  in right of  payment to the  Superior  Debt (or any notes or other
securities  issued in  substitution of all or any portion of the Superior Debt),
and (b) any notes or other debt securities  issued in substitution of all or any
portion of the Subordinated  Debt that are subordinated to the Superior Debt (or
any notes or other  securities  issued in  substitution of all or any portion of
the Superior Debt) to the same extent that the Subordinated Debt is subordinated
to the Superior Debt pursuant to the terms of this Note.

     "Required  Lenders"  means,  collectively,  the Senior  Revolving  Required
Lenders and the Senior Term Required Lenders;  provided, that, (i) if the Senior
Revolving Debt has been paid in full,  "Required  Lenders" means the Senior Term
Required  Lenders,  and (ii) if the  Senior  Term  Debt  has been  paid in full,
"Required Lenders" means the Senior Revolving Required Lenders.

                                       9
<PAGE>

     "Senior  Agents" means,  collectively,  the Senior  Revolving Agent and the
Senior Term Agent, and each individually, a "Senior Agent".

     "Senior Lenders" means,  collectively,  the Senior Revolving  Lenders,  the
Senior Term Lenders and any Refinancing Lender.

     "Senior  Revolving  Agent"  means Bank One in its  capacity as  contractual
representative  of the Senior Revolving Lenders pursuant to the Senior Revolving
Credit  Agreement  and not in its  individual  capacity  as a  Senior  Revolving
Lender, and any successor  administrative agent appointed pursuant to the Senior
Revolving  Credit  Agreement  (including any Refinancing  Lender or successor or
replacement  administrative  agent under any  successor or new credit  agreement
entered into in connection with the refinancing,  replacement or substitution in
whole or in part of the Senior Revolving Debt).

     "Senior  Revolving Credit Agreement" means that certain Credit Agreement by
and among the  Company,  the  lenders  from  time to time a party  thereto  (the
"Senior Revolving Lenders"), and the Senior Revolving Agent as amended, modified
or supplemented  from time to time and any replacement,  successor or new credit
agreement entered into in connection with the refinancing thereof.

     "Senior  Revolving Debt" means and includes (a) all  indebtedness for loans
made or  letters  of credit  issued or other  credit  extended  under the Senior
Revolving Credit  Agreement,  (b) all other  Obligations under and as defined in
the  Senior  Revolving  Credit   Agreement,   including,   without   limitation,
liabilities,  obligations,  expenses  and fees  under any Hedge  Agreements  (as
defined in the Senior Revolving Credit  Agreement)  between or among the Company
and any Senior Revolving Lender or any affiliate thereof, together with interest
thereon,  and (c) all indebtedness of the Company,  or any of their Subsidiaries
arising in connection with any refunding or refinancing  thereof (in which event
the terms "Senior Revolving Lenders" and "Senior Revolving Agent" shall refer to
the  Senior   Revolving   Lenders   and  Senior   Revolving   Agent  under  such
refunding/refinancing  facilities), in each instance together with all interest,
fees,  costs,  taxes,  expense  reimbursements,  indemnification  and other like
amounts  arising  under the  Senior  Revolving  Credit  Agreement  and any other
instrument  evidencing or agreement  governing any such indebtedness,  including
guaranties  and all such amounts that become  payable (or that would have become
payable if  enforceable  or allowable in such case or  proceeding)  on the terms
specified  in  such  instrument  or  agreement  after  the  commencement  of any
bankruptcy, reorganization, receivership, insolvency, liquidation or dissolution
proceeding,  whether or not the claim for such amount is enforceable,  allowable
or  allowed  as a claim  in such  proceeding  and  even  if  such  claim  is not
enforceable or allowed therein.

     "Senior Revolving  Required Lenders" means Required Banks as defined in the
Senior Revolving Credit Agreement.

     "Senior  Term  Agent"  means  Bank  One  in  its  capacity  as  contractual
representative  of the Senior  Term  Lenders  pursuant to the Senior Term Credit
Agreement and not in its  individual  capacity as a Senior Term Lender,  and any
successor  administrative  agent  appointed  pursuant  to the Senior Term Credit
Agreement   (including  any  Refinancing  Lender  or  successor  or

                                       10
<PAGE>

replacement  administrative  agent under any  successor or new credit  agreement
entered into in connection with the refinancing,  replacement or substitution in
whole or in part of the Senior Term Debt).

     "Senior Term Credit  Agreement"  means that certain Senior Term Second Lien
Secured Credit Agreement by and among the Company, the lenders from time to time
a party thereto (the

     "Senior Term Lenders"),  and the Senior Term Agent as amended,  modified or
supplemented  from  time  to  time  (to  the  extent  allowed  herein)  and  any
replacement,  successor or new credit agreement  entered into in connection with
the refinancing thereof.

     "Senior  Term Debt"  means (i)  indebtedness  under the Senior  Term Credit
Agreement and the promissory notes issued pursuant thereto,  including,  without
limitation, principal, premium, interest and other liabilities payable from time
to time  and  similar  obligations,  interest  accruing  before  and  after  any
Insolvency Event at the rate provided in the documentation  with respect thereto
(irrespective of whether such principal,  premium, interest or other liabilities
are  allowed  as a claim in any such  proceeding),  premiums,  penalties,  fees,
indemnities  or expenses,  and  regardless  of whether  direct or indirect,  now
existing or hereafter arising, absolute or contingent,  secured or unsecured, or
long or short term, (ii) obligations  arising under  guarantees  executed by the
Company or any of its members or  Subsidiaries  of items described in (i) above,
and   (iii)   renewals,   extensions,   refundings,   refinancings,   deferrals,
restructurings,  amendments  and  modifications  of the items  described  in (i)
and/or (ii) above.

     "Senior  Term  Repayment  Date"  means the date that all of the Senior Term
Debt is paid in full in cash.

     "Senior Term Required  Lenders"  means  Required  Lenders as defined in the
Senior Term Credit Agreement.

     "Subordinated   Debt"  means  (i)  indebtedness  under  the  Junior  Notes,
including,   without  limitation,   principal,   premium,   interest  and  other
liabilities  payable  from  time  to time  and  similar  obligations,  premiums,
penalties,  fees,  indemnities or expenses,  and regardless of whether direct or
indirect, now existing or hereafter arising, absolute or contingent,  secured or
unsecured,  or long or short term,  (ii)  obligations  arising under  guarantees
executed by the Company or any of its  Subsidiaries  of items  described  in (i)
above,  and (iii) renewals,  extensions,  refundings,  refinancings,  deferrals,
restructurings,  amendments  and  modifications  of the items  described  in (i)
and/or (ii) above.

     "Subsidiary"  means, with respect to any Person,  any corporation,  limited
liability  company,  partnership,  association or other business entity of which
(i) if a  corporation,  a majority of the total  voting power of shares of stock
entitled  (without  regard to the occurrence of any  contingency) to vote in the
election of  directors,  managers  or  trustees  thereof is at the time owned or
controlled,  directly or indirectly,  by that Person or one or more of the other
Subsidiaries  of that  Person  or a  combination  thereof,  or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar  ownership  interest  thereof is at the time
owned or  controlled,  directly  or  indirectly,  by any  Person  or one or more
Subsidiaries of that Person or a combination  thereof.  For purposes  hereof,

                                       11
<PAGE>

a Person or Persons shall be deemed to have a majority  ownership  interest in a
limited liability company, partnership,  association or other business entity if
such  Person or  Persons  shall be  allocated  a majority  of limited  liability
company,  partnership,  association or other business  entity gains or losses or
shall be or control any  managing  director or general  partner of such  limited
liability company, partnership, association or other business entity.

     "Superior  Debt" means (i) all Senior  Revolving  Debt; and (ii) all Senior
Term Debt.

     "Superior Loan Documents" means, collectively, the "Loan Papers" as defined
in the Senior  Revolving Credit Agreement and the "Loan Documents" as defined in
the Senior Term Credit Agreement.

     7. Amendment and Waiver. Except as otherwise expressly provided herein, the
provisions of the Note may be amended and the Company may take any action herein
prohibited,  or omit to perform any act herein  required to be  performed by it,
only if the  Company  has  obtained  the  written  consent of the holders of the
Junior Notes then  outstanding  and each Senior  Agent and the Required  Lenders
with respect to any Superior Debt then outstanding.

     8. Cancellation.  After all principal and accrued interest at any time owed
on this  Note has been  paid in full,  this  Note  shall be  surrendered  to the
Company for cancellation and shall not be reissued.

     9. Remedies Cumulative.  No remedy herein conferred upon the holder of this
Note is intended to be  exclusive of any other  remedy,  and each and every such
remedy shall be cumulative  and shall be in addition to every other remedy given
hereunder  or now or  hereafter  existing  at law or in equity or by  statute or
otherwise.

     10.  Remedies not Waived.  No course of dealing between the Company and the
holder of this Note or any delay on the part of the holder  hereof in exercising
any  rights  hereunder  shall  operate as a waiver of any right of the holder of
this Note.

     11. Covenants Bind Successors and Assigns. All the covenants, stipulations,
promises and  agreements  in this Note  contained by or on behalf of the Company
shall bind its successors and assigns, whether so expressed or not.

     12.  Governing  Law.  This  Note  shall be  governed  by and  construed  in
accordance with the laws of the State of New York.

     13. Heading.  The headings of the sections and subsections of this Note are
inserted for convenience only and do not constitute a part of this Note.

     14.  Third  Party  Beneficiary.  The  Company  and the  holder of this Note
acknowledge  and agree that the Senior Agents and the Senior Lenders and each of
their successors and assigns are third party  beneficiaries of the provisions of
Section 3 of this Note, and the provisions of Section 3 of this Note shall inure
to the benefit of and be  enforceable by the Senior Agent and the Senior Lenders
and their respective successors and assigns.

                                       12

<PAGE>

     15. Acceptance and Acknowledgment. By accepting this Note and advancing the
proceeds of the  Subordinated  Debt  evidenced by this Note,  the holder  hereof
hereby agrees to, acknowledges and accepts,  each of the terms and provisions of
this Note.

                  [Remainder Of Page Intentionally Left Blank]

                                       13
<PAGE>

     IN WITNESS WHEREOF, the Company has executed and delivered this Note on the
Date of Issuance.

                               QUEST CHEROKEE, LLC

                               By:   /s/ Jerry Cash
                                     --------------------------
                               Name: Jerry D. Cash
                                     --------------------------
                               Title:Manager
                                     --------------------------Exhibit 4.3
                                                                     -----------

                                CREDIT AGREEMENT

                                      among

                              QUEST CHEROKEE, LLC,
                                  as Borrower,

           The Financial Institutions Listed on Schedule 1.1-A Hereto,
                                    as Banks,

                                       and

                                  BANK ONE, NA,
                             as Administrative Agent

                                  $200,000,000

                                   dated as of

                                December 22, 2003

                         BANC ONE CAPITAL MARKETS, INC.,
                      as Sole Lead Arranger and Bookrunner

<PAGE>

                                TABLE OF CONTENTS

                                                                        Page No.
                                                                        --------

Article I terms defined........................................................1
   Section 1.1   Definitions...................................................1
   Section 1.2   Accounting Terms and Determinations..........................28
   Section 1.3   Petroleum Terms..............................................28
   Section 1.4   Money........................................................28

Article II THE CREDIT.........................................................28
   Section 2.1   Commitments..................................................28
   Section 2.2   Method of Borrowing..........................................32
   Section 2.3   Method of Requesting Letters of Credit.......................33
   Section 2.4   Notes........................................................33
   Section 2.5   Interest Rates; Payments.....................................34
   Section 2.6   Mandatory Prepayments........................................35
   Section 2.7   Voluntary Prepayments........................................35
   Section 2.8   Voluntary Reduction of Commitments...........................35
   Section 2.9   Termination of Commitments; Final Maturity
                 of Revolving Loan............................................36
   Section 2.10  Application of Payments......................................36
   Section 2.11  Commitment Fee...............................................36
   Section 2.12  Agency and other Fees........................................36

Article III GENERAL PROVISIONS......... ......................................36
   Section 3.1   Delivery and Endorsement of Notes............................36
   Section 3.2   General Provisions as to Payments............................37

Article IV BORROWING BASE.....................................................38
   Section 4.1   Reserve Report; Proposed Borrowing Base......................38
   Section 4.2   Scheduled Redeterminations of the Borrowing Base;
                 Procedures and Standards.....................................38
   Section 4.3   Special Redeterminations.....................................39
   Section 4.4   Devon Redeterminations.......................................39
   Section 4.5   Title Review Adjustment......................................40
   Section 4.6   Borrowing Base Deficiency....................................40
   Section 4.7   Initial Borrowing Base.......................................41

Article V COLLATERAL AND GUARANTEES...........................................41
   Section 5.1   Security.....................................................41
   Section 5.2   Guarantees...................................................42

Article VI CONDITIONS PRECEDENT...............................................42
   Section 6.1   Conditions to Initial Borrowing and Participation
                 in Letter of Credit Exposure.................................42
   Section 6.2   Conditions to Each Borrowing and each Letter of Credit.......47
   Section 6.3   Post-Closing Deliveries......................................47
   Section 6.4   Materiality of Conditions....................................47

Article VII REPRESENTATIONS AND WARRANTIES....................................48
   Section 7.1   Corporate Existence and Power................................48
   Section 7.2   Credit Party and Governmental Authorization; Contravention...48

                                       i
<PAGE>

   Section 7.3   Binding Effect...............................................48
   Section 7.4   Financial Information........................................49
   Section 7.5   Litigation...................................................49
   Section 7.6   ERISA........................................................49
   Section 7.7   Taxes and Filing of Tax Returns..............................50
   Section 7.8   Ownership of Properties Generally............................50
   Section 7.9   Mineral Interests............................................50
   Section 7.10  Licenses, Permits, Etc.......................................51
   Section 7.11  Compliance with Law..........................................51
   Section 7.12  Full Disclosure..............................................51
   Section 7.13  Organizational Structure; Nature of Business.................51
   Section 7.14  Environmental Matters........................................52
   Section 7.15  Burdensome Obligations.......................................52
   Section 7.16  Fiscal Year..................................................53
   Section 7.17  No Default...................................................53
   Section 7.18  Government Regulation........................................53
   Section 7.19  Insider......................................................53
   Section 7.20  Gas Balancing Agreements and Advance Payment Contracts.......53
   Section 7.21  Closing Documents............................................53

Article VIII AFFIRMATIVE COVENANTS...........................................53
   Section 8.1   Information..................................................54
   Section 8.2   Business of Credit Parties...................................56
   Section 8.3   Maintenance of Existence.....................................56
   Section 8.4   Title Data...................................................56
   Section 8.5   Right of Inspection..........................................56
   Section 8.6   Maintenance of Insurance.....................................57
   Section 8.7   Payment of Taxes and Claims..................................57
   Section 8.8   Compliance with Laws and Documents...........................57
   Section 8.9   Operation of Properties and Equipment........................57
   Section 8.10  Environmental Law Compliance.................................58
   Section 8.11  ERISA Reporting Requirements.................................58
   Section 8.12  Additional Documents.........................................59
   Section 8.13  Environmental Review.........................................59
   Section 8.14  Maintenance of Hedge Transactions............................59

Article IX NEGATIVE COVENANTS................................................60
   Section 9.1   Incurrence of Debt...........................................60
   Section 9.2   Restricted Payments..........................................60
   Section 9.3   Negative Pledge..............................................61
   Section 9.4   Consolidations and Mergers...................................61
   Section 9.5   Asset Dispositions...........................................61
   Section 9.6   Amendments to Organizational and Other Documents.............62
   Section 9.7   Use of  Proceeds.............................................62
   Section 9.8   Investments..................................................62
   Section 9.9   Transactions with Affiliates.................................63
   Section 9.10  ERISA........................................................63
   Section 9.11  Hedge Transactions...........................................63

                                       ii
<PAGE>

   Section 9.12  Fiscal Year..................................................63
   Section 9.13  Change in Business...........................................64
   Section 9.14  Obligations of Unrestricted Subsidiaries.....................64
   Section 9.15  Subordinate Debt.............................................64

Article X FINANCIAL COVENANTS................................................64
   Section 10.1  Current Ratio of Borrower....................................64
   Section 10.2  Consolidated Senior Debt to Consolidated EBITDA..............64
   Section 10.3  Consolidated Total Debt to Consolidated EBITDA...............64
   Section 10.4  Consolidated EBITDA to Consolidated Net Interest Expense.....65

Article XI DEFAULTS...........................................................65
   Section 11.1  Events of Default............................................65

Article XII AGENTS............................................................67
   Section 12.1  Appointment; Nature of Relationship..........................67
   Section 12.2  Powers.......................................................67
   Section 12.3  General Immunity.............................................68
   Section 12.4  No Responsibility for Loans, Recitals, etc...................68
   Section 12.5  Action on Instructions of Banks..............................68
   Section 12.6  Employment of Agents and Counsel.............................68
   Section 12.7  Reliance on Documents; Counsel...............................68
   Section 12.8  Administrative Agent's Reimbursement and Indemnification.....69
   Section 12.9  Notice of Default............................................69
   Section 12.10 Rights as a Bank.............................................69
   Section 12.11 Bank Credit Decision.........................................69
   Section 12.12 Successor Administrative Agent...............................70
   Section 12.13 Delegation to Affiliates.....................................71
   Section 12.14 Execution of Collateral Documents............................71
   Section 12.15 Collateral Releases..........................................71

Article XIII CHANGE IN CIRCUMSTANCES..........................................71
   Section 13.1  Increased Cost and Reduced Return............................71
   Section 13.2  Limitation on Type of Loans..................................73
   Section 13.3  Illegality...................................................73
   Section 13.4  Treatment of Affected Loans..................................73
   Section 13.5  Compensation.................................................74
   Section 13.6  Taxes........................................................74
   Section 13.7  Discretion of Banks as to Manner of Funding..................76

Article XIV MISCELLANEOUS.....................................................76
   Section 14.1  Notices......................................................76
   Section 14.2  No Waivers...................................................77
   Section 14.3  Expenses; Indemnification....................................77
   Section 14.4  Right of Set-off; Adjustments................................78
   Section 14.5  Amendments and Waivers.......................................78
   Section 14.6  Survival.....................................................79
   Section 14.7  Limitation on Interest.......................................79
   Section 14.8  Invalid Provisions...........................................79

<PAGE>

   Section 14.9  Waiver of Consumer Credit Laws...............................80
   Section 14.10 Assignments and Participations...............................80
   Section 14.11 TEXAS LAW....................................................83
   Section 14.12 Consent to Jurisdiction Waiver of Immunities.................83
   Section 14.13 Counterparts; Effectiveness..................................84
   Section 14.14 No Third Party Beneficiaries.................................84
   Section 14.15 COMPLETE AGREEMENT...........................................84
   Section 14.16 WAIVER OF JURY TRIAL.........................................84
   Section 14.17 USA PATRIOT ACT NOTIFICATION.................................84
   Section 14.18 Confidentiality..............................................85

                                      iii
<PAGE>

                                    EXHIBITS
                                    --------

EXHIBIT A  FORM OF FACILITY GUARANTY
EXHIBIT B  FORM OF PROMISSORY NOTE
EXHIBIT C  FORM OF EQUITYHOLDERS PLEDGE AGREEMENT
EXHIBIT D  FORM OF BORROWER PLEDGE AGREEMENT
EXHIBIT E  FORM OF SUBSIDIARY PLEDGE AGREEMENT
EXHIBIT F  FORM OF REQUEST FOR BORROWING
EXHIBIT G  FORM OF REQUEST FOR LETTER OF CREDIT
EXHIBIT H  FORM OF NOTICE OF CONTINUATION OR CONVERSION
EXHIBIT I  FORM OF CERTIFICATE OF FINANCIAL OFFICER
EXHIBIT J  FORM OF CERTIFICATE OF OWNERSHIP INTERESTS
EXHIBIT K  FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
EXHIBIT L  FORM OF CERTIFICATE OF EFFECTIVENESS
EXHIBIT M  FORM OF SUBORDINATE NOTE

                                    SCHEDULES
                                    ---------

SCHEDULE 1.1-A  FINANCIAL INSTITUTIONS
SCHEDULE 1.1-B  EXISTING LETTERS OF CREDIT
SCHEDULE 1.1-C  EXISTING HEDGE AGREEMENTS
SCHEDULE 1.1-D  DEVON CONSENT PROPERTIES
SCHEDULE 7.5    LITIGATION
SCHEDULE 7.10   LICENSES, PERMITS, ETC.
SCHEDULE 7.13   JURISDICTIONS, ETC.
SCHEDULE 7.14   ENVIRONMENTAL DISCLOSURE
SCHEDULE 9.1    EXISTING DEBT

                                       v
<PAGE>

                              LIST OF DEFINED TERMS
                              ---------------------

                                                                        Page No.
                                                                        --------
Adjusted Eurodollar Rate.......................................................1
Administrative Agent...........................................................1
Advance Payment................................................................1
Advance Payment Contract.......................................................1
Affected Bank.................................................................72
Affiliate......................................................................2
Agent..........................................................................2
Agents.........................................................................2
Agreement......................................................................2
Annualized Consolidated EBITDA.................................................2
Applicable Environmental Law...................................................2
Applicable Lending Office......................................................3
Applicable Margin..............................................................3
Approved Counterparty..........................................................3
Approved Fund..................................................................3
Approved Petroleum Engineer....................................................3
Assignment and Acceptance Agreement............................................4
Authorized Officer.............................................................4
Availability...................................................................4
Bank...........................................................................4
Bank One.......................................................................4
Banks..........................................................................4
Base Rate......................................................................4
Base Rate Borrowing............................................................4
Base Rate Loan.................................................................4
Bluestem.......................................................................4
BOCM...........................................................................4
Bookrunner.....................................................................4
Borrower.......................................................................4
Borrower Pledge Agreement......................................................4
Borrowing......................................................................4
Borrowing Base.................................................................4
Borrowing Base Deficiency......................................................5
Borrowing Base Increase Certificate............................................5
Borrowing Base Properties......................................................5
Borrowing Date.................................................................5
Certificate of Effectiveness...................................................5
Certificate of Ownership Interests.............................................5
Change of Control..............................................................5
Cherokee Partners..............................................................6
Closing Date...................................................................6
Closing Documents..............................................................6
Closing Transactions...........................................................6
Code...........................................................................7
Collateral Agent...............................................................7
Commitment.....................................................................7
Commitment Fee Percentage......................................................7
Commitment Percentage..........................................................8

                                       vi
<PAGE>

Consolidated Current Assets....................................................8
Consolidated Current Liabilities...............................................8
Consolidated EBITDA............................................................8
Consolidated Net Income........................................................9
Consolidated Net Interest Expense..............................................9
Consolidated Senior Debt.......................................................9
Consolidated Subsidiaries......................................................9
Consolidated Subsidiary........................................................9
Consolidated Total Debt........................................................9
Consolidated Total Debt to EBITDA Ratio........................................9
Continuation...................................................................9
Continue.......................................................................9
Continued......................................................................9
Contributed Properties.........................................................9
Contribution Documents.........................................................9
control........................................................................2
controlled by..................................................................2
Conversion....................................................................10
Convert.......................................................................10
Converted.....................................................................10
Credit Parties................................................................10
Credit Party..................................................................10
Current Financials............................................................10
Debt..........................................................................10
Default.......................................................................10
Default Rate..................................................................10
Devon.........................................................................11
Devon Acquisition.............................................................11
Devon Acquisition Agreement...................................................11
Devon Acquisition Agreement Assignment........................................11
Devon Acquisition Documents...................................................11
Devon Consent Properties Acquisition..........................................11
Devon Consent Property Transaction............................................11
Devon Hold Back Assignments...................................................11
Devon Holdback Agreement......................................................11
Devon Properties..............................................................11
Devon Redetermination.........................................................12
Devon Redetermination Date....................................................12
Devon Reserve Report..........................................................12
Distribution..................................................................12
Domestic Business Day.........................................................12
Domestic Lending Office.......................................................12
Environmental Complaint.......................................................12
Equity........................................................................12
Equity Investment.............................................................12
Equity Investment Documents...................................................13
Equity Purchase Agreement.....................................................13
Equityholders Pledge Agreement................................................13
ERISA.........................................................................13
ERISA Affiliate...............................................................13
Eurodollar Borrowing...........................................................4

                                      vii
<PAGE>

Eurodollar Business Day.......................................................13
Eurodollar Lending Office.....................................................13
Eurodollar Loans..............................................................13
Eurodollar Rate...............................................................13
Event of Default..............................................................65
Events of Default.........................................................13, 65
Exchange Act..................................................................14
Exhibit.......................................................................14
Existing Credit Agreements....................................................14
Existing Letters of Credit....................................................14
Existing Mortgages............................................................14
Existing Reserve Report.......................................................14
Facility Guaranty.............................................................14
Federal Funds Rate............................................................14
Financial Officer.............................................................14
Fiscal Quarter................................................................15
Fiscal Year...................................................................15
Fund..........................................................................15
GAAP..........................................................................15
Gas Balancing Agreement.......................................................15
Governmental Authority........................................................15
Guarantee.....................................................................15
Hazardous Discharge...........................................................15
Hazardous Substance...........................................................15
Hedge Agreements..............................................................15
Hedge Transaction.............................................................16
Holder........................................................................16
Holders.......................................................................16
Hydrocarbons..................................................................16
Immaterial Title Deficiencies.................................................16
Indirect Restricted Subsidiary............................................16, 27
Initial Borrowing Base........................................................16
Initial Title Required Reserve Value..........................................16
Intercreditor Agreement.......................................................16
Interest Period...............................................................16
Investment....................................................................17
Investor......................................................................17
Investors.....................................................................17
J-W Gas.......................................................................17
Laws..........................................................................17
Lending Office................................................................17
Letter of Credit Exposure.....................................................17
Letter of Credit Fee..........................................................17
Letter of Credit Fronting Fee.................................................18
Letter of Credit Issuer...................................................18, 28
Letters of Credit.............................................................18
Lien..........................................................................18
Loan Papers...................................................................18
March Operating Statement.....................................................55
Margin Regulations............................................................18
Margin Stock..................................................................18

                                      viii
<PAGE>

Material Adverse Change.......................................................18
Material Adverse Effect.......................................................18
Material Agreement............................................................18
Material Gas Imbalance........................................................19
Maximum Lawful Rate...........................................................19
measurement period............................................................60
Mineral Interests.............................................................19
Mortgages.....................................................................19
Note..........................................................................19
Notes.........................................................................19
Notice of Continuation or Conversion......................................20, 34
Obligations...................................................................20
Oil & Gas Hedge Transaction...................................................20
Operating Agreement...........................................................20
Outstanding Credit............................................................20
Participant...................................................................20
Participants..................................................................81
PBGC..........................................................................20
Permitted Contributed Property Defects........................................20
Permitted Devon Title Defects.................................................20
Permitted Encumbrances........................................................20
Permitted Investments.........................................................21
Permitted Tax Distributions...................................................22
Person........................................................................22
Plan..........................................................................22
Pledge Agreement..............................................................22
Ponderosa.....................................................................22
Prime Rate....................................................................22
Proved Mineral Interests......................................................22
Proved Nonproducing Mineral Interests.........................................22
Proved Producing Mineral Interests............................................23
Proved Undeveloped Mineral Interests..........................................23
PSI...........................................................................23
Purchasers................................................................23, 81
QES...........................................................................23
QES Management Agreement......................................................23
QES Payments..................................................................23
QRC...........................................................................23
Quarterly Date................................................................23
Quest Group...................................................................23
Quest Oil & Gas...............................................................23
RCRA..........................................................................52
Recognized Value..............................................................23
Redetermination...............................................................23
Redetermination Date..........................................................24
Register..................................................................24, 83
Regulation A..................................................................24
Regulation D..................................................................24
Regulation U..................................................................24
Request for Borrowing.........................................................24
Request for Letter of Credit..................................................24

                                       ix
<PAGE>

Required Banks................................................................24
Required Reserve Value........................................................24
Reserve Report................................................................24
Reserve Requirement...........................................................24
Restricted Payment............................................................25
Restricted Subsidiary.........................................................25
Revolving Loan................................................................25
Rolling Period................................................................25
Schedule......................................................................25
Scheduled Redetermination.....................................................25
Section.......................................................................26
Senior Term Agent.............................................................26
Senior Term Credit Agreement..................................................26
Senior Term Credit Documents..................................................26
Senior Term Debt..............................................................26
Senior Term Lender............................................................26
Sole Lead Arranger............................................................26
Special Redetermination.......................................................26
STP Cherokee..................................................................26
Subordinate Debt..............................................................26
Subordinate Debt Documents....................................................26
Subordinate Note..............................................................26
Subordinate Note Purchase Agreement...........................................27
Subsidiary....................................................................27
Subsidiary Pledge Agreement...................................................27
Tax...........................................................................27
Taxes.........................................................................27
Termination Date..............................................................27
TGGS..........................................................................27
Title Approved Properties.....................................................27
Total Commitment..............................................................27
Transferee....................................................................83
Type..........................................................................27
under common control with......................................................2
Unrestricted Subsidiary.......................................................28

                                       x
<PAGE>

                                CREDIT AGREEMENT
                                ----------------

     THIS CREDIT AGREEMENT (this "Agreement") is entered into as of the 22nd day
of December,  2003,  among QUEST  CHEROKEE,  LLC, a Delaware  limited  liability
company ("Borrower"),  BANK ONE, NA, with its main office in Chicago,  Illinois,
as Administrative Agent ("Administrative  Agent") and the financial institutions
listed on Schedule 1.1-A hereto as Banks (individually a "Bank" and collectively
"Banks").

                              W I T N E S S E T H:

     WHEREAS,  QRC (as  hereinafter  defined) and Borrower have  requested  that
Banks provide Borrower with a revolving  credit facility,  and Banks are willing
to provide such facility on the terms and subject to the conditions  hereinafter
set forth; and

     WHEREAS,  pursuant to Article XII of this Agreement,  Bank One, NA has been
appointed Administrative Agent for Banks hereunder; and

     WHEREAS,  pursuant to certain separate  agreements among Bank One, NA, Banc
One Capital  Markets,  Inc.  ("BOCM") and QRC, BOCM has been appointed Sole Lead
Arranger and Bookrunner for the credit facility provided herein.

     NOW,  THEREFORE,  in  consideration of the premises,  the  representations,
warranties,  covenants  and  agreements  contained  herein,  and other  good and
valuable   consideration,   the  receipt  and   adequacy  of  which  are  hereby
acknowledged, Borrower, Administrative Agent and Banks agree as follows:

                                    Article I
                                  TERMS DEFINED
                                  -------------

     Section 1.1  Definitions.  The  following terms,  as used herein, have  the
following meanings:

     "Adjusted  Eurodollar Rate" means, for any Eurodollar Loan for any Interest
Period  therefor,  the rate per annum  (rounded  upwards,  if necessary,  to the
nearest  1/100  of 1%)  determined  by  Administrative  Agent to be equal to the
quotient  obtained by dividing (a) the Eurodollar  Rate for such Eurodollar Loan
for  such  Interest  Period  by (b) 1 minus  the  Reserve  Requirement  for such
Eurodollar Loan for such Interest Period.

     "Administrative   Agent"   means  Bank  One,   NA,  in  its   capacity   as
Administrative  Agent for Banks hereunder or any permitted  successor thereto in
such capacity.

     "Advance  Payment  Contract"  means any  contract  whereby any Credit Party
either  (a)  receives  or  becomes  entitled  to  receive  (either  directly  or
indirectly)  any payment (an "Advance  Payment") to be applied toward payment of
the  purchase  price of  Hydrocarbons  produced or to be produced  from  Mineral
Interests  owned by any Credit Party and which Advance  Payment is, or is to be,
paid in advance of actual  delivery of such  production to or for the account of
the purchaser regardless of such production, or (b) grants an option or right of
refusal to the purchaser to take delivery of such production in lieu of payment,
and, in either of

                                       1
<PAGE>

the foregoing instances, the Advance Payment is, or is to be, applied as payment
in full for such  production when sold and delivered or is, or is to be, applied
as payment for a portion only of the purchase  price  thereof or of a percentage
or share of such  production;  provided that  inclusion of the standard "take or
pay"  provision  in any gas sales or  purchase  contract  or any  other  similar
contract  shall not, in and of itself,  constitute  such  contract as an Advance
Payment Contract for the purposes hereof.

     "Affiliate"  means, as to any Person, any Subsidiary of such Person, or any
other Person which,  directly or indirectly,  controls,  is controlled by, or is
under common  control  with,  such Person and, with respect to any Credit Party,
means,  any  director,  executive  officer,  general  partner or manager of such
Credit  Party and any Person who holds ten  percent  (10%) or more of the voting
stock, partnership interests,  membership interests or other ownership interests
of such Credit Party. For the purposes of this definition, "control" (including,
with correlative  meanings,  the terms "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession,  directly
or  indirectly,  of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
membership interests or partnership interests, or by contract or otherwise.

     "Agent" means Administrative  Agent, Sole Lead Arranger,  Bookrunner or any
other  agent  appointed   hereunder  from  time  to  time,  and  "Agents"  means
Administrative  Agent,  Sole  Lead  Arranger,  Bookrunner  and any  other  agent
appointed hereunder from time to time, collectively.

     "Agreement"  means  this  Credit  Agreement  as the same may  hereafter  be
modified, amended, supplemented or restated from time to time.

     "Annualized  Consolidated  EBITDA" means,  for purposes of calculating  the
financial  ratios set forth in Section  10.2,  Section 10.3 and Section 10.4 for
each Rolling Period ending on or prior to November 30, 2004,  Borrower's  actual
Consolidated  EBITDA for such Rolling Period multiplied by the factor determined
for such Rolling Period in accordance with the table below:

                 Rolling Period Ending          Factor

                 May 31, 2004                    2.4
                 August 31, 2004                 1.5
                 November 30, 2004               1.09

     "Applicable  Environmental  Law"  means any  federal,  state or local  law,
common law, ordinance,  regulation or policy, as well as order, decree,  permit,
judgment or injunction issued,  promulgated,  approved,  or entered  thereunder,
relating  to  the  environment,  health  and  safety,  or  Hazardous  Substances
(including, without limitation, the use, handling,  transportation,  production,
disposal,  discharge  or  storage  thereof)  or to  industrial  hygiene  or  the
environmental  conditions on, under, or about any real property owned, leased or
operated at any time by any Credit Party or any real property  owned,  leased or
operated by any other party including,  without limitation,  soil,  groundwater,
and indoor and ambient air conditions.

                                       2

<PAGE>

     "Applicable Lending Office" means, for each Bank and for each Type of Loan,
the "Lending  Office" of such Bank (or of an affiliate of such Bank)  designated
for such Type of Loan on the signature pages hereof or such other office of such
Bank (or an  affiliate  of such Bank) as such Bank may from time to time specify
to  Administrative  Agent and Borrower by written notice in accordance  with the
terms  hereof  as the  office  by which  Loans  of such  Type are to be made and
maintained.

     "Applicable Margin" means, as applicable:

     (a) on any date prior to the  repayment in full of the Senior Term Debt and
the termination of the Senior Term Credit  Agreement,  with respect to each Type
of Loan, an amount determined by reference to the ratio of Outstanding Credit to
the Borrowing Base on such date in accordance with the table below:

     Ratio of Outstanding              Applicable              Applicable
        Credit to                     Margin for              Margin for
       Borrowing Base               Eurodollar Loans        Base Rate Loans

           > .90 to 1                     3.500%                2.250%
           -

      > .75 to 1 and < .90 to 1           3.250%                2.000%
      -

      > .50 to 1 and < .75 to 1          3.000%                 1.750%
      -

           < .50 to 1                    2.750%                 1.500%

     (b) on any date after the repayment in full of the Senior Term Debt and the
termination  of the Senior Term Credit  Agreement,  with respect to each Type of
Loan, an amount  determined by reference to the ratio of  Outstanding  Credit to
the Borrowing Base on such date in accordance with the table below:

     Ratio of Outstanding              Applicable              Applicable
        Credit to                     Margin for              Margin for
       Borrowing Base               Eurodollar Loans        Base Rate Loans

           > .90 to 1                     2.500%                1.250%
           -

      > .75 to 1 and < .90 to 1           2.250%                1.000%
      -

      > .50 to 1 and < .75 to 1           2.000%                0.750%
      -

           < .50 to 1                     1.750%                0.500%

     "Approved  Counterparty"  means, at any time and from time to time, (i) any
Person engaged in the business of writing hedges for commodity, interest rate or
currency risk that is acceptable  to  Administrative  Agent and has, at the time
Borrower enters into a Hedge Agreement with such Person,  a credit rating of BBB
or better from Standard & Poor's Corporation, and (ii) Administrative Agent, any
Bank, or any Affiliate of Administrative Agent or any Bank.

     "Approved  Fund"  means any Fund that is  administered  or managed by (a) a
Bank, (b) an Affiliate of a Bank, or (c) an entity that administers or manages a
Bank.

     "Approved  Petroleum  Engineer"  means any  reputable  firm of  independent
petroleum   engineers   as  shall  be  selected  by  Borrower  and  approved  by
Administrative Agent, such approval not to be unreasonably withheld.

                                       3
<PAGE>

     "Assignment  and  Acceptance  Agreement" has the meaning given such term in
Section 14.10(c)(i).

     "Authorized  Officer" means, as to any Person, its Chief Executive Officer,
its President, its Chief Financial Officer, its Chief Accounting Officer, any of
its Directors, any of its Managers (in the case of a limited liability company),
any of its Vice Presidents, its Treasurer or its corporate Secretary.

     "Availability"  means,  as of any date,  the remainder of (a) the Borrowing
Base in effect on such date, minus (b) the Outstanding Credit on such date.

     "Bank" means any financial  institution  reflected on Schedule 1.1-A hereto
as having a Commitment and its successors and permitted  assignees,  and "Banks"
means all Banks.

     "Bank One" means Bank One,  NA, a national  banking  association,  with its
main office in Chicago, Illinois, in its capacity as a Bank.

     "Base Rate"  means,  for any day, the rate per annum equal to the higher of
(a) the Federal  Funds Rate for such day plus  one-half of one percent (.5%) and
(b) the Prime Rate for such day.  Any change in the Base Rate due to a change in
the Prime Rate or the Federal  Funds Rate shall be effective  automatically  and
without  notice to Borrower or any Bank on the effective  date of such change in
the Prime Rate or Federal Funds Rate.

     "Base Rate Loan" means the portion of the principal of the  Revolving  Loan
bearing interest with reference to the Base Rate.

     "Bluestem"  means  Bluestem  Pipeline,  LLC, a Delaware  limited  liability
company, which is a wholly owned Subsidiary of Borrower.

     "BOCM" means Banc One Capital Markets, Inc.

     "Bookrunner"  means BOCM, in its capacity as sole bookrunner for the credit
facility hereunder or any successor thereto.

     "Borrower" means Quest Cherokee, LLC, a Delaware limited liability company.

     "Borrower Pledge  Agreement" means a Pledge Agreement  substantially in the
form of Exhibit D attached  hereto (with  applicable  conforming  changes) to be
executed  by Borrower  pursuant to which  Borrower  shall  pledge to  Collateral
Agent,  for the  ratable  benefit of Banks and Senior Term  Lenders,  all of the
issued and  outstanding  Equity owned by Borrower of each Subsidiary of Borrower
described therein to secure the Obligations.

     "Borrowing"  means any  disbursement  to Borrower  under, or to satisfy the
obligations  of any Credit Party under,  any of the Loan Papers.  Any  Borrowing
which will  constitute  a part of the Base Rate Loan is  referred to herein as a
"Base Rate  Borrowing,"  and any  Borrowing  which will  constitute a Eurodollar
Loan, is referred to herein as a "Eurodollar Borrowing."

      "Borrowing Base" has the meaning set forth in Section 4.1 hereof.

                                       4
<PAGE>

     "Borrowing Base Deficiency"  means, as of any date, the amount,  if any, by
which the  Outstanding  Credit on such date exceeds the Borrowing Base in effect
on such date;  provided,  that,  for purposes of  determining  the existence and
amount of any Borrowing Base  Deficiency,  Letter of Credit Exposure will not be
deemed to be  outstanding  to the  extent it is  secured  by cash in the  manner
contemplated by Section 2.1(b).

     "Borrowing Base Increase  Certificate" means a certificate of an Authorized
Officer of Borrower,  in form and substance  acceptable to Administrative  Agent
and each  Bank,  notifying  Administrative  Agent and each  Bank  that  Borrower
requests an increase in the Borrowing  Base pursuant to Section 4.4(b) hereof in
connection with a Devon Consent  Property  Transaction,  and which shall,  among
other things,  certify as to (i) the description of the Devon Consent Properties
that are the  subject  of such  Devon  Consent  Property  Transaction,  (ii) the
aggregate  value of the Devon  Consent  Properties  that are the subject of such
Devon Consent Property Transaction, utilizing the allocated values for each such
applicable  Devon Consent  Property set forth on Schedule 1.1-D attached hereto,
(iii) the aggregate  amount of increases to the Borrowing Base  previously  made
pursuant to Section  4.4(b)  hereof,  and (iv) the effective  date of such Devon
Consent  Property  Transaction,  which date must be at least three (3)  Domestic
Business  Days  after  receipt  by  Administrative  Agent  and each Bank of such
Borrowing Base Increase Certificate.

     "Borrowing Base Properties" means all Mineral Interests  evaluated by Banks
for purposes of  establishing  the Borrowing Base. The Borrowing Base Properties
on the Closing Date are described in the legal descriptions of Mineral Interests
attached to the  Certificate of Ownership  Interests,  and constitute all of the
Contributed  Properties,  the Devon  Properties and the other Mineral  Interests
described in the Existing Reserve Report and the Devon Reserve Report.

     "Borrowing Date" means the Eurodollar Business Day or the Domestic Business
Day,  as the case may be,  upon which the  proceeds  of any  Borrowing  are made
available to Borrower or to satisfy any obligation of any Credit Party.

     "Certificate of Effectiveness"  means a Certificate of Effectiveness in the
form of Exhibit L attached hereto to be executed by Borrower and  Administrative
Agent upon the  satisfaction  of each of the conditions  precedent  contained in
Section 6.1 hereof.

     "Certificate  of  Ownership  Interests"  means a  Certificate  of Ownership
Interests in the form of Exhibit J attached  hereto to be executed and delivered
by an Authorized Officer of Borrower pursuant to Section 6.1(a)(xv) hereof.

     "Change of Control" means the  occurrence of any of the following,  whether
voluntary  or  involuntary,  including by operation of law: (a) any Credit Party
(other than Borrower)  shall cease to be a wholly-owned  Subsidiary of Borrower,
(b) for the period from the  Closing  Date until  December  22,  2006,  Cherokee
Partners shall cease, for any reason,  to own one-hundred  percent (100%) of the
Class A membership  interests in Borrower,  (c) the Quest Group shall cease, for
any reason,  to own  one-hundred  percent  (100%) of the issued and  outstanding
membership  or  other  Equity  interests  (other  than  the  Class A  membership
interests  described in clause (b) above) in  Borrower,  or (d) Jerry Cash shall
cease for any reason to be an executive

                                       5
<PAGE>

officer of Borrower;  provided,  that, with respect to this clause (d), it shall
not be a  "Change  of  Control"  hereunder  if  Borrower  appoints  a  successor
reasonably acceptable to Administrative Agent within sixty (60) days thereafter.

     "Cherokee  Partners" means Cherokee Energy Partners LLC, a Delaware limited
liability  company,  and a wholly owned  subsidiary of ArcLight  Energy Partners
Fund I, L.P.

     "Closing  Date" means the date upon which all of the  conditions  precedent
set forth in Section 6.1 have been  satisfied,  and Borrower and  Administrative
Agent have executed and delivered the  Certificate of  Effectiveness;  provided,
that, in no event shall such date be later than December 31, 2003.

     "Closing Documents" means the Devon Acquisition Documents,  the Senior Term
Credit  Documents,   the  Equity  Investment  Documents,  the  Subordinate  Debt
Documents,  the  Contribution  Documents,  the QES Management  Agreement and all
other material  documents,  instruments and agreements  executed or delivered by
any Credit Party in  connection  with, or otherwise  pertaining  to, the Closing
Transactions.

     "Closing Transactions" means the transactions to occur on the Closing Date,
including,  without  limitation:  (a) the  completion  of the Devon  Acquisition
pursuant to the terms of the Devon Acquisition  Documents,  (b) the consummation
and closing of the conveyance and  contribution by QRC and certain other members
of the Quest  Group to Borrower of the  Contributed  Properties  pursuant to the
terms of the Contribution Documents, (c) the completion of the Equity Investment
pursuant to the terms of the Equity Investment Documents,  (d) the execution and
delivery of the Subordinate Debt Documents,  and the closing and consummation of
the transactions  contemplated  thereby  pursuant to the terms thereof,  and the
receipt by Borrower of not less than  $51,000,000,  net of  commitment  fees and
expenses deducted from the proceeds of the issuance of the Subordinate Note, and
the  application of such proceeds to finance in part the Devon  Acquisition  and
the costs and expenses  associated  therewith and with the Subordinate Debt, (e)
the execution and delivery of the Senior Term Credit Documents,  and the closing
and consummation of the transactions  contemplated thereby pursuant to the terms
thereof,  and the  receipt by  Borrower  of not less than  $35,000,000  from the
issuance  of the senior  term  "Notes"  under and as defined in the Senior  Term
Credit  Agreement,  and the  application of such proceeds to finance in part the
Devon Acquisition and the costs and expenses  associated  therewith and with the
Senior Term Debt, (f) the  assignment  to, and  assumption  by,  Borrower of all
Hedge Agreements  entered into by Devon and members of the Quest Group with Bank
One (or its  affiliates)  prior to the date  hereof,  pursuant  to that  certain
Assignment  Agreement,  dated of even  date  herewith,  by and among  Devon,  as
Assignor  thereunder,  Borrower,  as  Assignee  thereunder,  and  Bank  One,  as
Remaining  Party  thereunder,  (g) the  repayment  in full  by  Borrower  of all
obligations,  Debt and liabilities  accrued and  outstanding  under the Existing
Credit Agreements as of the Closing Date, including, without limitation, (i) the
entire outstanding  principal balance of the loans and advances made thereunder,
(ii) all  accrued  but  unpaid  interest,  and  (iii)  all  accrued  but  unpaid
commitment and other fees,  (h) the  cancellation  of all letters of credit,  if
any,  outstanding under the Existing Credit Agreements,  (i) the termination (or
assignment and assumption of the Hedge Agreements listed and described on Part A
of  Schedule  1.1-C  hereof,  pursuant  to an  agreement  in form and  substance
satisfactory to Bank One), of all Hedge Agreements  entered into by QRC pursuant
to the terms of the Existing Credit

                                       6
<PAGE>

Agreements,  (j) the termination  and release of the Existing  Mortgages and all
other Liens securing the  obligations,  Debt and liabilities of any Credit Party
under  the  Existing  Credit  Agreements  (including,  without  limitation,  the
delivery of UCC-3 releases with respect to all uniform  commercial  code filings
made under or pursuant to the Existing Credit  Agreements),  and the delivery to
QRC of all original  certificates  and stock powers pledged and delivered by QRC
and the other  members of the Quest Group  pursuant to the terms of the Existing
Credit Agreements as security for QRC's obligations thereunder,  (k) the release
of all Guarantees of the  obligations,  Debt and liabilities of any Credit Party
under the Existing Credit Agreements, (l) the termination of the Existing Credit
Agreements,  and the  delivery to QRC of each  original  promissory  note issued
under the Existing Credit Agreements  marked  "Terminated and Paid in Full," (m)
the termination,  or assignment and assumption (pursuant to an agreement in form
and  substance  satisfactory  to Bank One), of the Hedge  Agreements  listed and
described on Part B of Schedule 1.1-C, (n) the cancellation (or replacement with
Letters  of  Credit  issued  hereunder)  of the  letters  of credit  listed  and
described on Part A of Schedule 1.1-B,  which letters of credit secure the Hedge
Agreements  described in clause (m)  preceding,  and (o) the payment of all fees
and expenses of  Administrative  Agent in connection with the credit  facilities
provided herein.

     "Code" means the Internal Revenue Code of 1986, as amended.

      "Collateral  Agent"  means Bank One, NA, a national  banking  association,
with its main office in Chicago,  Illinois,  in its capacity as collateral agent
under the Intercreditor  Agreement, and any successor collateral agent appointed
pursuant to the terms of such Intercreditor Agreement.

     "Commitment"  means,  with respect to any Bank, the commitment of such Bank
to lend its Commitment  Percentage of the Total Commitment to Borrower  pursuant
to Section 2.1 hereof, as such Commitment may be terminated or reduced from time
to time in accordance  with the  provisions  hereof.  On the Closing  Date,  the
amount of each Bank's  Commitment  is the amount set forth  opposite such Bank's
name on  Schedule  1.1-A  hereto;  provided,  that  after  giving  effect to any
Assignment  and Acceptance  Agreement,  the Commitment of each Bank shall be the
amount set forth in the Register maintained by Administrative  Agent pursuant to
Section 14.10(c)(iv) hereof.

     "Commitment Fee Percentage" means, as applicable:

     (a) on any date prior to the  repayment in full of the Senior Term Debt and
the termination of the Senior Term Credit Agreement,  the percentage  determined
by reference to the ratio of  Outstanding  Credit to the Borrowing  Base on such
date in accordance with the table below:

             Ratio of Outstanding Credit to         Commitment Fee
                    Borrowing Base                    Percentage

                       > .90 to 1                       0.500%
                       -

               > .75 to 1 and < .90 to 1                0.500%
               -

               > .50 to 1 and < .75 to 1                0.500%
               -

                       < .50 to 1                       0.500%

                                       7
<PAGE>

     (b) on any date after the repayment in full of the Senior Term Debt and the
termination of the Senior Term Credit  Agreement,  the percentage  determined by
reference to the ratio of Outstanding  Credit to the Borrowing Base on such date
in accordance with the table below:

             Ratio of Outstanding Credit to         Commitment Fee
                    Borrowing Base                    Percentage

                       > .90 to 1                       0.500%
                       -

               > .75 to 1 and < .90 to 1                0.500%
               -

               > .50 to 1 and < .75 to 1                0.500%
               -

                       < .50 to 1                       0.375%

     "Commitment  Percentage"  means,  with respect to each Bank, the Commitment
Percentage  for such Bank set forth on Schedule  1.1-A  hereto;  provided,  that
after giving effect to any Assignment and Acceptance  Agreement,  the Commitment
Percentage of each Bank shall be the amount set forth in the Register maintained
by Administrative Agent pursuant to Section 14.10(c)(iv) hereof.

     "Consolidated  Current  Assets"  means,  for any  Person at any  time,  the
current assets of such Person and its  Consolidated  Subsidiaries  at such time,
plus, in the case of Borrower,  the  Availability  at such time. For purposes of
this  definition,  any non-cash gains on any Hedge Agreement  resulting from the
requirements of SFAS 133 for any period of determination  shall be excluded from
the  determination  of  current  assets  of such  Person  and  its  Consolidated
Subsidiaries.

     "Consolidated  Current  Liabilities" means, for any Person at any time, the
current  liabilities of such Person and its  Consolidated  Subsidiaries  at such
time,  but, in the case of Borrower,  excluding the current  portion (if any) of
the  outstanding  principal  balance of the Revolving Loan. For purposes of this
definition, any non-cash losses or charges on any Hedge Agreement resulting from
the requirements of SFAS 133 for any period of  determination  shall be excluded
from  the   determination  of  current   liabilities  of  such  Person  and  its
Consolidated Subsidiaries.

     "Consolidated  EBITDA"  means,  for  any  Person  for  any  period  without
duplication:  (a) Consolidated Net Income of such Person for such period;  plus,
to the extent deducted in the calculation of  Consolidated  Net Income,  (b) the
sum of (i) income or  franchise  Taxes paid or accrued;  (ii)  Consolidated  Net
Interest   Expense  and  interest   accrued  on  the  Subordinate   Debt;  (iii)
amortization,  depletion and depreciation  expense;  (iv) any non-cash losses or
charges on any Hedge Agreement  resulting from the  requirements of SFAS 133 for
that  period;  and (v)  other  non-cash  charges  (excluding  accruals  for cash
expenses made in the ordinary course of business);  less, to the extent included
in the calculation of Consolidated Net Income,  (c) the sum of (i) the income of
any Person (other than  wholly-owned  Subsidiaries  of such Person)  unless such
income is received by such Person in a cash  distribution;  (ii) gains or losses
from sales or other dispositions of assets (other than Hydrocarbons  produced in
the normal course of business);  (iii) any non-cash gains on any Hedge Agreement
resulting  from  the  requirements  of  SFAS  133  for  that  period;  and  (iv)
extraordinary or non-recurring gains or non-recurring losses.

                                       8
<PAGE>

Notwithstanding  anything to the contrary  contained herein, all calculations of
Consolidated  EBITDA shall be for any applicable period of determination  during
which Borrower has  consummated  an  acquisition  or disposition  (to the extent
permitted hereunder) of properties or assets, calculated and determined on a pro
forma  basis  (such   calculation   to  be  acceptable   to,  and  approved  by,
Administrative  Agent) as if such  acquisition or disposition was consummated on
the first day of such applicable period.

     "Consolidated  Net Income"  means,  for any Person for any period,  the net
income  (or loss) of such  Person  and its  Consolidated  Subsidiaries  for such
period.

     "Consolidated  Net Interest  Expense" means, for any Person for any period,
the remainder of the following for such Person and its Consolidated Subsidiaries
for such period: (a) interest expense, minus (b) interest income.

     "Consolidated  Senior Debt" means, for any Person for any period,  all Debt
of such Person and its  Consolidated  Subsidiaries  determined on a consolidated
basis for such  period,  other than the (i) Senior Term Debt,  (ii)  Subordinate
Debt,  and (iii) Debt existing on the Closing Date and described on Schedule 9.1
attached hereto (but not any increases in the amount of such Debt).

     "Consolidated  Subsidiary" or  "Consolidated  Subsidiaries"  means, for any
Person,  any  Subsidiary  or  other  entity  the  accounts  of  which  would  be
consolidated with those of such Person in its consolidated financial statements.

     "Consolidated Total Debt" means, for any Person for any period, all Debt of
such Person and its Consolidated Subsidiaries determined on a consolidated basis
for such period, excluding Subordinate Debt.

     "Consolidated Total Debt to EBITDA Ratio" means and refers to the financial
ratio described and set forth in Section 10.3 hereof.

      "Continue," "Continuation" and "Continued" shall refer to the continuation
pursuant to Section 2.5 hereof and/or  Article XIII hereof of a Eurodollar  Loan
from one Interest Period to the next Interest Period.

     "Contributed  Properties" means,  collectively,  all oil and gas properties
and related assets  contributed  and conveyed to Borrower by certain  members of
the Quest Group on or prior to the Closing Date, which properties and assets are
described on Annex I of Exhibit A to the Certificate of Ownership Interests.

     "Contribution  Agreement"  means  that  certain  Contribution,  Conveyance,
Assignment and Assumption  Agreement,  dated of even date herewith, by and among
Borrower, Bluestem and each member of the Quest Group (other than QRC).

     "Contribution  Documents" means,  collectively,  the Contribution Agreement
and such other agreements,  assignments,  deeds,  conveyances,  certificates and
other  documents  and  instruments,   in  form  and  substance  satisfactory  to
Administrative  Agent,  executed and/or  delivered by, between and among certain
members of the Quest Group, Borrower, and Bluestem

                                       9
<PAGE>

pursuant to which certain  members of the Quest Group  contribute  and convey to
Borrower the Contributed Properties.

     "Convert,"  "Conversion"  and  "Converted"  shall  refer  to  a  conversion
pursuant  to Section 2.5 and/or  Article  XIII hereof of all or a portion of one
Type of Revolving Loan into another Type of Revolving Loan.

     "Credit  Parties"  means,   collectively,   Borrower  and  each  Restricted
Subsidiary, and "Credit Party" means any one of the foregoing.

     "Current  Financials"  means (a) the annual  audited  consolidated  balance
sheet of QRC and the related  consolidated  statements  of  operations  and cash
flows for the Fiscal Year ended May 31, 2003,  and (b) the  quarterly  unaudited
consolidated  balance sheet of QRC for the Fiscal Quarter ended August 31, 2003,
and the related unaudited  consolidated  statements of operations and cash flows
for the portion of QRC's Fiscal Year ended August 31, 2003.

     "Debt"  means,  for any Person at any time,  without  duplication,  (a) all
obligations  of such Person for  borrowed  money,  (b) all  obligations  of such
Person evidenced by bonds, debentures,  notes or other similar instruments,  (c)
all other  indebtedness  (including  capitalized lease  obligations,  other than
usual and customary oil and gas leases) of such Person on which interest charges
are  customarily  paid or accrued  other than accounts  payable  incurred in the
ordinary  course of business and in accordance  with  customary  trade terms and
which are not more than one hundred twenty (120) days pays the invoice date, (d)
all  Guarantees  by such Person of Debt of another  Person,  (e) the unfunded or
unreimbursed  portion of all  letters of credit  issued for the  account of such
Person,  (f) any amount owed by such Person  representing the deferred  purchase
price of  property  or  services  other than  accounts  payable  incurred in the
ordinary  course of business and in accordance  with  customary  trade terms and
which are not more than one hundred twenty (120) days past the invoice date, and
(g) all  liability  of such  Person as a general  partner of a  partnership  for
obligations  of such  partnership  of the nature  described  in (a)  through (f)
preceding.

     "Default"  means  any  condition  or event  which  constitutes  an Event of
Default or which with the giving of notice,  lapse of time or both would, unless
cured or waived, become an Event of Default.

     "Default Rate" means,  in respect of any principal of the Revolving Loan or
any other amount payable by Borrower under any Loan Paper which is not paid when
due (whether at stated  maturity,  by  acceleration,  or otherwise),  a rate per
annum during the period  commencing on the due date until such amount is paid in
full equal to the sum of (i) two percent (2%), plus (ii) the Applicable  Margin,
plus (iii) the Base Rate as in effect from time to time (provided,  that if such
amount in default is principal of a Eurodollar  Borrowing  and the due date is a
day other than the last day of an Interest Period  therefor,  the "Default Rate"
for such principal  shall be, for the period from and including the due date and
to but excluding the last day of the Interest  Period  therefor,  the sum of (a)
two percent (2%), plus (b) the Applicable  Margin,  plus (c) the Eurodollar Rate
for such  Borrowing for such Interest  Period as provided in Section 2.5 hereof,
and thereafter, the rate provided for above in this definition).

                                       10
<PAGE>

     "Devon" means Devon Energy  Production  Company,  L.P., an Oklahoma limited
partnership.

     "Devon  Acquisition" means the purchase by Borrower of the Devon Properties
pursuant to the Devon Acquisition Agreement.

     "Devon  Acquisition   Agreement"  means  that  certain  Purchase  and  Sale
Agreement  dated as of December  10,  2003,  by and between  Devon and TGGS,  as
seller  thereunder,  and QRC, as buyer thereunder.  The rights of QRC under such
Purchase and Sale Agreement have been assigned to Borrower pursuant to the Devon
Acquisition Agreement Assignment.

     "Devon  Acquisition  Agreement  Assignment"  means that certain  Assignment
dated as of December 22, 2003, by and between QRC, as assignor, and Borrower, as
assignee (and  acknowledged,  and consented to, by Devon and TGGS),  pursuant to
which (a) the  rights of QRC under  the Devon  Acquisition  Agreement  have been
assigned  to  Borrower,  and (b) Devon and TGGS  consent  to the  assignment  by
Borrower to Collateral Agent of all of Borrower's rights and interests under the
Devon Acquisition Agreement.

     "Devon Acquisition  Documents" means the Devon Acquisition  Agreement,  the
Devon Acquisition Agreement Assignment, the Devon Hold Back Agreement, the Devon
Hold Back Assignments and all assignments, deeds, conveyances,  certificates and
other  documents  and  instruments  now or hereafter  executed and delivered by,
between or among  QRC,  Borrower,  Devon,  TGGS  and/or any of their  affiliates
pursuant to the Devon  Acquisition  Agreement  or in  connection  with the Devon
Acquisition.

     "Devon Consent Properties" means the Devon Properties described on Schedule
1.1-D  hereto  for which  consents  from  third  parties  required  by the Devon
Acquisition  have not been obtained.  For purposes of such unobtained  consents,
Devon and Borrower have allocated to each Devon Consent  Property the portion of
the Sale Price (as  defined in the Devon  Acquisition  Agreement)  set forth for
such property on Schedule 1.1-D hereto.

      "Devon  Consent  Property  Transaction"  means,  with respect to any Devon
Consent  Property,  the funding and payment of the  applicable  Funding  Request
Amount (as  defined in the Devon Hold Back  Agreement)  pursuant to the terms of
the Devon Hold Back Agreement.

     "Devon Hold Back Agreement" means that certain Holdback Agreement, dated as
of December 22, 2003,  executed by and between Devon and  Borrower,  pursuant to
which,  among other  things,  the parties agree that a portion of the Sale Price
(as defined in the Devon Acquisition  Agreement) shall be withheld from delivery
to Devon until such time,  if ever,  as  Borrower  consummates  a Devon  Consent
Property Transaction.

     "Devon Hold Back  Assignments"  means the  "Holdback  Assignments"  and, as
applicable,  the  "Follow-Up  Assignments,"  as each such term is defined in the
Devon Hold Back Agreement.

     "Devon  Properties" means,  collectively,  the "Properties" as such term is
defined in the Devon Acquisition Agreement.

                                       11
<PAGE>

     "Devon  Redetermination"  means any  Redetermination  of the Borrowing Base
pursuant to Section 4.4(a).  Notwithstanding  anything to the contrary contained
herein,  no Devon  Redetermination  shall be deemed or construed to be a Special
Redetermination.

     "Devon  Redetermination  Date" means any date on which  either (a) Borrower
reassigns any Borrowing Base Property (or any interest therein) to Devon or TGGS
pursuant to the terms of Section 13 of the Devon Acquisition  Agreement,  or (b)
the Sale  Price (as  defined in the Devon  Acquisition  Agreement)  is  adjusted
downward in accordance with Section 13 of the Devon Acquisition Agreement.

     "Devon Reserve Report" mean the  engineering  and economic  analysis of the
Devon  Properties  prepared  as of  September  1, 2003 by  Cawley,  Gillespie  &
Associates.

     "Distribution" by any Person, means (a) with respect to any stock issued by
such  Person or any  partnership,  joint  venture,  limited  liability  company,
membership or other Equity interest of such Person, the retirement,  redemption,
purchase, or other acquisition for value of any such stock or partnership, joint
venture, limited liability company, membership or other Equity interest, (b) the
declaration or payment of any dividend or other  distribution on or with respect
to any stock, partnership,  joint venture, limited liability company, membership
or other Equity interest of any Person, and (c) any other payment by such Person
with  respect to such  stock,  partnership,  joint  venture,  limited  liability
company, membership or other Equity interest of such Person.

     "Domestic  Business  Day" means any day except a Saturday,  Sunday or other
day on  which  national  banks  in  Chicago,  Illinois  or  Dallas,  Texas,  are
authorized by Law to close.

      "Domestic  Lending  Office" means, as to each Bank, (a) its office located
at its address  identified  on Schedule  1.1-A  hereto as its  Domestic  Lending
Office,  (b) its office located at its address identified on the Register as its
Domestic  Lending  Office,  or (c) such other office as such Bank may  hereafter
designate   as  its   Domestic   Lending   Office  by  notice  to  Borrower  and
Administrative Agent.

     "Environmental Complaint" means any complaint,  summons,  citation, notice,
directive, order, claim, litigation, investigation, proceeding, judgment, letter
or other  communication  from any federal,  state or municipal  authority or any
other party against any Credit Party  involving (a) a Hazardous  Discharge from,
onto or migrating from or to any real property owned,  leased or operated at any
time by any Credit Party, (b) a Hazardous Discharge caused, in whole or in part,
by any Credit Party or by any Person  acting on behalf of or at the  instruction
of any Credit Party, or (c) any violation of any Applicable Environmental Law by
any Credit Party.

     "Equity" means shares of capital stock or a partnership,  profits, capital,
member or other  equity  interest,  or options,  warrants or any other rights to
substitute for or otherwise acquire the capital stock or a partnership, profits,
capital, member or other equity interest of any Person.

     "Equity  Investment"  means the  contribution  to the Equity of Borrower by
Cherokee  Partners in accordance  with,  and pursuant to, the Equity  Investment
Document.

                                       12
<PAGE>

     "Equity  Investment  Documents" means the Operating  Agreement,  the Equity
Purchase Agreement and all other material documents,  instruments and agreements
executed and/or delivered by Borrower,  Cherokee  Partners or the Quest Group in
connection with, or otherwise pertaining to, the Equity Investment.

     "Equityholders  Pledge  Agreement"  means  one or  more  Pledge  Agreements
substantially  in the  form  of  Exhibit  C  attached  hereto  (with  applicable
conforming  changes) to be executed by Cherokee  Partners and each member of the
Quest Group  (other than QRC)  pursuant  to which such  Person  shall  pledge to
Collateral Agent, for the ratable benefit of Banks and Senior Term Lenders,  all
of the issued and  outstanding  Equity owned by such Person of Borrower and each
Subsidiary of such Person described therein to secure the Obligations.

     "Equity Purchase Agreement" means that certain Membership Interest Purchase
Agreement,  dated as of the date hereof,  by and among Borrower,  each member of
the Quest Group (other than Parent) and Cherokee Partners.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended.

     "ERISA  Affiliate"  means any corporation or trade or business under common
control with any Credit Party as determined under section 4001(a)(14) of ERISA.

      "Eurodollar  Business  Day"  means  any  Domestic  Business  Day on  which
commercial  banks are open for  international  business  (including  dealings in
dollar deposits) in the applicable Eurodollar interbank market.

     "Eurodollar Lending Office" means, as to each Bank, (a) its office,  branch
or affiliate  located at its address  identified on Schedule 1.1-A hereto as its
Eurodollar  Lending Office,  (b) its office,  branch or affiliate located at its
address identified on the Register as its Eurodollar Lending Office, or (c) such
other office,  branch or affiliate of such Bank as it may hereafter designate as
its Eurodollar Lending Office by notice to Borrower and Administrative Agent.

     "Eurodollar  Loans" means Revolving Loans that bear interest at rates based
upon the Adjusted Eurodollar Rate.

     "Eurodollar  Rate" means,  for any Eurodollar  Loan for any Interest Period
therefor, the applicable British Bankers' Association LIBOR rate for deposits in
Dollars as reported by any generally recognized financial information service as
of 11:00 a.m. (London time) two (2) Eurodollar  Business Days prior to the first
day of such  Interest  Period,  and  having a  maturity  equal to such  Interest
Period;  provided,  that, if no such British Bankers'  Association LIBOR rate is
available  to  Administrative  Agent,  the  applicable  Eurodollar  Rate for the
relevant  Interest Period shall instead be the rate determined by Administrative
Agent to be the rate at which Bank One or one of its  Affiliate  banks offers to
place deposits in Dollars with first-class  banks in the London interbank market
at approximately 11:00 a.m. (London time) two (2) Eurodollar Business Days prior
to the first day of such  Interest  Period,  in the  appropriate  amount of Bank
One's  relevant  Eurodollar  Loan and having a maturity  equal to such  Interest
Period.

     "Events of Default" has the meaning set forth in Section 11.1.

                                       13
<PAGE>

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Exhibit"  refers to an exhibit attached to this Agreement and incorporated
herein by reference, unless specifically provided otherwise.

     "Existing Credit Agreements" means,  collectively,  that certain (i) Credit
Agreement  dated as of  November 7, 2002,  by and among  Wells Fargo Bank,  N.A.
(successor-in-interest  to Wells  Fargo Bank  Texas,  N.A.),  as  administrative
agent, the lenders a party thereto, QRC, as borrower thereunder, and Quest Oil &
Gas,  Ponderosa and STP  Cherokee,  as  guarantors  thereunder,  and (ii) Credit
Agreement dated as of November 7, 2002, by and among Wells Fargo Energy Capital,
Inc.,  QRC,  as  borrower  thereunder,  and Quest Oil & Gas,  Ponderosa  and STP
Cherokee,  as guarantors  thereunder,  as each may have been amended or modified
prior to the date hereof.

     "Existing Letters of Credit" means the letters of credit issued by Bank One
for the account of Borrower and  outstanding  on the date hereof,  including the
letters of credit, if any, described on Part B of Schedule 1.1-B hereof.

     "Existing  Mortgages"  means  the  mortgages,   deeds  of  trust,  security
agreements,   assignments,   pledges  and  other   documents,   instruments  and
agreements, which establish Liens on certain of the members of the Quest Group's
Mineral  Interests  to  secure  QRC's  obligations  under  the  Existing  Credit
Agreements.

     "Existing Reserve Report" means an engineering and economic analysis of the
Contributed  Properties  prepared  as of July 1,  2003 by  Cawley,  Gillespie  &
Associates.

     "Facility Guaranty" means a Guaranty substantially in the form of Exhibit A
attached  hereto to be executed  by each  Restricted  Subsidiary  of Borrower in
favor of  Banks,  pursuant  to which  such  Restricted  Subsidiary  of  Borrower
guarantees payment and performance in full of the Obligations.

     "Federal  Funds  Rate"  means,  for any day,  the rate per  annum  (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve  System  arranged by Federal  funds brokers on such day, as published by
the  Federal  Reserve  Bank  of New  York  on the  Domestic  Business  Day  next
succeeding  such day;  provided that (a) if the day for which such rate is to be
determined  is not a Domestic  Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding  Domestic Business
Day as so published on the next  succeeding  Domestic  Business  Day, and (b) if
such rate is not so published on such next succeeding Domestic Business Day, the
Federal   Funds  Rate  for  any  day  shall  be  the  average  rate  charged  to
Administrative Agent on such day on such transactions received by Administrative
Agent from three Federal Funds brokers of recognized standing.

     "Financial  Officer"  of any  Person  means  its Chief  Financial  Officer;
provided,  that if no Person serves in such capacity,  "Financial Officer" shall
mean the highest ranking  executive  officer of such Person with  responsibility
for accounting, financial reporting, cash management and similar functions.

                                       14
<PAGE>

     "Fiscal  Quarter"  means the three (3) month  periods  ending on August 31,
November 30, February 28 (or 29, as applicable) and May 31 of each Fiscal Year.

     "Fiscal Year" means a twelve (12) month period ending May 31.

     "Fund" means any Person (other than a natural  person) that is (or will be)
engaged in making,  purchasing,  holding or otherwise  investing  in  commercial
loans and similar extensions of credit in the ordinary course of its business.

     "GAAP" means those generally accepted accounting principles as in effect in
the United States from time to time.

     "Gas Balancing  Agreement"  means any agreement or arrangement  whereby any
Credit Party,  or any other party having an interest in any  Hydrocarbons  to be
produced from Mineral Interests in which any Credit Party owns an interest,  has
a right to take more than its proportionate share of production therefrom.

     "Governmental  Authority"  means  any  court  or  governmental  department,
commission,  board,  bureau,  agency, or instrumentality of any nation or of any
province, state, commonwealth, nation, territory, possession, county, parish, or
municipality, whether now or hereafter constituted or existing.

     "Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly  guaranteeing any Debt or other obligation of
any other Person and,  without  limiting the  generality of the  foregoing,  any
obligation,  direct or indirect,  contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay,  or to maintain financial statement conditions, by "comfort letter"
or other  similar  undertaking  of support or otherwise) or (b) entered into for
the purpose of  assuring  in any other  manner the obligee of such Debt or other
obligation  of the payment  thereof or to protect such  obligee  against loss in
respect thereof (in whole or in part), provided, that the term "Guarantee" shall
not include  endorsements  for  collection or deposit in the ordinary  course of
business.

     "Hazardous  Discharge"  means any releasing,  spilling,  leaking,  pumping,
pouring,  emitting,  emptying,   discharging,   injecting,  escaping,  leaching,
disposing or dumping of any Hazardous  Substance  from or onto any real property
owned,  leased or operated at any time by any Credit Party or any real  property
owned, leased or operated by any other party.

     "Hazardous  Substance"  means any  pollutant,  toxic  substance,  hazardous
waste,  compound,  element or  chemical  that is defined  as  hazardous,  toxic,
noxious, dangerous or infectious pursuant to any Applicable Environmental Law or
which is otherwise regulated by any Applicable  Environmental Law or is required
to  be  investigated   and/or  remediated  by  or  pursuant  to  any  Applicable
Environmental Law.

     "Hedge  Agreements"  means,   collectively,   any  agreement,   instrument,
arrangement or schedule or supplement thereto evidencing any Hedge Transaction.

                                       15
<PAGE>

     "Hedge  Transaction" means any commodity,  interest rate, currency or other
swap,  option,  collar,  futures contract or other contract  pursuant to which a
Person  hedges  risks  related to commodity  prices,  interest  rates,  currency
exchange  rates,  securities  prices  or  financial  market  conditions.   Hedge
Transactions expressly includes Oil and Gas Hedge Transactions.

     "Holder"  means Cherokee  Partners and any other holder of the  Subordinate
Debt, and "Holders" means Cherokee Partners and all such holders, collectively.

     "Hydrocarbons"  means oil, gas,  coalbed methane gas,  casinghead gas, drip
gasolines,  natural gasoline,  condensate,  distillate, and all other liquid and
gaseous hydrocarbons  produced or to be produced in conjunction  therewith,  and
all products,  by-products  and all other  substances  derived  therefrom or the
processing thereof,  and all other minerals and substances,  including,  but not
limited to, sulphur,  lignite,  coal, uranium,  thorium, iron, geothermal steam,
water,  carbon  dioxide,  helium,  and any  and all  other  minerals,  ores,  or
substances of value, and the products and proceeds therefrom, including, without
limitation, all gas resulting from the in-situ combustion of coal or lignite.

     "Immaterial  Title  Deficiencies"  means,  with respect to  Borrowing  Base
Properties,  defects or clouds on title,  discrepancies  in reported net revenue
and  working   interest   ownership   percentages  and  other  Liens,   defects,
discrepancies  and  similar  matters  which  do  not,  individually  or  in  the
aggregate, affect Borrowing Base Properties with a Recognized Value greater than
four  percent  (4%)  of the  Recognized  Value  of all of  such  Borrowing  Base
Properties.

     "Indirect  Restricted  Subsidiary"  has the meaning  given such term in the
definition of "Subsidiary Pledge Agreement."

     "Initial   Borrowing  Base"  means  a  Borrowing  Base  in  the  amount  of
$57,000,000,  which  shall be in effect  during  the  period  commencing  on the
Closing Date and continuing  until the first  Redetermination  after the Closing
Date.

     "Initial Title Required Reserve Value" means Proved Mineral  Interests that
have a Recognized  Value of not less than fifty percent (50%) of the  Recognized
Value of all Proved Mineral Interests held by Borrower and its Subsidiaries.

     "Intercreditor   Agreement"  means  that  certain   Collateral  Agency  and
Intercreditor  Agreement,  dated of even  date  herewith,  among  Administrative
Agent, Banks, Senior Term Agent, Senior Term Lenders, Collateral Agent, Borrower
and Bluestem,  as the same may be amended,  modified,  supplemented  or restated
from time to time.

     "Interest Period" means, with respect to each Eurodollar Borrowing and each
Continuation of Eurodollar  Loans and each Conversion of all or part of the Base
Rate  Loan to  Eurodollar  Loans,  the  period  commencing  on the  date of such
Borrowing,  Continuation  or Conversion  and ending one (1), two (2),  three (3)
and, if available to all Banks, six (6) months thereafter, as Borrower may elect
in the applicable Request for Borrowing or Notice of Continuation or Conversion;
provided, that:

                                       16
<PAGE>

          (a) any Interest  Period which would  otherwise  end on a day which is
     not a  Eurodollar  Business  Day shall be extended  to the next  succeeding
     Eurodollar  Business  Day  unless  such  Eurodollar  Business  Day falls in
     another calendar month, in which case such Interest Period shall end on the
     next preceding Eurodollar Business Day;

          (b) any Interest Period which begins on the last  Eurodollar  Business
     Day of a  calendar  month  (or on a day for which  there is no  numerically
     corresponding day in the calendar month at the end of such Interest Period)
     shall, subject to clause (c) below, end on the last Eurodollar Business Day
     of a calendar month;

          (c) if any  Interest  Period  includes a date on which any  payment of
     principal of the Eurodollar  Loans which are the subject of such Borrowing,
     Continuation or Conversion is required to be made  hereunder,  but does not
     end on such date, then (i) the principal  amount of such  Eurodollar  Loans
     required to be repaid on such date shall have an Interest  Period ending on
     such date, and (ii) the remainder of each such Eurodollar  Loans shall have
     an Interest Period determined as set forth above;

          (d) no Interest Period shall extend past the Termination Date; and

          (e) during  the first  sixty (60) days  after the  Closing  Date,  all
     Interest Periods shall be one (1) month in duration.

     "Investment"  means,  with  respect  to  any  Person,  any  loan,  advance,
extension of credit,  capital  contribution to, investment in or purchase of the
stock or other securities of, or interests in, any other Person; provided, that,
"Investment"  shall not include  current  customer and trade  accounts which are
payable in accordance with customary trade terms.

     "Investor"  means each of  Cherokee  Partners  and each member of the Quest
Group (other than QRC), and "Investors"  means Cherokee Partners and each member
of the Quest Group (other than QRC), collectively.

     "J-WGas"  means  J-W Gas  Gathering,  L.L.C.,  a Kansas  limited  liability
company, which is a wholly owned Subsidiary of PSI.

     "Laws"  means  all  applicable  statutes,  laws,  ordinances,  regulations,
orders,  writs,  injunctions,  or decrees of any  state,  commonwealth,  nation,
territory,  possession,  county, township, parish,  municipality or Governmental
Authority.

     "Lending  Office" means, as to any Bank, its Domestic Lending Office or its
Eurodollar Lending Office, as the context may require.

     "Letter  of  Credit  Exposure"  of any Bank  means  such  Bank's  aggregate
participation in the unfunded portion and the funded but unreimbursed portion of
Letters of Credit  outstanding at any time, minus any cash securing such Letters
of Credit pursuant to, and in accordance with, Section 2.1(b).

     "Letter of Credit Fee" means,  with respect to any Letter of Credit  issued
hereunder,  a fee in an  amount  equal  to the  greater  of (a)  $500,  or (b) a
percentage of the stated amount of such

                                       17
<PAGE>

Letter of Credit  (calculated  on a per annum  basis based on the stated term of
such  Letter of  Credit)  equal to the  Applicable  Margin  then in  effect  for
Eurodollar  Loans;  provided,  that,  at any time while an Event of Default  has
occurred and is continuing, the percentage referenced in clause (b) hereof shall
be two percent (2%) per annum in excess of the rate otherwise payable under this
Agreement on each such Letter of Credit.

     "Letter of Credit Fronting Fee" means, with respect to any Letter of Credit
issued hereunder,  a fee equal to one eighth of one percent (.125%) per annum of
the stated amount of such Letter of Credit.

     "Letter of Credit Issuer" has the meaning set forth in Section 2.1(b).

     "Letters  of  Credit"  means  letters of credit  issued for the  account of
Borrower  pursuant to Section 2.1(b),  and shall include the Existing Letters of
Credit.

     "Lien"  means,  with  respect to any asset,  any  mortgage,  lien,  pledge,
charge,  security  interest,  financing  statement or encumbrance of any kind in
respect of such asset.  For the purposes of this  Agreement,  the Credit Parties
shall be deemed to own  subject to a Lien any asset  which is  acquired  or held
subject  to the  interest  of a vendor or  lessor  under  any  conditional  sale
agreement,  capital lease or other title  retention  agreement  relating to such
asset.

     "Loan Papers" means this Agreement, the Notes, each Facility Guaranty which
may now or  hereafter  be  executed,  each  Pledge  Agreement  which  may now or
hereafter be executed,  all  Mortgages  now or at any time  hereafter  delivered
pursuant  to  Section  5.1,   the   Intercreditor   Agreement,   and  all  other
certificates,  documents  or  instruments  delivered  in  connection  with  this
Agreement, as the foregoing may be amended from time to time.

     "March 2004 Operating Statement" has the meaning given such term in Section
8.1(j) hereof.

     "Margin Regulations" means Regulations T, U and X of the Board of Governors
of the Federal Reserve System, as in effect from time to time.

     "Margin Stock" means "margin stock" as defined in Regulation U.

     "Material Adverse Change" means any circumstance or event that has or would
reasonably be expected to have a Material Adverse Effect.

     "Material  Adverse  Effect"  means a  material  adverse  effect  on (a) the
assets, liabilities,  financial condition, results of operations or prospects of
Borrower, individually, or the Credit Parties taken as a whole, (b) the right or
ability  of any  Credit  Party to  fully,  completely  and  timely  perform  its
obligations  under the Loan Papers, or (c) the validity or enforceability of any
Loan Paper against any Credit Party which is a party  thereto,  or the rights or
remedies of Administrative Agent, Collateral Agent or Banks thereunder.

     "Material   Agreement"  means  any  material  written  or  oral  agreement,
contract,  commitment,  or  understanding to which a Person is a party, by which
such  Person is  directly or  indirectly  bound,  or to which any assets of such
Person may be subject, which is not cancelable

                                       18
<PAGE>

by such  Person  upon notice of sixty (60) days or less  without  liability  for
further payment other than nominal penalty.

     "Material  Gas  Imbalance"   means,  with  respect  to  all  Gas  Balancing
Agreements to which any Credit Party is a party or by which any Mineral Interest
owned by any Credit Party is bound,  a net gas  imbalance to any Credit Party in
excess of $500,000.

     "Maximum  Lawful Rate" means,  for each Bank,  the maximum rate (or, if the
context so permits or requires,  an amount  calculated at such rate) of interest
which,  at the time in  question  would not cause the  interest  charged  on the
portion  of the  Revolving  Loan owed to such  Bank at such  time to exceed  the
maximum amount which such Bank would be allowed to contract for,  charge,  take,
reserve,  or receive under  applicable  Laws after taking into  account,  to the
extent  required by applicable  Laws,  any and all relevant  payments or charges
under  the  Loan  Papers.  To the  extent  the Laws of the  State  of Texas  are
applicable  for purposes of  determining  the "Maximum  Lawful  Rate," such term
shall  mean the  "indicated  rate  ceiling"  from time to time in  effect  under
Chapter 303 of the Texas Finance Code, as amended,  substituted for or restated,
or, if permitted by applicable  Law and effective upon the giving of the notices
required  by such  Chapter  303 (or  effective  upon any  other  date  otherwise
specified by applicable  Law), the "quarterly  ceiling" or "annualized  ceiling"
from time to time in effect  under such Chapter  303,  whichever  Administrative
Agent (with the approval of Required  Banks) shall elect to  substitute  for the
"indicated  rate ceiling," and vice versa,  each such  substitution  to have the
effect provided in such Chapter 303, and Administrative Agent (with the approval
of Required Banks) shall be entitled to make such election from time to time and
one or more times and, without notice to Borrower,  to leave any such substitute
rate in effect for subsequent periods in accordance with such Chapter 303.

     "Mineral Interests" means rights, estates,  titles, and interests in and to
oil and gas leases and any oil and gas interests, royalty and overriding royalty
interest,  production payment, net profits interests, oil and gas fee interests,
and other rights therein,  including,  without  limitation,  any reversionary or
carried interests relating to the foregoing,  together with rights,  titles, and
interests   created  by  or  arising   under  the  terms  of  any   unitization,
communization,  and pooling  agreements  or  arrangements,  and all  properties,
rights and interests covered thereby,  whether arising by contract, by order, or
by  operation  of Laws,  which now or  hereafter  include all or any part of the
foregoing.

     "Mortgages" means all mortgages,  deeds of trust,  amendments to mortgages,
security agreements,  assignments of production,  pledge agreements,  collateral
mortgages,  collateral  chattel  mortgages,  collateral  assignments,  financing
statements and other documents, instruments and agreements evidencing, creating,
perfecting or otherwise  establishing  the Liens required by Section 5.1 hereof.
All Mortgages  shall be in form and  substance  satisfactory  to  Administrative
Agent in its sole discretion.

     "Note" means a promissory note of Borrower  payable to the order of a Bank,
in  substantially  the form of Exhibit B hereto,  in the  amount of such  Bank's
Commitment,  evidencing  the  obligation  of  Borrower to repay to such Bank its
Commitment  Percentage of the Revolving Loan,  together with all  modifications,
extensions,  renewals, and rearrangements thereof, and "Notes" means all of such
Notes collectively.

                                       19
<PAGE>

     "Notice of Continuation or Conversion" has the meaning set forth in Section
2.5(c).

     "Obligations"  means all present and future  indebtedness,  obligations and
liabilities,  and all renewals and extensions  thereof,  or any part thereof, of
each Credit Party to Administrative Agent or to any Bank or any Affiliate of any
Bank arising  pursuant to the Loan Papers or pursuant to any Hedge  Agreement or
Hedge  Transaction  entered into with any Bank or any Affiliate of any Bank, and
all interest accrued thereon and costs, expenses, and reasonable attorneys' fees
incurred in the  enforcement or collection  thereof,  regardless of whether such
indebtedness,   obligations  and  liabilities  are  direct,   indirect,   fixed,
contingent, liquidated, unliquidated, joint, several or joint and several.

     "Oil & Gas Hedge Transaction"  means a Hedge Transaction  pursuant to which
any  Person  hedges the price to be  received  by it for  future  production  of
Hydrocarbons.

     "Operating  Agreement"  means that  certain  Amended and  Restated  Limited
Liability  Company  Agreement of Quest  Cherokee,  LLC, dated as of December 22,
2003,  by and among the members of the Quest Group (other than QRC) and Cherokee
Partners,  as the same may be  amended  or  modified  (to the  extent  permitted
hereunder),  which  agreement  amended and restated in its entirety that certain
Operating  Agreement for Quest Cherokee,  LLC, dated as of December 12, 2003, by
and among the members of the Quest Group (other than QRC) and Borrower.

     "Outstanding  Credit"  means,  on any  date,  the sum of (a) the  aggregate
outstanding  Letter of Credit  Exposure  on such date  including  the  Letter of
Credit  Exposure  attributable  to  Letters of Credit to be issued on such date,
plus (b) the aggregate  outstanding  principal  balance of the Revolving Loan on
such date, including the amount of any Borrowing to be made on such date.

     "Participant" has the meaning given such term in Section 14.10(b).

     "PBGC"  means  the  Pension  Benefit  Guaranty  Corporation  or any  entity
succeeding to any or all of its functions under ERISA.

     "Permitted Contributed Property Defects" means, collectively,  "Defects" as
defined in the Operating  Agreement and with respect to which Cherokee  Partners
has  notified  Borrower in  accordance  with Section  5.10(c) of such  Operating
Agreement.

      "Permitted Devon Title Defects" means, collectively,  "Defects" as defined
in the Devon Acquisition  Agreement with respect to which Borrower has the right
to (i) reassign  Devon  Properties  (or any  interest  therein) to Devon or TGGS
pursuant to Section 13 of the Devon Acquisition Agreement, or (ii) obtain a Sale
Price (as defined in the Devon Acquisition  Agreement)  adjustment in accordance
with Section 13 of the Devon Acquisition Agreement.

     "Permitted Encumbrances" means with respect to any asset:

          (a) Liens securing the Obligations;

                                       20
<PAGE>

               (b) minor defects in title which have no material  adverse effect
          on the value or the  operation  of the subject  property,  and for the
          purposes of this Agreement, a minor defect in title shall include, but
          not be limited  to,  easements,  rights-of-way,  servitudes,  permits,
          surface  leases  and  other  similar  rights  in  respect  of  surface
          operations,  and easements for pipelines,  streets,  alleys, highways,
          telephone  lines,  power  lines,  railways  and  other  easements  and
          rights-of-way,  on, over or in respect of any of the properties of any
          Credit Party that are customarily granted in the oil and gas industry;

               (c) inchoate  statutory or operators' Liens securing  obligations
          for labor,  services,  materials  and  supplies  furnished  to Mineral
          Interests which are not delinquent  (except to the extent permitted by
          Section 8.7);

               (d) mechanic's, materialmen's,  warehouseman's,  journeyman's and
          carrier's Liens and other similar Liens arising by operation of Law in
          the ordinary  course of business which are not  delinquent  (except to
          the extent permitted by Section 8.7);

               (e)  Liens  for  Taxes  or  assessments  not  yet  due or not yet
          delinquent, or, if delinquent,  that are being contested in good faith
          in the normal course of business by appropriate  action,  as permitted
          by Section 8.7;

               (f) lease burdens  payable to third parties which are deducted in
          the  calculation  of discounted  present  value in the Reserve  Report
          including,  without limitation,  any royalty,  overriding royalty, net
          profits interest, production payment, carried interest or reversionary
          working interest;

               (g) Liens, charges and encumbrances upon Borrower's assets, other
          than Proved Mineral Interests,  which in the aggregate,  do not have a
          value in excess of $500,000;

               (h) Liens granted to  Collateral  Agent to secure the Senior Term
          Debt as provided  in, and  subject to, the terms of the  Intercreditor
          Agreement;

               (i) Liens  securing Debt incurred to finance the  acquisition  of
          the  assets  which  are the  subject  of  such  Liens  (to the  extent
          permitted by Section 9.1 hereof); and

               (j) until May 31, 2004, (i) Permitted  Devon Title  Defects,  and
          (ii) Permitted Contributed Property Defects.

     "Permitted  Investments" means (a) readily marketable direct obligations of
the United  States of America (or  investments  in mutual funds or similar funds
which invest  solely in such  obligations),  (b) fully insured time deposits and
certificates  of deposit with  maturities of one year or less of any  commercial
bank  operating  in the United  States  having  capital and surplus in excess of
$100,000,000,  (c)  commercial  paper  of a  domestic  issuer  if at the time of
purchase  such paper is rated in one of the two highest  ratings  categories  of
Standard and Poor's Corporation or Moody's Investors  Service,  (d) mutual funds
either  (i)  rated  AA or  higher  by  Standard  & Poor's  Corporation,  or (ii)
investing  only  in  assets  listed  in  clauses  (a)  through  (c)  above,  (e)
Investments  by any Credit Party in Borrower or in a Subsidiary of Borrower that
has  provided a Facility  Guaranty  and the Equity of which has been  pledged to
Administrative Agent

                                       21
<PAGE>

pursuant to a Pledge  Agreement,  (f)  Investments in Hedge  Agreements  with an
Approved Counterparty, (g) Investments with Persons not an Affiliate of a Credit
Party  that are (i)  customary  in the oil and gas  business,  (ii)  made in the
ordinary course of such Credit Party's business,  and (iii) made in the form of,
or pursuant to, operating agreements,  farm-in agreements,  farm-out agreements,
development  agreements,   unitization  agreements,  joint  bidding  agreements,
services  contracts and other similar  agreements which a reasonable and prudent
oil and gas industry owner or operator would find acceptable, (h) operating bank
accounts in the  ordinary  course of a Credit  Party's  business,  and (i) other
Investments;  provided, that, the aggregate amount of all other Investments made
pursuant to this clause (i) outstanding at any time shall not exceed  $1,000,000
(measured on a cost basis).

     "Permitted  Tax  Distributions"  means,  for  any  applicable  tax  year of
Borrower,  quarterly tax distributions,  to be designated as such, within twenty
(20) days of each quarterly  estimated payment date for individuals,  or shortly
thereafter if computations  are not complete at or near the quarterly  estimated
payments  dates,  to the Investors in an amount equal to the aggregate  federal,
state and local income tax liability  then due and owing with respect to the net
income of Borrower  for such tax year  (calculated  using the  highest  federal,
state and local effective marginal income tax rates applicable to an individual)
taking into account losses of Borrower from prior periods.

     "Person" means an  individual,  a  corporation,  a  partnership,  a limited
liability company, an association,  a trust or any other entity or organization,
including a Government Authority.

     "Plan" means an employee benefit plan within the meaning of section 3(3) of
ERISA,  and  any  other  similar  plan,  policy  or  arrangement,  including  an
employment  contract,  whether formal or informal and whether legally binding or
not,  under which any Credit  Party or an ERISA  Affiliate of a Credit Party has
any  current or future  obligation  or  liability  or under which any present or
former  employee of any Credit Party or an ERISA Affiliate of a Credit Party, or
such present or former employee's  dependents or beneficiaries,  has any current
or future  right to benefits  resulting  from the  present or former  employee's
employment  relationship with any Credit Party or an ERISA Affiliate of a Credit
Party.

     "Pledge  Agreement"  means any  Equityholders  Pledge  Agreement,  Borrower
Pledge Agreement or Subsidiary Pledge Agreement,  and "Pledge  Agreements" means
all of such Pledge Agreements.

     "Ponderosa"   means  Ponderosa  Gas  Pipeline   Company,   Inc.,  a  Kansas
corporation, which is a wholly owned Subsidiary of QRC.

     "Prime Rate" means the per annum rate of interest  established from time to
time by Administrative Agent as its prime rate, which rate may not be the lowest
rate of interest charged by Administrative Agent to its customers.

     "Proved Mineral  Interests" means,  collectively,  Proved Producing Mineral
Interests, Proved Nonproducing Mineral Interests, and Proved Undeveloped Mineral
Interests.

     "Proved  Nonproducing  Mineral Interests" means all Mineral Interests which
constitute proved developed nonproducing reserves.

                                       22
<PAGE>

     "Proved  Producing  Mineral  Interests"  means all Mineral  Interests which
constitute proved developed producing reserves.

     "Proved  Undeveloped  Mineral  Interests" means all Mineral Interests which
constitute proved undeveloped reserves.

     "PSI" means Producers Service Incorporated, a Kansas corporation,  which is
a wholly owned Subsidiary of Ponderosa.

     "Purchasers" has the meaning given such term in Section 14.10(c).

     "QES" means Quest Energy Service,  Inc., a Kansas  corporation,  which is a
wholly owned Subsidiary of QRC.

     "QES  Management  Agreement"  means that certain  Operating and  Management
Agreement  dated as of  December  22,  2003,  by and between  Borrower  and QES,
pursuant  to which QES  agreed to perform  certain  general  and  administrative
services necessary for the operation of Borrower.

     "QES  Payments"  means  payments  by  Borrower  to QES  pursuant to the QES
Management  Agreement  to pay or  reimburse  QES for general and  administrative
services provided thereunder;  provided, that, in no event will QES Payments for
any Fiscal Year exceed, in the aggregate,  the sum of (i) $3,500,000,  plus (ii)
QES's actual costs associated with field and shop employees and their first line
supervisors  that perform  services under the QES Management  Agreement,  to the
extent such costs are accounted for as lease operating expenses.

     "QRC" means Quest Resource Corporation, a Nevada corporation.

     "Quest Group" means,  collectively,  QRC, Ponderosa,  PSI, Quest Oil & Gas,
QES, STP Cherokee, J-W Gas and their respective Subsidiaries other than Borrower
and Bluestem.

     "Quest Oil & Gas" means Quest Oil & Gas Corporation,  a Kansas corporation,
which is a wholly owned Subsidiary of QRC.

     "Quarterly  Date" means the last day of each  March,  June,  September  and
December.

     "Recognized Value" means, with respect to Mineral Interests, the portion of
the  Borrowing  Base which Bank One  attributes  to such Mineral  Interests  for
purposes of the most recent  redetermination  of the Borrowing  Base pursuant to
Article IV hereof (or for purposes of determining the initial  Borrowing Base in
the event no such  redetermination  has  occurred),  based  upon the  discounted
present value of the estimated net cash flow to be realized from the  production
of Hydrocarbons from such Mineral Interests.

     "Redetermination"    means   any   Scheduled    Redetermination,    Special
Redetermination, Devon Redetermination or other redetermination of the Borrowing
Base pursuant to Section 4.4(b) or Section 4.5.  Notwithstanding anything to the
contrary  contained herein, no redetermination of the Borrowing Base pursuant to
Section  4.4(b) or Section  4.5 shall be deemed to be a Special  Redetermination
hereunder.

                                       23
<PAGE>

     "Redetermination   Date"   means  (a)  with   respect   to  any   Scheduled
Redetermination,  (i) July 1, 2004,  and (ii) each October 1 and April 1 of each
year,   commencing   October  1,  2004,   (b)  with   respect  to  any   Special
Redetermination,  the first day of the first month which is not less than twenty
(20)  Domestic  Business  Days  following  the date of a  request  for a Special
Redetermination,  (c) with  respect  to any Devon  Redetermination,  each  Devon
Redetermination  Date, (d) with respect to any  redetermination of the Borrowing
Base  pursuant to Section  4.4(b),  the date of the  consummation  of each Devon
Consent  Property  Transaction  as set forth in each  applicable  Borrowing Base
Increase  Certificate,  and  (e)  with  respect  to any  redetermination  of the
Borrowing  Base  pursuant to Section  4.5, May 31, 2004 (or as of a date shortly
thereafter to be designated  by  Administrative  Agent in a notice to Borrower).
The Closing Date shall also  constitute a  Redetermination  Date for purposes of
this Agreement.

     "Register" has the meaning given such term in Section 14.10(c)(iv).

     "Regulation A" means  Regulation A of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Part 221, as in effect from time to time.

     "Regulation D" means  Regulation D of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Part 221, as in effect from time to time.

     "Regulation U" means  Regulation U of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Part 221, as in effect from time to time.

     "Request for Borrowing" has the meaning set forth in Section 2.2(a).

     "Request for Letter of Credit" has the meaning set forth in Section 2.3(a).

     "Required  Banks" means Banks  holding at least  sixty-six  and  two-thirds
percent (66 2/3%) of the Total Commitment.

     "Required  Reserve  Value"  means  Proved  Mineral  Interests  that  have a
Recognized Value of not less than  eighty-percent  (80%) of the Recognized Value
of all Proved Mineral Interests held by Borrower and its Subsidiaries.

     "Reserve Report" means an unsuperseded  engineering analysis of the Mineral
Interests  owned by Borrower,  in form and  substance  reasonably  acceptable to
Administrative   Agent,  prepared  in  accordance  with  customary  and  prudent
practices  in  the  petroleum  engineering  industry  and  Financial  Accounting
Standards  Board  Statement 69. Each Reserve Report  required to be delivered by
August 31 of each year pursuant to Section 4.1 shall be prepared by the Approved
Petroleum  Engineer.  Each other Reserve  Report shall be prepared at Borrower's
option  by  either  (i) the  Approved  Petroleum  Engineer,  or (ii)  Borrower's
in-house staff.  Notwithstanding  the foregoing,  in connection with any Special
Redetermination  requested by Borrower,  the Reserve Report shall be in form and
scope reasonably  acceptable to Required Banks.  Until superseded,  the Existing
Reserve  Report and the Devon  Reserve  Report shall be  considered  the Reserve
Report.

     "Reserve  Requirement"  means,  at any  time,  the  maximum  rate at  which
reserves (including, without limitation, any marginal, special, supplemental, or
emergency reserves) are

                                       24
<PAGE>

required  to be  maintained  under  regulations  issued from time to time by the
Board of Governors of the Federal  Reserve  System (or any  successor) by member
banks of the Federal  Reserve  System  against in the case of Eurodollar  Loans,
"Eurocurrency  liabilities"  (as such  term is used in  Regulation  D).  Without
limiting the effect of the foregoing,  the Reserve Requirement shall reflect any
other  reserves  required to be  maintained by such member banks with respect to
(i) any category of liabilities  which  includes  deposits by reference to which
the  Adjusted  Eurodollar  Rate is to be  determined,  or (ii) any  category  of
extensions  of  credit or other  assets  which  include  Eurodollar  Loans.  The
Adjusted  Eurodollar  Rate  shall  be  adjusted  automatically  on and as of the
effective date of any change in the Reserve Requirement.

     "Restricted   Payment"  means,   with  respect  to  any  Person,   (a)  any
Distribution by such Person, (b) any capital  contribution,  loan,  advance,  or
payment by any Credit  Party to QRC,  any other member of the Quest Group or any
Unrestricted  Subsidiary,  (c) the  issuance of a Guarantee  by any Credit Party
with  respect to any Debt or other  obligation  of QRC,  any other member of the
Quest Group or any  Unrestricted  Subsidiary,  (d) the  retirement,  redemption,
defeasance,  repurchase or prepayment prior to scheduled maturity by such Person
or any  Affiliate  of  such  Person  of any  Debt  of  such  Person,  or (e) the
retirement,  redemption,  defeasance,  repurchase  or payment by Borrower or any
affiliate  of Borrower  of any part of the  principal  of, or  interest  on, the
Subordinate Debt at any time prior to the termination of all Commitments and the
payment and performance in full of the Obligations and the Senior Term Debt.

     "Restricted  Subsidiary" means, as of the date hereof,  Bluestem,  and also
means any  Subsidiary  of Borrower  which  Borrower  hereafter  designates  as a
"Restricted  Subsidiary;"  provided,  that no  Subsidiary  of Borrower will be a
Restricted  Subsidiary  unless (a) one hundred  percent (100%) of its issued and
outstanding  Equity  has been  pledged  to  Administrative  Agent to secure  the
Obligations  pursuant to a Pledge Agreement,  and (b) it has executed a Facility
Guaranty.

     "Revolving Loan" means the revolving  credit loan in an amount  outstanding
at any time not to exceed the amount of the Total Commitment then in effect less
the amount of the Letter Credit Exposure then outstanding to be made by Banks to
Borrower  in  accordance  with  Section 2.1 hereof.  The  Revolving  Loan may be
comprised of the Base Rate Loan and one or more Eurodollar Loans as Borrower may
select in a Request for Borrowing or a Notice of Continuation or Conversion.

     "Rolling  Period" means (a) for (i) the five (5) month period ending on May
31, 2004,  (ii) the eight (8) month period ending on August 31, 2004,  and (iii)
the eleven (11) month period ending on November 30, 2004, the period  commencing
on January 1, 2004 and ending on the last day of such applicable period, and (b)
thereafter, any period of four (4) consecutive Fiscal Quarters.

     "Schedule"  means a "schedule"  attached to this Agreement and incorporated
herein by reference, unless specifically indicated otherwise.

     "Scheduled Redetermination" means any Redetermination of the Borrowing Base
pursuant  to Section  4.2 and shall  include,  without  limitation,  the initial
Scheduled Redetermination to occur on July 1, 2004.

                                       25
<PAGE>

     "Section"  refers to a "section" or "subsection"  of this Agreement  unless
specifically indicated otherwise.

     "Senior Term Agent"  means Bank One, NA, in its capacity as  administrative
agent for Senior Term  Lenders  under the Senior Term  Credit  Agreement  or any
permitted successor thereto in such capacity.

     "Senior Term Credit  Agreement"  means that certain Senior Term Second Lien
Secured Credit  Agreement,  dated of even date herewith,  by and among Borrower,
Bluestem, as a subsidiary guarantor,  Senior Term Agent and Senior Term Lenders,
as modified,  amended,  supplemented or restated from time to time to the extent
permitted hereunder.

     "Senior Term Credit Documents" means, collectively,  the Senior Term Credit
Agreement,  and any other  agreements,  documents,  instruments or  certificates
executed and delivered from time to time in connection therewith.

     "Senior  Term Debt"  means the Debt  evidenced  by the Senior  Term  Credit
Documents.

     "Senior Term Lender"  means any Person from time to time that is a party to
the Senior Term Credit Agreement as a "Lender" (as therein defined).

     "Sole Lead Arranger"  means BOCM, in its capacity as sole lead arranger for
the credit facility hereunder or any successor thereto.

     "Special  Redetermination"  means any Redetermination of the Borrowing Base
pursuant to Section 4.3.

     "STP Cherokee" means STP Cherokee, Inc., an Oklahoma corporation,  which is
a wholly owned Subsidiary of QRC.

     "Subordinate  Debt"  means  any and all Debt of  Borrower  owing  under the
Subordinate Debt Documents and evidenced by the Subordinate Note,  including all
renewals and extensions  thereof to the extent permitted  hereunder,  which Debt
shall be on terms and conditions acceptable to Administrative Agent and Banks in
their sole discretion;  provided,  that, the principal amount of the Subordinate
Debt shall not, at any time, exceed $51,000,000 (plus the amount of any interest
paid in kind which may be added to the principal of such Debt).

     "Subordinate  Debt Documents"  means,  collectively,  the Subordinate  Note
Purchase  Agreement,  the Subordinate Note and all other agreements,  promissory
notes or other  instruments  evidencing the Subordinate  Debt, which Subordinate
Debt Documents  shall, in all respects,  be in form and substance  acceptable to
Administrative Agent and each Bank in their sole discretion.

     "Subordinate Note" means one or more Junior  Subordinated  Promissory Notes
in the form of Exhibit M attached  hereto to be executed by Borrower and payable
to the  order of the  Holders,  in an  original  aggregate  principal  amount of
$51,000,000.

                                       26
<PAGE>

     "Subordinate  Note  Purchase  Agreement"  means that certain Note  Purchase
Agreement, dated of even date herewith, by and among Borrower and the Holders.

     "Subsidiary"  means,  for any Person,  any  corporation  or other entity of
which  securities or other ownership  interests  having ordinary voting power to
elect a majority of the board of directors or other persons  performing  similar
functions  (including  that of a general  partner)  are at the time  directly or
indirectly  owned,  collectively,  by such Person and any  Subsidiaries  of such
Person. The term "Subsidiary" shall include Subsidiaries of Subsidiaries (and so
on).

     "Subsidiary Pledge Agreement" means a Pledge Agreement substantially in the
form of Exhibit E attached  hereto (with  applicable  conforming  changes) to be
executed by each existing and/or future Restricted Subsidiary of Borrower to the
extent  such  Restricted  Subsidiary  owns any  outstanding  Equity of any other
Restricted  Subsidiary of Borrower (for purposes of this  definition and Section
5.1(d) hereof, such Subsidiary is referred to herein and therein as an "Indirect
Restricted  Subsidiary"),  pursuant to which such  Restricted  Subsidiary  shall
pledge to  Collateral  Agent,  for the ratable  benefit of Banks and Senior Term
Lenders,  all of the  issued and  outstanding  Equity  owned by such  Restricted
Subsidiary of each Indirect  Restricted  Subsidiary  described therein to secure
the Obligations.

     "Taxes"  means  all  taxes,  assessments,  filing  or other  fees,  levies,
imposts,  duties,  deductions,  withholdings,  stamp taxes,  capital transaction
taxes,  foreign exchange taxes or other charges,  or other charges of any nature
whatsoever,  from time to time or at any time imposed by Law or any Governmental
Authority. "Tax" means any one of the foregoing.

     "Termination Date" means December 22, 2006.

     "TGGS" means Tall Grass Gas Services,  LLC, an Oklahoma  limited  liability
company.

     "Title  Approved  Properties"  means such of the Borrowing Base  Properties
with respect to which  Administrative  Agent and its counsel shall have received
either (i) title opinions issued by a firm or firms acceptable to Administrative
Agent,  in form and  substance  satisfactory  to  Administrative  Agent  and its
counsel, or (ii) other evidence of title acceptable to Administrative  Agent and
its counsel,  reflecting  that Borrower  owns net revenue  interests and working
interests in the Borrowing  Base  Properties  covered by such title opinions (or
such other acceptable evidence of title) which are not less than the net revenue
interests  and not greater than the working  interests for such  Borrowing  Base
Properties reflected in the Devon Reserve Report and Existing Reserve Report, as
applicable, free and clear of all Liens other than Permitted Encumbrances.

     "Total  Commitment"  means  the  Commitments  of all  Banks  in an  initial
aggregate  amount of  $200,000,000  as such amount shall be reduced from time to
time pursuant to Section 2.8 and Section 2.9.

     "Transferee" has the meaning given such term in Section 14.10(d).

     "Type" means, with reference to a Revolving Loan, the  characterization  of
such  Revolving  Loan as the Base Rate Loan or a  Eurodollar  Loan  based on the
method by which the accrual of interest on such Revolving Loan is calculated.

                                       27
<PAGE>

     "Unrestricted  Subsidiary" means, as of the date hereof, each member of the
Quest Group (other than QRC), and also means any Subsidiary of Borrower which is
not a Restricted Subsidiary.

     Section 1.2 Accounting Terms and Determinations. Unless otherwise specified
herein,  all accounting  terms used herein shall be interpreted,  all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered  hereunder shall be expressed in U.S. dollars and shall be prepared
in  accordance  with GAAP,  applied on a basis  consistent  with the most recent
audited  consolidated  financial  statements  of Borrower  and its  Consolidated
Subsidiaries  delivered to Banks except for changes  concurred in by  Borrower's
independent   certified   public   accountants   and  which  are   disclosed  to
Administrative Agent on the next date on which financial statements are required
to be delivered to Banks pursuant to Section 8.1(a) or Section 8.1(b); provided,
that,  unless Required Banks shall  otherwise  agree in writing,  no such change
shall  modify  or  affect  the  manner in which  compliance  with the  covenants
contained in Article X are  computed  such that all such  computations  shall be
conducted  utilizing  financial  information  presented  consistently with prior
periods.

     Section 1.3 Petroleum Terms. As used herein,  the terms "proved  reserves,"
"proved developed  reserves,"  "proved developed  producing  reserves,"  "proved
developed  nonproducing  reserves," and "proved  undeveloped  reserves" have the
meaning  given such terms from time to time and at the time in  question  by the
Society of Petroleum Engineers of the American Institute of Mining Engineers.

     Section 1.4 Money. Unless expressly  stipulated  otherwise,  all references
herein to "dollars,"  "money,"  "funds,"  "payments,"  "prepayments"  or similar
financial or monetary terms,  are references to currency of the United States of
America.

                                   Article II
                                   THE CREDIT
                                   ----------

     Section 2.1 Commitments.

     (a) Each Bank severally agrees,  subject to Section 2.1(c), Section 6.1 and
Section 6.2 and the other terms and conditions set forth in this  Agreement,  to
lend to  Borrower  from  time to time  prior  to the  Termination  Date  amounts
requested  by  Borrower  not  to  exceed  in  the  aggregate  at  any  one  time
outstanding,  the amount of such Bank's Commitment reduced by an amount equal to
such  Bank's  Letter  of  Credit  Exposure.  Each  Borrowing  shall be (i) in an
aggregate  principal  amount of  $1,000,000 or any larger  integral  multiple of
$100,000  (except that any Base Rate  Borrowing may be in an amount equal to the
Availability  at such time),  and (ii) made from the Banks ratably in accordance
with  their  respective  Commitment   Percentages.   Subject  to  the  foregoing
limitations and the other provisions of this Agreement, prior to the Termination
Date Borrower may borrow under this Section 2.1(a),  repay amounts  borrowed and
request new Borrowings to be made under this Section 2.1(a).

     (b) Administrative  Agent, or such Bank designated by Administrative  Agent
which  (without  obligation  to do so)  consents to the same  ("Letter of Credit
Issuer")  will,  from time to time prior to the date which is five (5)  Domestic
Business Days prior to the Termination

                                       28
<PAGE>

Date,  upon  request by  Borrower,  issue  Letters of Credit for the  account of
Borrower or any Restricted Subsidiary designated by Borrower, so long as (i) the
sum of (A) the total Letter of Credit Exposure then existing, and (B) the amount
of the requested Letter of Credit does not exceed $5,000,000,  and (ii) Borrower
would be entitled to a Borrowing  under Section 2.1(a) and Section 2.1(c) in the
amount of the  requested  Letter of  Credit.  Not less than  three (3)  Domestic
Business  Days prior to the  requested  date of  issuance  of any such Letter of
Credit, Borrower (and any Restricted Subsidiary for whose account such Letter of
Credit is being issued)  shall  execute and deliver to Letter of Credit  Issuer,
Letter of Credit Issuer's customary letter of credit application. Each Letter of
Credit  shall be in the  minimum  amount  of  $10,000  and  shall be in form and
substance  acceptable to Letter of Credit Issuer. No Letter of Credit shall have
an  expiration  date  later  than  the  earlier  of (A) one (1) year  after  the
Termination Date, or (B) one (1) year from the date of issuance (or, in the case
of any  renewal  or  extension  thereof,  one (1) year  after  such  renewal  or
extension).  Upon the date of issuance of a Letter of Credit,  and, with respect
to the Existing Letters of Credit,  on the Closing Date, Letter of Credit Issuer
shall be deemed to have sold to each  other  Bank,  and each other Bank shall be
deemed to have  unconditionally and irrevocably  purchased from Letter of Credit
Issuer, a non recourse  participation in the related Letter of Credit and Letter
of Credit Exposure equal to such Bank's Commitment  Percentage of such Letter of
Credit and Letter of Credit  Exposure.  Upon  request of any Bank,  but not less
often than quarterly,  Administrative Agent shall provide notice to each Bank by
telephone,  teletransmission or telex setting forth each Letter of Credit issued
and outstanding  pursuant to the terms hereof and specifying the beneficiary and
expiration  date of each such Letter of Credit,  each Bank's  percentage of each
such Letter of Credit and the actual dollar amount of each Bank's  participation
held by Letter of Credit Issuer thereof for such Bank's account and risk. At the
time of issuance of each Letter of Credit,  Borrower shall pay to Administrative
Agent in respect of such  Letter of Credit (1) the  applicable  Letter of Credit
Fee, and (2) the applicable Letter of Credit Fronting Fee.  Administrative Agent
shall  distribute  the Letter of Credit Fee  payable  upon the  issuance of each
Letter  of  Credit  to Banks in  accordance  with  their  respective  Commitment
Percentages,  and  Administrative  Agent shall  distribute  the Letter of Credit
Fronting Fee to Letter of Credit  Issuer for its own  account.  Any (y) material
amendment or  modification,  or (z) renewal or extension of any Letter of Credit
shall be deemed to be the  issuance  of a new Letter of Credit for  purposes  of
this Section 2.1(b).  Notwithstanding anything to the contrary contained herein,
Borrower shall pay to  Administrative  Agent in connection  with the issuance of
each Letter of Credit and/or any amendment or  modification of any nature to any
existing Letter of Credit,  Administrative  Agent's usual and customary fees for
the issuance of,  amendments or modifications  to, and processing of, Letters of
Credit.  In the event of any conflict  between the terms of the above referenced
letter of credit application and the terms of this Agreement or any of the other
Loan Papers, the terms of said Loan Papers shall be controlling.

     Immediately upon the occurrence of an Event of Default and the acceleration
of the  Obligations  hereunder,  and also on the date which is five (5) Domestic
Business  Days  prior to the  Termination  Date,  Borrower  shall  deposit  with
Administrative  Agent cash in such amounts as Administrative  Agent may request,
up to a maximum amount equal to the aggregate existing Letter of Credit Exposure
of all  Banks;  provided,  that,  in the case of any of the  Events  of  Default
specified  in  Section  11.1(g)  or  Section  11.1(h),  an  amount  equal to the
aggregate  existing  Letter of  Credit  Exposure  of all Banks  shall be due and
payable without any notice to Borrower or any other act by Administrative  Agent
or any Bank. Any amounts so deposited shall be held by

                                       29
<PAGE>

Administrative  Agent for the ratable  benefit of all Banks as security  for the
outstanding  Letter of Credit Exposure and the other  Obligations,  and Borrower
will, in connection therewith,  execute and deliver (and cause each other Credit
Party to execute and deliver)  such  security  agreements  in form and substance
satisfactory  to  Administrative  Agent which  Administrative  Agent may, in its
discretion,  require.  As drafts or demands for payment are presented  under any
Letter of Credit,  Administrative  Agent shall  apply such cash to satisfy  such
drafts or demands unless other mutually  satisfactory  arrangements  for payment
thereof have previously been made with Borrower. When all Letters of Credit have
expired  and the  Obligations  have  been  repaid  in full  (and no Bank has any
obligation  to lend or issue  Letters  of  Credit  hereunder)  or such  Event of
Default has been cured to the  satisfaction  of Required  Banks,  Administrative
Agent shall release to Borrower any remaining cash deposited  under this Section
2.1(b). Whenever Borrower is required to make deposits under this Section 2.1(b)
and fails to do so on the day such deposit is due,  Administrative  Agent or any
Bank may, without notice to Borrower,  make such deposit (whether by application
of proceeds of any  collateral  for the  Obligations,  by  transfers  from other
accounts  maintained with any Bank or otherwise)  using any funds then available
to any Bank of any Credit  Party,  any  guarantor  or any other party liable for
repayment of the Obligations.

     Notwithstanding  anything to the contrary contained herein, Borrower hereby
agrees to reimburse each Letter of Credit Issuer immediately upon demand by such
Letter of Credit Issuer, and in immediately  available funds, for any payment or
disbursement  made by such  Letter of Credit  Issuer  under any Letter of Credit
issued by it.  Payment  shall be made by Borrower with interest on the amount so
paid or disbursed by Letter of Credit Issuer from and including the date payment
is made under any Letter of Credit to but  excluding the date of payment (to the
extent paid on or prior to 12:00 noon, Chicago, Illinois time, on such date, but
including the date of such payment to the extent paid after 12:00 noon, Chicago,
Illinois  time, on such date),  at the lesser of (i) the Maximum Lawful Rate, or
(ii) the Default Rate.  The  obligations  of Borrower  under this paragraph will
continue  until  all  Letters  of  Credit  have  expired  and all  reimbursement
obligations with respect thereto have been paid in full by Borrower.

     Borrower  shall be  obligated  to  reimburse  Letter of Credit  Issuer upon
demand  for all  amounts  paid  under  Letters  of  Credit  as set  forth in the
immediately preceding paragraph hereof.  Provided no Default has occurred and is
continuing,  and  Borrower  would  otherwise  be entitled  to a Borrowing  under
Section 2.1(a),  such reimbursement may come from such a Borrowing.  If Borrower
for any reason fails to reimburse  Letter of Credit  Issuer in full upon demand,
Banks shall  reimburse  Letter of Credit Issuer in  accordance  with each Banks'
Commitment  Percentage  for amounts  due and unpaid  from  Borrower as set forth
hereinbelow;  provided,  however, that no such reimbursement made by Banks shall
discharge  Borrower's  obligations  to reimburse  Letter of Credit  Issuer.  All
reimbursement  amounts  payable  by any Bank  under this  Section  2.1(b)  shall
include interest thereon at the Federal Funds Rate, from the date of the payment
of such amounts by Letter of Credit Issuer to the date of  reimbursement by such
Bank.  No Bank  shall be liable for the  performance  or  nonperformance  of the
obligations  of  any  other  Bank  under  this  paragraph.   The   reimbursement
obligations of Banks under this paragraph  shall continue after the  Termination
Date and shall survive termination of this Agreement and the other Loan Papers.

     Borrower shall indemnify and hold  Administrative  Agent,  Letter of Credit
Issuer and each Bank, and their respective officers, directors,  representatives
and employees harmless from loss for any claim, demand or liability which may be
asserted against any or such indemnified

                                       30
<PAGE>

party in connection  with actions taken under Letters of Credit or in connection
therewith  (including  losses  resulting  from  the  negligence  of any or  such
indemnified  party), and shall pay each indemnified party for reasonable fees of
attorneys  and  legal  costs  paid or  incurred  by each  indemnified  party  in
connection  with any matter related to Letters of Credit,  except for losses and
liabilities  incurred  as a direct  result of the gross  negligence  or  willful
misconduct  of such  indemnified  party,  IT BEING THE EXPRESS  INTENTION OF THE
PARTIES THAT EACH INDEMNIFIED PARTY SHALL BE INDEMNIFIED FOR THE CONSEQUENCES OF
ITS OWN  ORDINARY  NEGLIGENCE.  If Borrower for any reason fails to indemnify or
pay such  indemnified  party as set forth herein in full,  Banks shall indemnify
and pay such  indemnified  party upon  demand,  in  accordance  with each Bank's
Commitment  Percentage of such amounts due and unpaid from  Borrower;  provided,
however,  that,  no  such  payment  made by  Banks  shall  discharge  Borrower's
obligation to indemnify or pay such  indemnified  party in  accordance  with the
terms hereof.  The provisions of this paragraph shall survive the termination of
this Agreement.

     Neither  Administrative  Agent nor any other Letter of Credit  Issuer makes
any representation or warranty,  nor assumes any responsibility  with respect to
the validity,  legality,  sufficiency or  enforceability of any letter of credit
application  executed  and  delivered  in  connection  with any Letter of Credit
issued  hereunder  or any  document  relative  thereto or to the  collectibility
thereunder.  Neither  Administrative Agent nor any other Letter of Credit Issuer
assumes any  responsibility  for the financial  condition of Borrower or for the
performance of any obligation of Borrower.  Administrative  Agent and each other
Letter of Credit  Issuer may use its  discretion  with respect to  exercising or
refraining from  exercising any rights,  or taking or refraining from taking any
action  which may be vested in it or which it may be  entitled to take or assert
with  respect  to any  Letter  of Credit  or any  letter of credit  application.
FURTHERMORE,  EXCEPT AS SET FORTH HEREIN,  NEITHER  ADMINISTRATIVE AGENT NOR ANY
OTHER  LETTER OF CREDIT  ISSUER SHALL BE UNDER ANY  LIABILITY TO ANY BANK,  WITH
RESPECT TO ANYTHING ADMINISTRATIVE AGENT OR ANY SUCH LETTER OF CREDIT ISSUER MAY
DO OR REFRAIN FROM DOING IN THE EXERCISE OF ITS JUDGMENT, THE SOLE LIABILITY AND
RESPONSIBILITY OF ADMINISTRATIVE AGENT AND SUCH LETTER OF CREDIT ISSUER BEING TO
HANDLE EACH BANK'S SHARE ON AS FAVORABLE A BASIS AS ADMINISTRATIVE AGENT OR SUCH
LETTER OF CREDIT ISSUER HANDLES ITS OWN SHARE. NEITHER  ADMINISTRATIVE AGENT NOR
ANY OTHER  LETTER OF CREDIT  ISSUER  SHALL HAVE ANY  DUTIES OR  RESPONSIBILITIES
EXCEPT THOSE EXPRESSLY SET FORTH HEREIN AND THOSE DUTIES AND  LIABILITIES  SHALL
BE SUBJECT TO THE LIMITATIONS AND QUALIFICATIONS SET FORTH HEREIN.  FURTHERMORE,
NEITHER  ADMINISTRATIVE  AGENT,  ANY LETTER OF CREDIT  ISSUER,  NOR ANY OF THEIR
DIRECTORS,  OFFICERS,  OR  EMPLOYEES  SHALL BE LIABLE  FOR ANY  ACTION  TAKEN OR
OMITTED  (WHETHER OR NOT SUCH  ACTION  TAKEN OR OMITTED IS  EXPRESSLY  SET FORTH
HEREIN)  UNDER OR IN  CONNECTION  HEREWITH  OR UNDER  ANY  OTHER  INSTRUMENT  OR
DOCUMENT  IN  CONNECTION  HEREWITH,  EXCEPT  FOR  GROSS  NEGLIGENCE  OR  WILLFUL
MISCONDUCT.  Neither  Administrative Agent nor any other Letter of Credit Issuer
shall incur any liability to any Bank, Borrower, or any Affiliate of any Bank or
Borrower, in acting upon any notice, document, order, consent,

                                       31
<PAGE>

certificate,  warrant or other instrument  reasonably believed by Administrative
Agent or such  Letter of Credit  Issuer to be  genuine  or  authentic  and to be
signed by the proper party.

     (c) No Bank will be obligated to lend to Borrower hereunder or incur Letter
of Credit  Exposure,  and Borrower shall not be entitled to borrow  hereunder or
obtain  Letters  of  Credit  hereunder,  in an  amount  which  would  cause  the
Outstanding Credit to exceed the Borrowing Base then in effect. No Bank shall be
obligated to fund  Borrowings  hereunder  and Borrower  shall not be entitled to
Borrowings  hereunder  during the  existence  of a  Borrowing  Base  Deficiency.
Nothing in this Section 2.1(c) shall be deemed to limit any Bank's obligation to
reimburse  any Letter of Credit  Issuer  with  respect to its  participation  in
Letters of Credit as a result of the drawing under any Letter of Credit pursuant
to Section 2.1(b).

     Section 2.2 Method of Borrowing.

     (a) In order to request any  Borrowing  under Section 2.1,  Borrower  shall
hand deliver, telex or telecopy to Administrative Agent a duly completed Request
for Borrowing (herein so called) prior to 11:00 a.m.  (Chicago,  Illinois time),
(i) on the Borrowing Date specified for a proposed Base Rate Borrowing, and (ii)
at least  three (3)  Eurodollar  Business  Days before the  Borrowing  Date of a
proposed Eurodollar  Borrowing (which, in respect of the initial Borrowing,  may
be given at least three (3) Eurodollar Business Days prior to the Closing Date).
Each such Request for Borrowing shall be  substantially in the form of Exhibit F
attached hereto, and shall specify:

          (A) the Borrowing  Date of such  Borrowing,  which shall be a Domestic
     Business Day in the case of a Base Rate Borrowing or a Eurodollar  Business
     Day in the case of a Eurodollar Borrowing;

          (B) the aggregate amount of such Borrowing;

          (C)  whether  such  Borrowing  is to be a  Base  Rate  Borrowing  or a
     Eurodollar Borrowing; and

          (D) in  the  case  of a  Eurodollar  Borrowing,  the  duration  of the
     Interest  Period  applicable  thereto,  subject  to the  provisions  of the
     definition of Interest Period.

     (b) Upon  receipt of a Request for  Borrowing,  Administrative  Agent shall
promptly  notify  each  Bank  of the  contents  thereof  and the  amount  of the
Borrowing  to be loaned by such Bank  pursuant  thereto,  and such  Request  for
Borrowing shall not thereafter be revocable by Borrower.

     (c) Not later than 12:00 noon (Chicago,  Illinois time) on the date of each
Borrowing,  each Bank shall make  available  its  Commitment  Percentage of such
Borrowing, in Federal or other funds immediately available in Chicago,  Illinois
to  Administrative  Agent at its  address set forth on  Schedule  1.1-A  hereto.
Unless  Administrative  Agent determines that any applicable condition specified
in Section 6.2 has not been satisfied,  Administrative Agent will make the funds
so received from Banks available to Borrower at Administrative Agent's aforesaid
address.

                                       32
<PAGE>

     (d) Unless Borrower or a Bank, as the case may be, notifies  Administrative
Agent  prior  to  the  date  on  which  it  is  scheduled  to  make  payment  to
Administrative  Agent of (i) in the case of a Bank,  the proceeds of a Revolving
Loan or (ii) in the case of Borrower,  a payment of principal,  interest or fees
to  Administrative  Agent for the  account of Banks,  that it does not intend to
make such  payment,  Administrative  Agent may assume that such payment has been
made.  Administrative  Agent may, but shall not be obligated to, make the amount
of such  payment  available  to the  intended  recipient  in reliance  upon such
assumption.  If such Bank or Borrower,  as the case may be, has not in fact made
such payment to  Administrative  Agent,  the recipient of such payment shall, on
demand by Administrative Agent, repay to Administrative Agent the amount so made
available  together  with  interest  thereon  in  respect of each day during the
period   commencing   on  the  date  such  amount  was  so  made   available  by
Administrative Agent until the date Administrative Agent recovers such amount at
a rate per annum  equal to (x) in the case of  payment  by a Bank,  the  Federal
Funds  Rate for such day for the  first  three  (3) days  and,  thereafter,  the
interest rate  applicable to the relevant  Revolving  Loan or (y) in the case of
payment by Borrower,  the interest  rate  applicable  to the relevant  Revolving
Loan.

     Section 2.3 Method of Requesting Letters of Credit.

     (a) In order to request any Letter of Credit hereunder, Borrower shall hand
deliver,  telex or telecopy to Administrative Agent a duly completed Request for
Letter of Credit (herein so called) prior to 12:00 noon (Chicago, Illinois time)
at least three (3) Domestic Business Days before the date specified for issuance
of  such  Letter  of  Credit.  Each  Request  for  Letter  of  Credit  shall  be
substantially in the form of Exhibit G attached hereto,  shall be accompanied by
the applicable  Letter of Credit  Issuer's duly completed and executed letter of
credit application and agreement and shall specify:

          (i) the requested date for issuance of such Letter of Credit;

          (ii) the terms of such requested Letter of Credit,  including the name
     and address of the beneficiary,  the stated amount, the expiration date and
     the  conditions  under which  drafts  under such Letter of Credit are to be
     available; and

          (iii) the purpose of such Letter of Credit.

     (b) Upon  receipt of a Request for Letter of Credit,  Administrative  Agent
shall promptly  notify each Bank and the proposed Letter of Credit Issuer of the
contents  thereof,  including the amount of the requested Letter of Credit,  and
such Request for Letter of Credit shall not thereafter be revocable by Borrower.

     (c) No later  than  12:00 noon  (Chicago,  Illinois  time) on the date each
Letter of Credit is requested,  unless  Administrative  Agent or the  applicable
Letter of Credit Issuer determines that any applicable  condition  precedent set
forth in Section 6.2 hereof has not been satisfied, Administrative Agent or such
other  applicable  Letter of Credit Issuer will issue and deliver such Letter of
Credit pursuant to the instructions of Borrower.

     Section 2.4 Notes. Each Bank's Commitment  Percentage of the Revolving Loan
shall be  evidenced  by a single  Note  payable  to the order of such Bank in an
amount equal to such Bank's Commitment.

                                       33
<PAGE>

     Section 2.5 Interest Rates; Payments.

     (a) The principal  amount of the Base Rate Loan outstanding from day to day
shall bear  interest at a rate per annum equal to the sum of (i) the  Applicable
Margin plus (ii) the  applicable  Base Rate in effect from day to day;  provided
that in no event shall the rate charged  hereunder or under the Notes exceed the
Maximum  Lawful  Rate.  Interest  on the Base Rate Loan  shall be  payable as it
accrues on the last day of each calendar month, commencing January 31, 2004, and
on the Termination Date.

     (b) The principal  amount of each Eurodollar Loan  outstanding  from day to
day shall bear interest for the Interest Period applicable thereto at a rate per
annum equal to the sum of (i) the  Applicable  Margin  plus (ii) the  applicable
Adjusted  Eurodollar  Rate;  provided  that in no event  shall the rate  charged
hereunder  or under the Notes exceed the Maximum  Lawful  Rate.  Interest on any
portion of the principal of each  Eurodollar  Loan subject to an Interest Period
of one (1),  two (2) or three (3) months shall be payable on the last day of the
Interest Period applicable thereto.  Interest on any portion of the principal of
each  Eurodollar  Loan subject to an Interest  Period of six (6) months shall be
payable on the last day of the Interest  Period  applicable  thereto and on each
Quarterly Date.

     (c) So long as no Default or Event of Default shall be continuing,  subject
to the provisions of this Section 2.5,  Borrower shall have the option of having
all or any portion of the principal  outstanding  under the Revolving  Loan be a
Base Rate Loan or one (1) or more Eurodollar Loans, which shall bear interest at
rates determined by reference to the Base Rate and the Adjusted Eurodollar Rate,
respectively.  Prior to the  termination of each Interest Period with respect to
each  Eurodollar  Loan,  Borrower  shall  give  written  notice  (a  "Notice  of
Continuation  or  Conversion")  in the form of  Exhibit  H  attached  hereto  to
Administrative  Agent  of the Type of Loan  which  shall  be  applicable  to the
principal of such Eurodollar  Loan upon the expiration of such Interest  Period.
Such Notice of Continuation or Conversion shall be given to Administrative Agent
at  least  one (1)  Domestic  Business  Day,  in the  case of a Base  Rate  Loan
selection,  and three (3) Eurodollar  Business Days, in the case of a Eurodollar
Loan  selection,  prior to the termination of the Interest Period then expiring.
If Borrower  shall specify a Eurodollar  Loan,  such Notice of  Continuation  or
Conversion  shall also  specify  the length of the  succeeding  Interest  Period
(subject to the provisions of the definition of such term) selected by Borrower.
Each Notice of  Continuation  or Conversion  shall be irrevocable  and effective
upon  notification  thereof to  Administrative  Agent. If the required Notice of
Continuation or Conversion shall not have been timely received by Administrative
Agent,  Borrower  shall be  deemed to have  elected  that the  principal  of the
Eurodollar Loan subject to the Interest Period then expiring be Converted to the
Base Rate Loan upon the expiration of such Interest  Period and Borrower will be
deemed to have given  Administrative  Agent notice of such election.  Subject to
the  limitations  set forth in this  Section  2.5(c) on the amount and number of
Eurodollar  Loans,  Borrower  shall have the right to Convert all or any part of
the Base Rate Loan to a Eurodollar Loan by giving  Administrative Agent a Notice
of  Continuation  or Conversion  of such election at least three (3)  Eurodollar
Business Days prior to the date on which Borrower elects to make such Conversion
(a  "Conversion  Date").  The  Conversion  Date selected by Borrower  shall be a
Eurodollar  Business  Day.  Notwithstanding  anything in this Section 2.5 to the
contrary,  no portion of the principal of the Base Rate Loan may be Converted to
a  Eurodollar  Loan and no  Eurodollar  Loan may be  Continued  as such when any
Default or Event of Default

                                       34
<PAGE>

has  occurred  and is  continuing,  but  each  such  Eurodollar  Loan  shall  be
automatically Converted to the Base Rate Loan on the last day of each applicable
Interest  Period.  Borrower  shall not be  permitted  to have more than five (5)
Eurodollar Loans in effect at any time.

     (d) Notwithstanding anything to the contrary set forth in Section 2.5(a) or
Section  2.5(b) above,  after the  occurrence  of an Event of Default,  interest
shall accrue on the outstanding  principal balance of the Revolving Loan, and to
the extent permitted by Law, on the accrued but unpaid interest on the Revolving
Loan from the period from and including the  occurrence of such Event of Default
to but  excluding the date the same is remedied at a rate per annum equal to the
lesser of (i) the Default Rate, and (ii) the Maximum Lawful Rate.

     (e)  Administrative  Agent shall determine each interest rate applicable to
the Revolving  Loan in accordance  with the terms hereof.  Administrative  Agent
shall  promptly  notify  Borrower and Banks by telex,  telecopy or cable of each
rate  of  interest  so  determined,  and  its  determination  thereof  shall  be
conclusive in the absence of manifest error.

     (f)  Notwithstanding  the  foregoing,  if at any time the rate of  interest
calculated with reference to the Base Rate or the Eurodollar Rate hereunder (the
"contract  rate")  is  limited  to  the  Maximum  Lawful  Rate,  any  subsequent
reductions  in the  contract  rate shall not reduce the rate of  interest on the
Revolving  Loan below the Maximum Lawful Rate until the total amount of interest
accrued  equals the amount of interest  which would have accrued if the contract
rate had at all times been in effect.  In the event that at maturity  (stated or
by acceleration),  or at final payment of any Note, the total amount of interest
paid or  accrued on such Note is less than the amount of  interest  which  would
have accrued if the  contract  rate had at all times been in effect with respect
thereto,  then at such time, to the extent permitted by law,  Borrower shall pay
to the holder of such Note an amount  equal to the  difference  between  (i) the
lesser of the amount of interest  which would have accrued if the contract  rate
had at all times  been in effect  and the amount of  interest  which  would have
accrued if the Maximum Lawful Rate had at all times been in effect, and (ii) the
amount of interest actually paid on such Note.

     (g) Interest  payable  hereunder on each  Eurodollar Loan shall be computed
based on the number of actual days  elapsed  assuming  that each  calendar  year
consisted of 360 days. Interest payable hereunder on the Base Rate Loan shall be
computed based on the actual number of days elapsed  assuming that each calendar
year consisted of 365 days (or 366 days in a leap year).

     Section 2.6  Mandatory  Prepayments.  Upon the  occurrence of any Borrowing
Base Deficiency,  Borrower shall make the mandatory prepayments of the Revolving
Loan required by Section 4.6 hereof.

     Section 2.7 Voluntary  Prepayments.  Borrower may,  subject to Section 13.5
and the  other  provisions  of  this  Agreement,  prepay  the  principal  of the
Revolving Loan in whole or in part. Any partial prepayment shall be in a minimum
amount of $500,000 and shall be in an integral multiple of $100,000.

     Section 2.8 Voluntary Reduction of Commitments.  Borrower may, by notice to
Administrative Agent five (5) Domestic Business Days prior to the effective date
of any such

                                       35
<PAGE>

reduction,  reduce the Total  Commitment  (and thereby  reduce the Commitment of
each Bank ratably) in amounts not less than $2,000,000 and in an amount which is
an integral multiple of $1,000,000. On the effective date of any such reduction,
Borrower shall,  to the extent  required as a result of such  reduction,  make a
principal  payment on the  Revolving  Loan in an amount  sufficient to cause the
principal  balance of the Revolving Loan then outstanding to be equal to or less
than the Total  Commitment as thereby  reduced.  Notwithstanding  the foregoing,
Borrower shall not be permitted to voluntarily reduce the Total Commitment to an
amount less than the aggregate Letter of Credit Exposure of all Banks.

     Section 2.9 Termination of  Commitments;  Final Maturity of Revolving Loan.
The Total Commitment (and the Commitment of each Bank) shall terminate,  and the
entire outstanding  principal balance of the Revolving Loan, all unpaid interest
accrued thereon, all accrued but unpaid fees hereunder and all other outstanding
Obligations shall be due and payable in full on the Termination Date.

     Section 2.10  Application of Payments.  Each repayment  pursuant to Section
2.6,  Section  2.7,  Section  2.8,  Section  2.9 and  Section  4.6 shall be made
together with accrued interest on the amount repaid to the date of payment,  and
shall be applied in accordance with Section 3.2 and the other provisions of this
Agreement.

     Section 2.11  Commitment  Fee. On the  Termination  Date, on each Quarterly
Date  prior to the  Termination  Date,  and,  in the event the  Commitments  are
terminated in their entirety prior to the Termination  Date, on the date of such
termination, Borrower shall pay to Administrative Agent, for the ratable benefit
of each Bank based on each Bank's Commitment Percentage,  a commitment fee equal
to the  Commitment  Fee  Percentage  in effect from day to day (applied on a per
annum  basis and  computed  on the basis of actual  days  elapsed and as if each
calendar year consisted of 365 days (or 366 days in a leap year)) of the average
daily  Availability  for the Fiscal Quarter (or portion  thereof)  ending on the
date such payment is due.

     Section 2.12 Agency and other Fees. Borrower shall, and shall cause QRC to,
pay to  Administrative  Agent and its Affiliates  such other fees and amounts as
QRC and/or  Borrower  shall be required to pay to  Administrative  Agent and its
Affiliates from time to time pursuant to any separate agreement between or among
QRC, Borrower and Administrative  Agent or such Affiliates.  Such fees and other
amounts shall be retained by  Administrative  Agent and its  Affiliates,  and no
Bank (other than Bank One) shall have any interest therein. Administrative Agent
may disburse any fees paid to Administrative  Agent and its Affiliates  pursuant
to this  Section  2.12 in any manner  Administrative  Agent  desires in its sole
discretion.

                                  Article III
                               GENERAL PROVISIONS
                               ------------------

     Section  3.1  Delivery  and  Endorsement  of Notes.  On the  Closing  Date,
Administrative  Agent shall  deliver to each Bank the Note payable to such Bank.
Each Bank may endorse (and prior to any  transfer of its Note shall  endorse) on
the  schedules  attached  and forming a part  thereof  appropriate  notations to
evidence the date and amount of its Commitment Percentage of each Borrowing, the
Interest Period applicable  thereto,  and the date and amount of each payment of
principal made by Borrower with respect thereto; provided that the failure by

                                       36
<PAGE>

any Bank to so endorse its Note shall not affect the  liability  of Borrower for
the repayment of all amounts  outstanding under such Note together with interest
thereon.  Each Bank is hereby irrevocably  authorized by Borrower to endorse its
Note and to  attach to and make a part of any such  Note a  continuation  of any
such schedule as required.

     Section 3.2 General Provisions as to Payments.

     (a) Borrower  shall make each payment of principal of, and interest on, the
Revolving  Loan,  and all fees payable  hereunder  shall be paid, not later than
12:00 noon  (Chicago,  Illinois  time) on the date when due, in Federal or other
funds immediately available in Chicago, Illinois, to Administrative Agent at its
address set forth on Schedule 1.1-A hereto, without defense, set-off,  deduction
or  counterclaim.  Administrative  Agent will  promptly  (and if such payment is
received by  Administrative  Agent by 10:00 a.m.  (Chicago,  Illinois time), and
otherwise if reasonably possible,  on the same Domestic Business Day) distribute
to each  Bank  its  Commitment  Percentage  of each  such  payment  received  by
Administrative Agent for the account of Banks. Whenever any payment of principal
of, or interest on, the Base Rate Loan or of fees shall be due on a day which is
not a Domestic  Business Day, the date for payment  thereof shall be extended to
the next succeeding Domestic Business Day. Whenever any payment of principal of,
or interest on, any portion of any  Eurodollar  Loan shall be due on a day which
is not a Eurodollar Business Day, the date for payment thereof shall be extended
to the next succeeding Eurodollar Business Day (subject to the provisions of the
definition  of Interest  Period).  If the date for any payment of  principal  is
extended by operation of Law or otherwise, interest thereon shall be payable for
such extended time.  Borrower hereby authorizes  Administrative  Agent to charge
from time to time against  Borrower's  accounts  with  Administrative  Agent any
amount then due.

     (b) Prior to the occurrence of an Event of Default,  all principal payments
received by Banks with respect to the  Revolving  Loan shall be applied first to
Eurodollar  Loans  outstanding with Interest Periods ending on or about the date
of such payment,  then to the Base Rate Loan, and then to Eurodollar  Loans next
maturing until such principal payment is fully applied.

     (c) After the occurrence and during the continuance of an Event of Default,
all amounts collected or received by  Administrative  Agent or any Bank shall be
applied  first to the payment of all proper  costs  incurred  by  Administrative
Agent in connection with the collection thereof (including  reasonable  expenses
and disbursements of Administrative  Agent), second to the payment of all proper
costs  incurred by Banks in connection  with the collection  thereof  (including
reasonable  expenses and disbursements of Banks),  third to the reimbursement of
any advances made by Banks to effect performance of any unperformed covenants of
any Credit  Party  under any of the Loan  Papers,  fourth to the  payment of any
unpaid  fees  required  pursuant  to Section  2.12,  fifth to the payment of any
unpaid fees required  pursuant to Section 2.1(b) and Section 2.11, sixth, to the
payment of all accrued but unpaid interest, seventh, to the payment to each Bank
of its Commitment  Percentage of the outstanding principal of the Revolving Loan
and to satisfy all obligations and liabilities then due under Hedge  Agreements,
such  payments  to be made  pro  rata to each  Bank  owed  such  Obligations  in
proportion  to  all  such  payments  owed  to  all  Banks  in  respect  of  such
Obligations,  and eighth,  to establish the deposits required in Section 2.1(b).
All payments received by a Bank after the occurrence and during the

                                       37
<PAGE>

continuance  of an Event of Default  for  application  to the  principal  of the
Revolving  Loan shall be applied by such Bank in the manner  provided in Section
3.2(b).

                                   Article IV
                                 BORROWING BASE
                                 --------------

     Section 4.1 Reserve Report;  Proposed  Borrowing Base. The aggregate amount
of credit  available  to  Borrower  under this  Agreement  shall be limited by a
Borrowing  Base  (herein so called)  which shall be  determined  by Banks at the
times and in  accordance  with the standards  and  procedures  set forth in this
Article IV. As soon as  available  and in any event by February 15 and August 31
of  each  year   commencing   August  31,  2004,   Borrower   shall  deliver  to
Administrative  Agent  and  each  Bank  a  Reserve  Report  prepared  as of  the
immediately  preceding  November 30 and May 31 respectively.  Additionally,  and
with respect to the initial Scheduled  Redetermination  to occur on July 1, 2004
only,  Borrower  shall deliver to  Administrative  Agent and each Bank the March
Operating  Statement.  Simultaneously with the delivery to Administrative  Agent
and each Bank of each Reserve Report, Borrower shall notify Administrative Agent
and each Bank of the amount of the Borrowing Base which Borrower requests become
effective on the next Redetermination Date (or such date promptly following such
Redetermination Date as Required Banks shall elect).

     Section 4.2 Scheduled  Redeterminations  of the Borrowing Base;  Procedures
and  Standards.  Based in part on the Reserve  Reports  made  available to Banks
pursuant to Section 4.1, Banks shall  redetermine the Borrowing Base on or prior
to the next Redetermination Date (or such date promptly thereafter as reasonably
possible based on the engineering and other information available to Banks). Any
Borrowing Base which becomes effective as a result of any Redetermination of the
Borrowing  Base  shall  be  subject  to the  following  restrictions:  (a)  such
Borrowing  Base  shall not exceed  the  Borrowing  Base  requested  by  Borrower
pursuant to Section 4.1 or Section 4.3 (as applicable),  (b) such Borrowing Base
shall not exceed the Total  Commitment then in effect,  (c) except in connection
with a Borrowing  Base  increase  pursuant to, and in compliance  with,  Section
4.4(b),  to the extent such  Borrowing  Base  represents  an  increase  from the
Borrowing  Base in effect prior to such  Redetermination,  such  Borrowing  Base
shall be  approved  by all Banks,  and (d) to the  extent  such  Borrowing  Base
represents  a  decrease  in  the   Borrowing   Base  in  effect  prior  to  such
Redetermination, or a reaffirmation of such prior Borrowing Base, such Borrowing
Base shall be approved by Required Banks. Each Redetermination  shall be made by
Banks in their sole discretion,  but based on such Banks'  customary  procedures
for  evaluating  oil and gas  properties  as such  exist at the time of any such
Redetermination.  Without  limiting such discretion,  Borrower  acknowledges and
agrees that Banks (i) may make such assumptions  regarding  appropriate existing
and projected  pricing for  Hydrocarbons as they deem  appropriate in their sole
discretion,  (ii)  may make  such  assumptions  regarding  projected  rates  and
quantities of future production of Hydrocarbons from the Mineral Interests owned
by  Borrower  as they  deem  appropriate  in their  sole  discretion,  (iii) may
consider the projected cash  requirements  of the Credit  Parties,  (iv) are not
required to (but may)  consider  any asset other than Proved  Mineral  Interests
owned by  Borrower  which  are  subject  to first  and  prior  Liens in favor of
Administrative  Agent for the ratable benefit of Banks to the extent required by
Section 5.1 hereof, and (v) may make such other assumptions,  considerations and
exclusions as Banks deem  appropriate in the exercise of their sole  discretion,
but  based  on such  Banks'  customary  procedures  for  evaluating  oil and gas
properties as such exist at the time of

                                       38
<PAGE>

any such  Redetermination.  It is further acknowledged and agreed that each Bank
may consider such other credit  factors as it deems  appropriate in the exercise
of its sole  discretion  and shall have no  obligation  in  connection  with any
Redetermination  to approve any increase from the Borrowing Base in effect prior
to such Redetermination. Promptly following any Redetermination of the Borrowing
Base,  Administrative Agent shall notify Borrower of the amount of the Borrowing
Base as  redetermined,  which  Borrowing  Base shall be effective as of the date
specified  in such  notice,  and shall remain in effect for all purposes of this
Agreement until the next Redetermination.

     Section 4.3 Special Redeterminations.

(a) In  addition  to  Scheduled  Redeterminations,  Devon  Redeterminations  and
redeterminations  of the Borrowing  Base pursuant to Section  4.4(b) and Section
4.5,  Borrower and  Required  Banks shall each be permitted to request a Special
Redetermination  of the Borrowing  Base once in each Fiscal Year. Any request by
Required   Banks   pursuant  to  this  Section  4.3(a)  shall  be  submitted  to
Administrative  Agent and  Borrower.  Any request by  Borrower  pursuant to this
Section 4.3(a) shall be submitted to  Administrative  Agent and each Bank and at
the time of such request Borrower shall (i) deliver to Administrative  Agent and
each Bank a Reserve Report, and (ii) also notify  Administrative  Agent and each
Bank of the Borrowing Base requested by Borrower in connection with such Special
Redetermination.

     (b) Any Special  Redetermination  shall be made by Banks in accordance with
the  procedures  and  standards  set forth in Section 4.2;  provided,  that,  no
Reserve  Report will be required to be  delivered  to  Administrative  Agent and
Banks in connection with any Special Redetermination requested by Required Banks
pursuant to Section 4.3(a) above.

     Section 4.4 Devon Redeterminations.

     (a) In addition to Scheduled Redeterminations, Special Redeterminations and
redeterminations  of the Borrowing  Base pursuant to Section  4.4(b) and Section
4.5,  Required Banks shall be permitted to make additional  redeterminations  of
the Borrowing Base on each Devon  Redetermination  Date (or as of a date shortly
thereafter to be designated  by  Administrative  Agent in a notice to Borrower),
pursuant to which Required Banks may reduce the Borrowing Base by such amount as
Required  Banks  shall  determine  in their sole  discretion,  but based on such
Banks' customary  procedures for evaluating oil and gas properties as such exist
at the time of any such Redetermination,  as a result of the reassignment of any
Borrowing  Base Property (or any interest  therein) to Devon or TGGS pursuant to
Section 13 of the Devon  Acquisition  Agreement,  the  existence  of any uncured
title,  environmental  or  other  defect  (including,  without  limitation,  any
Permitted  Devon Title  Defect) with respect to the Devon  Properties or (iii) a
downward  adjustment  to the Sale  Price (as  defined  in the Devon  Acquisition
Agreement) in accordance with Section 13 of the Devon Acquisition Agreement.

     (b)  Provided no Default,  Event of Default or  Borrowing  Base  Deficiency
exists or would  result  therefrom,  and further  provided  Borrower  has timely
delivered to Administrative  Agent and each Bank a properly completed  Borrowing
Base Increase Certificate, the Borrowing Base shall increase on the date of each
Devon Consent Property  Transaction by the amount set forth in such certificate;
provided, that, (i) no increase shall be in an amount less

                                       39
<PAGE>

than  $5,000,000  or the remaining  amount of the holdback  under the Devon Hold
Back Agreement,  (ii) in no event shall the amount of increases to the Borrowing
Base pursuant to this Section  4.4(b)  exceed,  in the  aggregate,  $13,000,000,
(iii) no  redetermination  of the Borrowing Base pursuant to this Section 4.4(b)
shall occur after the earlier of (a) the date on which (1) all of the Devon Hold
Back Assignments have been filed of record by Borrower (or Collateral  Agent, at
the  request  of  Borrower)  and/or  (2) a  determination  is made by Devon  and
Borrower that applicable consents will not be obtained, and (b) May 1, 2004, and
(iv)  Borrower  shall have  complied  with the terms of Section  5.1(b)  hereof.
Promptly  following any  Redetermination  of the Borrowing Base pursuant to this
Section 4.4(b),  Administrative Agent shall notify Borrower and each Bank of the
amount of the Borrowing  Base as  redetermined,  which  Borrowing  Base shall be
effective as of the date  specified  in such notice,  and shall remain in effect
for all purposes of this Agreement until the next Redetermination.  Within three
(3) Domestic  Business  Days  following  the  consummation  of any Devon Consent
Property  Transaction,  Administrative  Agent shall, and is hereby authorized by
Borrower to, at its election,  either (1) deliver (or cause  Collateral Agent to
deliver) all  applicable  Devon Hold Back  Assignments  previously  delivered to
Collateral  Agent  pursuant  to the terms of the Devon  Hold Back  Agreement  to
Borrower,  or (2)  deliver one such  applicable  Devon Hold Back  Assignment  to
Borrower and cause one to be filed of record in the real property records of the
appropriate county or counties.

     Section  4.5  Title   Review   Adjustment.   In   addition   to   Scheduled
Redeterminations,   Special   Redeterminations,   Devon   Redeterminations   and
redeterminations  of the  Borrowing  Base pursuant to Section  4.4(b),  Required
Banks shall be permitted to reduce the Borrowing  Base on May 31, 2004 (or as of
a date shortly  thereafter to be designated by Administrative  Agent in a notice
to Borrower),  (a) if, and only to the extent that,  and by the amount that, the
Recognized  Value of the  Title  Approved  Properties  on such date is less than
eighty  percent (80%) of the Recognized  Value of all Proved  Mineral  Interests
held by Borrower and its  Subsidiaries,  or (b) as a result of the  existence of
any uncured title, environmental or other defect (including, without limitation,
any  Permitted  Contributed  Property  Defect) with  respect to the  Contributed
Property.

     Section 4.6  Borrowing  Base  Deficiency.  If a Borrowing  Base  Deficiency
exists at any time  (other  than in  connection  with a Devon  Redetermination),
Borrower  shall,  within ninety (90) days following the date such Borrowing Base
Deficiency  first  occurs,  at its  option,  either  (a)  make a  prepayment  of
principal  on the  Revolving  Loan in an amount  sufficient  to  eliminate  such
Borrowing Base  Deficiency,  and, if such Borrowing  Base  Deficiency  cannot be
eliminated  pursuant to this Section 4.6 by prepayment of the Revolving  Loan in
full (as a result of outstanding Letter of Credit Exposure), Borrower shall also
deposit with  Administrative  Agent sufficient cash to be held by Administrative
Agent to secure outstanding Letter of Credit Exposure in the manner contemplated
by Section 2.1(b) as necessary to eliminate such Borrowing Base Deficiency,  (b)
submit  additional oil and gas properties owned by Borrower for consideration in
connection  with a  redetermination  of the Borrowing Base which  Administrative
Agent and Required Banks deem  sufficient in their sole discretion (but based on
Administrative  Agent's and each such Banks' customary procedures for evaluating
oil and gas  properties as such exist at such time) to eliminate  such Borrowing
Base  Deficiency,  or (c) eliminate  such Borrowing  Base  Deficiency  through a
combination  of  prepayments  on the Revolving Loan and submission of additional
oil and gas  properties  for  inclusion  in the  Borrowing  Base as set forth in
subclauses  (a) and (b) above.  Notwithstanding  the  foregoing,  in the event a
Borrowing   Base   Deficiency   exists   after   giving   effect  to  any  Devon
Redetermination, Borrower shall eliminate

                                       40
<PAGE>

such Borrowing Base Deficiency by making a single mandatory payment of principal
on the Revolving  Loan in an amount equal to the entire amount of such Borrowing
Base  Deficiency  within two (2) Domestic  Business  Days  following the date on
which such Borrowing Base Deficiency is determined to exist.

     Section  4.7  Initial  Borrowing  Base.  Notwithstanding  anything  to  the
contrary  contained  herein,  the  Borrowing  Base in effect  during  the period
commencing  on the Closing  Date and ending on the  effective  date of the first
Redetermination after the Closing Date shall be the Initial Borrowing Base.

                                   Article V
                            COLLATERAL AND GUARANTEES
                            -------------------------

     Section 5.1 Security.

     (a) The Obligations shall be secured by first and prior Liens (subject only
to Permitted  Encumbrances)  covering and  encumbering  (i) one hundred  percent
(100%) of all Borrowing Base  Properties,  and all of the issued and outstanding
Equity owned by Cherokee Partners and each member of the Quest Group (other than
QRC),  Borrower  and each  Restricted  Subsidiary  in  Borrower  and  each  such
Restricted Subsidiary. On the Closing Date, Borrower shall deliver to Collateral
Agent for the ratable benefit of each Bank and Senior Term Lender, the Mortgages
in form and substance  acceptable to  Administrative  Agent and duly executed by
Borrower,  together  with  such  other  assignments,   conveyances,  amendments,
agreements and other writings,  including,  without limitation,  UCC-1 financing
statements (each duly authorized and executed,  as applicable) as Administrative
Agent shall deem necessary or  appropriate to grant,  evidence and perfect first
and prior Liens in all Borrowing  Base  Properties  and other  interests of each
Credit  Party  required  by this  Section  5.1(a).  Borrower  hereby  authorizes
Administrative  Agent, and its agents,  successors and assigns,  to file any and
all  necessary   financing   statements  under  the  Uniform   Commercial  Code,
assignments  or  continuation  statements  as  necessary  from  time to time (in
Administrative  Agent's  discretion) to perfect (or continue  perfection of) the
Liens granted pursuant to the Loan Papers.

     (b) On or before each  Redetermination  Date after the Closing  Date and at
such  other  times as  Administrative  Agent or  Required  Banks  shall  request
(including,  without  limitation,  in connection with (i) any title and curative
review and work performed  after the Closing Date in connection with the Closing
Transactions,  or (ii) any Devon Consent Property  Transaction after the Closing
Date  pursuant to the terms of the Devon  Acquisition  Documents),  Borrower and
each Restricted  Subsidiary shall execute and deliver to  Administrative  Agent,
for the ratable benefit of each Bank, Mortgages in form and substance acceptable
to  Administrative  Agent and duly executed by Borrower and any such  Restricted
Subsidiary (as applicable)  together with such other  assignments,  conveyances,
amendments,  agreements and other writings, including, without limitation, UCC-1
financing  statements  (each duly  authorized  and executed,  as  applicable) as
Administrative Agent shall deem necessary or appropriate to grant,  evidence and
perfect the Liens required by Section 5.1(a) preceding with respect to Borrowing
Base Properties acquired by Borrower and each Restricted  Subsidiary  subsequent
to the  last  date on  which  Borrower  or any such  Restricted  Subsidiary  was
required to execute and deliver  Mortgages  pursuant to this Section 5.1(b),  or
which, for any other reason are not the subject of

                                       41
<PAGE>

valid,  enforceable,  perfected  first priority Liens (subject only to Permitted
Encumbrances) in favor of Administrative Agent for the ratable benefit of Banks.

     (c) At any time Borrower or any of its Subsidiaries are required to execute
and deliver  Mortgages  to  Administrative  Agent  pursuant to this  Section 5.1
(other than  Mortgages  to be delivered  on the Closing  Date,  which shall only
require  evidence  of title to  verify  Borrower's  title to the  Initial  Title
Required  Reserve  Value of the Proved  Producing  Mineral  Interests  which are
subject to such Mortgages to be delivered on the Closing  Date),  Borrower shall
also deliver to Administrative Agent such opinions of counsel (including,  if so
requested,  title opinions,  and in each case addressed to Administrative Agent)
and other  evidence of title as  Administrative  Agent shall deem  necessary  or
appropriate to verify (i) Borrower's or such Subsidiary's  title to the Required
Reserve Value of the Proved  Producing  Mineral  Interests  which are subject to
such  Mortgages,  and (ii) the  validity,  perfection  and priority of the Liens
created by such  Mortgages and such other matters  regarding  such  Mortgages as
Administrative Agent shall reasonably request.

     (d) To  the  extent  required  or  contemplated  by the  terms  of  Section
5.1(a)(ii),  Section 9.2 and the definition of "Permitted Investments," Borrower
shall,  and shall  cause  Cherokee  Partners  and each member of the Quest Group
(other than QRC) or any  Indirect  Restricted  Subsidiary  (as  applicable),  to
execute and deliver to Administrative  Agent a Pledge  Agreement,  together with
(i) all  certificates  (or other evidence  acceptable to  Administrative  Agent)
evidencing the issued and outstanding Equity of Borrower and any such Restricted
Subsidiary of every class owned by Cherokee Partners and each such member of the
Quest Group (other than QRC),  Borrower or such Indirect  Restricted  Subsidiary
(as  applicable)  which shall be duly  endorsed or  accompanied  by stock powers
executed in blank (as applicable),  and (ii) such UCC-1 financing  statements as
Administrative Agent shall deem necessary or appropriate to grant,  evidence and
perfect the Liens required by Section  5.1(a)(ii) in the issued and  outstanding
Equity of Borrower and each such Restricted Subsidiary.

     Section 5.2 Guarantees. Payment and performance of the Obligations shall be
fully guaranteed by each Restricted  Subsidiary pursuant to a Facility Guaranty,
and Borrower shall cause any such  applicable  Restricted  Subsidiary to execute
and deliver to Administrative Agent and Banks such Facility Guaranty.

                                   Article VI
                              CONDITIONS PRECEDENT
                              --------------------

     Section 6.1 Conditions to Initial  Borrowing and Participation in Letter of
Credit Exposure.  The obligation of each Bank to loan its Commitment  Percentage
of the initial Borrowing hereunder and the obligation of Letter of Credit Issuer
to issue any Letter of Credit issued hereunder is subject to the satisfaction of
each of the following conditions:

     (a) Closing  Deliveries.  Administrative  Agent shall have received each of
the following documents,  instruments and agreements,  each of which shall be in
form and  substance  and executed in such  counterparts  as shall be  reasonably
acceptable to Administrative Agent and each Bank and each of which shall, unless
otherwise indicated, be dated the Closing Date:

                                       42
<PAGE>

          (i) a Note  payable to the order of each  Bank,  each in the amount of
     such Bank's Commitment, duly executed by Borrower;

          (ii) the  Mortgages  to be executed on the  Closing  Date  pursuant to
     Section 5.1(a), duly executed and delivered by Borrower, together with such
     other assignments,  conveyances, amendments, agreements and other writings,
     including,  without limitation,  UCC-1 financing statements, tax affidavits
     and  applicable  department of revenue  documentation,  creating  first and
     prior Liens in all Borrowing Base Properties;

          (iii) an Equityholders Pledge Agreement duly executed and delivered by
     (1) Cherokee  Partners,  and (2) each member of the Quest Group (other than
     QRC),  together with (A) all certificates (or other evidence  acceptable to
     Administrative  Agent)  evidencing one hundred percent (100%) of the issued
     and  outstanding  Equity  of  Borrower  of every  class  owned by each such
     Person,  which  certificates  shall  be duly  endorsed  or  accompanied  by
     appropriate  stock powers (as applicable)  executed in blank,  and (B) such
     other  agreements  and  writings,   including,  without  limitation,  UCC-1
     financing statements as reasonably requested by Administrative Agent;

          (iv) the Borrower  Pledge  Agreement  duly  executed and  delivered by
     Borrower,  together with (A) all certificates (or other evidence acceptable
     to  Administrative  Agent)  evidencing  one hundred  percent  (100%) of the
     issued  and   outstanding   Equity  of  Bluestem  of  every  class,   which
     certificates  shall be duly endorsed or accompanied  by  appropriate  stock
     powers (as applicable) executed in blank, and (B) such other agreements and
     writings,  including,  without  limitation,  UCC-1 financing  statements as
     reasonably requested by Administrative Agent;

          (v) a Facility Guaranty duly executed and delivered by Bluestem;

          (vi) such financing  statements  (including,  without limitation,  the
     financing  statements  referenced in subclauses (ii), (iii) and (iv) above)
     as  Administrative  Agent shall  specify to fully  evidence and perfect all
     Liens  contemplated  by the Loan  Papers,  all of  which  shall be filed of
     record in such  jurisdictions as Administrative  Agent shall require in its
     sole discretion;

          (vii) a copy of the articles or certificate of incorporation, articles
     or certificate of  organization,  certificate  of limited  partnership,  or
     comparable  charter  documents,  and all  amendments  thereto,  of Cherokee
     Partners  and  each  member  of the  Quest  Group  and  each  Credit  Party
     accompanied by a certificate that such copy is true,  correct and complete,
     and dated  within ten (10) days of the  Closing  Date (or within such other
     period as acceptable to  Administrative  Agent),  issued by the appropriate
     Governmental Authority of the jurisdiction of incorporation or organization
     of Cherokee  Partners and each such member of the Quest Group and each such
     Credit  Party,  and  accompanied  by a  certificate  of  the  Secretary  or
     comparable  Authorized Officer of Cherokee Partners and each such member of
     the Quest Group and each such Credit Party that such copy is true,  correct
     and complete on the Closing Date, as well as any other information required
     by Section 326 of the USA Patriot Act or necessary for

                                       43
<PAGE>

Administrative  Agent or any Bank to verify the identity of Borrower as required
by Section 326 of the USA Patriot Act;

          (viii)  a copy  of  the  Operating  Agreement,  bylaws,   regulations,
     partnership  agreement or comparable charter documents,  and all amendments
     thereto,  of Cherokee  Partners and each member of the Quest Group and each
     Credit Party  accompanied  by a certificate  of the Secretary or comparable
     Authorized  Officer of Cherokee Partners and each member of the Quest Group
     and each such Credit Party that such copy is true,  correct and complete as
     of Closing Date;

          (ix)  certain   certificates   and  other  documents   issued  by  the
     appropriate    Governmental    Authorities   of   such   jurisdictions   as
     Administrative  Agent has  requested  relating to the existence of Cherokee
     Partners  and each member of the Quest  Group and each Credit  Party and to
     the effect that  Cherokee  Partners and each such member of the Quest Group
     and each such Credit Party is in good  standing with respect to the payment
     of franchise and similar Taxes and is duly  qualified to transact  business
     in such jurisdictions;

          (x)  a certificate  of incumbency of all officers of Cherokee Partners
     and each  member  of the  Quest  Group  and each  Credit  Party who will be
     authorized to execute or attest to any Loan Paper,  dated the Closing Date,
     executed by the  Secretary  or  comparable  Authorized  Officer of Cherokee
     Partners  and each  such  member of the  Quest  Group and each such  Credit
     Party;

          (xi)  copies  of   resolutions   or  comparable   authorizations   and
     shareholder   consents  approving  the  Loan  Papers  and  authorizing  and
     consenting (as applicable) to the Closing Transactions and the transactions
     contemplated  by this Agreement and the other Loan Papers,  duly adopted by
     the Board of  Directors  (or  comparable  authority)  and  approved  by the
     shareholders  of Cherokee  Partners  and each member of the Quest Group and
     each  Credit  Party   accompanied  by  certificates  of  the  Secretary  or
     comparable  officer of Cherokee  Partners and each such member of the Quest
     Group and each such  Credit  Party that such  copies  are true and  correct
     copies of resolutions and shareholder consents duly adopted at a meeting of
     or (if  permitted  by  applicable  Law and, if required by such Law, by the
     bylaws or comparable  charter  documents of Cherokee Partners and each such
     member of the Quest Group and each such Credit Party, as applicable) by the
     unanimous  written  consent  of  the  Board  of  Directors  (or  comparable
     authority) and the  shareholders of Cherokee  Partners and each such member
     of the Quest Group and each such Credit Party, as applicable, and that such
     resolutions  and  shareholder  consents  constitute all the resolutions and
     shareholder   consents   adopted  and/or  obtained  with  respect  to  such
     transactions,  have not been amended,  modified, or revoked in any respect,
     and are in full force and effect as of the Closing Date;

          (xii) an opinion of Stinson  Morrison Hecker LLP,  special counsel for
     the Credit  Parties  dated the Closing  Date,  favorably  opining as to the
     enforceability of each of the Loan Papers (including,  without  limitation,
     the  enforceability  of the Mortgages in the State of Kansas) and otherwise
     in form and substance satisfactory to Administrative Agent and Banks;

                                       44
<PAGE>

          (xiii) an opinion of Mullins, Hirsch & Rischard, P.C., special counsel
     for Borrower in Oklahoma  dated the Closing Date,  favorably  opining as to
     the  enforceability  of the Mortgages in such State,  and otherwise in form
     and substance satisfactory to Administrative Agent and Banks;

          (xiv) a  certificate  signed  by an  Authorized  Officer  of  Borrower
     stating  that (a) the  representations  and  warranties  contained  in this
     Agreement  and the other Loan Papers are true and correct in all  respects,
     (b) no Default or Event of Default has occurred and is continuing,  and (c)
     all  conditions  set forth in this  Section  6.1 and  Section 6.2 have been
     satisfied;

          (xv) a  Certificate  of Ownership  Interests  signed by an  Authorized
     Officer of Borrower in the form of Exhibit J attached hereto;

          (xvi) certificates from Borrower's  insurance broker setting forth the
     insurance  maintained by Borrower,  stating that such  insurance is in full
     force and effect;

          (xvii)a  report or reports in form,  scope and  detail  acceptable  to
     Administrative  Agent from  environmental  engineering  firms acceptable to
     Administrative  Agent  setting forth the results of a review of each Credit
     Party's  Mineral  Interests  and  operations  (after  giving  effect to the
     Closing  Transactions),  which report(s) shall not reflect the existence of
     facts or circumstances  which would constitute a material  violation of any
     Applicable  Environmental  Law or which are  likely to result in a material
     liability to QRC, any other member of the Quest Group or any Credit Party;

          (xviii) a copy of (A) each  Closing  Document  and all other  material
     documents,  instruments  and agreements  executed  and/or  delivered by any
     member of the Quest Group  and/or any Credit Party in  connection  with the
     Closing Transactions, and (B) the QES Management Agreement, together with a
     certificate  from an Authorized  Officer of Borrower  certifying  that such
     copies are accurate and complete and represent  the complete  understanding
     and  agreement of the parties with respect to the subject  matter  thereof;
     and

          (xix) executed  originals (in recordable  form) of all Devon Hold Back
     Assignments  to be delivered to Collateral  Agent  pursuant to the terms of
     the Devon Hold Back Agreement.

     (b) Title Review.  Administrative Agent or its counsel shall have completed
a review of title to the Initial Title  Required  Reserve Value of all Borrowing
Base  Properties,  and such review  shall not have  revealed  any  condition  or
circumstance  which  would  reflect  that  the  representations  and  warranties
contained in Section 7.8 hereof are inaccurate in any material respect.

     (c) Closing Transactions.  Subject only to the disbursement and application
of the initial Borrowing,  the Closing Transactions shall have occurred and been
consummated on the terms set forth in the Closing  Documents (or  Administrative
Agent shall be satisfied  that such  transactions  will occur and be consummated
simultaneously with the Closing Date).

                                       45
<PAGE>

     (d) No Material  Adverse  Change.  In the sole  discretion of each Bank, no
Material Adverse Change shall have occurred since May 31, 2003.

     (e) No Legal Prohibition.  The transactions  contemplated by this Agreement
shall be permitted by applicable  Law and  regulation  and shall not subject any
Agent or any Bank to any  material  adverse  change in its assets,  liabilities,
financial  condition,  operations  or prospects or subject any Credit Party to a
Material Adverse Change.

     (f) No Litigation.  No litigation,  arbitration or similar proceeding shall
be  pending  or, to the  knowledge  of  Borrower,  threatened  which  calls into
question  the  validity  or  enforceability  of this  Agreement,  the other Loan
Papers,  the Closing  Transactions or the  transactions  contemplated  hereby or
thereby.

     (g) Closing and Other Fees.  Borrower shall have paid (i) to Administrative
Agent  for  the  ratable   benefit  of  each  Bank,   and  shall  have  paid  to
Administrative Agent and its Affiliates (for their own account),  the fees to be
paid on the Closing Date pursuant to Section 2.12,  and (ii) all fees,  expenses
and disbursements of counsel for Administrative  Agent to the extent invoiced on
or prior to the Closing  Date,  together with such  additional  amounts as shall
constitute such counsel's  reasonable  estimate of expenses and disbursements to
be incurred  by such  counsel in  connection  with the  recording  and filing of
Mortgages and financing  statements;  provided,  that,  such estimate  shall not
thereafter   preclude   further   settling  of  accounts  between  Borrower  and
Administrative Agent.

     (h)  Organizational  Structure.  Each Bank shall be  satisfied  in its sole
judgment with the organizational,  capital,  legal and management  structure and
tax liabilities of each Credit Party.

     (i) Hedge Transactions.  Borrower shall have entered into, or been assigned
by a member  of the Quest  Group or  Devon,  Hedge  Transactions  with  Approved
Counterparties,  and on terms and conditions, acceptable to Required Banks, with
respect to not less than  eighty-five  percent (85%) of  Administrative  Agent's
forecasted  production from Proved Producing  Mineral  Interests for a period of
three (3) years,  and which shall provide Borrower with a minimum NYMEX weighted
average  price of $4.70 per  MMBTU,  and which  condition  Administrative  Agent
acknowledges has been satisfied on or prior to the Closing Date.

     (j) Other Matters.  All matters related to this  Agreement,  the other Loan
Papers, the Credit Parties,  the Closing Documents and the Closing  Transactions
shall be  reasonably  acceptable to each Bank in its sole  discretion,  and each
Credit  Party shall have  delivered to  Administrative  Agent and each Bank such
evidence  as they shall  request to  substantiate  any  matters  related to this
Agreement,  the other Loan Papers, the Credit Parties, the Closing Documents and
the Closing Transactions as Administrative Agent or any Bank shall request.

     Upon  satisfaction (or waiver in writing by  Administrative  Agent and each
Bank) of each of the  conditions  set forth in this  Section  6.1,  Borrower and
Administrative  Agent shall execute the Certificate of Effectiveness.  Each Bank
hereby authorizes Administrative Agent to execute

                                       46
<PAGE>

the Certificate of  Effectiveness on its behalf and acknowledges and agrees that
the execution of the Certificate of Effectiveness by Administrative  Agent shall
be binding on each such Bank.

     Section 6.2  Conditions to Each  Borrowing  and each Letter of Credit.  The
obligation of each Bank to loan its Commitment  Percentage of each Borrowing and
the obligation of any Letter of Credit Issuer to issue,  extend,  amend or renew
any  Letter  of Credit  on the date  such  Letter  of  Credit  is to be  issued,
extended,  amended or renewed is  subject  to the  further  satisfaction  of the
following conditions:

     (a) timely receipt by Administrative  Agent of a Request for Borrowing or a
Request for Letter of Credit (as applicable);

     (b)  immediately  before  and  after  giving  effect to such  Borrowing  or
issuance  of such  Letter of Credit,  no Default or Event of Default  shall have
occurred and be continuing  and the funding of such Borrowing or the issuance of
the  requested  Letter of Credit  (as  applicable)  shall not cause a Default or
Event of Default;

     (c) the  representations  and warranties of each Credit Party  contained in
this  Agreement and the other Loan Papers shall be true and correct on and as of
the date of such Borrowing or issuance of such Letter of Credit (as applicable),
except to the extent such  representations  and warranties are expressly limited
to an earlier date;

     (d) the amount of the  requested  Borrowing or the amount of the  requested
Letter of Credit (as applicable) shall not exceed the Availability;

     (e) no Material Adverse Change shall have occurred; and

     (f) the funding of such  Borrowing or the issuance of such Letter of Credit
(as applicable) shall be permitted by applicable Law.

     The  funding of each  Borrowing  and the  issuance of each Letter of Credit
hereunder shall be deemed to be a representation and warranty by Borrower on the
date of such  Borrowing  and the date of issuance of each Letter of Credit as to
the facts specified in Section 6.2(b) through Section 6.2(e).

     Section 6.3  Post-Closing Deliveries. Borrower shall deliver,  or cause  to
be  delivered,  to  Administrative  Agent and its counsel,  on or before May 31,
2004,  opinions  of  title  or other  evidence  of  title in form and  substance
reasonably  acceptable to  Administrative  Agent and its counsel  regarding that
portion of the Borrowing Base Properties which,  together with all such evidence
of title  previously  received,  reviewed and  approved,  results in evidence of
title  satisfactory to  Administrative  Agent and its counsel  covering not less
than the Required Reserve Value.

     Section 6.4  Materiality of Conditions.  Each condition precedent herein is
material to the transactions  contemplated herein, and time is of the essence in
respect of each thereof.

                                       47
<PAGE>

                                  Article VII
                         REPRESENTATIONS AND WARRANTIES
                         ------------------------------

     Borrower represents and warrants to Administrative Agent and each Bank that
each of the  following  statements  is true and  correct on the date hereof (and
after giving effect to the Closing  Transactions),  and will be true and correct
on the  occasion of each  Borrowing  and the  issuance of each Letter of Credit,
except to the extent such  representations  and warranties are expressly limited
to an earlier date:

     Section 7.1  Corporate  Existence  and Power.  Each  Credit  Party (a) is a
corporation,  partnership  or limited  liability  company duly  incorporated  or
organized (as applicable),  validly existing and in good standing under the Laws
of its jurisdiction of  incorporation  or  organization,  (b) has all corporate,
partnership or limited  liability company power (as applicable) and all material
governmental licenses, authorizations,  consents and approvals required to carry
on its  businesses as now conducted and as proposed to be conducted,  and (c) is
duly  qualified to transact  business as a foreign  corporation,  partnership or
limited  liability company (as applicable) in each jurisdiction in which it does
business,  except in each  case  above,  where  such  lack or  failure  to be so
qualified could not reasonably be expected to have a Material Adverse Effect.

     Section 7.2 Credit Party and Governmental Authorization; Contravention. The
execution,  delivery and performance of this Agreement and the other Loan Papers
by each  Credit  Party  (to the  extent  each  Credit  Party  is a party to this
Agreement  and such Loan  Papers)  are within  such  Credit  Party's  corporate,
partnership or limited liability  company powers (as applicable),  when executed
will be duly  authorized  by all  necessary  corporate,  partnership  or limited
liability company action (as applicable), require no action by or in respect of,
or filing with, any Governmental Authority and do not contravene,  or constitute
a default under, any provision of applicable Law (including, without limitation,
the Margin Regulations) or of the articles or certificate of incorporation,  the
articles or  certificate  of  organization,  the  Operating  Agreement,  bylaws,
regulations, partnership agreement or comparable charter documents of any Credit
Party  or of  any  agreement,  judgment,  injunction,  order,  decree  or  other
instrument binding upon any Credit Party or result in the creation or imposition
of any Lien on any asset of any Credit  Party other than the Liens  securing the
Obligations.

     Section 7.3 Binding Effect. This Agreement  constitutes a valid and binding
agreement of  Borrower;  the other Loan Papers when  executed  and  delivered in
accordance with this Agreement, will constitute valid and binding obligations of
each Credit Party  executing the same;  and each Loan Paper is, or when executed
and delivered, will be, enforceable against each Credit Party which executes the
same in  accordance  with its terms in all material  respects  except as (a) the
enforceability thereof may be limited by bankruptcy,  insolvency or similar Laws
affecting  creditors  rights  generally,  and (b) the  availability of equitable
remedies may be limited by equitable principles of general applicability.

                                       48
<PAGE>

     Section 7.4  Financial Information.

     (a) The Current  Financials  fairly  present,  in conformity with GAAP, the
consolidated   financial  position  of  QRC  and  its  consolidated  results  of
operations and cash flows as of the dates and for the periods covered thereby.

     (b) The most recent annual audited  consolidated  balance sheet of Borrower
and the related  consolidated  statements of  operations  and cash flows for the
Fiscal Year then ended, copies of which have been delivered to each Bank, fairly
present,  in all material respects and in conformity with GAAP, the consolidated
financial  position  of  Borrower  as of the end of  such  Fiscal  Year  and its
consolidated results of operations and cash flows for such Fiscal Year.

     (c) The most  recent  quarterly  unaudited  consolidated  balance  sheet of
Borrower delivered to Banks, and the related unaudited  consolidated  statements
of  operations  and cash flows for the  portion of  Borrower's  Fiscal Year then
ended,  fairly  present,  in all material  respects and in conformity  with GAAP
applied on a basis  consistent  with the  financial  statements  referred  to in
Section 7.4(a), the consolidated  financial position of Borrower as of such date
and its  consolidated  results of operations  and cash flows for such portion of
Borrower's Fiscal Year.

     (d)  Since  the  date  of  Borrower's  most  recent  annual  and  quarterly
consolidated  balance sheet and  consolidated  statements of operations and cash
flow  delivered  to Banks,  there  has been no  material  adverse  change in the
assets,  liabilities,  financial position, results of operations or prospects of
the Credit Parties on a consolidated basis.

     Section 7.5  Litigation.  Except for  matters  disclosed  on  Schedule  7.5
attached hereto,  there is no action,  suit or proceeding pending against, or to
the  knowledge of any Credit Party,  threatened  against or affecting any Credit
Party  before  any  Governmental  Authority  in  which  there  is  a  reasonable
possibility of an adverse decision which could have a Material Adverse Effect or
which could reasonably be expected to adversely affect, in any material respect,
the validity of the Loan Papers.

     Section 7.6  ERISA.  No Credit  Party nor any ERISA Affiliate of any Credit
Party  maintains or has ever  maintained or been  obligated to contribute to any
Plan  covered  by Title IV of ERISA or subject to the  funding  requirements  of
section 412 of the Code or section  302 of ERISA.  Each Plan  maintained  by any
Credit Party or any ERISA  Affiliate of any Credit Party is in compliance in all
material  respects with all applicable  Laws.  Except in such instances where an
omission or failure would not have a Material  Adverse Effect,  (a) all returns,
reports and notices required to be filed with any regulatory agency with respect
to any Plan  have  been  filed  timely,  and (b) no  Credit  Party nor any ERISA
Affiliate  of any Credit  Party has failed to make any  contribution  or pay any
amount due or owing as required  by the terms of any Plan.  There are no pending
or,  to  the  best  of  Borrower's  knowledge,   threatened  claims,   lawsuits,
investigations  or  actions  (other  than  routine  claims for  benefits  in the
ordinary  course)  asserted or instituted  against,  and no Credit Party nor any
ERISA  Affiliate of any Credit Party has knowledge of any threatened  litigation
or claims  against,  the assets of any Plan or its related  trust or against any
fiduciary of a Plan with  respect to the  operation of such Plan that are likely
to result in liability of any Credit  Party  having a Material  Adverse  Effect.
Except in such instances

                                       49
<PAGE>

where an omission or failure would not have a Material Adverse Effect, each Plan
that is intended to be  "qualified"  within the meaning of section 401(a) of the
Code is, and has been during the period from its adoption to date, so qualified,
both  as to  form  and  operation  and  all  necessary  governmental  approvals,
including a favorable  determination as to the  qualification  under the Code of
such Plan and each amendment thereto,  have been or will be timely obtained.  No
Credit  Party nor any ERISA  Affiliate  of any Credit  Party has  engaged in any
prohibited  transactions,  within the meaning of section 406 of ERISA or section
4975 of the Code, in connection with any Plan which would result in liability of
any Credit Party having a Material Adverse Effect. No Credit Party nor any ERISA
Affiliate of any Credit Party maintains or contributes to any Plan that provides
a  post-employment  health benefit,  other than a benefit required under section
601 of  ERISA,  or  maintains  or  contributes  to a Plan that  provides  health
benefits  that is not fully  funded  except where the failure to fully fund such
Plan would not have a Material  Adverse  Effect.  No Credit  Party nor any ERISA
Affiliate  of  any  Credit  Party   maintains,   has  established  or  has  ever
participated  in a multiple  employer  welfare  benefit  arrangement  within the
meaning of section 3(40)(A) of ERISA.

     Section 7.7 Taxes and Filing of Tax  Returns.  Except  where the payment of
Taxes are being  contested in accordance with Section 8.7, each Credit Party has
filed all tax  returns  required to have been filed and has paid all Taxes shown
to be due and payable on such returns, including interest and penalties, and all
other Taxes which are payable by such party,  to the extent the same have become
due and payable.  No Credit Party knows of any proposed  material Tax assessment
against it and all Tax liabilities of each Credit Party are adequately  provided
for. No Credit Party has been notified by the Internal  Revenue Service or other
Governmental  Authority seeking Taxes in excess of those already paid, which has
not been discharged or resolved.

     Section 7.8 Ownership of Properties  Generally.  Each Credit Party has good
and valid fee simple or leasehold  title to all material  properties  and assets
purported to be owned by it, including, without limitation, all assets reflected
in the balance  sheets  referred to in Section 7.4(b) and Section 7.4(c) and all
assets which are used by the Credit Parties in the operation of their respective
businesses,  and none of such  properties or assets is subject to any Lien other
than Permitted Encumbrances.

     Section 7.9 Mineral  Interests.  Borrower has good and defensible  title to
all Mineral  Interests  described  in the  Reserve  Report,  including,  without
limitation,  all Borrowing Base  Properties,  free and clear of all Liens except
Permitted Encumbrances and Immaterial Title Deficiencies.  With the exception of
Immaterial Title Deficiencies, all such Mineral Interests are valid, subsisting,
and in full force and effect, and all rentals,  royalties, and other amounts due
and  payable  in respect  thereof  have been duly  paid.  Without  regard to any
consent or non-consent  provisions of any joint operating agreement covering any
of Borrower's  Proved  Mineral  Interests,  and with the exception of Immaterial
Title  Deficiencies,  Borrower's  share of (a) the costs for each Proved Mineral
Interest  described  in the  Reserve  Report  is not  greater  than the  decimal
fraction set forth in the Reserve Report,  before and after payout,  as the case
may  be,  and  described  therein  by  the  respective   designations   "working
interests,"  "WI," "gross working  interest,"  "GWI," or similar terms,  and (b)
production  from,  allocated  to,  or  attributed  to each such  Proved  Mineral
Interest is not less than the decimal  fraction set forth in the Reserve Report,
before  and after  payout,  as the case may be,  and  described  therein  by the
designations "net

                                       50
<PAGE>

revenue interest," "NRI," or similar terms. Each well drilled in respect of each
Proved Producing Mineral Interest described in the Reserve Report (y) is capable
of, and is presently,  either producing Hydrocarbons in commercially  profitable
quantities  or in the process of being worked over or enhanced,  and Borrower is
currently receiving payments for its share of any such production, with no funds
in respect of any thereof being presently held in suspense,  other than any such
funds being held in suspense  pending  delivery of appropriate  division orders,
and (z) has been drilled,  bottomed,  completed, and operated in compliance with
all  applicable  Laws,  in each case except where such failure  would not have a
Material  Adverse  Effect,  and  no  such  well  which  is  currently  producing
Hydrocarbons  is subject to any  penalty  in  production  by reason of such well
having produced in excess of its allowable production.

     Section 7.10 Licenses,  Permits,  Etc. Except as disclosed on Schedule 7.10
attached hereto, each Credit Party possesses such valid franchises, certificates
of convenience and necessity,  operating rights,  licenses,  permits,  consents,
authorizations,  exemptions  and  orders  of  Governmental  Authorities,  as are
necessary to carry on its business in all material respects as now conducted and
as proposed to be  conducted,  except to the extent a failure to obtain any such
item would not have a Material Adverse Effect.

     Section 7.11  Compliance  with Law. The  business  and  operations  of each
Credit Party have been and are being  conducted,  in all material  respects,  in
accordance with all applicable Laws.

     Section 7.12 Full Disclosure.  All information  heretofore furnished by the
Quest Group and each Credit Party to Administrative Agent or any Bank in writing
for  purposes of or in  connection  with this  Agreement,  any Loan  Paper,  any
transaction  contemplated hereby or thereby, or the Closing Transactions was, as
of the date it was  furnished,  true,  complete and  accurate in every  material
respect.  The Credit  Parties  have  disclosed or have caused to be disclosed to
Banks  in  writing  any and all  facts  (other  than  facts  of  general  public
knowledge)  which might  reasonably be expected to result in a Material  Adverse
Change.  No  representation  is made as to any financial  projections other than
that such  projections are based on information that QRC or any Credit Party, as
applicable, believed to be accurate, and were calculated in a manner QRC, or any
Credit Party, as applicable, believed to be accurate.

     Section  7.13  Organizational  Structure;  Nature  of  Business.  As of the
Closing Date, (a) QRC is a holding  company owning one hundred percent (100%) of
the issued and  outstanding  Equity in Quest Oil & Gas,  QES,  STP  Cherokee and
Ponderosa, (b) QRC has no direct, wholly-owned Subsidiaries other than Quest Oil
& Gas, QES, STP Cherokee and  Ponderosa,  (c) Quest Oil & Gas, QES, STP Cherokee
and Bluestem have no  Subsidiaries,  and own no  properties  which are Borrowing
Base Properties,  (d) Ponderosa has no Subsidiaries  other than PSI, and owns no
properties  which are Borrowing  Base  Properties,  (e) PSI has no  Subsidiaries
other than J-W Gas, and owns no properties  which are Borrowing Base Properties,
and (f) J-W Gas has no Subsidiaries,  and owns no properties which are Borrowing
Base Properties.  One hundred percent (100%) of the Class B ownership  interests
of  Borrower  are owned by the  members  of the Quest  Group  (other  than QRC).
Borrower has no  Subsidiaries  other than Bluestem.  Borrower is engaged only in
the business of acquiring,  exploring,  and  developing  Mineral  Interests (and
related and  ancillary  pipelines  and related  assets) and the  production  and
marketing of Hydrocarbons therefrom, and activities related thereto.

                                       51
<PAGE>

Schedule 7.13 attached hereto accurately  reflects,  as of the Closing Date, (i)
the  jurisdiction of  incorporation or organization of QRC, each other member of
the Quest Group and each Credit Party, (ii) each jurisdiction in which QRC, each
other  member of the Quest Group and each Credit  Party is qualified to transact
business  as a foreign  corporation,  foreign  partnership  or  foreign  limited
liability company,  (iii) the authorized,  issued and outstanding Equity of QRC,
each  other  member  of the  Quest  Group and each  Credit  Party,  and (iv) all
outstanding warrants,  options,  subscription rights,  convertible securities or
other  rights to purchase  Equity of QRC,  each other member of the Quest Group,
QES, and each Credit Party.

     Section  7.14  Environmental  Matters.  Except  for  matters  disclosed  on
Schedule 7.14 attached hereto, no operation conducted by any Credit Party and no
real or personal property now owned or leased by any Credit Party, or previously
owned or leased by any member of the Quest Group (including, without limitation,
any such Person's Mineral Interests) and no operation conducted thereon,  and to
Borrower's  knowledge,  no operations of any prior owner,  lessee or operator of
any such properties (including any member of the Quest Group), is or has been in
violation of any Applicable  Environmental  Law other than  violations or claims
which neither  individually  nor in the aggregate  will have a Material  Adverse
Effect.  Except for matters  disclosed  on  Schedule  7.14  attached  hereto (as
supplemented  from time to time with the consent of  Administrative  Agent),  no
Credit  Party,  nor any  such  property  nor  operation  is the  subject  of any
existing,   pending  or,  to  Borrower's  knowledge,   threatened  Environmental
Complaint. To Borrower's knowledge, all notices, permits,  licenses, and similar
authorizations,  required  to be  obtained  or  filed  in  connection  with  the
ownership  of each tract of real  property  or  operations  of any Credit  Party
thereon  and each item of  personal  property  owned,  leased or operated by any
Credit Party,  including,  without limitation,  notices,  licenses,  permits and
authorizations  required  in  connection  with  any past or  present  treatment,
storage, disposal, or release of Hazardous Substances into the environment, have
been duly  obtained or filed  except to the extent the failure to obtain or file
such notices,  licenses,  permits and  authorizations  would not have a Material
Adverse  Effect.  All  Hazardous  Substances,  generated  at each  tract of real
property and by each item of personal property owned,  leased or operated by any
Credit Party have been transported, treated, and disposed of only by carriers or
facilities maintaining valid permits under RCRA (as hereinafter defined) and all
other Applicable  Environmental Laws for the conduct of such activities.  Except
for matters  disclosed  on Schedule  7.14  attached  hereto,  there have been no
Hazardous Discharges which were not in compliance with Applicable  Environmental
Laws other than Hazardous  Discharges  which would not,  individually  or in the
aggregate,  have a Material  Adverse  Effect.  Except for matters  disclosed  on
Schedule  7.14  attached  hereto  (as  supplemented  from  time to time with the
consent of Administrative  Agent), no Credit Party has any contingent  liability
in connection with any Hazardous Discharge which could reasonably be expected to
have a Material  Adverse  Effect.  As used in this Section 7.14, the term "RCRA"
shall mean the Resource Conservation and Recovery Act of 1976, as amended by the
Used Oil Recycling Act of 1980, the Solid Waste Recovery Act of 1976, as amended
by the Solid  Waste  Disposal  Act of 1980,  and the  Hazardous  and Solid Waste
Amendments of 1984,  as the same may be further  amended and in effect from time
to time.

     Section  7.15  Burdensome  Obligations.  No  Credit  Party,  nor any of the
properties  of any Credit  Party,  is subject to any Law or any  pending  or, to
Borrower's  knowledge,  threatened  change of Law or subject to any  restriction
under its articles (or certificate) of incorporation, articles or certificate of
organization, Operating Agreement, bylaws, regulations, partnership

                                       52
<PAGE>

agreement or comparable  charter  documents or under any agreement or instrument
to  which  any  Credit  Party  or by  which  any  Credit  Party  or any of their
properties  may be subject or bound,  which is so unusual or burdensome as to be
likely in the  foreseeable  future to have a Material  Adverse  Effect.  Without
limiting the foregoing,  no Credit Party is a party to or bound by any agreement
(other  than  the Loan  Papers)  or  subject  to any  order of any  Governmental
Authority which prohibits or restricts in any way the right of such Credit Party
or any  Restricted  Subsidiary of any Credit Party to make  Distributions  other
than the Senior Term Credit  Agreement,  the Subordinate  Debt Documents and the
Operating Agreement.

     Section 7.16 Fiscal Year. Borrower's Fiscal Year is June 1 through May 31.

     Section 7.17 No Default.  As of the Closing Date,  neither a Default nor an
Event  of  Default  has  occurred  or will  exist  after  giving  effect  to the
transactions contemplated by this Agreement or the other Loan Papers.

     Section  7.18  Government  Regulation.   No  Credit  Party  is  subject  to
regulation  under the Public  Utility  Holding  Company Act of 1935, the Federal
Power Act, the  Interstate  Commerce Act (as any of the preceding acts have been
amended),  the Investment  Company Act of 1940 or any other Law which  regulates
the incurring by such Credit Party of Debt,  including,  but not limited to Laws
relating to common  contract  carriers or the sale of  electricity,  gas, steam,
water or other public utility services.

     Section 7.19 Insider.  No Credit Party is, and no Person  having  "control"
(as that term is defined in 12 U.S.C. section 375(b) or regulations  promulgated
thereunder)  of any Credit Party is an "executive  officer" or "director" of any
Bank or any bank  holding  company of which any Bank is a  Subsidiary  or of any
Subsidiary of such bank holding company.

     Section 7.20 Gas Balancing Agreements and Advance Payment Contracts. On the
Closing  Date,  (a) there is no Material Gas  Imbalance,  and (b) the  aggregate
amount of all  Advance  Payments  received  by any Credit  Party  under  Advance
Payment  Contracts  which have not been satisfied by delivery of production does
not exceed $500,000.

     Section 7.21  Closing  Documents.  Borrower has provided to  Administrative
Agent a true,  correct  and  complete  copy  of each of the  Closing  Documents,
including all amendments and modifications thereto (whether  characterized as an
amendment,  modification,  waiver,  consent or similar  document).  No  material
rights or  obligations  of any party to any of the Closing  Documents  have been
waived  and no  party  to any of the  Closing  Documents  is in  default  of its
obligations or in breach of any  representations  or warranties made thereunder.
Each of the Closing Documents is a valid, binding and enforceable  obligation of
each party thereto in accordance with its terms and is in full force and effect.

                                  Article VIII
                              AFFIRMATIVE COVENANTS
                              ---------------------

     Borrower  covenants and agrees that, so long as any Bank has any commitment
to lend or  participate  in Letter of Credit  Exposure  hereunder  or any amount
payable  under  any  Note  remains  unpaid  or  any  Letter  of  Credit  remains
outstanding:

                                       53
<PAGE>

     Section 8.1  Information.  Borrower will deliver, or cause to be delivered,
to each Bank:

     (a) as soon as available and in any event within ninety (90) days after the
end of each Fiscal Year of Borrower, a consolidated balance sheet of Borrower as
of the end of such Fiscal Year and the related consolidated statements of income
and statements of cash flow for such Fiscal Year, and beginning with Fiscal Year
2005,  setting  forth  in each  case in  comparative  form the  figures  for the
previous  Fiscal  Year,  all  reported by Borrower in  accordance  with GAAP and
audited by a firm of independent  public  accountants  of nationally  recognized
standing and acceptable to Administrative Agent;

     (b) as soon as available and in any event within forty-five (45) days after
the end of each of the first  three (3) Fiscal  Quarters  of each Fiscal Year of
Borrower,  a consolidated balance sheet of Borrower as of the end of such Fiscal
Quarter and the related consolidated statements of income and statements of cash
flow for such quarter and for the portion of Borrower's Fiscal Year ended at the
end of such Fiscal Quarter,  and beginning with the third quarter of Fiscal Year
2005,  setting  forth  in each  case in  comparative  form the  figures  for the
corresponding  quarter  and the  corresponding  portion of  Borrower's  previous
Fiscal Year; all financial  statements delivered pursuant to this Section 8.1(b)
shall be certified as to fairness of  presentation,  GAAP and  consistency  by a
Financial  Officer  of  Borrower,  except  for  footnotes  and  year  end  audit
adjustments;

     (c)  simultaneously  with the delivery of each set of financial  statements
referred to in Section  8.1(a) and Section 8.1(b) a certificate of the Financial
Officer of Borrower in the form of Exhibit I attached hereto,  (i) setting forth
in reasonable  detail the calculations  required to establish whether the Credit
Parties were in  compliance  with the  requirements  of Article X on the date of
such  financial  statements,  (ii)  stating  whether,  to the  knowledge of such
Financial Officer, there exists on the date of such certificate any Default and,
if any Default then  exists,  setting  forth the details  thereof and the action
which Borrower is taking or proposes to take with respect thereto, (iii) stating
whether or not such financial statements fairly reflect in all material respects
the results of operations and financial  condition of Borrower as of the date of
the delivery of such financial  statements  and for the period covered  thereby,
(iv) setting forth (A) whether as of such date there is a Material Gas Imbalance
and, if so, setting forth the amount of net gas  imbalances  under Gas Balancing
Agreements  to  which  any  Credit  Party is a party  or by  which  any  Mineral
Interests  owned by any Credit Party is bound,  and (B) the aggregate  amount of
all Advance  Payments  received  under  Advance  Payment  Contracts to which any
Credit  Party is a party or by which any Mineral  Interests  owned by any Credit
Party is bound which have not been satisfied by delivery of production,  if any,
(v) setting forth a summary of the Hedge  Transactions to which any Credit Party
is a party on such date, and (vi) setting forth the other information  described
in Exhibit I attached hereto;

     (d) promptly upon the mailing  thereof to the Equity  holders of any Credit
Party  generally,  copies  of  all  financial  statements,   reports  and  proxy
statements so mailed;

     (e)  promptly  upon the filing  thereof,  copies of all final  registration
statements,  post effective amendments thereto and annual,  quarterly or special
reports which any Credit Party shall have filed with the Securities and Exchange
Commission;

                                       54
<PAGE>

     (f) promptly upon receipt of same, any notice or other information received
by  any  Credit  Party   indicating  (i)  any   potential,   actual  or  alleged
non-compliance   with  or  violation  of  the  requirements  of  any  Applicable
Environmental Law which could result in liability to any Credit Party for fines,
clean up or any other  remediation  obligations or any other liability in excess
of $500,000 in the aggregate;  (ii) any  threatened  Hazardous  Discharge  which
Hazardous  Discharge  would  impose  on any  Credit  Party a duty to report to a
Governmental  Authority or to pay cleanup costs or to take remedial action under
any Applicable  Environmental  Law which could result in liability to any Credit
Party  for  fines,  clean up and  other  remediation  obligations  or any  other
liability in excess of $500,000 in the aggregate;  or (iii) the existence of any
Lien arising under any Applicable  Environmental  Law securing any obligation to
pay fines,  clean up or other remediation costs or any other liability in excess
of $500,000 in the aggregate.  Without limiting the foregoing, each Credit Party
shall provide to Banks  promptly upon receipt of same by any Credit Party copies
of all  environmental  consultants or engineers  reports  received by any Credit
Party which would render the  representation  and warranty  contained in Section
7.14 untrue or inaccurate in any respect;

     (g) in the event any notification is provided to any Bank or Administrative
Agent  pursuant to Section  8.1(f)  hereof or  Administrative  Agent or any Bank
otherwise  learns of any event or condition under which any such notice would be
required,  then, upon request of Required Banks,  Borrower shall,  within thirty
(30) days of such  request,  cause to be furnished to  Administrative  Agent and
each  Bank  a  report  by  an   environmental   consulting  firm  acceptable  to
Administrative  Agent and Required  Banks,  stating that a review of such event,
condition  or  circumstance  has been  undertaken  (the scope of which  shall be
acceptable  to  Administrative  Agent and  Required  Banks)  and  detailing  the
findings,  conclusions and  recommendations  of such consultant.  Borrower shall
bear all expenses and costs associated with such review and updates thereof;

     (h)  immediately  upon any Authorized  Officer of any Credit Party becoming
aware of the occurrence of any Default,  a certificate of an Authorized  Officer
of Borrower  setting forth the details  thereof and the action which Borrower is
taking or proposes to take with respect thereto;

     (i) no later than February 15 and August 31 of each year, commencing August
31, 2004, a Reserve Report;

     (j) no  later  than  the  sixty  (60)  days  after  the end of each  month,
commencing January 2004, (i) lease operating statements setting forth production
volumes,  revenues,  expenses,  and cash flow and product prices for all oil and
gas  properties  owned by Borrower  for such month,  each such  statement  to be
accompanied by a management  discussion and analysis of major variances from the
preceding monthly report delivered hereunder,  and (ii) drilling reports setting
forth (A) a list of new wells  drilled  during such  month,  (B) a list of wells
requiring pipeline connections,  and the status of such connections, and (C) gas
and water  production on a per diem basis from each well;  provided,  that, with
respect to the  statements  and  reports for the month of March 2004 (the "March
2004 Operating Statement"),  in addition to the information set forth in clauses
(i) and (ii) of this Section  8.1(j),  the March 2004 Operating  Statement shall
include a summary of recent drilling  activity with respect to Borrower's Proved
Producing Mineral  Interests and such other information as Administrative  Agent
or any Bank may

                                       55
<PAGE>

reasonably  request in connection with the initial Scheduled  Redetermination to
occur on July 1, 2004;

     (k) promptly notify Banks of any Material Adverse Change;

     (l) promptly notify Banks of any material  litigation  involving any Credit
Party;

     (m) as soon as available,  and in any event no later than five (5) Domestic
Business Days prior to any  Redetermination  of the  Borrowing  Base pursuant to
Section 4.4(b) hereof, a properly completed Borrowing Base Increase Certificate;

     (n) promptly notify  Administrative Agent of the remediation of any defects
in the Contributed  Properties,  including upon obtaining any necessary consents
not obtained as of the Closing Date; and

     (o) from time to time such additional information regarding the financial
position or business of any Credit Party as Administrative Agent, at the request
of any Bank, may reasonably request.

     Section 8.2  Business of Credit Parties.   The  sole  business  of Borrower
will continue to be the acquisition,  exploration,  development and operation of
Mineral Interests (and related and ancillary pipelines and related assets),  the
production and marketing of Hydrocarbons  therefrom,  and activities  reasonably
related thereto.

     Section 8.3 Maintenance of Existence.  Borrower shall, and shall cause each
other  Credit  Party to, at all times  maintain its  corporate,  partnership  or
limited   liability   company   existence  in  its  state  of  incorporation  or
organization,  and (b) maintain its good standing and  qualification to transact
business in all  jurisdictions  where the failure to maintain  good  standing or
qualification to transact business could have a Material Adverse Effect.

     Section 8.4 Title Data.  In addition to the title  information  required by
Section 5.1(c), Section 6.1(b) and Section 6.3 hereof,  Borrower shall, upon the
request of Required Banks,  cause to be delivered to  Administrative  Agent such
title opinions and other information  regarding title to Mineral Interests owned
by Borrower or any other Credit Party as are appropriate to determine the status
thereof;  provided,  however,  that,  Banks may not require  Borrower to furnish
title opinions  (except  pursuant to Section 5.1(c),  Section 6.1(b) and Section
6.3) unless (a) an Event of Default  shall have occurred and be  continuing,  or
(b)  Required  Banks  have  reason  to  believe  that  there is a  defect  in or
encumbrance  upon  Borrower's  title  to such  Mineral  Interests  that is not a
Permitted Encumbrance or Immaterial Title Deficiency.

     Section 8.5 Right of Inspection.  Borrower will permit, and will cause each
other Credit Party to permit,  any officer,  employee or agent of Administrative
Agent or of any Bank to visit and inspect any of the assets of any Credit Party,
examine  each  Credit  Party's  books of record and  accounts,  take  copies and
extracts  therefrom,  and discuss the  affairs,  finances  and  accounts of each
Credit Party with such Credit Party's officers,  accountants and auditors,  upon
prior advance  notice at such  reasonable  times and as often as  Administrative
Agent or any Bank may reasonably desire, all at the expense of Borrower.

                                       56
<PAGE>

     Section 8.6  Maintenance  of Insurance.  Borrower will, and will cause each
other Credit Party to, at all times maintain or cause to be maintained insurance
covering such risks as are customarily carried by businesses similarly situated,
including,   without  limitation,  the  following:  (a)  workmen's  compensation
insurance (to the extent  required and  applicable);  (b)  employer's  liability
insurance (to the extent required and  applicable);  (c)  comprehensive  general
public  liability and property damage  insurance;  (d) insurance  against losses
customarily  insured  against  as a result of damage by fire,  lightning,  hail,
tornado,  explosion  and other similar risk;  and (e)  comprehensive  automobile
liability  insurance.  All loss payable clauses or provisions in all policies of
insurance  maintained by any Credit Party  pursuant to this Section 8.6 shall be
endorsed in favor of and made  payable to  Administrative  Agent for the ratable
benefit of Banks, as their interests may appear. Administrative Agent shall have
the right,  for the ratable  benefit of Banks,  to collect,  and Borrower hereby
assigns to  Administrative  Agent for the  ratable  benefit of Banks (and hereby
agrees to cause each other Credit Party to assign),  any and all monies that may
become payable under any such policies of insurance by reason of damage, loss or
destruction of any of property  which stands as security for the  Obligations or
any part thereof,  and Administrative  Agent may, at its election,  either apply
for the ratable benefit of Banks all or any part of the sums so collected toward
payment of the  Obligations,  whether or not such  Obligations  are then due and
payable, in such manner as Administrative Agent may elect or release same to the
applicable Credit Party.

     Section 8.7 Payment of Taxes and Claims. Borrower will, and will cause each
other Credit Party to, pay (a) all Taxes imposed upon it or any of its assets or
with respect to any of its  franchises,  business,  income or profits before any
material  penalty or  interest  accrues  thereon,  and (b) all  material  claims
(including,  without  limitation,  claims for  labor,  services,  materials  and
supplies)  for sums which have  become due and  payable and which by Law have or
might become a Lien (other than a Permitted  Encumbrance)  on any of its assets;
provided,  however,  no payment of Taxes or claims  shall be required if (i) the
amount,  applicability  or validity thereof is currently being contested in good
faith by  appropriate  action  promptly  initiated and  diligently  conducted in
accordance with good business  practices and no material part of the property or
assets of Borrower, and no part of the assets of any Restricted Subsidiary which
would be material to Borrower, is subject to any pending levy or execution, (ii)
Borrower  and  any  Restricted  Subsidiary,  as and to the  extent  required  in
accordance with GAAP,  shall have set aside on their books reserves  (segregated
to the extent  required  by GAAP)  deemed by them to be  adequate  with  respect
thereto,   and  (iii)  Borrower  has  notified   Administrative  Agent  of  such
circumstances, in detail satisfactory to Administrative Agent.

     Section 8.8  Compliance  with Laws and  Documents.  Borrower will, and will
cause each other Credit  Party to,  comply with (a) all Laws,  their  respective
certificates  (or articles) of  incorporation,  bylaws,  regulations and similar
organizational  documents and all Material  Agreements to which any Credit Party
is a party,  and (b) all Senior Term Credit  Documents to which any Credit Party
is a party, except where such failure could not reasonably be expected to have a
Material Adverse Effect.

     Section 8.9 Operation of Properties and Equipment

     (a) Borrower  will,  and will cause each other  Credit Party to,  maintain,
develop and operate its Mineral Interests in a good and workmanlike  manner, and
observe and

                                       57
<PAGE>

comply with all of the terms and provisions,  express or implied, of all oil and
gas leases relating to such Mineral  Interests so long as such Mineral Interests
are  capable of  producing  Hydrocarbons  and  accompanying  elements  in paying
quantities, except where such failure to comply could not reasonably be expected
to have a Material Adverse Effect.

     (b) Borrower will, and will cause each other Credit Party to, comply in all
respects  with all  contracts  and  agreements  applicable to or relating to its
Mineral  Interest or the production and sale of  Hydrocarbons  and  accompanying
elements  therefrom,  except  to the  extent a failure  to so  comply  could not
reasonably be expected to have a Material Adverse Effect.

     (c) Borrower  will, and will cause each other Credit Party to, at all times
maintain,  preserve and keep all  operating  equipment  used with respect to its
Mineral  Interests in proper repair,  working order and condition,  and make all
necessary  or  appropriate  repairs,  renewals,   replacements,   additions  and
improvements thereto so that the efficiency of such operating equipment shall at
all times be properly  preserved  and  maintained,  except where such failure to
comply  could not  reasonably  be  expected to have a Material  Adverse  Effect;
provided,  further  that,  no item of operating  equipment  need be so repaired,
renewed,  replaced,  added to or  improved,  if  Borrower  shall  in good  faith
determine  that such action is not  necessary  or  desirable  for the  continued
efficient and profitable operation of the business of such Credit Party.

     Section 8.10  Environmental  Law Compliance.  Borrower will, and will cause
each other  Credit  Party to,  comply with all  Applicable  Environmental  Laws,
including, without limitation, (a) all licensing,  permitting,  notification and
similar requirements of Applicable Environmental Laws, and (b) all provisions of
all  Applicable  Environmental  Laws  regarding  storage,  discharge,   release,
transportation,  treatment  and disposal of Hazardous  Substances,  except where
such failure could not reasonably be expected to have a Material Adverse Effect.
Borrower  will,  and will cause each other  Credit  Party to,  promptly  pay and
discharge when due all legal debts,  claims,  liabilities and  obligations  with
respect  to any  clean-up  or  remediation  measures  necessary  to comply  with
Applicable Environmental Laws.

     Section 8.11 ERISA Reporting Requirements. Borrower shall furnish, or cause
to be furnished, to Administrative Agent:

     (a) promptly and in any event (i) within thirty (30) days after Borrower or
any  ERISA  Affiliate   receives  notice  from  any  regulatory  agency  of  the
commencement of an audit,  investigation or similar proceeding with respect to a
Plan,  and (ii)  within  ten (10) days  after  Borrower  or any ERISA  Affiliate
contacts  the Internal  Revenue  Service for the purpose of  participation  in a
closing  agreement or any  voluntary  resolution  program with respect to a Plan
which could have a Material  Adverse  Effect or knows or has reason to know that
any event  with  respect  to any Plan of  Borrower  or any ERISA  Affiliate  has
occurred that is reasonably  believed by Borrower to potentially have a Material
Adverse  Effect,  a written notice  describing  such event and  describing  what
action is being taken or is proposed to be taken with respect thereto,  together
with a copy of any notice of such event that is given to the PBGC;

     (b) promptly and in any event within  thirty (30) days after the receipt by
Borrower of a request therefor by a Bank,  copies of any annual and other report
(including

                                       58
<PAGE>

Schedule  B thereto)  with  respect  to a Plan  filed by  Borrower  or any ERISA
Affiliate  with the United  States  Department  of Labor,  the Internal  Revenue
Service or the PBGC;

     (c)  notification  within thirty (30) days of the effective date thereof of
any  material  increases  in the  benefits,  or  material  change in the funding
method,  of any existing Plan which is not a  multiemployer  plan (as defined in
section 4001(a)(3) of ERISA), or the establishment of any material new Plans, or
the  commencement  of  contributions  to any Plan to which Borrower or any ERISA
Affiliate was not previously contributing; and

     (d)  promptly  after  receipt of written  notice of  commencement  thereof,
notice of all (i) claims made by participants or  beneficiaries  with respect to
any  Plan,  and  (ii)  actions,  suits  and  proceedings  before  any  court  or
governmental department,  commission,  board, bureau, agency or instrumentality,
domestic or foreign,  affecting  Borrower or any ERISA Affiliate with respect to
any Plan,  except those which, in the aggregate,  if adversely  determined could
not have a Material Adverse Effect.

     Section 8.12 Additional Documents. Borrower will, and will cause each other
Credit Party to, cure  promptly any defects in the creation and issuance of each
Note, and the execution and delivery of this Agreement and the other Loan Papers
and, at Borrower's expense, Borrower shall promptly and duly execute and deliver
to each Bank, and cause each other Credit Party to promptly and duly execute and
deliver to each  Bank,  upon  reasonable  request,  all such  other and  further
documents,  agreements and instruments in compliance with or  accomplishment  of
the covenants and  agreements  of the Credit  Parties in this  Agreement and the
other Loan Papers as may be reasonably  necessary or  appropriate  in connection
therewith.

     Section 8.13 Environmental Review. Borrower shall deliver to Administrative
Agent prior to the completion by any Credit Party of any material acquisition of
Mineral  Interests or related  assets,  other than an  acquisition of additional
interests  in  Mineral  Interests  in which a Credit  Party  previously  held an
interest,  a report  or  reports  obtained  by  Borrower  in the  course of such
acquisition,  which  report or reports  shall set forth the results of a Phase I
environmental review of such Mineral Interests and related assets. Additionally,
if requested by Administrative  Agent or Required Banks in writing in connection
with any such material  acquisition,  Borrower  shall deliver to  Administrative
Agent,  within  thirty (30) days of  Administrative  Agent's or Required  Banks'
written  request,  a report or reports related to any such material  acquisition
which shall be in form, scope and detail acceptable to Administrative Agent from
environmental  engineering firms acceptable to  Administrative  Agent, and which
shall set forth the  results of a Phase I  environmental  review of the  Mineral
Interests and related  assets the subject of such material  acquisition.  All of
the reports  delivered  to  Administrative  Agent  pursuant to this Section 8.13
shall not reflect the existence of facts or circumstances which would constitute
a material violation of any Applicable  Environmental Law or which are likely to
result in a material liability to any Credit Party.

     Section 8.14  Maintenance of Hedge  Transactions.  Borrower shall (a) enter
into and maintain the Hedge Transactions  required by Section 6.1(i) hereof, and
(b) not amend,  modify or cancel  same  without  the prior  written  approval of
Required Banks.

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<PAGE>

                                   Article IX
                               NEGATIVE COVENANTS

     Borrower  agrees  that so long as any  Bank has any  commitment  to lend or
participate in Letter of Credit  Exposure  hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:

     Section 9.1 Incurrence of Debt. Borrower will not, nor will Borrower permit
any other Credit  Party to,  incur,  become or remain  liable for any Debt other
than (a) the  Obligations,  (b) the Senior Term Debt;  provided,  that,  (i) the
aggregate principal amount of such Debt does not exceed $35,000,000 at any time,
(ii) the advance of the  proceeds of such Debt on the Closing Date is applied to
pay a  portion  of the  costs of the Devon  Acquisition,  and  (iii)  Bluestem's
Guarantee  of the Senior  Term Debt  shall be  subordinated  to the  Obligations
pursuant to the terms of the Intercreditor  Agreement, (c) the Subordinate Debt;
provided,  that, (i) the aggregate principal amount of such Debt does not exceed
$51,000,000  (plus the amount of any interest paid in kind which may be added to
the principal of such Debt) at any time, and (ii) the advance of the proceeds of
such Debt on the  Closing  Date is  applied to pay a portion of the costs of the
Devon  Acquisition,  (d) Debt  existing on the  Closing  Date and  described  on
Schedule 9.1 attached  hereto (but not increases in the amount of such Debt) and
secured by Permitted  Encumbrances  described in clause (i) of the definition of
Permitted  Encumbrances,  and (e) other unsecured Debt which,  together with the
Debt described in clause (d) hereof, shall not exceed $2,000,000 at any time.

     Section 9.2  Restricted  Payments.  Borrower  will not,  nor will  Borrower
permit any other Credit  Party to,  directly or  indirectly,  declare or pay, or
incur any liability to declare or pay, any Restricted  Payment;  provided,  that
(a) any Subsidiary of Borrower may make  Distributions  to Borrower,  any Credit
Party may make  Distributions  to any other  Credit  Party  that has  provided a
Facility  Guaranty,  and all of the  Equity of which  owned by  Borrower  or any
Indirect Restricted Subsidiary has been pledged to Administrative Agent pursuant
to a Pledge Agreement, (c) so long as (i) no Default exists on the date any such
payment is made, and no Default or Event of Default would result therefrom,  and
(ii) before and after giving  effect to any such  payment,  Availability  is not
less than ten percent (10%) of the Borrowing  Base then in effect,  Borrower may
make  prepayments  of the  principal of the Senior Term Debt, so long as (i) the
Senior Term Debt has been repaid in full, (ii) no Default exists on the date any
such  Distribution  is made,  and no Default or Event of  Default  would  result
therefrom,  and (iii) before and after giving  effect to any such  Distribution,
Availability  is not less than ten percent (10%) of the  Borrowing  Base then in
effect,  Borrower  may make  Distributions  to (w) the Holders in respect of the
Subordinate  Debt, and (x) the Investors in respect of their Equity interests in
Borrower and in accordance with the terms of the Operating Agreement;  provided,
that, in no event will such  Distributions  made pursuant to this Section 9.2(d)
exceed  in the  aggregate,  during  any  twelve  (12)  month  rolling  period (a
"measurement period"),  $15,000,000;  provided further, that, (y) the limitation
otherwise set forth in the immediately preceding proviso shall not be applicable
in the event the  Consolidated  Total Debt to EBITDA Ratio for the most recently
completed  Rolling  Period is less than 2.0 to 1.0,  and (z) prior to making any
such Distribution  pursuant to this Section 9.2(d),  Administrative  Agent shall
have received a certificate of a Financial Officer of Borrower setting forth (1)
detailed  calculations of the Consolidated  Total Debt to EBITDA Ratio as of the
date of such certificate, and (2) the aggregate dollar amount of

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<PAGE>

Distributions  previously  made to the  Investors  and Holders  pursuant to this
Section  9.2(d)  during the  applicable  measurement  period,  (e) so long as no
Default,  Event of Default or Borrowing Base  Deficiency  exists on the date any
such  distribution is declared or paid, and no Default or Event of Default would
result  therefrom,  Borrower  may  make  Permitted  Tax  Distributions,  and (f)
Borrower may make QES Payments.

     Section 9.3 Negative  Pledge.  Borrower will not, nor will Borrower  permit
any other Credit Party to, create,  assume or suffer to exist any Lien on any of
their respective assets, other than Permitted  Encumbrances.  Borrower will not,
nor will  Borrower  permit any other Credit Party to, enter into or become bound
by any  agreement  (other  than this  Agreement)  that  prohibits  or  otherwise
restricts  the right of Borrower or any other Credit Party to create,  assume or
suffer  to  exist  any  Lien on any of  their  respective  assets  in  favor  of
Administrative Agent for the ratable benefit of Banks.

     Section  9.4  Consolidations  and  Mergers.  Borrower  will  not,  nor will
Borrower permit any other Credit Party to, consolidate or merge with or into any
other Person;  provided,  that, so long as no Default or Event of Default exists
or will result,  any Restricted  Subsidiary  may merge or  consolidate  with any
other Person so long as such Restricted Subsidiary is the surviving Person and a
wholly owned direct or indirect Subsidiary of Borrower.

Section 9.5  Asset Dispositions.  Borrower will not, nor will Borrower permit
any other Credit Party to, sell, lease,  transfer,  abandon or otherwise dispose
of any asset  other  than (a) the sale in the  ordinary  course of  business  of
Hydrocarbons produced from Borrower's Mineral Interests, (b) the disposition, in
the ordinary course of Borrower's business,  of equipment and related items that
are  obsolete  or no longer  useful in  Borrower's  business,  and  provided  no
Default,  Event of Default or Borrowing Base  Deficiency  exists or would result
therefrom,  the sale, lease, transfer,  abandonment,  exchange,  reassignment or
other  disposition  of other assets;  provided,  that (i) Borrower shall provide
Administrative  Agent with not less than ten (10) Domestic  Business Days notice
of such sale,  lease,  transfer,  abandonment,  exchange,  reassignment or other
disposition pursuant to this clause (c), and (ii) the aggregate value (which, in
the case of assets  consisting  of Mineral  Interests,  shall be the  Recognized
Value of such Mineral Interests as proposed by Administrative Agent and approved
by (x)  Required  Banks and  Required  Lenders  (as such term is  defined in the
Senior Term Credit  Agreement)  in the event any portion of the Senior Term Debt
is then  outstanding,  and (y) Required  Banks in the event the Senior Term Debt
has been paid in full,  and in the case of any exchange,  shall be the net value
or net Recognized  Value realized or resulting from such exchange) of all assets
sold,  leased,  transferred,   abandoned,  exchanged,  reassigned  or  otherwise
disposed  of  pursuant  to  this  clause  (c) in any  period  between  Scheduled
Redeterminations  shall not exceed five percent (5%) of the Borrowing  Base then
in effect (for purposes of this clause (c) the Closing Date will be deemed to be
a Scheduled  Redetermination);  provided, further that no sale, lease, transfer,
abandonment,  exchange,  reassignment or other disposition of any Borrowing Base
Property  shall be  permitted  pursuant to this clause (c) unless all  mandatory
prepayments  required  by  Section  2.6 in  connection  with such  sale,  lease,
transfer,  abandonment,  exchange,  reassignment  or other  disposition are made
concurrently  with the closing  thereof.  In no event will Borrower or any other
Credit  Party  sell,  transfer  or  dispose  of any  Equity  in  any  Restricted
Subsidiary  nor will any Credit  Party  issue or sell any Equity or any  option,
warrant or other right to acquire such Equity or security  convertible into such
Equity to any Person other than the Credit Party which is

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<PAGE>

the direct  parent of such issuer on the Closing  Date or, in the case of future
created or acquired Restricted Subsidiaries,  any such issuance of Equity on the
date of, and in connection  with, the creation or acquisition of such Restricted
Subsidiary.

     Section 9.6 Amendments to Organizational and Other Documents. Borrower will
not,  nor will  Borrower  permit any other Credit Party to, enter into or permit
any  modification  or amendment of, or waive any material right or obligation of
any Person under (a) its certificate or articles of  incorporation,  articles or
organization,   bylaws,  partnership  agreement,   regulations,   the  Operating
Agreement,   or  other   organizational   documents   other   than   amendments,
modifications and waivers which will not, individually or in the aggregate, have
a Material  Adverse Effect,  (b) the QES Management  Agreement (other than minor
modifications to reflect day-to-day personnel and operational requirements), (c)
any Senior  Term  Credit  Document  the effect of which is to (i)  increase  the
maximum  principal  amount of the Senior Term Debt or rate of interest on any of
the Senior Term Debt (other than as a result of the imposition of a default rate
of interest in accordance  with the terms of the Senior Term Credit  Documents),
(ii)  change or add any event of default  or any  covenant  with  respect to the
Senior Term Debt if the effect of such change or addition is to cause any one or
more of the Senior Term Credit  Documents to be more  restrictive  on any Credit
Party than such  Senior  Term  Credit  Documents  were  prior to such  change or
addition, (iii) change the dates upon which payments of principal or interest on
the  Senior  Term  Debt  are due,  (iv)  change  any  redemption  or  prepayment
provisions  of the  Senior  Term  Debt,  or (v) grant any Liens in any assets or
properties  of any Credit  Party,  other than the Liens  granted  under the Loan
Papers,  (d) any Equity  Investment  Document,  and/or (e) any Subordinate  Debt
Document.

     Section 9.7 Use of Proceeds.  The proceeds of  Borrowings  will not be used
for any purpose other than (a) working capital,  (b) to finance the acquisition,
exploration  and  development  of Mineral  Interests,  and related and ancillary
pipelines and related  assets  (including  paying fees and closing costs related
thereto),  (c) for general corporate  purposes,  (d) with respect to the initial
Borrowing hereunder on the Closing Date, to repay in full the obligations,  Debt
and liabilities of QRC outstanding under the Existing Credit Agreements, and (e)
to make any payments permitted by Section 9.2. None of such proceeds (including,
without  limitation,  proceeds of Letters of Credit  issued  hereunder)  will be
used, directly or indirectly, for the purpose, whether immediate,  incidental or
ultimate,  of purchasing or carrying any Margin Stock, and none of such proceeds
will be used in violation of applicable Law (including,  without limitation, the
Margin  Regulations).  Letters of Credit will be issued  hereunder  only for the
purpose of securing  bids,  tenders,  bonds,  tax payments,  contracts and other
obligations entered into in the ordinary course of Borrower's business.  Without
limiting the  foregoing,  no Letters of Credit will be issued  hereunder for the
purpose of or providing  credit  enhancement  with respect to any Debt or equity
security of any Credit Party or to secure any Credit  Party's  obligations  with
respect to Hedge  Transactions  other than Hedge  Transactions with a Bank or an
Affiliate of such Bank.

     Section 9.8  Investments.  Borrower will not, nor Borrower permit any other
Credit Party to, directly or indirectly, make or have outstanding any Investment
other than Permitted Investments.

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<PAGE>

     Section 9.9  Transactions  with  Affiliates.  Borrower  will not,  nor will
Borrower  permit any other Credit Party to,  engage in any  transaction  with an
Affiliate  unless such  transaction  is as  favorable  to such party as could be
obtained  in  an  arm's  length  transaction  with  an  unaffiliated  Person  in
accordance  with  prevailing  industry  customs and  practices.  Notwithstanding
anything to the contrary,  the QES  Management  Agreement and  Subordinate  Debt
Documents are permitted hereunder.

     Section 9.10 ERISA.  Borrower will not, nor will Borrower  permit any other
Credit  Party to (a) take any  action  or fail to take any  action  which  would
result in a violation of ERISA,  the Code or other Laws  applicable to the Plans
maintained or  contributed  to by it or any ERISA  Affiliate,  or (b) modify the
term of, or the  funding  obligations  or  contribution  requirements  under any
existing Plan,  establish a new Plan, or become obligated or incur any liability
under a Plan that is not  maintained or  contributed to by Borrower or any ERISA
Affiliate as of the Closing Date unless,  in each case, such violation or action
could not reasonably be expected to result in a Material Adverse Effect.

     Section  9.11 Hedge  Transactions.  Borrower  will not,  nor will  Borrower
permit any other Credit Party to, enter into any Hedge Transactions  (other than
Hedge Transactions  required by Section 6.1(i) hereof) which would cause (a) the
amount of Hydrocarbons  which are the subject of Hedge Transactions in existence
at such time to exceed  seventy-five  percent  (75%) of  Borrower's  "forecasted
production  from  Proved  Mineral  Interests"  (as  defined  below)  during  any
applicable  calendar  year,  as measured  from the current date (a  "measurement
date"), which Hedge Transactions shall not have a tenor of greater than four (4)
years, or (b) the notional amount of all Hedge  Transactions  then in effect for
the purpose of hedging  Borrower's  interest rate exposure to exceed one hundred
percent  (100%) of the  Consolidated  Total  Debt of  Borrower  projected  to be
outstanding  for any period covered by such Hedge  Transaction.  As used in this
Section 9.11,  "forecasted  production from Proved Mineral  Interests" means the
forecasted  production  for oil and gas  for  the  applicable  calendar  year as
reflected in the most recent Reserve Report  delivered to  Administrative  Agent
pursuant to Section 4.1 hereof, after giving effect to any pro forma adjustments
for the consummation of any  acquisitions or dispositions  between the effective
date of such Reserve Report and the measurement  date. Once confirmed,  no Hedge
Transaction may be amended or modified,  or cancelled  without the prior written
consent of Required Banks.  Borrower shall collaterally assign all of its right,
title and interest in each agreement or contract  evidencing a Hedge Transaction
to the  Collateral  Agent and shall,  if  requested by  Administrative  Agent or
Required  Banks,  cause each such agreement or contract (a) to expressly  permit
such  assignment  and (b) upon the occurrence of any default or event of default
under such  agreement or  contract,  (i) to permit Banks to cure such default or
event of default and assume the  obligations of Borrower under such agreement or
contract and (ii) to prohibit the  termination  of such agreement or contract by
the counterparty  thereto if Banks assume the obligations of Borrower under such
agreement or contract  and Banks take the actions  required  with the  foregoing
clause (i).

     Section 9.12  Fiscal Year.  Borrower will not, nor will Borrower permit any
other Credit Party to, change its Fiscal Year.

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<PAGE>

     Section  9.13 Change in  Business.  Borrower  will not,  nor will  Borrower
permit  any  other  Credit  Party  to,  engage in any  business  other  than the
businesses engaged in by such parties on the date hereof as described in Section
7.13 hereof.

     Section 9.14 Obligations of Unrestricted  Subsidiaries.  Borrower will not,
nor will Borrower permit any other Credit Party to, incur any liability, Debt or
obligation  to QRC,  any other member of the Quest  Group,  or any  Unrestricted
Subsidiary of any nature, or have any liability  (whether by operation of law or
otherwise) for any liability, Debt or obligation of QRC, any other member of the
Quest  Group or any  Unrestricted  Subsidiary,  other  than with  respect to the
payments  and  Distributions  to the extent  expressly  permitted by Section 9.2
hereof.

     Section 9.15  Subordinate  Debt.  Borrower  will not make any payment on or
with respect to any Subordinate Debt except as expressly  permitted by the terms
of the Subordinate  Note;  provided,  that,  Borrower may make  Distributions in
respect of such  Subordinate  Debt in accordance with, and subject to, the terms
of Section 9.2(d) hereof.

                                   Article X
                               FINANCIAL COVENANTS
                               -------------------

     Borrower  agrees  that so long as any  Bank has any  commitment  to lend or
participate in Letter of Credit  Exposure  hereunder or any amount payable under
any Note remains unpaid or any Letter of Credit remains outstanding:

     Section 10.1 Current Ratio of Borrower.  Borrower will not permit its ratio
of (a) Consolidated  Current Assets to (b) its Consolidated  Current Liabilities
as of the end of any Fiscal Quarter to be less than 1.0 to 1.0.

     Section 10.2 Consolidated Senior Debt to Consolidated EBITDA. As of the end
of any Fiscal  Quarter,  commencing with the Fiscal Quarter ending May 31, 2004,
Borrower  will not permit its ratio of (a)  Consolidated  Senior  Debt (for each
Rolling Period ending on such date) to (b) Consolidated EBITDA (for each Rolling
Period  ending on such date or Annualized  Consolidated  EBITDA for such Rolling
Period in the case of a Rolling  Period ending on or prior to November 30, 2004)
to be greater than the ratio set forth below for each such Fiscal Quarter:

                                               Consolidated Senior Debt to
                Fiscal Quarter Ending          Consolidated EBITDA Ratio

                    May 31, 2004                       3.00 to 1.0
                  August 31, 2004                      3.00 to 1.0
     November 30, 2004 and each Fiscal Quarter
                 ending thereafter                     2.50 to 1.0

     Section 10.3  Consolidated Total Debt to Consolidated EBITDA. As of the end
of any Fiscal  Quarter,  commencing with the Fiscal Quarter ending May 31, 2004,
Borrower  will not  permit  its ratio of (a)  Consolidated  Total Debt (for each
Rolling Period ending on such date) to (b) Consolidated EBITDA (for each Rolling
Period ending on such date, or Annualized  Consolidated  EBITDA for such Rolling
Period in the case of a Rolling  Period ending on or prior to November 30, 2004)
to be greater than the ratio set forth below for each such Fiscal Quarter:

                                       64
<PAGE>

                                               Consolidated Total Debt to
                Fiscal Quarter Ending             Consolidated EBITDA

                    May 31, 2004                       3.50 to 1.0
                  August 31, 2004                      3.50 to 1.0
     November 30, 2004 and each Fiscal Quarter
                 ending thereafter                     3.00 to 1.0

     Section 10.4 Consolidated  EBITDA to Consolidated Net Interest Expense.  As
of the end of any Fiscal  Quarter,  commencing  with the Fiscal  Quarter  ending
February 28, 2004, Borrower will not permit its ratio of (a) Consolidated EBITDA
(for each Rolling Period ending on such date, or Annualized  Consolidated EBITDA
for such Rolling  Period in the case of a Rolling  Period  ending on or prior to
November 30, 2004) to (b) Consolidated Net Interest Expense to be less than 2.50
to 1.0 for each such Fiscal Quarter.

                                   Article XI
                                    DEFAULTS
                                    --------

     Section  11.1 Events of  Default.  If one or more of the  following  events
(collectively  "Events of Default" and individually an "Event of Default") shall
have occurred and be continuing:

     (a) Borrower shall fail to pay when due any principal on any Note;

     (b) Borrower  shall fail to pay when due accrued  interest on any Note,  or
QRC (with  respect to Section 2.12 only) or Borrower  shall fail to pay when due
any fees or any other amount payable by such party  hereunder,  and such failure
shall  continue for a period of three (3) Domestic  Business Days  following the
due date;

     (c)  Borrower  shall fail to observe or perform any  covenant or  agreement
contained in Section 4.6, Section 6.3, Section 8.1(f),  Section 8.1(g),  Section
8.1(h),  Section 8.1(k),  Section 8.1(l),  Section 8.2, Section 8.3(a),  Section
8.5,  Section 8.6, Section 8.11,  Section 8.14,  Article IX or Article X of this
Agreement;

     (d) any Credit  Party  shall fail to observe  or perform  any  covenant  or
agreement contained in this Agreement or the other Loan Papers (other than those
referenced in Section  11.1(a),  Section  11.1(b) and Section  11.1(c)) and such
failure  continues for a period of thirty (30) days after the earlier of (i) the
date any  Authorized  Officer of any Credit  Party  acquires  knowledge  of such
failure,  or (ii)  written  notice of such  failure has been given to any Credit
Party by Administrative Agent or any Bank;

     (e) any representation, warranty, certification or statement made or deemed
to have been made by any Credit Party in any certificate, financial statement or
other document  delivered  pursuant to this  Agreement  shall prove to have been
incorrect in any material respect when made;

     (f) any Credit Party shall fail to make any payment when due on any Debt of
such Person in a principal  amount equal to or greater than  $1,000,000,  or any
other event or

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<PAGE>

condition  shall occur which (i) results in the  acceleration of the maturity of
any such  Debt,  or (ii)  entitles  the  holder of such Debt to  accelerate  the
maturity thereof;

     (g)  any Credit Party shall  commence a voluntary case or other  proceeding
seeking  liquidation,  reorganization  or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar Law now or hereafter
in effect  or  seeking  the  appointment  of a  trustee,  receiver,  liquidator,
custodian  or  other  similar  official  of it or any  substantial  part  of its
property, or shall consent to any such relief or to the appointment of or taking
possession  by any such  official  in an  involuntary  case or other  proceeding
commenced  against  it, or shall make a general  assignment  for the  benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate, partnership or limited liability company action to authorize
any of the foregoing;

     (h)  an involuntary case or other proceeding shall be commenced against any
Credit Party seeking liquidation, reorganization or other relief with respect to
it or its debts under any  bankruptcy,  insolvency  or other  similar Law now or
hereafter  in  effect  or  seeking  the  appointment  of  a  trustee,  receiver,
liquidator, custodian or other similar official of it or any substantial part of
its  property,  and such  involuntary  case or  other  proceeding  shall  remain
undismissed and unstayed for a period of sixty (60) days; or an order for relief
shall be entered  against any Credit Party under the federal  bankruptcy Laws as
now or hereafter in effect;

     (i)  one (1) or more  final judgments  or orders  for the  payment of money
aggregating in excess of $1,000,000  shall be rendered  against any Credit Party
and such judgment or order shall  continue  unsatisfied  and unstayed for thirty
(30) days;

     (j)  (i) any event  occurs with  respect to any Plan or Plans  pursuant  to
which any Credit  Party  and/or any ERISA  Affiliate  incur a liability  due and
owing at the time of such event, without existing funding therefor,  for benefit
payments  under such Plan or Plans in excess of  $1,000,000;  or (ii) any Credit
Party, any ERISA Affiliate,  or any other  "party-in-interest"  or "disqualified
person,"  as such  terms are  defined  in  section  3(14) of ERISA  and  section
4975(e)(2)  of the Code,  shall engage in  transactions  which in the  aggregate
results  in a direct or  indirect  liability  to any  Credit  Party or any ERISA
Affiliate in excess of  $1,000,000  under section 409 or 502 of ERISA or section
4975 of the Code which either (A) results in a Lien on any Credit Party's assets
which is not a Permitted Encumbrance,  or (B) continues unsatisfied for a period
of thirty  (30) days after any  Authorized  Officer of any  Credit  Party  first
acquires knowledge of such liability;

     (k)  a Change of Control shall occur;

     (l)  this Agreement or any other Loan Paper shall cease to be in full force
and effect or shall be declared null and void or the validity or  enforceability
thereof  shall be contested or  challenged  by any Credit  Party,  or any Credit
Party shall deny that it has any further  liability or  obligation  under any of
the Loan  Papers,  or any Lien  created by the Loan Papers  shall for any reason
(other than the release  thereof in accordance with the Loan Papers) cease to be
a valid, first priority, perfected Lien (subject to Permitted Encumbrances) upon
any of the property or assets purported to be covered thereby;

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<PAGE>

     (m)  a Default (as defined therein)  shall  occur  under  any  Senior  Term
Credit Document; or

     (n) any Credit Party or Holder shall repudiate or contest the subordination
provisions of the  Subordinate  Debt Documents,  or otherwise  assert in writing
that such  subordination  provisions  are not  valid,  binding  and  enforceable
against any such party;

then, and in every such event,  Administrative  Agent shall without presentment,
notice or demand (unless expressly  provided for herein) of any kind (including,
without limitation, notice of intention to accelerate and acceleration),  all of
which are hereby  waived,  (a) if requested  by Required  Banks,  terminate  the
Commitments and they shall thereupon terminate, and (b) if requested by Required
Banks, take such other actions as may be permitted by the Loan Papers including,
declaring  the Notes  (together  with accrued  interest  thereon) to be, and the
Notes shall thereupon become, immediately due and payable; provided that, in the
case of any of the Events of  Default  specified  in Section  11.1(g) or Section
11.1(h),   without  any  notice  to  any  Credit  Party  or  any  other  act  by
Administrative Agent or Banks, the Commitments shall thereupon terminate and the
Notes (together with accrued interest thereon) shall become  immediately due and
payable.

                                  Article XII
                                     AGENTS

     Section 12.1  Appointment;  Nature of Relationship.  Bank One, NA is hereby
appointed  by  each  of  the  Banks  as  its  contractual   representative   and
Administrative  Agent  hereunder and under each other Loan Paper,  and each Bank
irrevocably   authorizes   Administrative   Agent  to  act  as  the  contractual
representative  of such Bank with the  rights  and  duties  expressly  set forth
herein and in the other Loan Papers.  Administrative Agent agrees to act as such
contractual  representative and Administrative Agent upon the express conditions
contained  in this  Article  XII.  Notwithstanding  the use of the defined  term
"Administrative   Agent,"  it  is   expressly   understood   and   agreed   that
Administrative  Agent shall not have any fiduciary  responsibilities to any Bank
by reason of this  Agreement  or any other  Loan  Paper and that  Administrative
Agent is merely acting as the contractual  representative of the Banks with only
those duties as are  expressly  set forth in this  Agreement  and the other Loan
Papers. In its capacity as the Banks' contractual representative, Administrative
Agent (i) does not hereby assume any fiduciary duties to any of the Banks,  (ii)
is a  "representative"  of the Banks  within the  meaning  of the term  "secured
party" as defined in the Texas Uniform  Commercial  Code, and (iii) is acting as
an independent  contractor,  the rights and duties of which are limited to those
expressly  set forth in this  Agreement  and the other Loan Papers.  Each of the
Banks  hereby  agrees  to assert no claim  against  Administrative  Agent on any
theory of liability  for breach of fiduciary  duty,  any and all of which claims
each Bank hereby waives.

     Section 12.2 Powers.  Administrative Agent shall have and may exercise such
powers under the Loan Papers as are  specifically  delegated  to  Administrative
Agent by the terms of each thereof,  together with such powers as are reasonably
incidental  thereto.  Administrative  Agent shall have no implied  duties to the
Banks, or any obligation to the Banks to take any action  thereunder  except any
action  specifically  provided by the Loan Papers to be taken by  Administrative
Agent.

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<PAGE>

     Section 12.3 General Immunity.  Neither Administrative Agent nor any of its
directors, officers, agents or employees shall be liable to Borrower or any Bank
for any action taken or omitted to be taken by it or them hereunder or under any
other Loan Paper or in  connection  herewith or  therewith  except to the extent
such action or inaction is  determined in a final  non-appealable  judgment by a
court of  competent  jurisdiction  to have arisen from the gross  negligence  or
willful misconduct of such Person.

     Section  12.4  No  Responsibility   for  Loans,   Recitals,   etc.  Neither
Administrative  Agent nor any of its  directors,  officers,  agents or employees
shall be responsible for or have any duty to ascertain,  inquire into, or verify
(a) any statement,  warranty or representation  made in connection with any Loan
Paper or any Borrowing  hereunder;  (b) the  performance or observance of any of
the  covenants or  agreements  of any obligor  under any Loan Paper,  including,
without limitation,  any agreement by an obligor to furnish information directly
to each Bank;  (c) the  satisfaction  of any condition  specified in Article VI,
except receipt of items required to be delivered solely to Administrative Agent;
(d) the existence or possible existence of any Default or Event of Default;  (e)
the validity, enforceability,  effectiveness,  sufficiency or genuineness of any
Loan Paper or any other instrument or writing furnished in connection therewith;
(f) the value, sufficiency,  creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of Borrower or any guarantor
of any of the  Obligations  or of any  of  Borrower's  or any  such  guarantor's
respective Subsidiaries.  Administrative Agent shall have no duty to disclose to
the Banks  information  that is not  required  to be  furnished  by  Borrower to
Administrative  Agent at such time, but is voluntarily  furnished by Borrower to
Bank One (either in its capacity as  Administrative  Agent or in its  individual
capacity).

     Section 12.5 Action on Instructions of Banks. Administrative Agent shall in
all cases be fully protected in acting, or in refraining from acting,  hereunder
and under any other Loan Paper in accordance with written instructions signed by
the Required Banks, and such instructions and any action taken or failure to act
pursuant  thereto  shall  be  binding  on all of the  Banks.  The  Banks  hereby
acknowledge  that  Administrative  Agent  shall  be  under  no duty to take  any
discretionary  action  permitted to be taken by it pursuant to the provisions of
this  Agreement  or any other Loan Paper unless it shall be requested in writing
to do so by Required  Banks.  Administrative  Agent shall be fully  justified in
failing or refusing to take any action  hereunder and under any other Loan Paper
unless it shall first be indemnified to its  satisfaction  by the Banks pro rata
against any and all  liability,  cost and expense that it may incur by reason of
taking or continuing to take any such action.

     Section 12.6  Employment  of Agents and Counsel.  Administrative  Agent may
execute any of its duties as Administrative  Agent hereunder and under any other
Loan Paper by or through employees,  agents, and attorneys-in-fact and shall not
be answerable to the Banks,  except as to money or securities  received by it or
its  authorized  agents,  for the  default or  misconduct  of any such agents or
attorneys-in-fact  selected by it with  reasonable  care.  Administrative  Agent
shall be entitled to advice of counsel  concerning the  contractual  arrangement
between  Administrative  Agent  and the  Banks  and all  matters  pertaining  to
Administrative Agent's duties hereunder and under any other Loan Paper.

     Section 12.7 Reliance on Documents; Counsel.  Administrative Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement,

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<PAGE>

paper or  document  believed  by it to be genuine  and  correct and to have been
signed or sent by the  proper  Person  or  Persons,  and,  in  respect  to legal
matters,  upon the opinion of counsel selected by  Administrative  Agent,  which
counsel may be employees of Administrative Agent.

     Section 12.8  Administrative  Agent's  Reimbursement  and  Indemnification.
Banks  agree  to  reimburse  and  indemnify   Administrative  Agent  ratably  in
proportion to their  respective  Commitments  (or, if the Commitments  have been
terminated,  in  proportion  to  their  Commitments  immediately  prior  to such
termination)   (i)  for  any  amounts  not  reimbursed  by  Borrower  for  which
Administrative  Agent is entitled to  reimbursement  by Borrower  under the Loan
Papers,  (ii) for any other expenses incurred by Administrative  Agent on behalf
of  the  Banks,  in  connection  with  the  preparation,   execution,  delivery,
administration   and  enforcement  of  the  Loan  Papers   (including,   without
limitation, for any expenses incurred by Administrative Agent in connection with
any dispute between  Administrative Agent and any Bank or between two or more of
the  Banks)  and  (iii)  for  any  liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments,  suits, costs, expenses or disbursements of any
kind and nature  whatsoever  which may be imposed  on,  incurred  by or asserted
against  Administrative  Agent in any way relating to or arising out of the Loan
Papers  or  any  other  document  delivered  in  connection   therewith  or  the
transactions contemplated thereby (including,  without limitation,  for any such
amounts incurred by or asserted against  Administrative Agent in connection with
any dispute between  Administrative Agent and any Bank or between two or more of
the Banks),  or the enforcement of any of the terms of the Loan Papers or of any
such  other  documents;  provided  that no Bank  shall be liable  for any of the
foregoing to the extent any of the foregoing is found in a final  non-appealable
judgment by a court of competent  jurisdiction  to have  resulted from the gross
negligence or willful misconduct of Administrative Agent. The obligations of the
Banks under this  Section  12.8 shall  survive  payment of the  Obligations  and
termination of this Agreement.

     Section 12.9 Notice of Default. Administrative Agent shall not be deemed to
have  knowledge or notice of the  occurrence  of any Default or Event of Default
hereunder unless Administrative Agent has received written notice from a Bank or
Borrower referring to this Agreement describing such Default or Event of Default
and  stating  that such  notice  is a "notice  of  default".  In the event  that
Administrative  Agent  receives such a notice,  Administrative  Agent shall give
prompt notice thereof to the Banks.

     Section  12.10  Rights as a Bank.  In the event  Administrative  Agent is a
Bank,  Administrative  Agent shall have the same rights and powers hereunder and
under any other Loan Paper with  respect  to its  Commitment  and its  Revolving
Loans as any Bank and may exercise the same as though it were not Administrative
Agent,  and the term "Bank" or "Banks"  shall,  at any time when  Administrative
Agent  is a  Bank,  unless  the  context  otherwise  indicates,  include  in its
individual capacity. Administrative Agent and its Affiliates may accept deposits
from, lend money to, and generally engage in any kind of trust,  debt, equity or
other  transaction,  in addition to those  contemplated by this Agreement or any
other Loan Paper,  with Borrower or any of its Subsidiaries in which Borrower or
such Subsidiary is not restricted hereby from engaging with any other Person.

     Section 12.11 Bank Credit  Decision.  Each Bank  acknowledges  that it has,
independently  and  without  reliance  upon  Administrative   Agent,  Sole  Lead
Arranger, Bookrunner

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<PAGE>

or any other Agent or Bank and based on the financial statements prepared by QRC
and/or  Borrower  and such  other  documents  and  information  as it has deemed
appropriate,  made its own  credit  analysis  and  decision  to enter  into this
Agreement and the other Loan Papers.  Each Bank also  acknowledges that it will,
independently  and  without  reliance  upon  Administrative   Agent,  Sole  Lead
Arranger,  Bookrunner or any other Agent or Bank and based on such documents and
information as it shall deem  appropriate at the time,  continue to make its own
credit  decisions in taking or not taking  action under this  Agreement  and the
other Loan Papers.

     Section 12.12  Successor  Administrative  Agent.  Administrative  Agent may
resign at any time by giving written notice thereof to Banks and Borrower,  such
resignation to be effective upon the  appointment of a successor  Administrative
Agent or, if no successor  Administrative  Agent has been appointed,  forty-five
(45) days after the retiring  Administrative Agent gives notice of its intention
to resign. Administrative Agent may be removed at any time with or without cause
by written notice received by  Administrative  Agent from Required  Banks,  such
removal to be effective on the date specified by Required  Banks.  Upon any such
resignation  or removal,  Required  Banks  shall have the right to  appoint,  on
behalf of Borrower and the Banks, a successor  Administrative Agent, which shall
be  approved  by  Borrower,  such  approval  not  to be  unreasonably  withheld;
provided,  that,  Borrower  shall not have the right to  approve  any  successor
Administrative  Agent  appointed  during the  continuance of any Default.  If no
successor  Administrative  Agent shall have been so appointed by Required  Banks
within thirty (30) days after the resigning Administrative Agent's giving notice
of its intention to resign, then the resigning Administrative Agent may appoint,
on behalf of Borrower and Banks, a successor Administrative Agent which shall be
approved by Borrower,  such approval not to be unreasonably withheld;  provided,
that, Borrower shall not have the right to approve any successor  Administrative
Agent appointed during the continuance of any Default.  If Administrative  Agent
has  resigned or been  removed and no  successor  Administrative  Agent has been
appointed,  Banks may perform all the duties of  Administrative  Agent hereunder
and  Borrower  shall make all  payments  in respect  of the  Obligations  to the
applicable Bank and for all other purposes Borrower shall deal directly with the
Banks.  No  successor  Administrative  Agent  shall be  deemed  to be  appointed
hereunder   until  such   successor   Administrative   Agent  has  accepted  the
appointment.  Any such successor Administrative Agent shall be a commercial bank
having  capital  and  retained  earnings  of at  least  $100,000,000.  Upon  the
acceptance of any appointment as  Administrative  Agent hereunder by a successor
Administrative  Agent,  such  successor  Administrative  Agent  shall  thereupon
succeed to and become vested with all the rights, powers,  privileges and duties
of the resigning or removed  Administrative Agent. Upon the effectiveness of the
resignation  or  removal  of  Administrative  Agent,  the  resigning  or removed
Administrative  Agent  shall be  discharged  from  its  duties  and  obligations
hereunder and under the Loan Papers.  After the effectiveness of the resignation
or removal of an Administrative  Agent, the provisions of this Article XII shall
continue  in effect for the benefit of such  Administrative  Agent in respect of
any  actions  taken  or  omitted  to be  taken  by it  while  it was  acting  as
Administrative  Agent  hereunder  and under the other Loan Papers.  In the event
that there is a successor to  Administrative  Agent by merger, or Administrative
Agent  assigns  its duties and  obligations  to an  Affiliate  pursuant  to this
Section 12.12,  then the term "Prime Rate" as used in this Agreement  shall mean
the prime  rate,  base rate or other  analogous  rate of the new  Administrative
Agent.

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<PAGE>

     Section  12.13  Delegation  to  Affiliates.  Borrower  and Banks agree that
Administrative  Agent may delegate any of its duties under this Agreement to any
of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers,
agents and employees)  which performs  duties in connection  with this Agreement
shall be entitled to the same benefits of the indemnification,  waiver and other
protective  provisions to which  Administrative  Agent is entitled under Article
XII and Article XIII.

     Section  12.14  Execution of  Collateral  Documents.  Without  limiting the
powers and authority of  Administrative  Agent  described  herein,  Banks hereby
empower  and  authorize   Administrative   Agent  to  execute  and  deliver  (as
applicable) to Borrower on their behalf the  Certificate of  Effectiveness,  the
Mortgages,  the Pledge Agreements,  the Intercreditor  Agreement and all related
financing statements and any other financing statements,  agreements,  documents
or  instruments  as shall be necessary or  appropriate to effect the purposes of
the foregoing instruments.

     Section  12.15  Collateral  Releases.  Banks hereby  empower and  authorize
Administrative  Agent to execute and  deliver to  Borrower  on their  behalf any
agreements,  documents or  instruments  as shall be necessary or  appropriate to
effect any releases of  collateral  which shall be permitted by the terms hereof
or of any other  Loan  Paper or which  shall  otherwise  have been  approved  by
Required  Banks (or, if required by the terms of Section 14.5, all of the Banks)
in writing.

                                  Article XIII
                             CHANGE IN CIRCUMSTANCES
                             -----------------------

     Section 13.1 Increased Cost and Reduced Return.

     (a) If, after the date hereof, the adoption of any applicable law, rule, or
regulation,  or any change in any applicable  law,  rule, or regulation,  or any
change in the  interpretation  or  administration  thereof  by any  Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration  thereof,  or compliance by any Bank (or its  Applicable  Lending
Office) with any request or  directive  (whether or not having the force of law)
of any such Governmental Authority, central bank, or comparable agency:

          (i) shall subject such Bank (or its Applicable  Lending Office) to any
     tax, duty, or other charge with respect to any Eurodollar  Loans, its Note,
     or its obligation to make Eurodollar Loans, or change the basis of taxation
     of any  amounts  payable to such Bank (or its  Applicable  Lending  Office)
     under this Agreement or its Note in respect of any Eurodollar  Loans (other
     than  taxes  imposed  on the  overall  net  income  of  such  Bank  or such
     Applicable Lending Office);

          (ii) shall impose,  modify,  or deem  applicable any reserve,  special
     deposit,  assessment,  compulsory loan, or similar  requirement (other than
     the Reserve  Requirement  utilized  in the  determination  of the  Adjusted
     Eurodollar  Rate)  relating to any extensions of credit or other assets of,
     or any deposits with or other  liabilities or commitments of, such Bank (or
     its  Applicable  Lending  Office),  including  the  Commitment of such Bank
     hereunder; or

                                       71
<PAGE>

          (iii) shall impose on such Bank (or its Applicable  Lending Office) or
     on the London interbank market any other condition affecting this Agreement
     or its  Note  or  any of  such  extensions  of  credit  or  liabilities  or
     commitments;

and the result of any of the  foregoing is to increase the cost to such Bank (or
its  Applicable  Lending  Office) of making,  Converting  into,  Continuing,  or
maintaining any Eurodollar  Loans or to reduce any sum received or receivable by
such Bank (or its  Applicable  Lending  Office) under this Agreement or its Note
with respect to any Eurodollar  Loans,  then the Borrower shall pay to such Bank
on  demand  (provided  such  demand  is  made  within  ninety  (90)  days of the
incurrence  of such  increased  cost) such amount or amounts as will  compensate
such  Bank  for  such  increased  cost  or  reduction.   If  any  Bank  requests
compensation by Borrower under this Section 13.1(a),  Borrower may, by notice to
such Bank (with a copy to Administrative  Agent), suspend the obligation of such
Bank to make or Continue  Eurodollar Loans or to Convert all or part of the Base
Rate Loan owing to such Bank into Eurodollar Loans, until the event or condition
giving rise to such request ceases to be in effect (in which case the provisions
of Section 13.4 shall be applicable);  provided,  that such suspension shall not
affect the right of such Bank to receive the compensation so requested.

     (b) If,  after the date  hereof,  any Bank shall have  determined  that the
adoption of any applicable law, rule, or regulation  regarding  capital adequacy
or any change therein or in the interpretation or administration  thereof by any
Governmental  Authority,  central bank, or  comparable  agency  charged with the
interpretation or administration  thereof, or any request or directive regarding
capital  adequacy  (whether  or not  having  the  force  of  law)  of  any  such
Governmental  Authority,  central bank, or comparable  agency, has or would have
the  effect of  reducing  the rate of return on the  capital of such Bank or any
corporation  controlling  such Bank as a consequence of such Bank's  obligations
hereunder to a level below that which such Bank or such  corporation  could have
achieved but for such  adoption,  change,  request,  or  directive  (taking into
consideration its policies with respect to capital adequacy), then, from time to
time upon  demand,  Borrower  shall pay to such Bank such  additional  amount or
amounts as will compensate  such Bank for such reduction.  In the event any Bank
(herein,  an "Affected Bank") requests  compensation under this Section 13.1(b),
Borrower  may  elect  to  replace  such  Affected  Bank as a Bank  party to this
Agreement;  provided that,  with respect to the replacement of an Affected Bank,
no Default or Event of Default shall have occurred and be continuing at the time
of  such  replacement,   and  provided  further  that,   concurrently  with  the
replacement  of any  Affected  Bank,  (x) another  bank or other entity which is
reasonably satisfactory to Administrative Agent shall agree, as of such date, to
purchase for cash the Revolving Loans and other  Obligations due to the Affected
Bank pursuant to an Assignment and Acceptance Agreement and to become a Bank for
all purposes under this Agreement and to assume all  obligations of the Affected
Bank to be  terminated  as of such date and to comply with the  requirements  of
Section 14.10  applicable  to  assignments,  and (y) Borrower  shall pay to such
Affected Bank in same day funds on the day of such  replacement  (i) all amounts
that are due to such Affected Bank pursuant to this Section 13.1(b), and (ii) an
amount,  if any,  equal to the payment which would have been due to such Bank on
the day of such  replacement  under Section 13.5 had the Revolving Loans of such
Affected  Bank been  prepaid on such date  rather  than sold to the  replacement
Bank.

     (c) Each Bank shall promptly  notify Borrower and  Administrative  Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such

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<PAGE>

Bank to  compensation  pursuant  to this  Section  13.1  and  will  designate  a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise  disadvantageous to it. Any Bank claiming  compensation under
this Section 13.1 shall furnish to Borrower and Administrative Agent a statement
setting forth the additional  amount or amounts to be paid to it hereunder which
shall be  conclusive  in the  absence of manifest  error.  In  determining  such
amount, such Bank may use any reasonable averaging and attribution methods.

     Section 13.2  Limitation on Type of Loans.  If on or prior to the first day
of any Interest Period for any Eurodollar Loan:

     (a)  Administrative   Agent  determines  (which   determination   shall  be
conclusive)  that by reason of  circumstances  affecting  the  relevant  market,
adequate and reasonable  means do not exist for ascertaining the Eurodollar Rate
for such Interest Period; or

     (b) Required Banks determine (which  determination shall be conclusive) and
notify   Administrative  Agent  that  the  Adjusted  Eurodollar  Rate  will  not
adequately and fairly reflect the cost to Banks of funding  Eurodollar Loans for
such Interest Period;

then  Administrative  Agent shall give Borrower prompt notice thereof specifying
the relevant Type of Revolving Loans and the relevant amounts or periods, and so
long as such condition remains in effect,  Banks shall be under no obligation to
make additional  Revolving Loans of such Type,  Continue Revolving Loans of such
Type, or to Convert  Revolving  Loans of any other Type into Revolving  Loans of
such Type, and Borrower shall,  on the last day(s) of the then current  Interest
Period(s)  for the  outstanding  Revolving  Loans of the affected  Type,  either
prepay such Revolving Loans or Convert such Revolving Loans into another Type of
Revolving Loan in accordance with the terms of this Agreement.

     Section  13.3  Illegality.  Notwithstanding  any  other  provision  of this
Agreement,  in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to make, maintain, or fund Eurodollar Loans hereunder,  then such
Bank shall promptly notify Borrower  thereof and such Bank's  obligation to make
or Continue  Eurodollar Loans and to Convert other Types of Revolving Loans into
Eurodollar Loans shall be suspended until such time as such Bank may again make,
maintain,  and fund  Eurodollar  Loans (in which case the  provisions of Section
13.4 shall be applicable).

     Section 13.4 Treatment of Affected  Loans. If the obligation of any Bank to
make particular  Eurodollar Loans or to Continue  Revolving Loans, or to Convert
Revolving  Loans of another Type into Revolving Loans of a particular Type shall
be suspended pursuant to Section 13.1 or Section 13.3 hereof (Revolving Loans of
such Type being herein called "Affected Loans" and such Type being herein called
the  "Affected  Type"),  such  Bank's  Affected  Loans  shall  be  automatically
Converted  into  the  Base  Rate  Loan on the last  day(s)  of the then  current
Interest Period(s) for Affected Loans (or, in the case of a Conversion  required
by  Section  13.3  hereof,  on such  earlier  date as such Bank may  specify  to
Borrower with a copy to  Administrative  Agent) and,  unless and until such Bank
gives notice as provided below that the circumstances  specified in Section 13.1
or Section 13.3 hereof that gave rise to such Conversion no longer exist:

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<PAGE>

     (a) to the extent that such Bank's  Affected  Loans have been so Converted,
all payments and  prepayments  of principal  that would  otherwise be applied to
such Bank's Affected Loans shall be applied instead to the Base Rate Loan; and

     (b) all Revolving  Loans that would  otherwise be made or Continued by such
Bank as Revolving Loans of the Affected Type shall be made or Continued  instead
as part of the Base Rate Loan,  and all Revolving  Loans of such Bank that would
otherwise  be  Converted  into  Revolving  Loans of the  Affected  Type shall be
Converted instead into (or shall remain) as part of the Base Rate Loan.

If such Bank gives notice to Borrower (with a copy to Administrative Agent) that
the  circumstances  specified  in Section  13.1 or Section 13.3 hereof that gave
rise to the  Conversion of such Bank's  Affected  Loans pursuant to this Section
13.4  no  longer  exist  (which  such  Bank  agrees  to do  promptly  upon  such
circumstances  ceasing to exist) at a time when Revolving  Loans of the Affected
Type made by other Banks are  outstanding,  such Bank's portion of the Base Rate
Loan  shall  be  automatically  Converted,  on the  first  day(s)  of  the  next
succeeding  Interest  Period(s)  for  such  outstanding  Revolving  Loans of the
Affected Type, to the extent necessary so that, after giving effect thereto, all
Revolving  Loans held by Banks holding  Revolving Loans of the Affected Type and
by such Bank are held pro rata (as to  principal  amounts,  Types  and  Interest
Periods) in accordance with their respective Commitments.

     Section 13.5 Compensation. Upon the request of any Bank, if such request is
made within ninety (90) days of the  incurrence of such loss,  cost, or expense,
Borrower  shall pay to such Bank such  amount or amounts as shall be  sufficient
(in the reasonable opinion of such Bank) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:

     (a) any payment,  prepayment,  or Conversion  of a Eurodollar  Loan for any
reason (including,  without limitation,  the acceleration of the Revolving Loan)
on a date other than the last day of the Interest Period for such Loan; or

     (b)  any  failure  by the  Borrower  for  any  reason  (including,  without
limitation, the failure of any condition precedent specified in Article VI to be
satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan on the date
for such Borrowing,  Conversion,  Continuation,  or prepayment  specified in the
relevant Request for Borrowing,  Notice of Continuation or Conversion,  or other
notice  of  Borrowing,  prepayment,   Continuation,  or  Conversion  under  this
Agreement.

     Section 13.6 Taxes.

     (a) Any and all  payments  by Borrower to or for the account of any Bank or
Administrative  Agent hereunder or under any other Loan Paper shall be made free
and clear of and  without  deduction  for any and all  present or future  Taxes,
duties,  levies,  imposts,   deductions,   charges  or  withholdings,   and  all
liabilities  with  respect  thereto,  excluding,  in the  case of each  Bank and
Administrative  Agent,  Taxes  imposed on its income,  and franchise and similar
Taxes  imposed on it by the  jurisdiction  under the Laws of which such Bank (or
its Applicable  Lending Office) or Administrative  Agent (as the case may be) is
organized or any political subdivision

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<PAGE>

thereof (all such  non-excluded  Taxes,  duties,  levies,  imposts,  deductions,
charges,  withholdings,  and liabilities being  hereinafter  referred to in this
Section 13.6 as "Non-Excluded  Taxes").  If Borrower shall be required by Law to
deduct any  Non-Excluded  Taxes from or in respect of any sum payable under this
Agreement or any other Loan Paper to any Bank or  Administrative  Agent, (i) the
sum payable  shall be  increased  as necessary so that after making all required
deductions  (including  deductions  applicable to additional  sums payable under
this Section 13.6) such Bank or Administrative Agent receives an amount equal to
the sum it would have received had no such  deductions  been made, (ii) Borrower
shall make such deductions, (iii) Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
Law, and (iv) Borrower shall furnish to Administrative Agent, at its address set
forth on Schedule  1.1-A hereto,  the original or a certified  copy of a receipt
evidencing payment thereof.

     (b) In addition, Borrower agrees to pay any and all present or future stamp
or  documentary  Taxes and any other  excise or  property  Taxes or  charges  or
similar  levies  which arise from any payment  made under this  Agreement or any
other Loan Paper or from the execution or delivery of, or otherwise with respect
to, this  Agreement or any other Loan Paper  (hereinafter  referred to as "Other
Taxes").

     (c) Borrower agrees to indemnify each Bank and Administrative Agent for the
full  amount  of Taxes and  Other  Taxes  (including,  without  limitation,  any
Non-Excluded  Taxes or Other Taxes  imposed or asserted by any  jurisdiction  on
amounts  payable  under this Section  13.6) paid by such Bank or  Administrative
Agent (as the case may be) and any liability (including penalties, interest, and
expenses) arising therefrom or with respect thereto.

     (d) Each Bank organized under the Laws of a jurisdiction outside the United
States,  on or prior to the date of its execution and delivery of this Agreement
in the case of each Bank listed on Schedule  1.1-A hereto and on or prior to the
date on which it becomes a Bank in the case of each other Bank, and from time to
time thereafter if requested in writing by Borrower or Administrative Agent (but
only so long  as  such  Bank  remains  lawfully  able to do so),  shall  provide
Borrower and Administrative Agent, at the time or times prescribed by applicable
Law,  with such  properly  completed  and executed  documentation  prescribed by
applicable Law (or reasonably  requested by Borrower)  certifying that such Bank
is entitled to benefits under an income tax treaty to which the United States is
a party  which  reduces the rate of  withholding  tax on payments of interest or
certifying that the income receivable  pursuant to this Agreement is effectively
connected  with the  conduct of a trade or business  in the United  States,  and
certifying  that such Bank is entitled to an exemption from or a reduced rate of
tax on payments pursuant to this Agreement or any of the other Loan Papers.

     (e) For any  period  with  respect  to which a Bank has  failed to  provide
Borrower and Administrative  Agent with the appropriate form pursuant to Section
13.6(d)  (unless such failure is due to a change in treaty,  law, or  regulation
occurring  subsequent to the date on which a form  originally was required to be
provided),  such Bank shall not be entitled  to  indemnification  under  Section
13.6(a) or Section  13.6(b) with respect to  Non-Excluded  Taxes  imposed by the
United States; provided,  however, that should a Bank, which is otherwise exempt
from or  subject  to a  reduced  rate of  withholding  Tax,  become  subject  to
Non-Excluded Taxes

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<PAGE>

because of its failure to deliver a form required hereunder, Borrower shall take
such steps as such Bank shall reasonably  request to assist such Bank to recover
such Non-Excluded Taxes.

     (f) If Borrower is required to pay additional amounts to or for the account
of any Bank pursuant to this Section 13.6,  then such Bank will (i) agree to use
reasonable  efforts to change the jurisdiction of its Applicable  Lending Office
so as to eliminate or reduce any such  additional  payment which may  thereafter
accrue  if  such  change,  in the  judgment  of  such  Bank,  is  not  otherwise
disadvantageous  to such Bank, and (ii) to the extent any such Bank recovers any
such  payment,  for which it has been  reimbursed  by Borrower,  from any taxing
authority, regulatory authority or government agency, promptly remit such sum to
Borrower.

     (g) Within  thirty (30) days after the date of any payment of  Non-Excluded
Taxes,  Borrower  shall  furnish  to  Administrative  Agent  the  original  or a
certified copy of a receipt evidencing such payment.

     (h) Without  prejudice to the  survival of any other  agreement of Borrower
hereunder,  the agreements and obligations of Borrower contained in this Section
13.6, and any Bank under Section  13.6(f),  shall survive the termination of the
Commitments and the payment in full of the Notes.

     Section 13.7  Discretion of Banks as to Manner of Funding.  Notwithstanding
any provisions of this Agreement to the contrary, each Bank shall be entitled to
fund and maintain its funding of all or any part of its Commitment in any manner
it sees  fit,  it  being  understood,  however,  that for the  purposes  of this
Agreement  all  determinations  hereunder  shall  be made as if  such  Bank  had
actually  funded and maintained  each Eurodollar Loan during the Interest Period
for such  Eurodollar  Loan  through the  purchase of deposits  having a maturity
corresponding  to the last day of such  Interest  Period and bearing an interest
rate equal to the Adjusted Eurodollar Rate for such Interest Period.

                                  Article XIV
                                  MISCELLANEOUS
                                  -------------

     Section 14.1 Notices. All notices, requests and other communications to any
party  hereunder shall be in writing  (including bank wire,  telecopy or similar
writing)  and shall be given,  if to  Administrative  Agent or any Bank,  at its
address or telecopier number set forth on Schedule 1.1-A hereto, and if given to
Borrower,  at its address or telecopy  number set forth on the  signature  pages
hereof (or in either  case,  at such other  address or  telecopy  number as such
party may  hereafter  specify  for the  purpose  by notice to the other  parties
hereto). Each such notice, request or other communication shall be effective (a)
if given by telecopy,  when such telecopy is transmitted to the telecopy  number
specified  in this Section 14.1 and the  appropriate  answerback  is received or
receipt  is  otherwise  confirmed,  (b) if  given by mail,  three  (3)  Domestic
Business  Days after  deposit in the mails with  first  class  postage  prepaid,
addressed as aforesaid,  or (c) if given by any other means,  when  delivered at
the  address   specified  in  this  Section  14.1;   provided  that  notices  to
Administrative  Agent  under  Article II or Article  III shall not be  effective
until received.

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<PAGE>

     Section 14.2  No Waivers.  No failure or delay  by  Administrative Agent or
any Bank in exercising any right, power or privilege hereunder or under any Note
or other Loan Paper  shall  operate as a waiver  thereof nor shall any single or
partial  exercise  thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies herein
provided  shall be  cumulative  and not  exclusive  of any  rights  or  remedies
provided by Law or in any of the other Loan Papers.

     Section 14.3  Expenses; Indemnification.

     (a) Borrower  agrees to pay on demand all reasonable  costs and expenses of
Administrative  Agent and Sole Lead Arranger in connection with the syndication,
preparation, execution, delivery, modification, and amendment of this Agreement,
the other  Loan  Papers,  and the other  documents  to be  delivered  hereunder,
including,  without limitation,  the reasonable fees and expenses of counsel for
Administrative   Agent  with  respect  thereto  and  with  respect  to  advising
Administrative  Agent  as to its  rights  and  responsibilities  under  the Loan
Papers.  Borrower  further  agrees to pay on demand  all costs and  expenses  of
Administrative   Agent  and  Banks,  if  any  (including,   without  limitation,
reasonable  attorneys'  fees and expenses),  in connection  with the enforcement
(whether  through  negotiations,  legal  proceedings,  or otherwise) of the Loan
Papers and the other documents to be delivered hereunder.

     (b) BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS EACH AGENT AND EACH BANK
AND  EACH  OF  THEIR  AFFILIATES  AND  THEIR  RESPECTIVE  OFFICERS,   DIRECTORS,
EMPLOYEES,  AGENTS, AND ADVISORS (EACH, AN "INDEMNIFIED PARTY") FROM AND AGAINST
ANY  AND  ALL  CLAIMS,  DAMAGES,  LOSSES,   LIABILITIES,   COSTS,  AND  EXPENSES
(INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES) THAT MAY BE INCURRED
BY OR ASSERTED OR AWARDED  AGAINST ANY  INDEMNIFIED  PARTY, IN EACH CASE ARISING
OUT OF OR IN CONNECTION WITH OR BY REASON OF (INCLUDING,  WITHOUT LIMITATION, IN
CONNECTION WITH ANY INVESTIGATION,  LITIGATION,  OR PROCEEDING OR PREPARATION OF
DEFENSE  IN  CONNECTION  THEREWITH)  THE LOAN  PAPERS,  ANY OF THE  TRANSACTIONS
CONTEMPLATED  HEREIN  OR THE  ACTUAL  OR  PROPOSED  USE OF THE  PROCEEDS  OF THE
REVOLVING LOAN  (INCLUDING  ANY OF THE FOREGOING  ARISING FROM THE NEGLIGENCE OF
THE  INDEMNIFIED  PARTY),  EXCEPT  TO  THE  EXTENT  SUCH  CLAIM,  DAMAGE,  LOSS,
LIABILITY,  COST, OR EXPENSE IS FOUND IN A FINAL,  NON-APPEALABLE  JUDGMENT BY A
COURT OF COMPETENT  JURISDICTION TO HAVE RESULTED FROM SUCH INDEMNIFIED  PARTY'S
GROSS  NEGLIGENCE  OR  WILLFUL  MISCONDUCT.  IN THE  CASE  OF AN  INVESTIGATION,
LITIGATION  OR OTHER  PROCEEDING  TO WHICH THE  INDEMNITY  IN THIS  SECTION 14.3
APPLIES,  SUCH INDEMNITY SHALL BE EFFECTIVE  WHETHER OR NOT SUCH  INVESTIGATION,
LITIGATION  OR  PROCEEDING  IS  BROUGHT  BY  CREDIT   PARTIES,   ITS  DIRECTORS,
SHAREHOLDERS  OR  CREDITORS OR AN  INDEMNIFIED  PARTY OR ANY OTHER PERSON OR ANY
INDEMNIFIED  PARTY  IS  OTHERWISE  A  PARTY  THERETO  AND  WHETHER  OR  NOT  THE
TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED.  BORROWER AGREES NOT TO ASSERT
ANY CLAIM AGAINST ANY AGENT, ANY BANK, ANY

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<PAGE>

OF THEIR AFFILIATES, OR ANY OF THEIR RESPECTIVE DIRECTORS,  OFFICERS, EMPLOYEES,
ATTORNEYS,  AGENTS,  AND  ADVISERS,  ON ANY THEORY OF  LIABILITY,  FOR  SPECIAL,
INDIRECT,  CONSEQUENTIAL,  OR  PUNITIVE  DAMAGES  ARISING  OUT  OF OR  OTHERWISE
RELATING TO THE LOAN PAPERS, ANY OF THE TRANSACTIONS  CONTEMPLATED HEREIN OR THE
ACTUAL OR PROPOSED USE OF THE PROCEEDS OF THE REVOLVING LOAN.

     (c) Without  prejudice to the  survival of any other  agreement of Borrower
hereunder,  the agreements and obligations of Borrower contained in this Section
14.3  shall  survive  the  payment in full of the  Revolving  Loan and all other
amounts payable under this Agreement.

     Section 14.4 Right of Set-off; Adjustments.

     (a) Upon the occurrence and during the continuance of any Event of Default,
each Bank (and each of its Affiliates) is hereby authorized at any time and from
time to time, to the fullest  extent  permitted by Law, to set off and apply any
and all deposits (general or special,  time or demand,  provisional or final) at
any time held and other  indebtedness  at any time owing by such Bank (or any of
its  Affiliates) to or for the credit or the account of any Credit Party against
any and all of the  Obligations,  irrespective  of whether  such Bank shall have
made any demand  under this  Agreement  or Note held by such and  although  such
obligations  may be unmatured.  Each Bank agrees promptly to notify the affected
Credit Party after any such set-off and application made by such Bank; provided,
however,  that the failure to give such notice  shall not affect the validity of
such  set-off and  application.  The rights of each Bank under this Section 14.4
are in addition to other rights and  remedies  (including,  without  limitation,
other rights of set-off) that such Bank may have.

     (b) If any Bank (a "benefited  Bank") shall at any time receive any payment
of all or part of the amounts owing to it, or interest  thereon,  or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
or otherwise),  in a greater  proportion  than any such payment to or collateral
received by any other  Bank,  if any,  in respect of such other  Bank's  amounts
owing to it, or interest  thereon,  such  benefited Bank shall purchase for cash
from the other Banks a participating interest in such portion of each such other
Bank's  amounts owing to it, or shall provide such other Banks with the benefits
of any such collateral,  or the proceeds thereof, as shall be necessary to cause
such benefited  Bank to share the excess payment or benefits of such  collateral
or proceeds ratably with each other Bank; provided,  however, that if all or any
portion of such excess  payment or benefits is  thereafter  recovered  from such
benefited  Bank,  such purchase  shall be rescinded,  and the purchase price and
benefits  returned,  to the  extent  of such  recovery,  but  without  interest.
Borrower agrees that any Bank so purchasing a participation from a Bank pursuant
to this Section 14.4 may, to the fullest extent  permitted by Law,  exercise all
of its rights of payment  (including  the right of set-off) with respect to such
participation as fully as if such Person were the direct creditor of Borrower in
the amount of such participation.

     Section 14.5 Amendments and Waivers.  Any provision of this Agreement,  the
Notes or any other Loan  Paper may be  amended  or waived if, but only if,  such
amendment or waiver is

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<PAGE>

in writing and is signed by Borrower and Required  Banks (and,  if the rights or
duties of any Agent are affected thereby, by such Agent);  provided that no such
amendment  or  waiver  shall,  unless  signed by all  Banks,  (a)  increase  the
Commitment  of any Bank,  (b) reduce the principal of or rate of interest on any
Revolving Loan or any fees or other amounts payable hereunder or for termination
of any  Commitment,  (c) change the percentage of the Total  Commitment,  or the
number of Banks  which  shall be  required  for Banks or any of them to take any
action  under this Section 14.5 or any other  provision of this  Agreement,  (d)
extend  the  due  date  for,  or  forgive  any  principal,   interest,  fees  or
reimbursement  obligations due hereunder,  (e) release any material guarantor or
other  material  party liable for all or any part of the  Obligations or release
any material  part of the  collateral  for the  Obligations  or any part thereof
other than releases required pursuant to sales of collateral which are expressly
permitted by Section 9.5 hereof,  (f) amend or modify any of the  provisions  of
Article  IV  hereof or the  definitions  of any terms  defined  therein,  or (g)
increase any Borrowing Base above the Borrowing Base then in effect.

     Section 14.6 Survival.  All representations,  warranties and covenants made
by any Credit Party herein or in any certificate or other  instrument  delivered
by it or in its behalf  under the Loan Papers shall be  considered  to have been
relied upon by Banks and shall survive the delivery to Banks of such Loan Papers
or the extension of the Revolving Loan (or any part thereof),  regardless of any
investigation  made by or on behalf of Banks. The indemnity  provided in Section
14.3(b)  herein shall  survive the  repayment of all credit  advances  hereunder
and/or the  discharge or release of any Lien  granted  hereunder or in any other
Loan Paper, contract or agreement between Borrower or any other Credit Party and
any Agent or any Bank.

     Section 14.7 Limitation on Interest.  Regardless of any provision contained
in the Loan Papers, Banks shall never be entitled to receive, collect, or apply,
as interest on the Revolving  Loan,  any amount in excess of the Maximum  Lawful
Rate, and in the event any Bank ever  receives,  collects or applies as interest
any such excess,  such amount which would be deemed excessive  interest shall be
deemed a partial  prepayment of principal and treated  hereunder as such; and if
the Revolving Loan is paid in full, any remaining  excess shall promptly be paid
to Borrower.  In  determining  whether or not the interest paid or payable under
any specific  contingency  exceeds the Maximum  Lawful Rate,  Borrower and Banks
shall,  to the extent  permitted  under  applicable  Law, (a)  characterize  any
non-principal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effects thereof and (c) amortize, prorate,
allocate and spread, in equal parts, the total amount of the interest throughout
the entire  contemplated  term of the Notes,  so that the  interest  rate is the
Maximum Lawful Rate throughout the entire term of the Notes; provided,  however,
that if the unpaid principal balance thereof is paid and performed in full prior
to the end of the full contemplated  term thereof,  and if the interest received
for the actual  period of  existence  thereof  exceeds the Maximum  Lawful Rate,
Banks  shall  refund to  Borrower  the amount of such excess and, in such event,
Banks shall not be subject to any penalties provided by any Laws for contracting
for, charging,  taking, reserving or receiving interest in excess of the Maximum
Lawful Rate.

     Section 14.8  Invalid  Provisions.  If any  provision of the Loan Papers is
held to be  illegal,  invalid,  or  unenforceable  under  present or future Laws
effective during the term thereof, such provision shall be fully severable,  the
Loan Papers shall be  construed  and enforced as if such  illegal,  invalid,  or
unenforceable provision had never comprised a part thereof, and the

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<PAGE>

remaining provisions thereof shall remain in full force and effect and shall not
be  affected by the  illegal,  invalid,  or  unenforceable  provision  or by its
severance  therefrom.   Furthermore,  in  lieu  of  such  illegal,  invalid,  or
unenforceable provision there shall be added automatically as a part of the Loan
Papers  a  provision  as  similar  in  terms  to  such  illegal,   invalid,   or
unenforceable provision as may be possible and be legal, valid and enforceable.

     Section 14.9 Waiver of Consumer Credit Laws. Pursuant to Chapter 346 of the
Texas Finance Code, as amended,  Borrower agrees that such Chapter 346 shall not
govern or in any manner apply to the Revolving Loan.

     Section 14.10 Assignments and Participations.

     (a)  Successors  and Assigns.  The terms and  provisions of the Loan Papers
shall be binding  upon and inure to the benefit of Borrower  and Banks and their
respective  successors and assigns  permitted  hereby,  except that (i) Borrower
shall not have the  right to assign  its  rights or  obligations  under the Loan
Papers  without the prior written  consent of each Bank,  (ii) any assignment by
any Bank  must be made in  compliance  with  Section  14.10(c),  and  (iii)  any
transfer by participation must be made in compliance with Section 14.10(b).  Any
attempted  assignment or transfer by any party not made in compliance  with this
Section  14.10(a) shall be null and void,  unless such  attempted  assignment or
transfer is treated as a participation in accordance with Section 14.10(b).  The
parties to this Agreement  acknowledge that clause (ii) of this Section 14.10(a)
relates only to absolute assignments and this Section 14.10(a) does not prohibit
assignments creating security interests,  including, without limitation, (x) any
pledge or  assignment by any Bank of all or any portion of its rights under this
Agreement  and any Note to a Federal  Reserve  Bank or (y) in the case of a Bank
which is a Fund,  any pledge or  assignment  of all or any portion of its rights
under this  Agreement and any Note to its trustee in support of its  obligations
to its trustee; provided,  however, that no such pledge or assignment creating a
security  interest  shall  release  the  transferor  Bank  from its  obligations
hereunder unless and until the parties thereto have complied with the provisions
of Section  14.10(c).  Administrative  Agent may treat the Person which made any
Revolving  Loan or which holds any Note as the owner  thereof  for all  purposes
hereof unless and until such Person  complies with Section  14.10(c);  provided,
however,  that  Administrative  Agent may in its  discretion  (but  shall not be
required to) follow  instructions  from the Person which made any Revolving Loan
or which holds any Note to direct  payments  relating to such  Revolving Loan or
Note to another Person.  Any assignee of the rights to any Revolving Loan or any
Note agrees by  acceptance  of such  assignment to be bound by all the terms and
provisions of the Loan Papers. Any request,  authority or consent of any Person,
who at the time of making such  request or giving such  authority  or consent is
the owner of the rights to any  Revolving  Loan  (whether or not a Note has been
issued in evidence  thereof),  shall be conclusive and binding on any subsequent
holder or assignee of the rights to such Revolving Loan.

     (b) Participations.

          (i) Any  Bank  may at any  time  sell to one or more  banks  or  other
     entities  ("Participants")  participating  interests in any Revolving  Loan
     owing to such Bank, any Note held by such Bank, any Commitment of such Bank
     or any other  interest of such Bank under the Loan Papers.  In the event of
     any such sale by a Bank of

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<PAGE>

     participating interests to a Participant, such Bank's obligations under the
     Loan  Papers  shall  remain  unchanged,   such  Bank  shall  remain  solely
     responsible  to the  other  parties  hereto  for  the  performance  of such
     obligations,  such Bank shall remain the owner of its  Revolving  Loans and
     the holder of any Note  issued to it in evidence  thereof for all  purposes
     under the Loan Papers, all amounts payable by Borrower under this Agreement
     shall  be  determined  as if such  Bank  had not  sold  such  participating
     interests,  and Borrower and  Administrative  Agent shall  continue to deal
     solely and directly  with such Bank in  connection  with such Bank's rights
     and obligations under the Loan Papers.

          (ii) Each Bank shall  retain the sole right to  approve,  without  the
     consent of any  Participant,  any amendment,  modification or waiver of any
     provision  of the Loan Papers  other than any  amendment,  modification  or
     waiver  with  respect to any  Revolving  Loan or  Commitment  in which such
     Participant has an interest which would require consent of all of the Banks
     pursuant to the terms of Section 14.5 or of any other Loan Paper.

          (iii) Borrower  agrees that each  Participant  shall be deemed to have
     the  right  of  setoff   provided  in  Section   14.4  in  respect  of  its
     participating  interest in amounts  owing under the Loan Papers to the same
     extent as if the amount of its  participating  interest were owing directly
     to it as a Bank  under the Loan  Papers;  provided,  that  each Bank  shall
     retain the right of setoff  provided  in Section  14.4 with  respect to the
     amount of participating interests sold to each Participant.  Banks agree to
     share with each Participant,  and each Participant, by exercising the right
     of setoff  provided in Section  14.4,  agrees to share with each Bank,  any
     amount  received  pursuant  to the  exercise  of its right of setoff,  such
     amounts to be shared in accordance with Section 14.4 as if each Participant
     were a Bank.  Borrower  further  agrees  that  each  Participant  shall  be
     entitled to the yield  protection  provisions  contained in Article XIII to
     the same  extent  as if it were a Bank and had  acquired  its  interest  by
     assignment pursuant to Section 14.10(c);  provided,  that (A) a Participant
     shall not be entitled to receive any greater  payment  under  Article  XIII
     than the Bank who sold the participating interest to such Participant would
     have received had it retained such interest for its own account, unless the
     sale of such  interest to such  Participant  is made with the prior written
     consent of Borrower,  and (B) any  Participant not  incorporated  under the
     laws of the United States of America or any State thereof  agrees to comply
     with the  provisions  of  Section  13.6 to the same  extent as if it were a
     Bank.

     (c) Assignments.

          (i) Any  Bank  may at any time  assign  to one or more  banks or other
     entities ("Purchasers") all or any part of its rights and obligations under
     the Loan Papers.  The parties to such assignment  shall execute and deliver
     an Assignment  and Acceptance  Agreement  (herein so called) which shall be
     substantially  in the form of  Exhibit  K or in such  other  form as may be
     agreed to by the parties  thereto.  Each such  assignment with respect to a
     Purchaser which is not a Bank or an Affiliate of a Bank or an Approved Fund
     shall either be in an amount equal to the entire applicable  Commitment and
     Revolving  Loans of the  assigning  Bank or (unless  each of  Borrower  and
     Administrative Agent otherwise consents) be in an aggregate amount not less
     than $5,000,000. The amount of

                                       81
<PAGE>

     the assignment  shall be based on the  Commitment or outstanding  Revolving
     Loans (if the Commitment has been  terminated)  subject to the  assignment,
     determined as of the date of such assignment or as of the "Effective Date,"
     if the  "Effective  Date" is specified  in the  Assignment  and  Acceptance
     Agreement.

          (ii) The consent of Borrower  shall be required prior to an assignment
     becoming effective unless Purchaser is a Bank, an Affiliate of a Bank or an
     Approved Fund,  provided that the consent of Borrower shall not be required
     if a Default has occurred and is continuing.  The consent of Administrative
     Agent shall be required prior to an assignment  becoming  effective  unless
     the  Purchaser is a Bank, an Affiliate of a Bank or an Approved  Fund.  The
     consent of Letter of Credit Issuer shall be required prior to an assignment
     of a Commitment becoming effective unless Purchaser is a Bank, an Affiliate
     of a Bank or an Approved  Fund.  Any consent  required  under this  Section
     14.10(c)(ii) shall not be unreasonably withheld or delayed.

          (iii) Upon (A) delivery to  Administrative  Agent of an Assignment and
     Acceptance  Agreement,  together  with any  consents  required  by  Section
     14.10(c)(i) and (ii), and (B) payment by the assignor Bank or the Purchaser
     of a $3,500 fee to  Administrative  Agent for  processing  such  assignment
     (unless such fee is waived by Administrative  Agent), such assignment shall
     become  effective on the effective  date  specified in such  Assignment and
     Acceptance  Agreement.  On and after the effective date of such assignment,
     such Purchaser shall for all purposes be a Bank party to this Agreement and
     any other Loan Paper  executed  by or on behalf of Banks and shall have all
     the rights and  obligations  of a Bank under the Loan  Papers,  to the same
     extent as if it were an original  party thereto,  and the  transferor  Bank
     shall be  released  with  respect to the  Commitment  and  Revolving  Loans
     assigned  to such  Purchaser  without  any  further  consent  or  action by
     Borrower,  Banks or  Administrative  Agent.  In the  case of an  assignment
     covering all of the  assigning  Bank's  rights and  obligations  under this
     Agreement,  such Bank shall cease to be a Bank hereunder but shall continue
     to be entitled to the benefits of, and subject to, those provisions of this
     Agreement  and  the  other  Loan  Papers  which  survive   payment  of  the
     Obligations and termination of the applicable agreement.  Any assignment or
     transfer by a Bank of rights or obligations  under this Agreement that does
     not comply with this Section 14.10(c) shall be treated for purposes of this
     Agreement  as a sale by such Bank of a  participation  in such  rights  and
     obligations in accordance with Section  14.10(b).  Upon the consummation of
     any  assignment  to a Purchaser  pursuant  to this  Section  14.10(c),  the
     transferor Bank,  Administrative  Agent and Borrower shall make appropriate
     arrangements  so that new Notes or, as appropriate,  replacement  Notes are
     issued  to  such   transferor  Bank  and  new  Notes  or,  as  appropriate,
     replacement Notes, are issued to such Purchaser,  in each case in principal
     amounts  reflecting their respective  Commitments,  as adjusted pursuant to
     such assignment.

          (iv) Administrative  Agent, acting solely for this purpose as an agent
     of Borrower,  shall maintain at one of its offices in Chicago,  Illinois or
     Dallas,  Texas a copy of each Assignment and Acceptance Agreement delivered
     to it and a register for the  recordation of the names and addresses of the
     Banks, and the Commitments of, and principal amounts of the Revolving Loans
     owing to, each Bank pursuant to the terms

                                       82
<PAGE>

     hereof  from time to time (the  "Register").  The  entries in the  Register
     shall be conclusive, and Borrower, Administrative Agent and Banks may treat
     each Person  whose name is recorded in the  Register  pursuant to the terms
     hereof  as  a  Bank   hereunder   for  all  purposes  of  this   Agreement,
     notwithstanding notice to the contrary. The Register shall be available for
     inspection by Borrower and any Bank, at any  reasonable  time and from time
     to time upon reasonable prior notice.

     (d) Dissemination of Information. Borrower authorizes each Bank to disclose
to any Participant or Purchaser or any other Person acquiring an interest in the
Loan  Papers by  operation  of law  (each a  "Transferee")  and any  prospective
Transferee  any and all  information  in such Bank's  possession  concerning the
creditworthiness   of  Borrower  and  its   Subsidiaries,   including,   without
limitation,  any information contained in any financial reports; provided, that,
each Transferee and prospective  Transferee  agrees to be bound by Section 14.18
of this Agreement.

     (e) Tax Treatment.  If any interest in any Loan Paper is transferred to any
Transferee which is not incorporated  under the laws of the United States or any
State thereof,  the transferor  Bank shall cause such  Transferee,  concurrently
with the  effectiveness  of such  transfer,  to comply  with the  provisions  of
Section 13.6(d).

     Section 14.11 TEXAS LAW(a) . THIS  AGREEMENT,  EACH NOTE AND THE OTHER LOAN
PAPERS  SHALL BE CONSTRUED  IN  ACCORDANCE  WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS  AND THE LAWS OF THE  UNITED  STATES  OF  AMERICA,  EXCEPT TO THE
EXTENT THAT THE LAWS OF ANY STATE IN WHICH ANY PROPERTY INTENDED AS SECURITY FOR
THE OBLIGATIONS IS LOCATED NECESSARILY GOVERN (A) THE PERFECTION AND PRIORITY OF
THE  LIENS IN FAVOR OF  ADMINISTRATIVE  AGENT  AND BANKS  WITH  RESPECT  TO SUCH
PROPERTY,  AND (B) THE EXERCISE OF ANY  REMEDIES  (INCLUDING  FORECLOSURE)  WITH
RESPECT TO SUCH PROPERTY.

     Section 14.12 Consent to Jurisdiction Waiver of Immunities.

     (a) Each Credit Party hereby irrevocably submits to the jurisdiction of any
Texas State or Federal court sitting in the Northern  District of Texas over any
action or proceeding  arising out of or relating to this  Agreement or any other
Loan  Papers,  and each such Credit  Party  hereby  irrevocably  agrees that all
claims in respect of such action or  proceeding  may be heard and  determined in
such  Texas  State or Federal  court.  Each  Credit  Party  agrees  that a final
judgment  on any  such  action  or  proceeding  shall be  conclusive  and may be
enforced in other  jurisdictions  by suit on the judgment or in any other manner
provided by Law.

     (b)  Nothing in this  Section  13.6(d)  shall  affect any right of Banks to
bring any action or proceeding  against any Credit Party or their  properties in
the courts of any other jurisdictions.

     (c) To the extent that  Borrower has or hereafter  may acquire any immunity
from  jurisdiction  of any  court or from any  legal  process  (whether  through
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with

                                       83
<PAGE>

respect to itself or its property,  such Person hereby  irrevocably  waives such
immunity in respect of its  obligations  under this Agreement and the other Loan
Papers.

     Section 14.13 Counterparts;  Effectiveness. This Agreement may be signed in
any number of  counterparts,  each of which shall be an original,  with the same
effect as if the  signatures  thereto and hereto were upon the same  instrument.
Subject  to the terms  and  conditions  herein  set  forth  (including,  without
limitation,  the execution and delivery of the  Certificate  of  Effectiveness),
this  Agreement  shall become  effective  when  Administrative  Agent shall have
received original or facsimile  counterparts hereof signed by all of the parties
hereto or, in the case of any Bank as to which an executed counterpart shall not
have been  received,  Administrative  Agent shall have received  telegraphic  or
other written  confirmation from such Bank of execution of a counterpart  hereof
by such Bank.

     Section  14.14 No Third  Party  Beneficiaries.  Except  for the  provisions
hereof  inuring to the  benefit of Agents not a party to this  Agreement,  it is
expressly  intended  that there  shall be no third  party  beneficiaries  of the
covenants, agreements, representations or warranties herein contained other than
third party beneficiaries permitted pursuant to Section 14.10.

     Section 14.15 COMPLETE AGREEMENT.  THIS AGREEMENT AND THE OTHER LOAN PAPERS
COLLECTIVELY  REPRESENT THE FINAL  AGREEMENT BY AND AMONG BANKS,  AGENTS AND THE
CREDIT   PARTIES   AND  MAY  NOT  BE   CONTRADICTED   BY   EVIDENCE   OF  PRIOR,
CONTEMPORANEOUS,  OR SUBSEQUENT ORAL AGREEMENTS OF BANKS, AGENTS, AND THE CREDIT
PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS  AMONG BANKS,  AGENTS,  AND THE
CREDIT PARTIES.

     Section  14.16  WAIVER OF JURY TRIAL.  BORROWER,  ADMINISTRATIVE  AGENT AND
BANKS HEREBY  IRREVOCABLY AND  UNCONDITIONALLY  WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING  RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN PAPERS
AND FOR ANY COUNTERCLAIM THEREIN.

     Section 14.17 USA PATRIOT ACT NOTIFICATION.  The following  notification is
provided to Borrower  pursuant to Section 326 of the USA Patriot Act of 2001, 31
U.S.C. Section 5318:

     IMPORTANT  INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.  To help
the government fight the funding of terrorism and money  laundering  activities,
Federal law requires all financial  institutions to obtain,  verify,  and record
information  that  identifies  each  person or  entity  that  opens an  account,
including  any  deposit  account,   treasury  management  account,  loan,  other
extension of credit, or other financial  services  product.  What this means for
Borrower:  when Borrower opens an account,  Administrative  Agent and Banks will
ask for Borrower's name, tax identification number,  business address, and other
information that will allow Administrative Agent and Banks to identify Borrower.
Administrative   Agent  and  Banks  may  also  ask  to  see   Borrower's   legal
organizational documents or other identifying documents.

                                       84
<PAGE>

     Section 14.18 Confidentiality.  Administrative Agent and each Bank (each, a
"Lending Party") agrees to keep  confidential any information  furnished or made
available  to  it  by  Borrower  pursuant  to  this  Agreement  that  is  marked
confidential; provided, that nothing herein shall prevent any Lending Party from
disclosing  such  information (a) to any other Lending Party or any Affiliate of
any Lending Party, or any officer, director,  employee, agent, or advisor of any
Lending Party or any Affiliate of any Lending  Party,  (b) subject to provisions
substantially  similar to those  contained in this Section  14.18,  to any other
Person if reasonably  incidental to the  administration  of the credit  facility
provided  herein,  (c) as required by any Law, rule or regulation,  (d) upon the
order of any court or administrative  agency,  (e) upon the request or demand of
any  regulatory  agency or  authority,  (f) that is or becomes  available to the
public or that is or becomes  available  to any  Lending  Party  other than as a
result of a disclosure by any Lending Party prohibited by this Agreement, (g) in
connection  with  any  litigation  to  which  such  Lending  Party or any of its
affiliates may be a party,  (h) to the extent  necessary in connection  with the
exercise of any remedy  under this  Agreement  or any other Loan Paper,  and (i)
subject to provisions  substantially  similar to those contained in this Section
14.18,  to any  actual or  proposed  participant  or  assignee.  Notwithstanding
anything herein to the contrary, confidential information shall not include, and
each party to any of the Loan Papers and their  respective  Affiliates  (and the
respective partners, directors, officers, employees,  advisors,  representatives
and other agents of each of the foregoing and their  Affiliates) may disclose to
any and all Persons,  without  limitation of any kind (i) any  information  with
respect to the U.S.  federal and state income tax treatment of the  transactions
contemplated hereby and any facts that may be relevant to understanding such tax
treatment,  which  facts  shall not  include  for this  purpose the names of the
parties or any other  Person  named  herein,  or  information  that would permit
identification  of the parties or such other  Persons,  or any pricing  terms or
other nonpublic business or financial  information that is unrelated to such tax
treatment or facts,  and (ii) all materials of any kind  (including  opinions or
other tax analyses) relating to such tax treatment or facts that are provided to
any of the Persons  referred to above,  and it is hereby  confirmed that each of
the Persons referred to above has been authorized to make such disclosures since
the commencement of discussions regarding the transactions contemplated hereby.

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed by their respective  Authorized Officers on the day and year first
above written.

                           [Signature Pages to Follow]

                                       85
<PAGE>

                                SIGNATURE PAGE TO
                                CREDIT AGREEMENT
                                  BY AND AMONG
                        QUEST CHEROKEE, LLC, AS BORROWER,
                     BANK ONE, NA, AS ADMINISTRATIVE AGENT,
                      THE OTHER AGENTS A PARTY THERETO, AND
                        THE FINANCIAL INSTITUTIONS LISTED
                       ON SCHEDULE 1.1-A THERETO, AS BANKS

BORROWER:
--------

QUEST CHEROKEE, LLC,
a Delaware limited liability company

By:   /s/ Jerry Cash
      ---------------------------------
Name: Jerry D. Cash
      ---------------------------------
Title:Manager
      ---------------------------------

Address for Notice:

5901 N. Western
Suite 200
Oklahoma City, Oklahoma  73118
Attn:  Jerry D. Cash
Tel. No. (405) 840-9894
Fax No. (405) 840-9897

                                 Signature Page

<PAGE>

                                SIGNATURE PAGE TO
                                CREDIT AGREEMENT
                                  BY AND AMONG
                        QUEST CHEROKEE, LLC, AS BORROWER,
                     BANK ONE, NA, AS ADMINISTRATIVE AGENT,
                      THE OTHER AGENTS A PARTY THERETO, AND
                        THE FINANCIAL INSTITUTIONS LISTED
                       ON SCHEDULE 1.1-A THERETO, AS BANKS

ADMINISTRATIVE AGENT:
--------------------

BANK ONE, NA,
as Administrative Agent

By:   /s/ J. Scott Fowler
      -------------------------
      J. Scott Fowler,
      Director, Capital Markets

BANKS:
-----

BANK ONE, NA

By:   /s/ J. Scott Fowler
      -------------------------
      J. Scott Fowler,
      Director, Capital Markets

                                 Signature Page

<PAGE>

                                 SCHEDULE 1.1-A

                             Financial Institutions

       Banks              Commitment Amount     Commitment Percentage

       Bank One, NA         $200,000,000.00            100.00%

       Totals:              $200,000,000.00            100.00%

<TABLE>
<CAPTION>
<S>             <C>                                 <C>                               <C>

Banks           Domestic Lending Office            Eurodollar Lending Office          Address for Notice

-----           -----------------------            -------------------------          ------------------

Bank One, NA    1 Bank One Plaza                   1 Bank One Plaza                   1717 Main Street
                Mail Code IL1-0634                 Mail Code IL1-0634                 4th Floor
                Chicago, Illinois 60670-0634       Chicago, Illinois 60670-0634       Mail Code TX1-2448
                Attn:  Jim Moore                   Attn:  Jim Moore                   Dallas, Texas 75201
                Tel. No. (312) 385-7057            Tel. No. (312) 385-7057            Attn:  J. Scott Fowler
                Fax No. (312) 732-4840             Fax No. (312) 732-4840             Tel. No. (214) 290-2162
                e-mail:  jim_t_moore@bankone.com   e-mail: jim_t_moore@bankonee-mail  Fax No. (214) 290-2332
                                                                                      e-mail:  scott_fowler@bankone.com
</TABLE>

Administrative Agent - Address:
1717 Main Street, 4th Floor
Mail Code TX1-2448
Dallas, Texas 75202
Tel. No. (214) 290-2162
Fax No. (214) 290-2332
e-mail: scott_fowler@bankone.com

                               Schedule 1.1-A - 1

<PAGE>

                                 SCHEDULE 1.1-B
                                 --------------

                           Existing Letters of Credit

                                [to be provided]

                               Schedule 1.1-B - 1

<PAGE>

                                 SCHEDULE 1.1-C

                            Existing Hedge Agreements

                                [to be provided]

Part A
------

Part B
------

                               Schedule 1.1-C - 1

<PAGE>

                                 SCHEDULE 1.1-D

                            Devon Consent Properties

                                [to be attached]

                               Schedule 1.1-D - 1

<PAGE>

                                  SCHEDULE 7.5
                                  ------------

                                   Litigation

1.   Davis Operating  Company v. STP Cherokee,  Inc., filed in District Court of
     Craig  County  Oklahoma,  Case  Number  CJ-2003-137:  Claim of  damages  by
     defendant for failure to hook up plaintiff to defendant's pipeline, as well
     as claim of  drainage  by  defendant  of  plaintiff's  reserves  due to the
     failure to hook up plaintiff to pipeline.

2.   Webster,  Howard C. and  Webster,  Shirley v. Amvest  Osage,  Inc. and STP,
     Inc.,  District Court of Nowata  County,  Oklahoma,  Case Number  CJ-03-74:
     Lawsuit for failure to terminate lease. Plaintiffs claim that defendant did
     not have good title from prior  operator  because  prior  operator  had bad
     title.

3.   Eddie R. Hill, et al v. Quest Resource Corporation and STP Cherokee,  Inc.,
     District Court of Craig County,  Oklahoma, Case Number CJ-2003-30:  Lawsuit
     for plaintiff's  failure to pay appropriate  royalties.  Defendant provided
     plaintiff with  information  regarding  royalty  calculation  shortly after
     lawsuit was filed and has not received any  correspondence  since providing
     such information  (approximately  eight to nine months prior to the date of
     the Agreement).

4.   The Union Central Life Insurance Company v. Quest Oil & Gas Corporation, et
     al., District Court of Neosho County, Kansas, Case Number 2003-C-V-8: Lease
     dispute regarding rights to mineral ownership. Dispute is regarding a piece
     of  property  leased  by Devon  and  acquired  by  defendant  in the  Devon
     acquisition and, as such, lawsuit should be dismissed.

                                Schedule 7.5 - 1

<PAGE>

                                  SCHEDULE 7.10

                             Licenses, Permits, Etc.

1.   Kansas Corporation Commission Motor Carriers Permit - Borrower

2.   Authority to do Business as a Foreign Corporation in Oklahoma - Bluestem

3.   Oklahoma Corporation  Commission Oil & Gas Operator's Permit - Borrower [To
     be obtained 12/22/03]

4.   Kansas Corporation Commission Oil & Gas Operator's Permit - Borrower [To be
     obtained 12/22/03]

5.   Kansas Corporation Commission Pipeline Operator's License - Bluestem [To be
     obtained 12/22/03]

                               Schedule 7.10 - 1

<PAGE>

                                  SCHEDULE 7.13

                               Jurisdictions, Etc.

<TABLE>
<CAPTION>
<S>                 <C>          <C>              <C>           <C>            <C>    <C>

                                                                 Shares of Stock/Membership Interests

                                                                                               Outstanding
                                                                                            Warrants, Options,
                                                                                               Subscription
                                                                                           Rights, Convertible
                                 States of                                                 Securities, or Other
                    State of      Foreign                       Total          Issued/     Rights to Purchase
                    Formation   Qualification     Class       Authorized     Outstanding         Equity

PARENT
------
Quest Resource      Nevada          None          Common      950,000,000    14,021,306    1 Outstanding Warrant1
Corporation
("QRC")

                                                  Preferred    49,500,000       None              None
                                                    Stock      undesignated
                                                               blank check

                                                  Series A        500,000        10,000           None
                                                  Preferred

QUEST GROUP
-----------
Ponderosa Gas       Kansas          None          Common        5,000,000       562,050           None
Pipeline Company,
Inc.

Quest Energy        Kansas          Oklahoma      Common        5,000,000       500,000           None
Service, Inc.

Quest Oil & Gas     Kansas          None          Common            1,000           100           None
Corporation

STP Cherokee, Inc.  Oklahoma        Kansas        Common           50,000        20,050           None

Producers Service   Kansas          None          Common            1,000           100           None
Incorporated

J-W Gas Gathering,  Kansas          None          N/A               N/A             N/A           None
L.L.C.

CREDIT
PARTIES
-------
Quest Cherokee,     Delaware        Kansas        Class A           10,000        10,000           None
LLC                                 Oklahoma      Units

                                                  Class B           10,000        10,000           None
                                                  Units

Bluestem Pipeline,  Delaware        Kansas        N/A               N/A           N/A              None
LLC                                 Oklahoma

</TABLE>

________________________

1 Wells Fargo Energy  Capital,  Inc.  holds a warrant to acquire up to 1,600,000
shares of the QRC's common stock,  for a purchase  price of $.001 per share,  at
any time on or before November 7, 2007.

                               Schedule 7.13 - 1

<PAGE>

                                  SCHEDULE 7.14

                            Environmental Disclosure

1.   September  2002  Limited  Due  Diligence  Review,  Cherokee  Basin Coal Bed
     Methane Project, Southeastern Kansas and Northeastern Oklahoma prepared for
     STP Inc.,  Wells Fargo Bank Texas,  N.A.,  and Wells Fargo Energy  Capital,
     Inc. and prepared by O&G  Environmental  Consulting,  LLC, 9033 East Easter
     Place, Suite 104, Englewood, Colorado 80112.

2.   May 2003 Draft Limited Due Diligence Review,  Southeastern  Kansas Coal Bed
     Methane  Project,   Southeastern  Kansas  prepared  for  Quest  Oil  &  Gas
     Corporation and prepared by O&G  Environmental  Consulting,  LLC, 9033 East
     Easter Place, Suite 104, Englewood, Colorado 80112.

3.   December 2003 Limited Due Diligence Review Update,  Cherokee Basin Coal Bed
     Methane Project, Southeastern Kansas and Northeastern Oklahoma prepared for
     Quest Cherokee,  LLC, ArcLight Capital  Partners,  LLC and Banc One Capital
     Markets, Inc. and prepared by O&G Environmental Consulting,  LLC, 9033 East
     Easter Place, Suite 104, Englewood, Colorado 80112.

4.   December  2003 Limited Due Diligence  Review,  Devon Lease Coal Bed Methane
     Project,  Southeastern Kansas and Northeastern  Oklahoma prepared for Quest
     Cherokee, LLC, ArcLight Capital Partners, LLC and Banc One Capital Markets,
     Inc. and prepared by O&G  Environmental  Consulting,  LLC, 9033 East Easter
     Place, Suite 104, Englewood, Colorado 80112.

                               Schedule 7.14 - 1

<PAGE>

                                  SCHEDULE 9.1
                                  ------------

                                  Existing Debt

      LENDER              SECURITY         LOAN BALANCE    MATURITY DATE
      ------              --------         ------------    -------------

Yates Center Branch       Inventory          $67,332.54      11/04/2004
Bank

Yates Center Branch       Equipment         $417,799.76      02/19/2008
Bank

Bank of Commerce         Building-Chanute,   $49,661.24      10/15/2013
                        125 & 127 W. Main

Caterpillar Financial     Equipment         $171,949.39     01/2006, 03/2006,
                                                            08/2005, 10/2006,
                                                                 11/2007

Case Credit               Equipment           $2,245.94     08/18/2004

DC Financial Services     Equipment          $34,983.78     07/25/2005,
                                                            12/27/2005

Ford Motor Credit           Trucks          $141,935.07     03/24/2006,
                                                            01/14/2006,
                                                            01/18/2005,
                                                            04/08/2007,
                                                            07/23/2007,
                                                            11/23/2007

Marilyn Lamb                Trucks            $8,725.00       None

Chrysler Financial          Trucks           $60,885.44     06/23/2005,
                                                            07/13/2005,
                                                            07/22/2007

BEC of Kansas (entity       None             $43,316.85       None
owned by Doug Lamb)

Total                                       $998,835.01

                                Schedule 9.1 - 1

<PAGE>

                                    EXHIBIT A
                                    ---------

                            FORM OF FACILITY GUARANTY

     THIS GUARANTY (this  "Guaranty") is dated as of the ___ day of ___________,
200__, by __________________,  a ______________________  ("Guarantor"), in favor
of BANK ONE,  NA,  with its main office in  Chicago,  Illinois,  and each of the
other  financial  institutions  (1) listed on  Schedule  1.1-A to the  Revolving
Credit  Agreement (as hereinafter  defined) as Banks  (collectively,  "Revolving
Lenders"),  and (2) from time to time  party to the Term  Credit  Agreement  (as
hereinafter defined) as Lenders (collectively, "Term Lenders") and each of their
respective  successors and assigns as permitted pursuant to the Revolving Credit
Agreement and the Term Credit Agreement (as applicable) (Bank One, NA, acting as
both a  Revolving  Lender  and a Term  Lender  but not as  Revolving  Agent  (as
hereinafter  defined),  Term Agent (as hereinafter defined), or Collateral Agent
(as  hereinafter  defined),  and each of the other Term  Lenders  and  Revolving
Lenders are collectively referred to herein as "Noteholders").

                              W I T N E S S E T H:

     WHEREAS,  Quest  Cherokee,   LLC,  a  Delaware  limited  liability  company
("Borrower"),  Revolving  Lenders,  and Bank One,  NA,  with its main  office in
Chicago,  Illinois, as Administrative Agent thereunder  ("Revolving Agent"), are
parties to that certain Credit Agreement (as amended, restated,  supplemented or
otherwise modified from time to time, the "Revolving Credit  Agreement";  unless
otherwise defined or indicated herein,  all terms used herein with their initial
letter  capitalized  shall have the  meaning  given such terms in the  Revolving
Credit  Agreement)  dated as of December 22, 2003,  pursuant to which  Revolving
Lenders have agreed to make a revolving loan to Borrower and agreed to issue and
participate in letters of credit issued on behalf of Borrower; and

     WHEREAS, Borrower, Guarantor, Term Lenders, and Bank One, NA, with its main
office in Chicago,  Illinois, as Agent thereunder ("Term Agent"), are parties to
that  certain  Senior Term Second Lien  Secured  Credit  Agreement  (as amended,
restated, supplemented or otherwise modified from time to time, the "Term Credit
Agreement"  and,  together  with the  Revolving  Credit  Agreement,  the "Credit
Agreements" and, each individually,  a "Credit  Agreement") dated as of December
22,  2003,  pursuant  to which Term  Lenders  have agreed to make a term loan to
Borrower; and

     WHEREAS,  certain of the relative rights and remedies of Revolving  Lenders
and  Term  Lenders  are  set  forth  in  that  certain   Collateral  Agency  and
Intercreditor  Agreement  dated as of December  22, 2003 among Bank One,  NA, as
Collateral Agent thereunder  ("Collateral Agent"),  Revolving Agent, Term Agent,
Noteholders,   Borrower,  Cherokee  Energy  Partners  LLC,  a  Delaware  limited
liability  company,  and  Guarantor  (as  amended,  restated,   supplemented  or
otherwise modified from time to time, the "Intercreditor Agreement"); and

     WHEREAS,  pursuant  to the  terms of the  Credit  Agreements,  Borrower  is
obligated to deliver this Guaranty executed by Guarantor; and

                                      A-1

<PAGE>

     WHEREAS,  the board of directors of Guarantor has determined  that valuable
benefits  will be  derived by it as a result of the  Credit  Agreements  and the
extension of credit made (and to be made) by Noteholders thereunder; and

     WHEREAS,   the  board  of  directors  of  Guarantor  has  determined   that
Guarantor's execution,  delivery and performance of this Guaranty may reasonably
be  expected  to benefit  Guarantor,  directly  or  indirectly,  are in the best
interests  of  Guarantor,  and  are  necessary  or  convenient  to the  conduct,
promotion or attainment of Borrower's business; and

     WHEREAS,  Guarantor has further determined that the benefits accruing to it
from each Credit Agreement exceed Guarantor's  anticipated  liability under this
Guaranty.

     NOW, THEREFORE, for valuable consideration,  the receipt and sufficiency of
which are hereby  acknowledged  and confessed,  Guarantor  hereby  covenants and
agrees as follows:

     1. Guarantor hereby absolutely and  unconditionally  guarantees the prompt,
complete  and full payment when due, no matter how such shall become due, of the
Obligations,  and further  guarantees  that  Borrower  will  properly and timely
perform  the  Obligations.   Notwithstanding  any  contrary  provision  in  this
Guaranty, however, Guarantor's maximum liability under this Guaranty is limited,
to the  extent,  if any,  required  so that  its  liability  is not  subject  to
avoidance  under  applicable  Debtor  Relief  Laws (as such term is  defined  in
Paragraph 8 hereof). As used herein, "Obligations" shall mean, collectively, all
Obligations,  as such term is defined in the Revolving Credit Agreement, and all
Obligations, as such term is defined in the Term Credit Agreement.

     2. If Guarantor is or becomes liable for any indebtedness owing by Borrower
to any Noteholder by  endorsement  or otherwise  than under this Guaranty,  such
liability shall not be in any manner impaired or affected hereby, and the rights
of  Noteholders  hereunder  shall be cumulative of any and all other rights that
Noteholders may ever have against  Guarantor.  The exercise by any Noteholder of
any  right or remedy  hereunder  or under  any  other  instrument,  at law or in
equity,  shall not preclude the  concurrent or subsequent  exercise of any other
right or remedy.

     3. In the event of default by  Borrower in payment of the  Obligations,  or
any part thereof,  when such Obligations become due, either by their terms or as
the result of the  exercise  of any power to  accelerate,  Guarantor  shall,  on
demand,  and without  further  notice of dishonor and without any notice  having
been given to Guarantor previous to such demand of the acceptance by Noteholders
of this  Guaranty or of the creating or incurring of such  Obligations,  pay the
amount due thereon to Noteholders  as set forth in this  Guaranty,  and it shall
not be  necessary  for any  Noteholder,  in order to  enforce  such  payment  by
Guarantor,  first, to institute suit or exhaust its remedies against Borrower or
others liable on such Obligations, to have Borrower joined with Guarantor in any
suit brought under this Guaranty or to enforce their rights against any security
which shall ever have been given to secure such indebtedness; provided, however,
that in the event any Noteholder  elects to enforce and/or exercise any remedies
they may possess  with  respect to any  security  for the  Obligations  prior to
demanding  payment from  Guarantor,  Guarantor  shall  nevertheless be obligated
hereunder for any and all sums still owing to Noteholders on the Obligations and
not repaid or recovered incident to the exercise of such remedies.

                                      A-2

<PAGE>

     4.  Notice to  Guarantor  of the  acceptance  of this  Guaranty  and of the
making,  renewing or assignment of the  Obligations  and each item thereof,  are
hereby expressly waived by Guarantor.

     5. Each  payment  on the  Obligations  shall be deemed to have been made by
Borrower  unless  express  written notice is given to Noteholders at the time of
such payment that such payment is made by Guarantor as specified in such notice.

     6. If all or any part of the Obligations at any time are secured, Guarantor
agrees that Collateral Agent and/or Noteholders may at any time and from time to
time, at their  discretion  and with or without  valuable  consideration,  allow
substitution   or  withdrawal  of  collateral  or  other  security  and  release
collateral  or other  security or  compromise  or settle any amount due or owing
under the  Credit  Agreements  or amend or modify in whole or in part the Credit
Agreements or any Loan Paper executed in connection  with the Credit  Agreements
without  impairing  or  diminishing  the  obligations  of  Guarantor  hereunder.
Guarantor  further  agrees that if Borrower  executes in favor of any Noteholder
any collateral agreement, mortgage or other security instrument, the exercise by
any Noteholder of any right or remedy thereby conferred on such Noteholder shall
be wholly  discretionary with such Noteholder,  and that the exercise or failure
to  exercise  any such right or remedy  shall in no way impair or  diminish  the
obligation of Guarantor hereunder. Guarantor further agrees that Noteholders and
Collateral  Agent shall not be liable for their  failure to use diligence in the
collection  of the  Obligations  or in  preserving  the  liability of any Person
liable for the Obligations, and Guarantor hereby waives presentment for payment,
notice  of  nonpayment,   protest  and  notice  thereof   (including  notice  of
acceleration),  and diligence in bringing suits against any Person liable on the
Obligations,  or any part  thereof.  As used herein,  "Loan  Papers" shall mean,
collectively,  all Loan Papers,  as such term is defined in the Revolving Credit
Agreement,  and all Loan  Documents,  as such term is defined in the Term Credit
Agreement.

     7. Guarantor agrees that Noteholders,  in their  discretion,  may (a) bring
suit against all guarantors (including, without limitation, Guarantor hereunder)
of the Obligations jointly and severally or against any one or more of them, (b)
compound  or  settle  with  any  one  or  more  of  such   guarantors  for  such
consideration  as  Noteholders  may deem proper,  and (c) release one or more of
such guarantors from liability  hereunder,  and that no such action shall impair
the rights of  Noteholders  to collect the  Obligations  (or the unpaid  balance
thereof) from other such guarantors of the  Obligations,  or any of them, not so
sued,  settled  with  or  released.  Guarantor  agrees,  however,  that  nothing
contained in this paragraph,  and no action by Noteholders  permitted under this
paragraph,  shall in any way affect or impair the rights or  obligations of such
guarantors among themselves.

     8. Guarantor  represents and warrants to each Noteholder that (a) Guarantor
is a limited  liability  company duly  organized and validly  existing under the
laws of the State of Delaware;  (b) Guarantor  possesses all requisite authority
and power to  authorize,  execute,  deliver  and  comply  with the terms of this
Guaranty;  (c) this  Guaranty  has been  duly  authorized  and  approved  by all
necessary  action on the part of Guarantor  and  constitutes a valid and binding
obligation of Guarantor  enforceable in accordance with its terms, except as (1)
the enforcement thereof may be limited by applicable Debtor Relief Laws, and (2)
the availability of equitable remedies may be limited by equitable principles of
general  applicability;  and  (d)  no  approval  or  consent  of  any  court  or
governmental  entity is required for the authorization,  execution,  delivery or
compliance with this

                                      A-3

<PAGE>

Guaranty  which  has  not  been  obtained  (and  copies  thereof   delivered  to
Noteholders).  As used in this Guaranty, the term "Debtor Relief Laws" means the
Bankruptcy  Code of the  United  States  of  America  and all  other  applicable
liquidation,    conservatorship,    bankruptcy,    moratorium,    rearrangement,
receivership,  insolvency,  reorganization,  suspension  of  payments or similar
debtor relief laws from time to time in effect affecting the rights of creditors
generally.

     9. Guarantor  covenants and agrees that until the  Obligations are paid and
performed in full, it will (a) at all times maintain its existence and authority
to transact business in any state or jurisdiction where Guarantor has assets and
operations,  except  where the failure to maintain  such  existence or authority
would not have a Material  Adverse Effect,  (b) promptly  deliver to Noteholders
and to Collateral Agent such information respecting its business affairs, assets
and  liabilities  as  Noteholders  may  reasonably  request,  and (c)  duly  and
punctually  observe and perform all covenants  applicable to Guarantor under the
Credit Agreements and the other Loan Papers.  The failure of Guarantor to comply
with the terms of this paragraph  shall be an Event of Default under each Credit
Agreement.

     10. This Guaranty is for the benefit of Noteholders,  their  successors and
assigns,  and in the event of an assignment by Noteholders (or their  successors
or assigns) of the  Obligations,  or any part  thereof,  the rights and benefits
hereunder,  to the extent  applicable  to the  Obligations  so assigned,  may be
transferred with such  Obligations.  This Guaranty is binding upon Guarantor and
its successors and assigns.

     11. No modification,  consent, amendment or waiver of any provision of this
Guaranty,  nor  consent  to any  departure  by  Guarantor  therefrom,  shall  be
effective unless the same shall be in writing and signed by each Noteholder, and
then shall be effective  only in the  specific  instance and for the purpose for
which given.  No notice to or demand on Guarantor in any case shall,  of itself,
entitle  Guarantor to any other or further  notice or demand in similar or other
circumstances.  No delay or omission by  Noteholders  in exercising any power or
right hereunder shall impair any such right or power or be construed as a waiver
thereof or any acquiescence therein, nor shall any single or partial exercise of
any such power preclude other or further  exercise  thereof,  or the exercise of
any other  right or power  hereunder.  All rights and  remedies  of  Noteholders
hereunder are  cumulative of each other and of every other right or remedy which
Noteholders  may otherwise  have at law or in equity or under any other contract
or  document,  and the  exercise  of one or more  rights or  remedies  shall not
prejudice or impair the  concurrent  or  subsequent  exercise of other rights or
remedies.

     12. No provision herein or in any promissory note,  instrument or any other
Loan Paper executed by Borrower or Guarantor  evidencing the  Obligations  shall
require  the  payment  or permit the  collection  of  interest  in excess of the
Maximum  Lawful Rate.  If any excess of interest in such respect is provided for
herein or in any such promissory note, instrument,  or any other Loan Paper, the
provisions of this paragraph  shall govern,  and neither  Borrower nor Guarantor
shall be obligated  to pay the amount of such  interest to the extent that it is
in excess of the amount  permitted by law. The intention of the parties being to
conform strictly to any applicable federal or state usury laws now in force, all
promissory  notes,  instruments  and other Loan  Papers  executed by Borrower or
Guarantor  evidencing the Obligations  shall be held subject to reduction to the
amount allowed under said usury laws as now or hereafter construed by the courts
having jurisdiction.

                                      A-4

<PAGE>

     13. If  Guarantor  should  breach or fail to perform any  provision of this
Guaranty,  Guarantor agrees to pay Noteholders all costs and expenses (including
court  costs and  reasonable  attorneys  fees)  incurred by  Noteholders  in the
enforcement hereof.

     14. (a) The liability of Guarantor  under this Guaranty  shall in no manner
be impaired,  affected or released by the insolvency,  bankruptcy,  making of an
assignment for the benefit of creditors, arrangement,  compensation, composition
or readjustment of Borrower, or any proceedings affecting the status,  existence
or assets of  Borrower or other  similar  proceedings  instituted  by or against
Borrower and affecting the assets of Borrower.

     (b) Guarantor  acknowledges  and agrees that any interest on any portion of
the Obligations which accrues after the commencement of any proceeding  referred
to in clause (a) of this  Paragraph  14 above (or, if interest on any portion of
the  Obligations  ceases  to  accrue  by  operation  of  law  by  reason  of the
commencement  of said  proceeding,  such  interest as would have accrued on such
portion of the Obligations if said  proceedings had not been commenced) shall be
included in the Obligations because it is the intention of Guarantor, Collateral
Agent and  Noteholders  that the  Obligations  which are guaranteed by Guarantor
pursuant to this Guaranty should be determined without regard to any rule of law
or  order  which  may  relieve  Borrower  of any  portion  of such  Obligations.
Guarantor will permit any trustee in bankruptcy, receiver, debtor in possession,
assignee for the benefit of creditors or similar  Person to pay  Noteholders  or
Collateral  Agent,  or allow the claim of  Noteholders  or  Collateral  Agent in
respect of, any such interest  accruing after the date on which such  proceeding
is commenced.

     (c) In the event  that all or any  portion of the  Obligations  are paid by
Borrower,  the  obligations of Guarantor  hereunder shall continue and remain in
full  force and effect or be  reinstated,  as the case may be, in the event that
all or any part of such  payment(s)  are  rescinded  or  recovered  directly  or
indirectly from Collateral  Agent or any Noteholder as a preference,  fraudulent
transfer or otherwise, and any such payments which are so rescinded or recovered
shall constitute Obligations for all purposes under this Guaranty.

     15.  Guarantor  understands  and agrees  that any amounts of  Guarantor  on
account with any Noteholder may, after the occurrence and during the continuance
of an Event of  Default,  be offset to  satisfy  the  obligations  of  Guarantor
hereunder. Any Noteholder that offsets any such amounts against such obligations
shall take reasonable efforts to promptly notify Guarantor of such action.

     16.  Guarantor   hereby   subordinates  and  makes  inferior  any  and  all
indebtedness  now or at any time  hereafter owed by Borrower to Guarantor to the
Obligations  and agrees,  after the occurrence  and during the  continuance of a
Default  or an Event of Default  under and as  defined  in either the  Revolving
Credit Agreement or the Term Credit  Agreement,  or any event which with notice,
lapse of time, or both,  would constitute a Default or an Event of Default under
and as defined in either  the  Revolving  Credit  Agreement  or the Term  Credit
Agreement,  not to permit  Borrower to repay, or to accept payment from Borrower
of, such  indebtedness  or any part thereof without the prior written consent of
Noteholders.

     17. During the period that Revolving Lenders have any commitment to lend or
participate  in Letter of Credit  Exposure (as defined in the  Revolving  Credit
Agreement), or any amount payable

                                      A-5

<PAGE>

under any Note  remains  unpaid  or any  Letter of  Credit  (as  defined  in the
Revolving Credit Agreement) remains  outstanding,  and throughout any additional
preferential period subsequent thereto,  Guarantor shall not exercise any rights
of subrogation to which Guarantor may otherwise be entitled against Borrower, or
any other  guarantor  of the  Obligations,  as a result of any  payment  made by
Guarantor pursuant to this Guaranty.

     18. As of the date  hereof,  the fair  saleable  value of the  property  of
Guarantor is greater than the total amount of liabilities  (including contingent
and unliquidated  liabilities) of Guarantor, and Guarantor is able to pay all of
its  liabilities  as  such  liabilities  mature  and  Guarantor  does  not  have
unreasonably  small capital  within the meaning of Section 548, Title 11, United
States Code,  as amended.  In computing  the amount of  contingent or liquidated
liabilities,  such  liabilities have been computed at the amount which, in light
of all the facts and  circumstances  existing as of the date hereof,  represents
the  amount  that can  reasonably  be  expected  to become an actual or  matured
liability.

     19. If any  provision  of this  Guaranty is held to be illegal,  invalid or
unenforceable,  under present or future Laws  effective  during the term hereof,
such provision  shall be fully  severable,  this Guaranty shall be construed and
enforced as if such  illegal,  invalid,  or  unenforceable  provision  had never
comprised a part hereof,  and the  remaining  provisions  hereof shall remain in
full force and effect and shall not be  affected  by the  illegal,  invalid,  or
unenforceable  provision or by its severance herefrom.  Furthermore,  in lieu of
such  illegal,   invalid,  or  unenforceable  provision  there  shall  be  added
automatically as a part of this Guaranty a provision as similar in terms to such
illegal,  invalid,  or unenforceable  provision as may be possible and be legal,
valid and enforceable.

     20. (a) Guarantor  hereby  irrevocably  submits to the  jurisdiction of any
Texas State or Federal court sitting in the Northern  District of Texas over any
action or  proceeding  arising out of or relating to this  Guaranty or any other
Loan Paper, and Guarantor hereby  irrevocably  agrees that all claims in respect
of such action or proceeding  may be heard and determined in such Texas State or
Federal  court.  Guarantor  agrees  that a final  judgment on any such action or
proceeding  shall be conclusive  and may be enforced in other  jurisdictions  by
suit on the judgment or in any other manner provided by Law.

     (b) Nothing in this  Paragraph 20 shall affect any right of  Noteholders to
bring any action or proceeding  against any Guarantor or their properties in the
courts of any other jurisdictions.

     (c) To the extent that  Guarantor has or hereafter may acquire any immunity
from  jurisdiction  of any  court or from any  legal  process  (whether  through
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, Guarantor hereby
irrevocably  waives  such  immunity  in  respect of its  obligations  under this
Guaranty and the other Loan Papers.

     21. THIS  GUARANTY  AND THE OTHER LOAN PAPERS  COLLECTIVELY  REPRESENT  THE
FINAL AGREEMENT BY AND AMONG NOTEHOLDERS, COLLATERAL AGENT AND GUARANTOR AND MAY
NOT BE  CONTRADICTED BY EVIDENCE OF PRIOR,  CONTEMPORANEOUS,  OR SUBSEQUENT ORAL
AGREEMENTS OF

                                      A-6

<PAGE>

NOTEHOLDERS,  AGENT AND GUARANTOR.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
NOTEHOLDERS, COLLATERAL AGENT AND GUARANTOR.

     22. EACH NOTEHOLDER, BY ITS ACCEPTANCE OF THIS GUARANTY, AND GUARANTOR, FOR
ITSELF,  ITS  SUCCESSORS AND ASSIGNS,  HEREBY  IRREVOCABLY  AND  UNCONDITIONALLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING  RELATING TO THIS GUARANTY OR ANY OF THE OTHER LOAN PAPERS AND ANY
COUNTERCLAIM THEREIN.

     23.  THIS  GUARANTY  AND THE  OTHER  LOAN  PAPERS  SHALL  BE  CONSTRUED  IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.

     EXECUTED and effective as of the date first above written.

                                   GUARANTOR:

                               ____________________, a ______________________

                               By:
                                  ------------------------------------------
                               Name:
                                    ----------------------------------------
                               Title:
                                     ---------------------------------------

                                      A-7

<PAGE>

                                   EXHIBIT B
                                   ---------

                                      NOTE
                                      ----

$______________                   Dallas, Texas                   ________, ____

     FOR VALUE  RECEIVED,  the  undersigned,  Quest  Cherokee,  LLC,  a Delaware
limited  liability company  ("Maker"),  promises to pay to the order of [Name of
Bank]  ("Payee"),  at the  offices  of Bank  One,  NA,  with its main  office in
Chicago,  Illinois,  as  Administrative  Agent (herein so called),  at 1717 Main
Street,  4th Floor,  Mail Code,  TX1-2448,  Dallas,  Texas 75201, for Payee, the
principal sum of _________________ and No/100 Dollars ($_______________),  or so
much thereof as may be advanced and  outstanding,  together  with  interest,  as
hereinafter described.

     This Note has been  executed and  delivered  pursuant to, and is subject to
and governed by, the terms of that certain Credit Agreement dated as of December
22,  2003  (as  hereafter  renewed,  extended,  amended,  or  supplemented,  the
"Agreement") among Maker, Payee,  Administrative Agent and the other Banks named
therein, and is one of the "Notes" referred to therein. Unless otherwise defined
herein or unless the context hereof  otherwise  requires,  each term used herein
with its initial  letter  capitalized  has the meaning given to such term in the
Agreement.

     Maker also promises to pay interest on the unpaid  principal  amount hereof
in like money at the offices of  Administrative  Agent above referenced from the
date hereof at the rates applicable to amounts  outstanding  under the Revolving
Loan provided in the Agreement and on the dates specified in the Agreement.

     The  principal  balance  of this Note shall be paid at the times and in the
amounts  required by the Agreement.  The entire  outstanding  principal  balance
hereof and all accrued but unpaid  interest  thereon shall be due and payable in
full on the Termination Date.

     Upon and subject to the terms and conditions of the Agreement,  Maker shall
be  entitled  to prepay the  principal  of or interest on this Note from time to
time and at any time, in whole or in part.

     Upon the occurrence and during the continuance of an Event of Default,  and
upon the conditions  stated in the Agreement,  Administrative  Agent may, at its
option,  and shall,  to the extent  required in accordance with the terms of the
Agreement,  declare the entire unpaid  principal of and accrued interest on this
Note immediately due and payable  (provided that, upon the occurrence of certain
Events  of  Default,  and upon the  conditions  stated  in the  Agreement,  such
acceleration  shall be automatic),  without notice (except as otherwise required
by the Agreement),  demand, or presentment,  all of which are hereby waived, and
the holder  hereof  shall have the right to offset  against this Note any sum or
sums owed by the holder hereof to Maker.  All past-due  principal of and, to the
extent  permitted by law,  accrued interest on this Note shall, at the option of
the holder hereof, bear interest at the lesser of (a) the Maximum Lawful Rate or
(b) the Default Rate until paid from the due date.

     Notwithstanding  the  foregoing,  if at any  time,  any  rate  of  interest
calculated  under Section 2.5 of the Agreement (the "Contract Rate") exceeds the
Maximum  Lawful  Rate,  the rate of interest  hereunder  shall be limited to the
Maximum Lawful Rate, but any subsequent reductions in the

                                      B-1

<PAGE>

Contract  Rate  shall not  reduce  the rate of  interest  on this Note below the
Maximum Lawful Rate until the total amount of interest accrued equals the amount
of interest  which would have accrued  (including  the amount of interest  which
would have  accrued  prior to the payment or  prepayment  of any portion of this
Note) if the Contract Rate had at all times been in effect. In the event that at
maturity  (stated or by  acceleration),  or at final  payment of this Note,  the
total amount of interest paid or accrued on this Note is less than the amount of
interest  which would have accrued if the Contract Rate had at all times been in
effect with respect thereto,  then at such time, to the extent permitted by law,
the Maker shall pay to the holder of this Note an amount equal to the difference
between (a) the lesser of the amount of interest which would have accrued if the
Contract  Rate had at all times been in effect and the amount of interest  which
would have  accrued if the Maximum  Lawful Rate had at all times been in effect,
and (b) the amount of interest actually paid or accrued on this Note.

                               QUEST CHEROKEE, LLC, a Delaware limited
                               liability company

                               By:
                                  ---------------------------------
                               Name:
                                    -------------------------------
                               Title:
                                     ------------------------------

                                      B-2

<PAGE>

                            ADVANCES, MATURITIES, AND

                       PAYMENTS OF PRINCIPAL AND INTEREST

<TABLE>
<CAPTION>
<S>               <C>         <C>             <C>           <C>           <C>          <C>       <C>

                  Payee's
Borrowing Date   Commitment   Expiration of   Rate of       Amount of     Amount of    Unpaid    Notation Made
                 Percentage    Interest       Interest      Principal      Interest   Principal       By
                 of Borrowing   Period       Applicable to    Paid         Paid       Balance
                                               Tranche

</TABLE>

                                      B-3

<PAGE>

                                   EXHIBIT C
                                   ---------

                     FORM OF EQUITYHOLDERS PLEDGE AGREEMENT
                     --------------------------------------

     THIS PLEDGE  AGREEMENT (this  "Agreement")  is made as of  _______________,
200____, by ____________________,  a ________________  ("Pledgor"),  in favor of
Bank One, NA, with its main office in Chicago,  Illinois,  as  Collateral  Agent
(defined below) for the benefit of Revolving Lenders (as defined below) and Term
Lenders (defined below) (herein called "Pledgee").

                              W I T N E S S E T H:

     WHEREAS,  Quest  Cherokee,   LLC,  a  Delaware  limited  liability  company
("Borrower"),  Bank One,  NA, as  Administrative  Agent  thereunder  ("Revolving
Agent"),  and the financial  institutions  described as Banks on Schedule  1.1-A
thereto  (collectively,  "Revolving Lenders") are parties to that certain Credit
Agreement (as amended, restated, supplemented or otherwise modified from time to
time, the "Revolving Credit Agreement") dated as of December 22, 2003,  pursuant
to which  Revolving  Lenders have agreed to make revolving loans and participate
in letters of credit issued on behalf of Borrower; and

     WHEREAS,  Borrower,  Bluestem  Pipeline,  LLC, a Delaware limited liability
company ("Bluestem"),  Bank One, NA, as Agent thereunder ("Term Agent"), and the
financial institutions from time to time party thereto as Lenders (collectively,
"Term  Lenders"  and,  together  with  Revolving  Lenders,  "Lenders"  and, each
individually,  a "Lender")  are parties to that certain  Senior Term Second Lien
Secured  Credit  Agreement  (as  amended,  restated,  supplemented  or otherwise
modified from time to time, the "Term Credit  Agreement" and,  together with the
Revolving Credit Agreement,  the "Credit  Agreements" and, each individually,  a
"Credit  Agreement")  dated as of  December  22,  2003,  pursuant  to which Term
Lenders have agreed to make a term loan to Borrower; and

     WHEREAS,  certain of the  relative  rights and  remedies  of the  Revolving
Lenders and Term  Lenders are set forth in that  certain  Collateral  Agency and
Intercreditor  Agreement  dated December 22, 2003 among  Revolving  Agent,  Term
Agent,  Bank One,  NA, as  Collateral  Agent  thereunder  ("Collateral  Agent"),
Lenders,  Cherokee Energy  Partners LLC, a Delaware  limited  liability  company
("Cherokee Partners"), Bluestem and Borrower (as amended, restated, supplemented
or otherwise modified from time to time, the "Intercreditor Agreement"); and

     WHEREAS,  it is a condition  precedent to the  extensions  of credit by the
applicable  Lenders under the applicable  Credit  Agreements  that,  among other
things,  Pledgor  shall  have  executed  and  delivered  to  Pledgee a  security
agreement  granting to Pledgee,  for the benefit of Lenders, a security interest
in the Collateral (as defined herein); and

     WHEREAS,  the board of directors of Pledgor has  determined  that Pledgor's
execution, delivery and performance of this Agreement may reasonably be expected
to benefit  Pledgor,  directly or  indirectly,  and are in the best interests of
Pledgor.

     NOW,  THEREFORE,  in  consideration  of the premises and in order to induce
Lenders to extend credit under the Credit Agreements, Pledgor hereby agrees with
Pledgee as follows:

                                      C-1

<PAGE>

                                    ARTICLE I

                           Definitions and References

     Section 1.1. General  Definitions.  As used herein, the terms defined above
shall have the meanings  indicated above, and the following terms shall have the
following meanings:

     "Code" means the Uniform  Commercial  Code as now or hereafter in effect in
the State of Texas; provided,  that if by reason of mandatory provisions of law,
the perfection or the effect of perfection or  non-perfection of any Lien in any
Collateral  is  governed  by the  Uniform  Commercial  Code  as in  effect  in a
jurisdiction  other than Texas,  "Code" means the Uniform  Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or the effect of perfection or non-perfection.

     "Collateral" has the meaning given such term in Section 2.1.

     "Commitments" means the agreement or commitment by Lenders to make loans or
otherwise extend credit to Borrower under the Credit  Agreements,  and any other
agreement,  commitment,  statement of terms or other document  contemplating the
making of loans or  advances or other  extension  of credit by Lenders to or for
the account of  Borrower  which is now or at any time  hereafter  intended to be
secured by the Collateral under this Agreement.

     "Equity" means shares of capital stock or a partnership,  limited liability
company,  profits, capital or member interest, or options, warrants or any other
right to substitute for or otherwise acquire the capital stock or a partnership,
limited liability company, profits, capital or member interest of Borrower.

     "Lien" means any collateral assignment,  lien, pledge, encumbrance,  charge
or security interest.

     "Loan Papers" means,  collectively,  the Revolving Loan Papers and the Term
Loan Papers.

     "Notes" means, collectively, the Revolving Notes and the Term Notes.

     "Obligation  Documents"  means the Credit  Agreements,  the Notes, the Loan
Papers,  and all other documents and  instruments  under, by reason of which, or
pursuant  to  which,  any or all of the  Obligations  are  evidenced,  governed,
secured,  or otherwise dealt with, and all other agreements,  certificates,  and
other documents,  instruments and writings  heretofore or hereafter delivered in
connection herewith or therewith.

     "Obligations"  means all present and future  indebtedness,  obligations and
liabilities  of whatever type which are or shall be secured  pursuant to Section
2.2.

     "Other  Liable Party" means any Person,  other than Pledgor,  but including
Borrower,  who may now or may at any time  hereafter be primarily or secondarily
liable for any of the  Obligations  or who may now or may at any time  hereafter
have  granted to Pledgee or any Lender a Lien upon any  property as security for
the Obligations.

                                      C-2

<PAGE>

     "Permitted  Subordinate  Liens"  means Liens  granted to Cherokee  Partners
pursuant to that certain Pledge Agreement dated as of the date hereof,  executed
by Pledgor in favor of Cherokee  Partners,  as the same is in effect on the date
hereof, so long as such Liens remain  subordinate to the Liens of this Agreement
in a  manner  satisfactory  to  Pledgee  in its  sole  discretion.  [NOTE:  THIS
DEFINITION  AND ALL  REFERENCED  THERETO  IN THIS  AGREEMENT  APPLY  ONLY TO THE
EQUITYHOLDERS PLEDGE AGREEMENT EXECUTED BY QUEST ENERGY SERVICE, INC., PRODUCERS
SERVICE INCORPORATED,  QUEST OIL & GAS CORPORATION,  STP CHEROKEE, INC., J-W GAS
GATHERING,  L.L.C., AND PONDEROSA GAS PIPELINE COMPANY,  INC.; ALL REFERENCES TO
THIS DEFINITION WILL BE DELETED IN EQUITYHOLDERS  PLEDGE AGREEMENTS  EXECUTED BY
OTHER ENTITIES]

     "Person" means any individual, corporation,  partnership, limited liability
company,  association,  trust,  other  entity or  organization,  or any court or
governmental department,  commission,  board, bureau, agency, or instrumentality
of any  nation  or of any  province,  state,  commonwealth,  nation,  territory,
possession,   county,   parish,  or  municipality,   whether  now  or  hereafter
constituted or existing.

     "Pledged Equity" has the meaning given it in Section 2.1(a).

     "Revolving Loan Papers" means the Revolving Credit Agreement, the Revolving
Notes,   this   Agreement,   each  Master  Debt  Guaranty  (as  defined  in  the
Intercreditor  Agreement) which may now or hereafter be executed,  each Security
Document (as defined in the Intercreditor  Agreement) which may now or hereafter
be executed,  all mortgages,  mortgage  amendments  and mortgage  supplements or
modifications now or at any time hereafter  delivered pursuant to Section 5.1 of
the  Revolving  Credit  Agreement,  and all  other  certificates,  documents  or
instruments delivered in connection with the Revolving Credit Agreement,  as the
foregoing may be amended from time to time.

     "Revolving  Notes" means,  collectively,  the promissory notes from time to
time  executed by Borrower  and  payable to the order of each  Revolving  Lender
pursuant  to the terms of the  Revolving  Credit  Agreement  and shall  include,
without  limitation,  that certain Note dated December 22, 2003,  payable to the
order of Bank One, NA, in the original principal amount of $200,000,000, bearing
interest as therein  provided and with interest and  principal  being payable as
therein provided.

     "Term Loan Papers" means the Term Credit  Agreement,  the Term Notes,  this
Agreement,  each Master Debt  Guaranty  which may now or  hereafter be executed,
each Security  Document  which may now or hereafter be executed,  all mortgages,
mortgage amendments and mortgage supplements or modifications now or at any time
hereafter  delivered  in  connection  with the  Term  Credit  Agreement,  as the
foregoing may be amended from time to time.

     "Term Notes" means,  collectively,  the promissory  notes from time to time
executed  by Borrower  and payable to the order of each Term Lender  pursuant to
the terms of the Term Credit Agreement.

     Section 1.2. Other  Definitions.  Reference is hereby made to the Revolving
Credit  Agreement for a statement of the terms thereof.  All  capitalized  terms
used in this Agreement which

                                      C-3

<PAGE>

are defined in the Revolving Credit  Agreement and not otherwise  defined herein
shall  have the same  meanings  herein as set forth  therein,  except  where the
context otherwise  requires.  All terms used in this Agreement which are defined
in the Code and not otherwise defined herein or in the  Intercreditor  Agreement
shall have the same meanings  herein as set forth in the Code,  except where the
context otherwise requires.

     Section 1.3. Schedules. All schedules attached to this Agreement are a part
hereof for all purposes.

     Section 1.4. Amendment of Defined Instruments. Unless the context otherwise
requires or unless otherwise provided herein,  references in this Agreement to a
particular  agreement,  instrument  or  document  also refer to and  include all
renewals, extensions, amendments, modifications,  supplements or restatements of
any such agreement,  instrument or document,  provided that nothing contained in
this Section 1.4 shall be construed to authorize  any Person to execute or enter
into  any  such  renewal,  extension,  amendment,  modification,  supplement  or
restatement.

     Section 1.5.  References  and Titles.  All  references in this Agreement to
Schedules, Articles, Sections,  subsections, and other subdivisions refer to the
Schedules,  Articles,  Sections,  subsections  and  other  subdivisions  of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of any subdivision  are for  convenience  only and do not constitute any part of
any such  subdivision  and  shall be  disregarded  in  construing  the  language
contained in this Agreement.  The words "this  Agreement,"  "herein,"  "hereof,"
"hereby,"  "hereunder"  and words of similar import refer to this Agreement as a
whole and not to any particular  subdivision  unless  expressly so limited.  The
phrases "this Section" and "this  subsection"  and similar phrases refer only to
the Sections or subsections  hereof in which the phrase occurs. The word "or" is
not exclusive,  and the word  "including" (in all of its forms) means "including
without limitation".  Pronouns in masculine, feminine and neuter gender shall be
construed to include any other  gender,  and words in the singular form shall be
construed  to include  the plural and vice versa  unless the  context  otherwise
requires.

                                   ARTICLE II

                                Security Interest

     Section 2.1. Grant of Security Interest.  As collateral security for all of
the  Obligations,  Pledgor  hereby  pledges and assigns to Pledgee and grants to
Pledgee a continuing  security interest for the benefit of Lenders in and to all
of  Pledgor's  following  rights,  interests  and  property  (collectively,  the
"Collateral"):

     (a) all of the issued and  outstanding  Equity of Borrower (i) described on
Schedule 1 attached hereto and (ii) that Pledgor now owns or hereafter  acquires
(all of the foregoing being herein sometimes called the "Pledged Equity");

     (b) any and all  proceeds,  and all dividends  and  distributions  (cash or
otherwise)  payable  and/or  distributable  with  respect  to, all or any of the
Pledged Equity; and

                                      C-4

<PAGE>

     (c) all cash, securities, dividends and other property at any time and from
time to time  receivable or otherwise  distributed  in respect of or in exchange
for any or all of the  Pledged  Equity  and any other  property  substituted  or
exchanged therefor.

     Section 2.2.  Obligations  Secured. The security interest created hereby in
the  Collateral  constitutes  continuing  collateral  security  for  all  of the
following  obligations,  indebtedness and  liabilities,  whether now existing or
hereafter incurred:

     (a) Credit Agreement Indebtedness. The payment by Borrower, as and when due
and  payable,  of all amounts  from time to time owing by  Borrower  under or in
respect  of the  Credit  Agreements,  the Notes or any of the  other  Obligation
Documents.

     (b)  Renewals.  All  renewals,   extensions,   amendments,   modifications,
supplements, or restatements of, or substitutions for, any of the foregoing.

     (c) Performance. The due performance and observance by Borrower and Pledgor
of all of their other obligations from time to time existing under or in respect
of any of the Obligation Documents.

     (d) Oil & Gas Hedge  Transactions.  The payment and  performance of any and
all present or future  obligations of any Credit Party according to the terms of
any  present  or  future  Oil  &  Gas  Hedge  Transaction,   including,  without
limitation, any present or future swap agreements, cap, floor, collar, exchange,
transaction,  forward  agreement  or other  exchange  or  protection  agreements
relating  to crude oil,  natural gas or other  hydrocarbons,  or any option with
respect to any such  transaction now existing or hereafter  entered into between
and/or among any Credit  Party,  Pledgee,  any Lender or any affiliate of any of
the foregoing.

                                   ARTICLE III
                                   -----------

                    Representations, Warranties and Covenants
                    -----------------------------------------

     Section  3.1.  Representations  and  Warranties.   Pledgor  represents  and
warrants as follows:

     (a)  Ownership  and Liens.  Pledgor  has good and  marketable  title to the
Collateral free and clear of all Liens,  encumbrances or adverse claims,  except
for the Lien created by this  Agreement  and  Permitted  Subordinate  Liens.  No
effective financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording  office except such as
have been filed in favor of Pledgee relating to this Agreement.

     (b) No Conflicts or Consents.  Neither the ownership or the intended use of
the Collateral by Pledgor,  nor the grant of the security interest by Pledgor to
Pledgee  herein,  will (i)  conflict  with any  provision of (a) any domestic or
foreign law, statute, rule or regulation,  (b) the certificate of incorporation,
articles of incorporation,  charter or bylaws of Pledgor or Borrower, or (c) any
agreement,  judgment,  license,  order or permit  applicable  to or binding upon
Pledgor or Borrower;  or (ii) result in or require the creation of any Lien upon
any  assets  or  properties  of  Pledgor  other  than the Lien  created  by this
Agreement and Permitted Subordinate Liens. No consent, approval,

                                      C-5

<PAGE>

authorization or order of, and no notice to or filing with Borrower or any other
Person is  required  in  connection  with the grant by Pledgor  of the  security
interest  herein,  or,  except to the extent  required by  applicable  law,  the
exercise by Pledgee of its rights and remedies hereunder.

     (c) Security  Interest.  Pledgor has and will have at all times full right,
power and authority to grant a security interest in the Collateral to Pledgee in
the manner  provided  herein,  free and clear of any Lien  other than  Permitted
Subordinate  Liens. This Agreement creates a valid and binding security interest
in favor of Pledgee  in the  Collateral  securing  the  Obligations.  The taking
possession  by  Pledgee  (for  the  benefit  of  Lenders)  of all  certificates,
instruments and cash constituting Collateral from time to time and the filing of
the financing statements delivered  concurrently  herewith by Pledgor to Pledgee
will perfect Pledgee's  security interest  hereunder in the Collateral  securing
the Obligations,  subject to no Liens other than Permitted Subordinate Liens. No
further or subsequent filing,  recording,  registration,  other public notice or
other  action is  necessary  or  desirable  to  perfect or  otherwise  continue,
preserve or protect such security interest except for continuation statements or
filings as  contemplated  in Section  3.3(b).  Upon completion of the perfection
acts  contemplated  in this Section  3.1(c),  Pledgee will have a first priority
perfected Lien in the Collateral.

     (d) Pledged  Equity.  (i) Pledgor is the legal and beneficial  owner of the
Pledged  Equity;  (ii) the Pledged Equity is duly  authorized and issued,  fully
paid and  non-assessable  (as applicable),  and all documentary,  stamp or other
taxes or fees owing in  connection  with the  issuance,  transfer  and/or pledge
thereof   hereunder  have  been  paid;  (iii)  no  dispute,   right  of  setoff,
counterclaim  or defense  exists with  respect to all or any part of the Pledged
Equity;  (iv) the  Pledged  Equity  is free and  clear  of all  Liens,  options,
warrants, puts, calls or other rights of third Persons, and restrictions,  other
than the Lien created by this  Agreement and Permitted  Subordinate  Liens;  (v)
Pledgor  has full  right and  authority  to pledge  the  Pledged  Equity for the
purposes and upon the terms set out herein;  (vi)  certificates  (as applicable)
representing the Pledged Equity have been delivered to Pledgee,  together with a
duly  executed  blank stock or transfer  power for each  certificate;  and (vii)
Borrower has not issued, and there are not outstanding, any options, warrants or
other rights to acquire Equity of Borrower.

     Section 3.2. Affirmative Covenants.  Unless Pledgee shall otherwise consent
in writing,  Pledgor  will at all times comply with the  covenants  contained in
this Section 3.2 from the date hereof and so long as any part of the Obligations
or Commitments is outstanding.

     (a) Ownership and Liens. Pledgor will maintain good title to all Collateral
free and clear of all Liens, except for (i) the first priority security interest
created by this Agreement,  and (ii) Permitted  Subordinate Liens.  Pledgor will
cause to be  terminated  any  financing  statement  or other  registration  with
respect to the Collateral, except such as may exist or as may have been filed in
favor of (or  otherwise  assigned  to)  Pledgee  or with  respect  to  Permitted
Subordinate  Liens.  Pledgor  will  defend  Pledgee's  right,  title and special
property and security  interest in and to the  Collateral  against the claims of
any Person.

     (b)  Further  Assurances.  Pledgor  will at any time and from  time to time
promptly execute and deliver all further  instruments and documents and take all
further action that may be necessary or that Pledgee may  reasonably  request in
order (i) to perfect and protect the security interest created

                                      C-6

<PAGE>

or  purported  to be created  hereby  and the first  priority  of such  security
interest; (ii) to enable Pledgee to exercise and enforce its rights and remedies
hereunder  in  respect  of the  Collateral;  or (iii) to  otherwise  effect  the
purposes of this Agreement, including: (A) authorizing and filing such financing
or continuation  statements,  or amendments thereto, as may be necessary or that
Pledgee may  reasonably  request in order to perfect and  preserve  the security
interest  created or  purported  to be created  hereby,  and (B)  furnishing  to
Pledgee from time to time  statements  and  schedules  further  identifying  and
describing  the  Collateral  and  such  other  reports  in  connection  with the
Collateral as Pledgee may reasonably request, all in reasonable detail.

     (c) Delivery of Pledged Equity. All certificates,  instruments and writings
evidencing  the Pledged  Equity shall be delivered to Pledgee on or prior to the
execution and delivery of this Agreement.  All other  certificates,  instruments
and  writings  hereafter  evidencing  or  constituting  Pledged  Equity shall be
delivered  to  Pledgee  promptly  upon the  receipt  thereof  by or on behalf of
Pledgor.  All Pledged  Equity shall be held by or on behalf of Pledgee  pursuant
hereto and shall be  delivered  in the same  manner and with the same  effect as
described  in Section 2.1 and Section  3.1.  Upon  delivery,  such Equity  shall
thereupon  constitute  "Pledged Equity" and shall be subject to the Liens herein
created,  for the purposes and upon the terms and  conditions  set forth in this
Agreement and the other Loan Papers.

     (d) Proceeds of Pledged Equity. If Pledgor shall receive,  by virtue of its
being or having been an owner of any Pledged Equity,  any (i) Equity  (including
any certificate  representing  any Equity or distribution in connection with any
increase or  reduction  of capital,  reorganization,  reclassification,  merger,
consolidation,  sale of assets,  or spinoff or  split-off),  promissory  note or
other  instrument or writing;  (ii) option or right,  whether as an addition to,
substitution  for, or in exchange for, any Pledged  Equity or  otherwise;  (iii)
dividends or other distributions payable in cash (except such dividends or other
distributions permitted to be retained by Pledgor pursuant to Section 4.7) or in
securities  or other  property;  or (iv)  dividends  or other  distributions  in
connection  with a partial or total  liquidation or dissolution or in connection
with a reduction of capital,  capital surplus or paid-in surplus,  Pledgor shall
receive the same in trust for the benefit of Pledgee,  shall  segregate  it from
Pledgor's other property,  and shall promptly deliver it to Pledgee in the exact
form received,  with any necessary  endorsement or appropriate stock or transfer
powers duly executed in blank, to be held by Pledgee as Collateral.

     (e) Status of Pledged  Equity.  The  certificates  evidencing  the  Pledged
Equity (as applicable)  shall at all times be valid and genuine and shall not be
altered.  The  Pledged  Equity at all times  shall be duly  authorized,  validly
issued,  fully paid, and non-assessable (as applicable),  shall not be issued in
violation of the  pre-emptive  rights of any Person or of any agreement by which
Pledgor or Borrower is bound,  and shall not be subject to any  restrictions  or
conditions  with  respect to the  transfer,  voting or  capital  of any  Pledged
Equity.

     (f) Permitted  Subordinate Liens.  Pledgor shall take all actions necessary
to ensure that the Permitted Subordinate Liens are at all times subordinated, in
a manner satisfactory to Pledgee in its sole discretion, to the Liens granted in
favor of Pledgee for the benefit of Lenders hereunder.

                                      C-7

<PAGE>

     Section 3.3. Negative Covenants.  Unless Pledgee shall otherwise consent in
writing,  Pledgor will at all times comply with the covenants  contained in this
Section 3.3 from the date hereof and so long as any part of the  Obligations  or
the Commitments is outstanding.

     (a) Transfer or Encumbrance. Pledgor will not sell, assign (by operation of
law or otherwise),  transfer, exchange, lease or otherwise dispose of any of the
Collateral,  nor will Pledgor  grant a Lien upon or file or record any financing
statement or other  registration  with respect to the Collateral  (other than in
connection with Permitted  Subordinate  Liens),  nor will Pledgor allow any such
Lien,  financing  statement,  or  other  registration  to exist  (other  than in
connection with Permitted  Subordinate  Liens) or deliver actual or constructive
possession of the Collateral to any other Person.

     (b)  Financing   Statement  Filings.   Pledgor  recognizes  that  financing
statements  pertaining to the Collateral have been or may be filed where Pledgor
is organized or formed, maintains any Collateral, has its records concerning any
Collateral,  has its chief executive  office or chief place of business,  or has
its principal  place of  residence.  Without  limitation  of any other  covenant
herein,  Pledgor  will not  cause or permit  any  change to be made in its name,
identity or corporate structure, or any change to be made to its jurisdiction of
formation or  organization  unless  Pledgor shall have notified  Pledgee of such
change at least thirty (30) days prior to the effective date of such change, and
shall have first taken all action required by Pledgee for the purpose of further
perfecting  or  protecting  the  security  interest  in favor of  Pledgee in the
Collateral.  In any notice furnished  pursuant to this subsection,  Pledgor will
expressly state that the notice is required by this Agreement and contains facts
that may require additional filings of financing statements or other notices for
the purposes of  continuing  perfection  of Pledgee's  security  interest in the
Collateral.

     (c) Impairment of Security Interest.  Pledgor will not take or fail to take
any action which would in any manner  impair the  enforceability  or priority of
Pledgee's security interest in any Collateral.

     (d)  Restrictions  on  Pledged  Equity.  Pledgor  will not  enter  into any
agreement  creating,  or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any Pledged Equity.

                                   ARTICLE IV

                       Remedies, Powers and Authorizations
                       -----------------------------------

     Section 4.1. Provisions Concerning the Collateral.

     (a) Additional  Financing  Statement  Filings.  Pledgor  hereby  authorizes
Pledgee to file one or more financing or continuation statements, and amendments
thereto,  relating  to the  Collateral.  Pledgor  further  agrees that a carbon,
photographic or other reproduction of this Agreement or any financing  statement
describing  any  Collateral is  sufficient  as a financing  statement and may be
filed in any jurisdiction Pledgee may deem appropriate.

     (b) Power of  Attorney.  Pledgor  hereby  irrevocably  appoints  Pledgee as
Pledgor's attorney-in-fact and proxy, with full authority in the place and stead
of Pledgor  and in the name of Pledgor or  otherwise,  from time to time to give
notification to Pledgor, Borrower, registrar, transfer

                                      C-8

<PAGE>

agent, financial  intermediary,  or other Person of Pledgee's security interests
hereunder and,  following the occurrence and during the  continuance of an Event
of Default  and in  Pledgee's  discretion,  to take any action  (except  for the
exercise  of any voting  rights  pertaining  to the  Pledged  Equity or any part
thereof) and to execute any instrument,  certificate or notice which Pledgee may
deem  necessary  or  advisable  to  accomplish  the  purposes of this  Agreement
including:  (i) to request or instruct  Pledgor or Borrower (and each registrar,
transfer  agent,  or similar  Person acting on behalf of Pledgor or Borrower) to
register  the pledge or transfer  of the  Collateral  to  Pledgee;  (ii) to ask,
demand,  collect, sue for, recover,  compound,  receive and give acquittance and
receipts  for  moneys  due and to become  due under or in  respect of any of the
Collateral;   (iii)  to  receive,  indorse  and  collect  any  drafts  or  other
instruments,  documents and chattel  paper;  and (iv) to file any claims or take
any action or institute  any  proceedings  which  Pledgee may deem  necessary or
desirable for the  collection  of any of the  Collateral or otherwise to enforce
the rights of Pledgee with respect to any of the Collateral.

     (c)  Performance  by Pledgee.  If Pledgor fails to perform any agreement or
obligation  contained herein,  Pledgee may itself perform,  or cause performance
of,  such  agreement  or  obligation,  and the  expenses  of Pledgee  reasonably
incurred in connection therewith shall be payable by Pledgor under Section 4.4.

     (d) Collection  Rights.  Pledgee shall have the right at any time, upon the
occurrence and during the  continuance  of a Default or an Event of Default,  to
notify any or all obligors  (including  Borrower)  under any accounts or general
intangibles  included among the Collateral of the assignment  thereof to Pledgee
and to direct such  obligors to make payment of all amounts due or to become due
to Pledgor thereunder directly to Pledgee and, upon such notification and at the
expense of Pledgor and to the extent  permitted  by law,  to enforce  collection
thereof and to adjust,  settle or compromise the amount or payment  thereof,  in
the same manner and to the same extent as Pledgor could have done. After Pledgor
receives  notice  that  Pledgee  has given any notice  referred to above in this
subsection,  (i) all amounts and proceeds  (including  instruments and writings)
received by Pledgor in respect of such accounts or general  intangibles shall be
received in trust for the benefit of Pledgee hereunder, shall be segregated from
other funds of Pledgor and shall be  forthwith  paid over to Pledgee in the same
form  as so  received  (with  any  necessary  endorsement)  to be  held  as cash
collateral and (A) released to Pledgor upon the remedy of all Defaults or Events
of  Default,  or (B)  if  any  Event  of  Default  shall  have  occurred  and be
continuing,  applied as  specified  in Section  4.3;  and (ii)  Pledgor will not
adjust,  settle or  compromise  the  amount or  payment  of any such  account or
general  intangible  or release  wholly or partly any account  debtor or obligor
thereof or allow any credit or discount thereon.

     Section 4.2. Event of Default  Remedies.  If an Event of Default shall have
occurred  and be  continuing,  Pledgee may from time to time in its  discretion,
without limitation and without notice except as expressly provided below:

     (a) exercise in respect of the Collateral,  in addition to other rights and
remedies provided for herein,  under the other Obligation Documents or otherwise
available to it, all the rights and remedies of a secured party on default under
the Code (whether or not the Code applies to the affected Collateral);

                                      C-9

<PAGE>

     (b) require Pledgor to, and Pledgor hereby agrees that it will upon request
of Pledgee  forthwith,  assemble  all or part of the  Collateral  as directed by
Pledgee and make it available to Pledgee at a place to be  designated by Pledgee
which is reasonably convenient to both parties;

     (c) reduce its claim to judgment  against Pledgor or foreclose or otherwise
enforce,  in whole or in part,  the  security  interest  created  hereby  by any
available judicial procedure;

      (d) dispose of, at its office,  on the  premises of Pledgor or  elsewhere,
all or any part of the Collateral, as a unit or in parcels, by public or private
proceedings,  and by way of one or more contracts (it being agreed that the sale
of any part of the  Collateral  shall not exhaust  Pledgee's  power of sale, but
sales  may be  made  from  time  to  time,  and at any  time,  until  all of the
Collateral has been sold or until the  Obligations  have been paid and performed
in full),  and at any such sale it shall not be  necessary to exhibit any of the
Collateral;

     (e) buy (or allow any Lender to buy) the  Collateral,  or any part thereof,
at any public sale;

     (f) buy (or allow any Lender to buy) the  Collateral,  or any part thereof,
at any  private  sale  if the  Collateral  is of a type  customarily  sold  in a
recognized  market or is of a type which is the  subject  of widely  distributed
standard price quotations; and

     (g) apply by appropriate judicial proceedings for appointment of a receiver
for the Collateral, or any part thereof, and Pledgor hereby consents to any such
appointment.

     Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten (10)  days'  notice to  Pledgor of the time and place of any public
sale or the time after  which any  private  sale is to be made shall  constitute
reasonable  notification.  Pledgee  shall not be  obligated  to make any sale of
Collateral  regardless of notice of sale having been given.  Pledgee may adjourn
any public or  private  sale from time to time by  announcement  at the time and
place fixed therefor,  and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

     Section 4.3.  Application  of Proceeds.  If any Event of Default shall have
occurred and be continuing, Pledgee may in its discretion apply any cash held by
Pledgee as Collateral,  and any cash proceeds  received by Pledgee in respect of
any sale of,  collection from, or other  realization upon all or any part of the
Collateral,  in  the  order  and  manner  contemplated  by  Section  4.4  of the
Intercreditor Agreement.

     Section 4.4. Release and Expenses. In addition to, and not in qualification
of, any similar obligations under other Obligation Documents:

     (a) Pledgor agrees to release and forever discharge Pledgee and each Lender
from and against any and all claims,  losses and  liabilities  growing out of or
resulting from this Agreement  (including  enforcement of this  Agreement).  The
foregoing  release and discharge shall apply whether or not such claims,  losses
and liabilities are in any way or to any extent owed, in whole or in part, under
any claim or theory of strict  liability or are, to any extent caused,  in whole
or in part,  by any  negligent  act or  omission  of any kind by  Pledgee or any
Lender.

                                      C-10

<PAGE>

     (b) Pledgor  agrees to pay on demand all  reasonable  costs and expenses of
Pledgee in connection with the preparation,  execution, delivery,  modification,
and amendment of this Agreement, and the perfection and preservation of the Lien
created under this Agreement, including, without limitation, the reasonable fees
and  expenses of counsel for Pledgee  with  respect  thereto and with respect to
advising  Pledgee as to its rights under this Agreement.  Pledgor further agrees
to pay on demand all costs and expenses of Pledgee,  if any (including,  without
limitation, reasonable attorneys' fees and expenses), in connection with the (i)
the custody, preservation, use or operation of, or the sale of, collection from,
or other realization upon, any Collateral;  and (ii) the exercise or enforcement
of any of the rights of Pledgee hereunder (whether through  negotiations,  legal
proceedings, or otherwise).

     Section  4.5.  Non-Judicial  Remedies.  In granting to Pledgee the power to
enforce its rights hereunder without prior judicial process or judicial hearing,
Pledgor expressly waives,  renounces and knowingly relinquishes,  to the fullest
extent  permitted  by  applicable  law,  any legal right  which might  otherwise
require Pledgee to enforce its rights by judicial  process.  In so providing for
non-judicial  remedies,  Pledgor  recognizes and concedes that such remedies are
consistent with the usage of trade, are responsive to commercial necessity,  and
are the result of a bargain  at arm's  length.  Nothing  herein is  intended  to
prevent Pledgee or Pledgor from resorting to judicial  process at either party's
option.

     Section  4.6.  Other  Recourse.  Pledgor  waives,  to  the  fullest  extent
permitted by applicable  law, any right to require Pledgee or Lenders to proceed
against any other  Person,  exhaust any  Collateral  or other  security  for the
Obligations,  or to have any Other  Liable Party joined with Pledgor in any suit
arising out of the Obligations or this Agreement,  or pursue any other remedy in
Pledgee's  power.  Pledgor  further waives,  to the fullest extent  permitted by
applicable  law, any and all notice of acceptance  of this  Agreement and of the
creation,  modification,  rearrangement,  renewal or extension for any period of
any of the Obligations from time to time. Pledgor further waives, to the fullest
extent  permitted  by  applicable  law,  any  defense  arising  by reason of any
disability  or other  defense  of any  Other  Liable  Party or by  reason of the
cessation from any cause  whatsoever of the liability of any Other Liable Party.
Until all of the Obligations shall have been paid in full, Pledgor shall have no
right to subrogation  and Pledgor  waives,  to the fullest  extent  permitted by
applicable  law, the right to enforce any remedy which Pledgee or any Lender has
or may hereafter have against any Other Liable Party, and waives, to the fullest
extent  permitted by applicable law, any benefit of and any right to participate
in any other  security  whatsoever  now or  hereafter  held by Pledgee.  Pledgor
authorizes  Pledgee and each  Lender,  without  notice or demand and without any
reservation of rights against Pledgor and without affecting  Pledgor's liability
hereunder or on the Obligations, from time to time to (a) take or hold any other
property of any type from any other Person as security for the Obligations,  and
exchange,  enforce,  waive and  release any or all of such other  property;  (b)
renew, extend for any period, accelerate,  modify, compromise, settle or release
any of the obligations of any Other Liable Party in respect to any or all of the
Obligations or other security for the Obligations;  (c) waive, enforce,  modify,
amend or supplement any of the  provisions of any  Obligation  Document with any
Person other than Pledgor; and (d) release or substitute any Other Liable Party.

                                      C-11

<PAGE>

     Section 4.7. Voting Rights, Dividends Etc. in Respect of Pledged Equity.

     (a) So long as no Default or Event of Default  shall have  occurred  and be
continuing, Pledgor may receive and retain any and all dividends,  distributions
or interest paid in respect of the Pledged Equity;  provided,  however, that any
and all

          (i) dividends,  distributions  and interest paid or payable other than
     in cash in  respect  of,  and  instruments  and  other  property  received,
     receivable or otherwise  distributed  in respect of or in exchange for, any
     Pledged Equity,

          (ii)  dividends  and other  distributions  paid or  payable in cash in
     respect  of any  Pledged  Equity  in  connection  with a  partial  or total
     liquidation or  dissolution  or in connection  with a reduction of capital,
     capital surplus or paid-in surplus, and

          (iii)cash paid, payable or otherwise  distributed in redemption of, or
     in exchange for, any Pledged Equity,

          shall be,  and shall  forthwith  be  delivered  to Pledgee to hold as,
     Pledged Equity and shall, if received by Pledgor,  be received in trust for
     the benefit of Pledgee,  be segregated  from the other property or funds of
     Pledgor,  and be forthwith  delivered to Pledgee in the exact form received
     with any necessary endorsement or appropriate stock or transfer powers duly
     executed in blank, to be held by Pledgee as Collateral.

     (b) Upon the occurrence and during the continuance of a Default or an Event
of Default:

          (i) all  rights of  Pledgor  to  receive  and  retain  the  dividends,
     distributions  and  interest  payments  which  Pledgor  would  otherwise be
     authorized to receive and retain pursuant to subsection (a) of this Section
     4.7 shall  automatically  cease, and all such rights shall thereupon become
     vested in Pledgee which shall  thereupon have the right to receive and hold
     as Pledged Equity such dividends, distributions and interest payments;

          (ii) without limiting the generality of the foregoing,  Pledgee may at
     its  option   exercise  any  and  all  rights  of   conversion,   exchange,
     subscription or any other rights,  privileges or options  pertaining to any
     of the Pledged  Equity  (except  voting  rights) as if it were the absolute
     owner thereof,  including the right to exchange, in its discretion, any and
     all of the Pledged Equity upon the merger,  consolidation,  reorganization,
     recapitalization  or other  adjustment of Pledgor or Borrower,  or upon the
     exercise  by  Pledgor  or  Borrower  of  any  right,  privilege  or  option
     pertaining to any Pledged Equity, and, in connection therewith,  to deposit
     and  deliver  any  and  all of  the  Pledged  Equity  with  any  committee,
     depository,  transfer agent,  registrar or other designated agent upon such
     terms and conditions as it may determine; and

          (iii)all dividends and interest payments which are received by Pledgor
     contrary to the  provisions of subsection (b) (i) of this Section 4.7 shall
     be received in trust for the benefit of Pledgee,  shall be segregated  from
     other  funds of  Pledgor,  and shall be  forthwith  paid over to Pledgee as
     Pledged  Equity  in the  exact  form  received,  to be held by  Pledgee  as
     Collateral.

     Anything herein to the contrary  notwithstanding,  Pledgee may not exercise
any voting rights pertaining to the Pledged Equity, and Pledgor may at all times
exercise any and all voting rights  pertaining to the Pledged Equity or any part
thereof for any purpose not inconsistent with the terms

                                      C-12

<PAGE>

of this Agreement or any other Obligation Document;  provided, however, upon the
occurrence  and during  the  continuance  of a Default  or an Event of  Default,
Pledgor will not exercise or refrain from exercising any such right, as the case
may be, if Pledgee gives notice that, in Pledgee's  judgment,  such action would
result in a Material  Adverse  Change  with  respect to the value of the Pledged
Equity or the benefits to Pledgee of its security interest hereunder.

     Section  4.8.  Private  Sale of Pledged  Equity.  Pledgor  recognizes  that
Pledgee may deem it  impracticable to effect a public sale of all or any part of
the Pledged  Equity and that  Pledgee may,  therefore,  determine to make one or
more private sales of any such  securities  to a restricted  group of purchasers
who will be obligated to agree,  among other things,  to acquire such securities
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that any such private sale may be at prices
and on terms less  favorable to the seller than the prices and other terms which
might have been obtained at a public sale and,  notwithstanding  the  foregoing,
agrees  that  such  private  sales  shall  be  deemed  to  have  been  made in a
commercially  reasonable  manner and that Pledgee  shall have no  obligation  to
delay the sale of any such securities for the period of time necessary to permit
Pledgor or Borrower to register such  securities  (with no obligation of Pledgor
or  Borrower  to  accomplish  such  registration)  for  public  sale  under  the
Securities Act of 1933, as amended (the "Securities Act").

                                    ARTICLE V

                                  Miscellaneous
                                  -------------

     Section 5.1.  Notices.  Any notice or  communication  required or permitted
hereunder shall be given in writing,  sent by personal delivery, by telecopy, by
delivery  service with proof of delivery,  or by registered or certified  United
States mail, postage prepaid, addressed to the appropriate party as follows:

To Pledgor:                c/o Quest Resource Corporation
                           5901 N. Western, Suite 200
                           Oklahoma City, Oklahoma 73118
                           Attn: Jerry D. Cash
                           Fax No.: (405) 840-9894

To Pledgee:                Bank One, NA, as Collateral Agent
                           1717 Main Street, 4th Floor
                           Mail Code TX1-2448
                           Dallas, Texas 75201
                           Attn: J. Scott Fowler
                           Fax No.: (214) 290-2332

     or to such other  address or to the  attention of such other  individual as
hereafter  shall be  designated  in  writing  by the  applicable  party  sent in
accordance  herewith.  Any such notice or communication  shall be deemed to have
been given (a) in the case of personal delivery or delivery  service,  as of the
date of first  attempted  delivery  at the  address  or in the  manner  provided
herein, (b)

                                      C-13

<PAGE>

in the case of  telecopy,  upon  receipt,  or (c) in the case of  registered  or
certified United States mail, three (3) days after deposit in the mail.

     Section 5.2.  Amendments.  No amendment of any provision of this  Agreement
shall be  effective  unless it is in writing and signed by Pledgor and  Pledgee,
and no  waiver  of any  provision  of  this  Agreement,  and no  consent  to any
departure by Pledgor  therefrom,  shall be effective unless it is in writing and
signed by Pledgee,  and then such waiver or consent  shall be effective  only in
the specific  instance  and for the specific  purpose for which given and to the
extent specified in such writing.

     Section 5.3.  Preservation of Rights.  No failure on the part of Pledgee or
any Lender to exercise, and no delay in exercising, any right hereunder or under
any other Obligation  Document shall operate as a waiver thereof;  nor shall any
single or  partial  exercise  of any such  right  preclude  any other or further
exercise  thereof or the exercise of any other right.  Neither the execution nor
the delivery of this  Agreement  shall in any manner  impair or affect any other
security  for the  Obligations.  The rights and  remedies of Pledgee and Lenders
provided herein and in the other Obligation  Documents are cumulative of and are
in addition to, and not  exclusive  of, any rights or remedies  provided by law.
The rights of Pledgee  and Lenders  under any  Obligation  Document  against any
party  thereto are not  conditional  or  contingent on any attempt by Pledgee or
Lenders  to  exercise  any of its or their  rights  under any  other  Obligation
Document against such party or against any other Person.

     Section 5.4.  Unenforceability.  Any provision of this  Agreement  which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be  ineffective  to  the  extent  of  such  prohibition  or  invalidity  without
invalidating the remaining  portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

     Section 5.5. Survival of Agreements.  All representations and warranties of
Pledgor  herein,  and all  covenants  and  agreements  herein shall  survive the
execution  and delivery of this  Agreement,  the  execution  and delivery of any
other Obligation Documents and the creation of the Obligations.

     Section 5.6. Other Liable Party. Neither this Agreement nor the exercise by
Pledgee  or the  failure  of Pledgee  to  exercise  any  right,  power or remedy
conferred  herein or by law shall be  construed  as  relieving  any Other Liable
Party  from  liability  on the  Obligations  or  any  deficiency  thereon.  This
Agreement  shall  continue  irrespective  of the fact that the  liability of any
Other  Liable  Party  may  have  ceased  or  irrespective  of  the  validity  or
enforceability  of any other  Obligation  Document to which Pledgor or any Other
Liable Party may be a party,  and  notwithstanding  the  reorganization,  death,
incapacity  or bankruptcy of any Other Liable  Party,  and  notwithstanding  the
reorganization  or bankruptcy  or other event or proceeding  affecting any Other
Liable Party.

     Section  5.7.  Binding  Effect and  Assignment.  This  Agreement  creates a
continuing  security  interest  in the  Collateral  and (a) shall be  binding on
Pledgor and its successors and permitted assigns, and (b) shall inure,  together
with all rights and remedies of Pledgee hereunder, to the benefit of Pledgee and
Lenders  and their  respective  successors,  transferees  and  assigns.  Without
limiting the generality of the foregoing, Pledgee and Lenders may pledge, assign
or otherwise transfer any

                                      C-14

<PAGE>

or all of their respective  rights under any or all of the Obligation  Documents
to any other Person,  and such other Person shall  thereupon  become vested with
all of the benefits in respect thereof granted herein or otherwise.  None of the
rights or duties of Pledgor  hereunder may be assigned or otherwise  transferred
without the prior written consent of Pledgee.

     Section 5.8.  Termination.  It is  contemplated  by the parties hereto that
there may be times when no Obligations are outstanding, but notwithstanding such
occurrences,  this  Agreement  shall remain valid and shall be in full force and
effect as to subsequent outstanding  Obligations.  Upon the satisfaction in full
of the Obligations,  upon the termination or expiration of each Credit Agreement
and any other  Commitment  of  Lenders  to extend  credit to  Pledgor,  and upon
written request for the termination hereof delivered by Pledgor to Pledgee, this
Agreement  and the security  interest  created  hereby shall  terminate  and all
rights to the Collateral  shall revert to Pledgor.  Pledgee will, upon Pledgor's
request and at Pledgor's  expense,  (a) return to Pledgor such of the Collateral
as shall not have been sold or otherwise  disposed of or applied pursuant to the
terms hereof,  and (b) execute and deliver to Pledgor such  documents as Pledgor
shall reasonably request to evidence such termination.

     Section 5.9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND  GOVERNED  BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED
STATES OF AMERICA.

     Section 5.10.  Counterparts.  This Agreement may be separately  executed in
any number of  counterparts,  all of which when so  executed  shall be deemed to
constitute one and the same Agreement.

     Section 5.11. Loan Paper. This Agreement is a "Loan Paper",  and, except as
expressly  provided  herein to the  contrary,  this  Agreement is subject to all
provisions of the Credit Agreements governing the Loan Papers.

                                      C-15

<PAGE>

     IN WITNESS WHEREOF,  Pledgor has executed and delivered this Agreement,  as
of the date first above written.

                               ______________________, a ___________________

                               By:
                                  ------------------------------------------
                               Name:
                                    ----------------------------------------
                               Title:
                                     ---------------------------------------

     Borrower hereby  acknowledges  and consents to the pledge of the Collateral
and hereby  agrees to  observe  and  perform  each and every  provision  of this
Agreement applicable to Borrower.

                               QUEST CHEROKEE, LLC,
                               a Delaware limited liability company

                               By:
                                  ----------------------------------------
                                    Jerry D. Cash,
                                    Manager

                                      C-16

<PAGE>

                                   SCHEDULE 1
                                   ----------

                                      C-17

<PAGE>

                                   EXHIBIT D
                                   ---------

                        FORM OF BORROWER PLEDGE AGREEMENT
                        ---------------------------------

     THIS PLEDGE  AGREEMENT (this  "Agreement")  is made as of  _______________,
200____,   by  Quest  Cherokee,   LLC,  a  Delaware  limited  liability  company
("Pledgor"),  in favor  of Bank  One,  NA,  with its  main  office  in  Chicago,
Illinois,  as  Collateral  Agent  (defined  below) for the benefit of  Revolving
Lenders (as defined  below) and Term  Lenders  (defined  below)  (herein  called
"Pledgee").

     W I T N E S S E T H:

     WHEREAS,   Pledgor,  Bank  One,  NA,  as  Administrative  Agent  thereunder
("Revolving  Agent"),  and the  financial  institutions  described  as  Banks on
Schedule 1.1-A thereto  (collectively,  "Revolving Lenders") are parties to that
certain  Credit  Agreement  (as  amended,  restated,  supplemented  or otherwise
modified  from  time to time,  the  "Revolving  Credit  Agreement")  dated as of
December  22,  2003,  pursuant to which  Revolving  Lenders  have agreed to make
revolving  loans  and  participate  in  letters  of  credit  issued on behalf of
Pledgor; and

     WHEREAS,  Pledgor,  Bluestem  Pipeline,  LLC, a Delaware limited  liability
company ("Bluestem"),  Bank One, NA, as Agent thereunder ("Term Agent"), and the
financial institutions from time to time party thereto as Lenders (collectively,
"Term  Lenders"  and,  together  with  Revolving  Lenders,  "Lenders"  and, each
individually,  a "Lender")  are parties to that certain  Senior Term Second Lien
Secured  Credit  Agreement  (as  amended,  restated,  supplemented  or otherwise
modified from time to time, the "Term Credit  Agreement" and,  together with the
Revolving Credit Agreement,  the "Credit  Agreements" and, each individually,  a
"Credit  Agreement")  dated as of  December  22,  2003,  pursuant  to which Term
Lenders have agreed to make a term loan to Pledgor; and

     WHEREAS,  certain of the  relative  rights and  remedies  of the  Revolving
Lenders and Term  Lenders are set forth in that  certain  Collateral  Agency and
Intercreditor  Agreement  dated December 22, 2003 among  Revolving  Agent,  Term
Agent,  Bank One,  NA, as  Collateral  Agent  thereunder  ("Collateral  Agent"),
Lenders,  Cherokee Energy Partners,  LLC, a Delaware limited liability  company,
Bluestem and Pledgor (as amended,  restated,  supplemented or otherwise modified
from time to time, the "Intercreditor Agreement"); and

     WHEREAS,  it is a condition  precedent to the  extensions  of credit by the
applicable  Lenders under the applicable  Credit  Agreements  that,  among other
things,  Pledgor  shall  have  executed  and  delivered  to  Pledgee a  security
agreement  granting to Pledgee,  for the benefit of Lenders, a security interest
in the Collateral (as defined herein); and

     WHEREAS,  the board of directors of Pledgor has  determined  that Pledgor's
execution, delivery and performance of this Agreement may reasonably be expected
to benefit  Pledgor,  directly or  indirectly,  and are in the best interests of
Pledgor.

     NOW,  THEREFORE,  in  consideration  of the premises and in order to induce
Lenders to extend credit under the Credit Agreements, Pledgor hereby agrees with
Pledgee as follows:

                                      D-1

<PAGE>

                                    ARTICLE I

                           Definitions and References

     Section 1.1. General  Definitions.  As used herein, the terms defined above
shall have the meanings  indicated above, and the following terms shall have the
following meanings:

     "Code" means the Uniform  Commercial  Code as now or hereafter in effect in
the State of Texas; provided,  that if by reason of mandatory provisions of law,
the perfection or the effect of perfection or  non-perfection of any Lien in any
Collateral  is  governed  by the  Uniform  Commercial  Code  as in  effect  in a
jurisdiction  other than Texas,  "Code" means the Uniform  Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or the effect of perfection or non-perfection.

     "Collateral" has the meaning given such term in Section 2.1.

     "Commitments" means the agreement or commitment by Lenders to make loans or
otherwise  extend credit to Pledgor under the Credit  Agreements,  and any other
agreement,  commitment,  statement of terms or other document  contemplating the
making of loans or  advances or other  extension  of credit by Lenders to or for
the  account of Pledgor  which is now or at any time  hereafter  intended  to be
secured by the Collateral under this Agreement.

     "Equity" means shares of capital stock or a partnership,  limited liability
company,  profits, capital or member interest, or options, warrants or any other
right to substitute for or otherwise acquire the capital stock or a partnership,
limited  liability  company,   profits,  capital  or  member  interest  of  each
Subsidiary (as defined in Section 2.1(a)).

     "Lien" means any collateral assignment,  lien, pledge, encumbrance,  charge
or security interest.

     "Loan Papers" means,  collectively,  the Revolving Loan Papers and the Term
Loan Papers.

     "Notes" means, collectively, the Revolving Notes and the Term Notes.

     "Obligation  Documents"  means the Credit  Agreements,  the Notes, the Loan
Papers,  and all other documents and  instruments  under, by reason of which, or
pursuant  to  which,  any or all of the  Obligations  are  evidenced,  governed,
secured,  or otherwise dealt with, and all other agreements,  certificates,  and
other documents,  instruments and writings  heretofore or hereafter delivered in
connection herewith or therewith.

     "Obligations"  means all present and future  indebtedness,  obligations and
liabilities  of whatever type which are or shall be secured  pursuant to Section
2.2.

     "Other  Liable Party" means any Person,  other than Pledgor,  but including
each  Subsidiary,  who may now or may at any  time  hereafter  be  primarily  or
secondarily  liable for any of the Obligations or who may now or may at any time
hereafter  have  granted to Pledgee  or any Lender a Lien upon any  property  as
security for the Obligations.

                                      D-2

<PAGE>

     "Person" means any individual, corporation,  partnership, limited liability
company,  association,  trust,  other  entity or  organization,  or any court or
governmental department,  commission,  board, bureau, agency, or instrumentality
of any  nation  or of any  province,  state,  commonwealth,  nation,  territory,
possession,   county,   parish,  or  municipality,   whether  now  or  hereafter
constituted or existing.

     "Pledged Equity" has the meaning given it in Section 2.1(a).

     "Revolving Loan Papers" means the Revolving Credit Agreement, the Revolving
Notes,   this   Agreement,   each  Master  Debt  Guaranty  (as  defined  in  the
Intercreditor  Agreement) which may now or hereafter be executed,  each Security
Document (as defined in the Intercreditor  Agreement) which may now or hereafter
be executed,  all mortgages,  mortgage  amendments  and mortgage  supplements or
modifications now or at any time hereafter  delivered pursuant to Section 5.1 of
the  Revolving  Credit  Agreement,  and all  other  certificates,  documents  or
instruments delivered in connection with the Revolving Credit Agreement,  as the
foregoing may be amended from time to time.

     "Revolving  Notes" means,  collectively,  the promissory notes from time to
time  executed  by Pledgor  and  payable to the order of each  Revolving  Lender
pursuant  to the terms of the  Revolving  Credit  Agreement  and shall  include,
without  limitation,  that certain Note dated December 22, 2003,  payable to the
order of Bank One, NA, in the original principal amount of $200,000,000, bearing
interest as therein  provided and with interest and  principal  being payable as
therein provided.

     "Term Loan Papers" means the Term Credit  Agreement,  the Term Notes,  this
Agreement,  each Master Debt  Guaranty  which may now or  hereafter be executed,
each Security  Document  which may now or hereafter be executed,  all mortgages,
mortgage amendments and mortgage supplements or modifications now or at any time
hereafter  delivered  in  connection  with the  Term  Credit  Agreement,  as the
foregoing may be amended from time to time.

     "Term Notes" means,  collectively,  the promissory  notes from time to time
executed by Pledgor and payable to the order of each Term Lender pursuant to the
terms of the Term Credit Agreement.

     Section 1.2. Other  Definitions.  Reference is hereby made to the Revolving
Credit  Agreement for a statement of the terms thereof.  All  capitalized  terms
used in this Agreement which are defined in the Revolving  Credit  Agreement and
not otherwise  defined  herein shall have the same meanings  herein as set forth
therein,  except where the context  otherwise  requires.  All terms used in this
Agreement  which are defined in the Code and not otherwise  defined herein or in
the Intercreditor  Agreement shall have the same meanings herein as set forth in
the Code, except where the context otherwise requires.

     Section 1.3. Schedules. All schedules attached to this Agreement are a part
hereof for all purposes.

     Section 1.4. Amendment of Defined Instruments. Unless the context otherwise
requires or unless otherwise provided herein,  references in this Agreement to a
particular agreement,

                                      D-3

<PAGE>

instrument  or  document  also refer to and include  all  renewals,  extensions,
amendments,  modifications,  supplements or  restatements of any such agreement,
instrument  or document,  provided  that  nothing  contained in this Section 1.4
shall be  construed  to  authorize  any Person to execute or enter into any such
renewal, extension, amendment, modification, supplement or restatement.

     Section 1.5.  References  and Titles.  All  references in this Agreement to
Schedules, Articles, Sections,  subsections, and other subdivisions refer to the
Schedules,  Articles,  Sections,  subsections  and  other  subdivisions  of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of any subdivision  are for  convenience  only and do not constitute any part of
any such  subdivision  and  shall be  disregarded  in  construing  the  language
contained in this Agreement.  The words "this  Agreement,"  "herein,"  "hereof,"
"hereby,"  "hereunder"  and words of similar import refer to this Agreement as a
whole and not to any particular  subdivision  unless  expressly so limited.  The
phrases "this Section" and "this  subsection"  and similar phrases refer only to
the Sections or subsections  hereof in which the phrase occurs. The word "or" is
not exclusive,  and the word  "including" (in all of its forms) means "including
without limitation".  Pronouns in masculine, feminine and neuter gender shall be
construed to include any other  gender,  and words in the singular form shall be
construed  to include  the plural and vice versa  unless the  context  otherwise
requires.

                                   ARTICLE II

                                Security Interest
                                -----------------

     Section 2.1. Grant of Security Interest.  As collateral security for all of
the  Obligations,  Pledgor  hereby  pledges and assigns to Pledgee and grants to
Pledgee a continuing  security interest for the benefit of Lenders in and to all
of the Pledgor's  following rights,  interests and property  (collectively,  the
"Collateral"):

     (a) all of the issued and outstanding  Equity (i) of  _____________________
described on Schedule 1 attached hereto, (ii) of __________________ that Pledgor
now owns or hereafter acquires,  and (iii) of any other Restricted Subsidiary of
Pledgor  (together  with  ___________,   referred  to  herein   collectively  as
"Subsidiaries"  and each  individually  a  "Subsidiary")  now owned or hereafter
created or acquired by Pledgor including, without limitation, the Equity of each
Subsidiary  owned by  Pledgor on the date  hereof  (all of the  foregoing  being
herein sometimes called the "Pledged Equity");

     (b) any and all  proceeds,  and all dividends  and  distributions  (cash or
otherwise)  payable  and/or  distributable  with  respect  to, all or any of the
Pledged Equity; and

     (c) all cash, securities, dividends and other property at any time and from
time to time  receivable or otherwise  distributed  in respect of or in exchange
for any or all of the  Pledged  Equity  and any other  property  substituted  or
exchanged therefor.

                                      D-4

<PAGE>

     Section 2.2.  Obligations  Secured. The security interest created hereby in
the  Collateral  constitutes  continuing  collateral  security  for  all  of the
following  obligations,  indebtedness and  liabilities,  whether now existing or
hereafter incurred:

     (a) Credit Agreement Indebtedness.  The payment by Pledgor, as and when due
and  payable,  of all  amounts  from time to time owing by  Pledgor  under or in
respect  of the  Credit  Agreements,  the Notes or any of the  other  Obligation
Documents.

     (b)  Renewals.  All  renewals,   extensions,   amendments,   modifications,
supplements, or restatements of, or substitutions for, any of the foregoing.

     (c) Performance.  The due performance and observance by each Subsidiary and
Pledgor of all of their other obligations from time to time existing under or in
respect of any of the Obligation Documents.

     (d) Oil & Gas Hedge  Transactions.  The payment and  performance of any and
all present or future  obligations of any Credit Party according to the terms of
any  present  or  future  Oil  &  Gas  Hedge  Transaction,   including,  without
limitation, any present or future swap agreements, cap, floor, collar, exchange,
transaction,  forward  agreement  or other  exchange  or  protection  agreements
relating  to crude oil,  natural gas or other  hydrocarbons,  or any option with
respect to any such  transaction now existing or hereafter  entered into between
and/or among any Credit  Party,  Pledgee,  any Lender or any affiliate of any of
the foregoing.

                                   ARTICLE III

                    Representations, Warranties and Covenants
                    -----------------------------------------

     Section  3.1.  Representations  and  Warranties.   Pledgor  represents  and
warrants as follows:

     (a)  Ownership  and Liens.  Pledgor  has good and  marketable  title to the
Collateral free and clear of all Liens,  encumbrances or adverse claims,  except
for the Lien  created by this  Agreement.  No effective  financing  statement or
other instrument similar in effect covering all or any part of the Collateral is
on file in any  recording  office  except  such as have  been  filed in favor of
Pledgee relating to this Agreement.

     (b) No Conflicts or Consents.  Neither the ownership or the intended use of
the Collateral by Pledgor,  nor the grant of the security interest by Pledgor to
Pledgee  herein,  will (i)  conflict  with any  provision of (a) any domestic or
foreign law, statute, rule or regulation,  (b) the certificate of incorporation,
articles of  incorporation,  charter or bylaws of Pledgor or any Subsidiary,  or
(c) any agreement,  judgment,  license, order or permit applicable to or binding
upon Pledgor or any Subsidiary; or (ii) result in or require the creation of any
Lien upon any assets or  properties  of Pledgor  other than the Lien  created by
this Agreement. No consent,  approval,  authorization or order of, and no notice
to or filing with any  Subsidiary  or any other Person is required in connection
with the grant by Pledgor of the security  interest  herein,  or,  except to the
extent  required by  applicable  law,  the exercise by Pledgee of its rights and
remedies hereunder.

                                      D-5

<PAGE>

     (c) Security  Interest.  Pledgor has and will have at all times full right,
power and authority to grant a security interest in the Collateral to Pledgee in
the manner provided herein, free and clear of any Lien. This Agreement creates a
valid and  binding  security  interest  in favor of  Pledgee  in the  Collateral
securing the Obligations.  The taking  possession by Pledgee (for the benefit of
Lenders) of all certificates,  instruments and cash constituting Collateral from
time to time and the filing of the financing statements  delivered  concurrently
herewith  by  Pledgor  to  Pledgee  will  perfect  Pledgee's  security  interest
hereunder in the Collateral  securing the  Obligations,  subject to no Liens. No
further or subsequent filing,  recording,  registration,  other public notice or
other  action is  necessary  or  desirable  to  perfect or  otherwise  continue,
preserve or protect such security interest except for continuation statements or
filings as  contemplated  in Section  3.3(b).  Upon completion of the perfection
acts  contemplated  in this Section  3.1(c),  Pledgee will have a first priority
perfected Lien in the Collateral.

     (d) Pledged  Equity.  (i) Pledgor is the legal and beneficial  owner of the
Pledged  Equity;  (ii) the Pledged Equity is duly  authorized and issued,  fully
paid and  non-assessable  (as applicable),  and all documentary,  stamp or other
taxes or fees owing in  connection  with the  issuance,  transfer  and/or pledge
thereof   hereunder  have  been  paid;  (iii)  no  dispute,   right  of  setoff,
counterclaim  or defense  exists with  respect to all or any part of the Pledged
Equity;  (iv) the  Pledged  Equity  is free and  clear  of all  Liens,  options,
warrants, puts, calls or other rights of third Persons, and restrictions,  other
than the Lien  created  by this  Agreement;  (v)  Pledgor  has  full  right  and
authority  to pledge the Pledged  Equity for the purposes and upon the terms set
out herein;  (vi)  certificates (as applicable)  representing the Pledged Equity
have been  delivered to Pledgee,  together with a duly  executed  blank stock or
transfer power for each  certificate;  and (vii) no Subsidiary  has issued,  and
there are not  outstanding,  any  options,  warrants or other  rights to acquire
Equity of any Subsidiary.

     Section 3.2. Affirmative Covenants.  Unless Pledgee shall otherwise consent
in writing,  Pledgor  will at all times comply with the  covenants  contained in
this Section 3.2 from the date hereof and so long as any part of the Obligations
or Commitments is outstanding.

      (a)  Ownership  and  Liens.  Pledgor  will  maintain  good  title  to  all
Collateral free and clear of all Liens,  except for the first priority  security
interest  created by this  Agreement.  Pledgor will cause to be  terminated  any
financing statement or other registration with respect to the Collateral, except
such as may exist or as may have been filed in favor of (or  otherwise  assigned
to) Pledgee. Pledgor will defend Pledgee's right, title and special property and
security interest in and to the Collateral against the claims of any Person.

     (b)  Further  Assurances.  Pledgor  will at any time and from  time to time
promptly execute and deliver all further  instruments and documents and take all
further action that may be necessary or that Pledgee may  reasonably  request in
order (i) to perfect and protect the security  interest  created or purported to
be created  hereby and the first  priority of such  security  interest;  (ii) to
enable  Pledgee to exercise  and enforce its rights and  remedies  hereunder  in
respect of the  Collateral;  or (iii) to  otherwise  effect the purposes of this
Agreement,  including: (A) authorizing and filing such financing or continuation
statements,  or  amendments  thereto,  as may be  necessary  or that Pledgee may
reasonably  request in order to  perfect  and  preserve  the  security  interest
created or purported to be created  hereby,  and (B)  furnishing to Pledgee from
time to time statements and schedules further

                                      D-6

<PAGE>

identifying  and  describing the Collateral and such other reports in connection
with the Collateral as Pledgee may reasonably request, all in reasonable detail.

     (c) Delivery of Pledged Equity. All certificates,  instruments and writings
evidencing  the Pledged  Equity shall be delivered to Pledgee on or prior to the
execution and delivery of this Agreement.  All other  certificates,  instruments
and  writings  hereafter  evidencing  or  constituting  Pledged  Equity shall be
delivered  to  Pledgee  promptly  upon the  receipt  thereof  by or on behalf of
Pledgor.  All Pledged  Equity shall be held by or on behalf of Pledgee  pursuant
hereto and shall be  delivered  in the same  manner and with the same  effect as
described  in Section 2.1 and Section  3.1.  Upon  delivery,  such Equity  shall
thereupon  constitute  "Pledged Equity" and shall be subject to the Liens herein
created,  for the purposes and upon the terms and  conditions  set forth in this
Agreement and the other Loan Papers.

     (d) Proceeds of Pledged Equity. If Pledgor shall receive,  by virtue of its
being or having been an owner of any Pledged Equity,  any (i) Equity  (including
any certificate  representing  any Equity or distribution in connection with any
increase or  reduction  of capital,  reorganization,  reclassification,  merger,
consolidation,  sale of assets,  or spinoff or  split-off),  promissory  note or
other  instrument or writing;  (ii) option or right,  whether as an addition to,
substitution  for, or in exchange for, any Pledged  Equity or  otherwise;  (iii)
dividends or other distributions payable in cash (except such dividends or other
distributions permitted to be retained by Pledgor pursuant to Section 4.7) or in
securities  or other  property;  or (iv)  dividends  or other  distributions  in
connection  with a partial or total  liquidation or dissolution or in connection
with a reduction of capital,  capital surplus or paid-in surplus,  Pledgor shall
receive the same in trust for the benefit of Pledgee,  shall  segregate  it from
Pledgor's other property,  and shall promptly deliver it to Pledgee in the exact
form received,  with any necessary  endorsement or appropriate stock or transfer
powers duly executed in blank, to be held by Pledgee as Collateral.

     (e) Status of Pledged  Equity.  The  certificates  evidencing  the  Pledged
Equity (as applicable)  shall at all times be valid and genuine and shall not be
altered.  The  Pledged  Equity at all times  shall be duly  authorized,  validly
issued,  fully paid, and non-assessable (as applicable),  shall not be issued in
violation of the  pre-emptive  rights of any Person or of any agreement by which
Pledgor or any Subsidiary is bound, and shall not be subject to any restrictions
or  conditions  with respect to the  transfer,  voting or capital of any Pledged
Equity.

     Section 3.3. Negative Covenants.  Unless Pledgee shall otherwise consent in
writing,  Pledgor will at all times comply with the covenants  contained in this
Section 3.3 from the date hereof and so long as any part of the  Obligations  or
the Commitments is outstanding.

     (a) Transfer or Encumbrance. Pledgor will not sell, assign (by operation of
law or otherwise),  transfer, exchange, lease or otherwise dispose of any of the
Collateral,  nor will Pledgor  grant a Lien upon or file or record any financing
statement or other registration with respect to the Collateral, nor will Pledgor
allow any such Lien,  financing  statement,  or other  registration  to exist or
deliver actual or constructive possession of the Collateral to any other Person.

     (b)  Financing   Statement  Filings.   Pledgor  recognizes  that  financing
statements  pertaining to the Collateral have been or may be filed where Pledgor
is organized or formed, maintains any

                                      D-7

<PAGE>

Collateral,  has its records concerning any Collateral,  has its chief executive
office or chief place of  business,  or has its  principal  place of  residence.
Without  limitation  of any other  covenant  herein,  Pledgor  will not cause or
permit any change to be made in its name,  identity or corporate  structure,  or
any change to be made to its  jurisdiction of formation or  organization  unless
Pledgor  shall have  notified  Pledgee of such change at least  thirty (30) days
prior to the  effective  date of such  change,  and shall have  first  taken all
action  required by Pledgee for the purpose of further  perfecting or protecting
the  security  interest  in favor of  Pledgee in the  Collateral.  In any notice
furnished  pursuant to this  subsection,  Pledgor will expressly  state that the
notice is  required  by this  Agreement  and  contains  facts  that may  require
additional filings of financing  statements or other notices for the purposes of
continuing perfection of Pledgee's security interest in the Collateral.

     (c) Impairment of Security Interest.  Pledgor will not take or fail to take
any action which would in any manner  impair the  enforceability  or priority of
Pledgee's security interest in any Collateral.

     (d)  Restrictions  on  Pledged  Equity.  Pledgor  will not  enter  into any
agreement  creating,  or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any Pledged Equity.

                                   ARTICLE IV

                       Remedies, Powers and Authorizations
                       -----------------------------------

     Section 4.1. Provisions Concerning the Collateral.

     (a) Additional  Financing  Statement  Filings.  Pledgor  hereby  authorizes
Pledgee to file one or more financing or continuation statements, and amendments
thereto,  relating  to the  Collateral.  Pledgor  further  agrees that a carbon,
photographic or other reproduction of this Agreement or any financing  statement
describing  any  Collateral is  sufficient  as a financing  statement and may be
filed in any jurisdiction Pledgee may deem appropriate.

     (b) Power of  Attorney.  Pledgor  hereby  irrevocably  appoints  Pledgee as
Pledgor's attorney-in-fact and proxy, with full authority in the place and stead
of Pledgor  and in the name of Pledgor or  otherwise,  from time to time to give
notification to Pledgor, any Subsidiary,  registrar,  transfer agent,  financial
intermediary,  or other Person of Pledgee's  security  interests  hereunder and,
following the occurrence  and during the  continuance of an Event of Default and
in  Pledgee's  discretion,  to take any action  (except for the  exercise of any
voting  rights  pertaining  to the Pledged  Equity or any part  thereof)  and to
execute any  instrument,  certificate or notice which Pledgee may deem necessary
or advisable to  accomplish  the purposes of this  Agreement  including:  (i) to
request or instruct  Pledgor or any  Subsidiary  (and each  registrar,  transfer
agent,  or similar  Person  acting on behalf of Pledgor  or any  Subsidiary)  to
register  the pledge or transfer  of the  Collateral  to  Pledgee;  (ii) to ask,
demand,  collect, sue for, recover,  compound,  receive and give acquittance and
receipts  for  moneys  due and to become  due under or in  respect of any of the
Collateral;   (iii)  to  receive,  indorse  and  collect  any  drafts  or  other
instruments,  documents and chattel  paper;  and (iv) to file any claims or take
any action or institute any proceedings which Pledgee may deem necessary or

                                      D-8

<PAGE>

desirable for the  collection  of any of the  Collateral or otherwise to enforce
the rights of Pledgee with respect to any of the Collateral.

     (c)  Performance  by Pledgee.  If Pledgor fails to perform any agreement or
obligation  contained herein,  Pledgee may itself perform,  or cause performance
of,  such  agreement  or  obligation,  and the  expenses  of Pledgee  reasonably
incurred in connection therewith shall be payable by Pledgor under Section 4.4.

     (d) Collection  Rights.  Pledgee shall have the right at any time, upon the
occurrence and during the  continuance  of a Default or an Event of Default,  to
notify any or all obligors  (including  each  Subsidiary)  under any accounts or
general  intangibles  included among the Collateral of the assignment thereof to
Pledgee  and to direct such  obligors  to make  payment of all amounts due or to
become due to Pledgor thereunder directly to Pledgee and, upon such notification
and at the  expense of Pledgor  and to the extent  permitted  by law, to enforce
collection  thereof and to adjust,  settle or  compromise  the amount or payment
thereof,  in the same manner and to the same extent as Pledgor  could have done.
After  Pledgor  receives  notice that  Pledgee has given any notice  referred to
above in this subsection,  (i) all amounts and proceeds  (including  instruments
and  writings)  received  by  Pledgor in  respect  of such  accounts  or general
intangibles  shall be received  in trust for the  benefit of Pledgee  hereunder,
shall be segregated from other funds of Pledgor and shall be forthwith paid over
to Pledgee in the same form as so received (with any necessary  endorsement)  to
be held as cash  collateral  and (A)  released to Pledgor upon the remedy of all
Defaults  or  Events  of  Default,  or (B) if any Event of  Default  shall  have
occurred  and be  continuing,  applied as  specified  in Section  4.3;  and (ii)
Pledgor will not adjust,  settle or compromise the amount or payment of any such
account or general  intangible or release wholly or partly any account debtor or
obligor thereof or allow any credit or discount thereon.

     Section 4.2. Event of Default  Remedies.  If an Event of Default shall have
occurred  and be  continuing,  Pledgee may from time to time in its  discretion,
without limitation and without notice except as expressly provided below:

     (a) exercise in respect of the Collateral,  in addition to other rights and
remedies provided for herein,  under the other Obligation Documents or otherwise
available to it, all the rights and remedies of a secured party on default under
the Code (whether or not the Code applies to the affected Collateral);

     (b) require Pledgor to, and Pledgor hereby agrees that it will upon request
of Pledgee  forthwith,  assemble  all or part of the  Collateral  as directed by
Pledgee and make it available to Pledgee at a place to be  designated by Pledgee
which is reasonably convenient to both parties;

     (c) reduce its claim to judgment  against Pledgor or foreclose or otherwise
enforce,  in whole or in part,  the  security  interest  created  hereby  by any
available judicial procedure;

     (d) dispose of, at its office, on the premises of Pledgor or elsewhere, all
or any part of the  Collateral,  as a unit or in  parcels,  by public or private
proceedings,  and by way of one or more contracts (it being agreed that the sale
of any part of the  Collateral  shall not exhaust  Pledgee's  power of sale, but
sales  may be  made  from  time  to  time,  and at any  time,  until  all of the
Collateral has been

                                      D-9

<PAGE>

sold or until the Obligations  have been paid and performed in full), and at any
such sale it shall not be necessary to exhibit any of the Collateral;

     (e) buy (or allow any Lender to buy) the  Collateral,  or any part thereof,
at any public sale;

     (f) buy (or allow any Lender to buy) the  Collateral,  or any part thereof,
at any  private  sale  if the  Collateral  is of a type  customarily  sold  in a
recognized  market or is of a type which is the  subject  of widely  distributed
standard price quotations; and

     (g) apply by appropriate judicial proceedings for appointment of a receiver
for the Collateral, or any part thereof, and Pledgor hereby consents to any such
appointment.

     Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten (10)  days'  notice to  Pledgor of the time and place of any public
sale or the time after  which any  private  sale is to be made shall  constitute
reasonable  notification.  Pledgee  shall not be  obligated  to make any sale of
Collateral  regardless of notice of sale having been given.  Pledgee may adjourn
any public or  private  sale from time to time by  announcement  at the time and
place fixed therefor,  and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

     Section 4.3.  Application  of Proceeds.  If any Event of Default shall have
occurred and be continuing, Pledgee may in its discretion apply any cash held by
Pledgee as Collateral,  and any cash proceeds  received by Pledgee in respect of
any sale of,  collection from, or other  realization upon all or any part of the
Collateral,  in  the  order  and  manner  contemplated  by  Section  4.4  of the
Intercreditor Agreement.

     Section 4.4. Release and Expenses. In addition to, and not in qualification
of, any similar obligations under other Obligation Documents:

     (a) Pledgor agrees to release and forever discharge Pledgee and each Lender
from and against any and all claims,  losses and  liabilities  growing out of or
resulting from this Agreement  (including  enforcement of this  Agreement).  The
foregoing  release and discharge shall apply whether or not such claims,  losses
and liabilities are in any way or to any extent owed, in whole or in part, under
any claim or theory of strict  liability or are, to any extent caused,  in whole
or in part,  by any  negligent  act or  omission  of any kind by  Pledgee or any
Lender.

     (b) Pledgor  agrees to pay on demand all  reasonable  costs and expenses of
Pledgee in connection with the preparation,  execution, delivery,  modification,
and amendment of this Agreement, and the perfection and preservation of the Lien
created under this Agreement, including, without limitation, the reasonable fees
and  expenses of counsel for Pledgee  with  respect  thereto and with respect to
advising  Pledgee as to its rights under this Agreement.  Pledgor further agrees
to pay on demand all costs and expenses of Pledgee,  if any (including,  without
limitation, reasonable attorneys' fees and expenses), in connection with the (i)
the custody, preservation, use or operation of, or the sale of, collection from,
or other realization upon, any Collateral;  and (ii) the exercise or enforcement
of any of the rights of Pledgee hereunder (whether through  negotiations,  legal
proceedings, or otherwise).

                                      D-10

<PAGE>

     Section  4.5.  Non-Judicial  Remedies.  In granting to Pledgee the power to
enforce its rights hereunder without prior judicial process or judicial hearing,
Pledgor expressly waives,  renounces and knowingly relinquishes,  to the fullest
extent  permitted  by  applicable  law,  any legal right  which might  otherwise
require Pledgee to enforce its rights by judicial  process.  In so providing for
non-judicial  remedies,  Pledgor  recognizes and concedes that such remedies are
consistent with the usage of trade, are responsive to commercial necessity,  and
are the result of a bargain  at arm's  length.  Nothing  herein is  intended  to
prevent Pledgee or Pledgor from resorting to judicial  process at either party's
option.

     Section  4.6.  Other  Recourse.  Pledgor  waives,  to  the  fullest  extent
permitted by applicable  law, any right to require Pledgee or Lenders to proceed
against any other  Person,  exhaust any  Collateral  or other  security  for the
Obligations,  or to have any Other  Liable Party joined with Pledgor in any suit
arising out of the Obligations or this Agreement,  or pursue any other remedy in
Pledgee's  power.  Pledgor  further waives,  to the fullest extent  permitted by
applicable  law, any and all notice of acceptance  of this  Agreement and of the
creation,  modification,  rearrangement,  renewal or extension for any period of
any of the Obligations from time to time. Pledgor further waives, to the fullest
extent  permitted  by  applicable  law,  any  defense  arising  by reason of any
disability  or other  defense  of any  Other  Liable  Party or by  reason of the
cessation from any cause  whatsoever of the liability of any Other Liable Party.
Until all of the Obligations shall have been paid in full, Pledgor shall have no
right to subrogation  and Pledgor  waives,  to the fullest  extent  permitted by
applicable  law, the right to enforce any remedy which Pledgee or any Lender has
or may hereafter have against any Other Liable Party, and waives, to the fullest
extent  permitted by applicable law, any benefit of and any right to participate
in any other  security  whatsoever  now or  hereafter  held by Pledgee.  Pledgor
authorizes  Pledgee and each  Lender,  without  notice or demand and without any
reservation of rights against Pledgor and without affecting  Pledgor's liability
hereunder or on the Obligations, from time to time to (a) take or hold any other
property of any type from any other Person as security for the Obligations,  and
exchange,  enforce,  waive and  release any or all of such other  property;  (b)
renew, extend for any period, accelerate,  modify, compromise, settle or release
any of the obligations of any Other Liable Party in respect to any or all of the
Obligations or other security for the Obligations;  (c) waive, enforce,  modify,
amend or supplement any of the  provisions of any  Obligation  Document with any
Person other than Pledgor; and (d) release or substitute any Other Liable Party.

     Section 4.7. Voting Rights, Dividends Etc. in Respect of Pledged Equity.

     (a) So long as no Default or Event of Default  shall have  occurred  and be
continuing, Pledgor may receive and retain any and all dividends,  distributions
or interest paid in respect of the Pledged Equity;  provided,  however, that any
and all

          (i) dividends,  distributions  and interest paid or payable other than
     in cash in  respect  of,  and  instruments  and  other  property  received,
     receivable or otherwise  distributed  in respect of or in exchange for, any
     Pledged Equity,

          (ii)  dividends  and other  distributions  paid or  payable in cash in
     respect  of any  Pledged  Equity  in  connection  with a  partial  or total
     liquidation or  dissolution  or in connection  with a reduction of capital,
     capital surplus or paid-in surplus, and

                                      D-11

<PAGE>

          (iii)  cash paid, payable or  otherwise distributed in redemption  of,
     or in exchange for, any Pledged Equity,

          shall be,  and shall  forthwith  be  delivered  to Pledgee to hold as,
     Pledged Equity and shall, if received by Pledgor,  be received in trust for
     the benefit of Pledgee,  be segregated  from the other property or funds of
     Pledgor,  and be forthwith  delivered to Pledgee in the exact form received
     with any necessary endorsement or appropriate stock or transfer powers duly
     executed in blank, to be held by Pledgee as Collateral.

     (b) Upon the occurrence and during the continuance of a Default or an Event
of Default:

          (i) all  rights of  Pledgor  to  receive  and  retain  the  dividends,
     distributions  and  interest  payments  which  Pledgor  would  otherwise be
     authorized to receive and retain pursuant to subsection (a) of this Section
     4.7 shall  automatically  cease, and all such rights shall thereupon become
     vested in Pledgee which shall  thereupon have the right to receive and hold
     as Pledged Equity such dividends, distributions and interest payments;

          (ii) without limiting the generality of the foregoing,  Pledgee may at
     its  option   exercise  any  and  all  rights  of   conversion,   exchange,
     subscription or any other rights,  privileges or options  pertaining to any
     of the Pledged  Equity  (except  voting  rights) as if it were the absolute
     owner thereof,  including the right to exchange, in its discretion, any and
     all of the Pledged Equity upon the merger,  consolidation,  reorganization,
     recapitalization or other adjustment of Pledgor or any Subsidiary,  or upon
     the exercise by Pledgor or any Subsidiary of any right, privilege or option
     pertaining to any Pledged Equity, and, in connection therewith,  to deposit
     and  deliver  any  and  all of  the  Pledged  Equity  with  any  committee,
     depository,  transfer agent,  registrar or other designated agent upon such
     terms and conditions as it may determine; and

          (iii) all dividends  and  interest  payments which  are   received  by
     Pledgor  contrary to the  provisions of subsection  (b) (i) of this Section
     4.7  shall be  received  in trust  for the  benefit  of  Pledgee,  shall be
     segregated from other funds of Pledgor, and shall be forthwith paid over to
     Pledgee as Pledged Equity in the exact form received, to be held by Pledgee
     as Collateral.

     Anything herein to the contrary  notwithstanding,  Pledgee may not exercise
any voting rights pertaining to the Pledged Equity, and Pledgor may at all times
exercise any and all voting rights  pertaining to the Pledged Equity or any part
thereof for any purpose not inconsistent with the terms of this Agreement or any
other Obligation Document; provided, however, upon the occurrence and during the
continuance  of a Default or an Event of Default,  Pledgor  will not exercise or
refrain from  exercising  any such right,  as the case may be, if Pledgee  gives
notice  that,  in  Pledgee's  judgment,  such action  would result in a Material
Adverse  Change with respect to the value of the Pledged  Equity or the benefits
to Pledgee of its security interest hereunder.

     Section  4.8.  Private  Sale of Pledged  Equity.  Pledgor  recognizes  that
Pledgee may deem it  impracticable to effect a public sale of all or any part of
the Pledged  Equity and that  Pledgee may,  therefore,  determine to make one or
more private sales of any such  securities  to a restricted  group of purchasers
who will be obligated to agree,  among other things,  to acquire such securities
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor

                                      D-12

<PAGE>

     acknowledges  that any such private sale may be at prices and on terms less
     favorable  to the seller  than the prices and other  terms which might have
     been obtained at a public sale and,  notwithstanding the foregoing,  agrees
     that such private sales shall be deemed to have been made in a commercially
     reasonable  manner and that Pledgee  shall have no  obligation to delay the
     sale of any such  securities  for the  period of time  necessary  to permit
     Pledgor or any Subsidiary to register such  securities  (with no obligation
     of Pledgor or any Subsidiary to accomplish  such  registration)  for public
     sale under the Securities Act of 1933, as amended (the "Securities Act").

                                    ARTICLE V

                                  Miscellaneous
                                  -------------

     Section 5.1.  Notices.  Any notice or  communication  required or permitted
hereunder shall be given in writing,  sent by personal delivery, by telecopy, by
delivery  service with proof of delivery,  or by registered or certified  United
States mail, postage prepaid, addressed to the appropriate party as follows:

To Pledgor:               c/o Quest Resource Corporation
                          5901 N. Western, Suite 200
                          Oklahoma City, Oklahoma 73118
                          Attn: Jerry D. Cash
                          Fax No.: (405) 840-9894

To Pledgee:               Bank One, NA, as Collateral Agent
                          1717 Main Street, 4th Floor
                          Mail Code TX1-2448
                          Dallas, Texas 75201
                          Attn: J. Scott Fowler
                          Fax No.: (214) 290-2332

     or to such other  address or to the  attention of such other  individual as
hereafter  shall be  designated  in  writing  by the  applicable  party  sent in
accordance  herewith.  Any such notice or communication  shall be deemed to have
been given (a) in the case of personal delivery or delivery  service,  as of the
date of first  attempted  delivery  at the  address  or in the  manner  provided
herein,  (b) in the  case  of  telecopy,  upon  receipt,  or (c) in the  case of
registered or certified  United States mail, three (3) days after deposit in the
mail.

     Section 5.2.  Amendments.  No amendment of any provision of this  Agreement
shall be  effective  unless it is in writing and signed by Pledgor and  Pledgee,
and no  waiver  of any  provision  of  this  Agreement,  and no  consent  to any
departure by Pledgor  therefrom,  shall be effective unless it is in writing and
signed by Pledgee,  and then such waiver or consent  shall be effective  only in
the specific  instance  and for the specific  purpose for which given and to the
extent specified in such writing.

                                      D-13

<PAGE>

     Section 5.3.  Preservation of Rights.  No failure on the part of Pledgee or
any Lender to exercise, and no delay in exercising, any right hereunder or under
any other Obligation  Document shall operate as a waiver thereof;  nor shall any
single or  partial  exercise  of any such  right  preclude  any other or further
exercise  thereof or the exercise of any other right.  Neither the execution nor
the delivery of this  Agreement  shall in any manner  impair or affect any other
security  for the  Obligations.  The rights and  remedies of Pledgee and Lenders
provided herein and in the other Obligation  Documents are cumulative of and are
in addition to, and not  exclusive  of, any rights or remedies  provided by law.
The rights of Pledgee  and Lenders  under any  Obligation  Document  against any
party  thereto are not  conditional  or  contingent on any attempt by Pledgee or
Lenders  to  exercise  any of its or their  rights  under any  other  Obligation
Document against such party or against any other Person.

     Section 5.4.  Unenforceability.  Any provision of this  Agreement  which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be  ineffective  to  the  extent  of  such  prohibition  or  invalidity  without
invalidating the remaining  portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

     Section 5.5. Survival of Agreements.  All representations and warranties of
Pledgor  herein,  and all  covenants  and  agreements  herein shall  survive the
execution  and delivery of this  Agreement,  the  execution  and delivery of any
other Obligation Documents and the creation of the Obligations.

     Section 5.6. Other Liable Party. Neither this Agreement nor the exercise by
Pledgee  or the  failure  of Pledgee  to  exercise  any  right,  power or remedy
conferred  herein or by law shall be  construed  as  relieving  any Other Liable
Party  from  liability  on the  Obligations  or  any  deficiency  thereon.  This
Agreement  shall  continue  irrespective  of the fact that the  liability of any
Other  Liable  Party  may  have  ceased  or  irrespective  of  the  validity  or
enforceability  of any other  Obligation  Document to which Pledgor or any Other
Liable Party may be a party,  and  notwithstanding  the  reorganization,  death,
incapacity  or bankruptcy of any Other Liable  Party,  and  notwithstanding  the
reorganization  or bankruptcy  or other event or proceeding  affecting any Other
Liable Party.

     Section  5.7.  Binding  Effect and  Assignment.  This  Agreement  creates a
continuing  security  interest  in the  Collateral  and (a) shall be  binding on
Pledgor and its successors and permitted assigns, and (b) shall inure,  together
with all rights and remedies of Pledgee hereunder, to the benefit of Pledgee and
Lenders  and their  respective  successors,  transferees  and  assigns.  Without
limiting the generality of the foregoing, Pledgee and Lenders may pledge, assign
or otherwise  transfer any or all of their respective rights under any or all of
the  Obligation  Documents  to any other  Person,  and such other  Person  shall
thereupon  become  vested with all of the  benefits in respect  thereof  granted
herein or  otherwise.  None of the rights or duties of Pledgor  hereunder may be
assigned or otherwise transferred without the prior written consent of Pledgee.

     Section 5.8.  Termination.  It is  contemplated  by the parties hereto that
there may be times when no Obligations are outstanding, but notwithstanding such
occurrences,  this  Agreement  shall remain valid and shall be in full force and
effect as to subsequent outstanding  Obligations.  Upon the satisfaction in full
of the Obligations,  upon the termination or expiration of each Credit Agreement
and any other  Commitment  of  Lenders  to extend  credit to  Pledgor,  and upon
written

                                      D-14

<PAGE>

request  for the  termination  hereof  delivered  by  Pledgor to  Pledgee,  this
Agreement  and the security  interest  created  hereby shall  terminate  and all
rights to the Collateral  shall revert to Pledgor.  Pledgee will, upon Pledgor's
request and at Pledgor's  expense,  (a) return to Pledgor such of the Collateral
as shall not have been sold or otherwise  disposed of or applied pursuant to the
terms hereof,  and (b) execute and deliver to Pledgor such  documents as Pledgor
shall reasonably request to evidence such termination.

     Section 5.9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND  GOVERNED  BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED
STATES OF AMERICA.

     Section 5.10.  Counterparts.  This Agreement may be separately  executed in
any number of  counterparts,  all of which when so  executed  shall be deemed to
constitute one and the same Agreement.

     Section 5.11. Loan Paper. This Agreement is a "Loan Paper",  and, except as
expressly  provided  herein to the  contrary,  this  Agreement is subject to all
provisions of the Credit Agreements governing the Loan Papers.

     IN WITNESS WHEREOF,  Pledgor has executed and delivered this Agreement,  as
of the date first above written.

                               QUEST CHEROKEE, LLC,
                               a Delaware limited liability company

                               By:
                                  ---------------------------------
                                    Jerry D. Cash,
                                    Manager

     Each  Subsidiary  hereby  acknowledges  and  consents  to the pledge of the
Collateral and hereby agrees to observe and perform each and every  provision of
this Agreement applicable to such Subsidiary.

                               ____________________, a ____________

                               By:
                                  ---------------------------------
                               Name:
                                    -------------------------------
                               Title:
                                     ------------------------------

                                      D-15

<PAGE>

                                   SCHEDULE 1
                                   ----------

                                      D-16

<PAGE>

                                   EXHIBIT E
                                   ---------

                       FORM OF SUBSIDIARY PLEDGE AGREEMENT
                       -----------------------------------

     THIS PLEDGE  AGREEMENT (this  "Agreement")  is made as of  _______________,
200____,   by  Quest  Cherokee,   LLC,  a  Delaware  limited  liability  company
("Pledgor"),  in favor  of Bank  One,  NA,  with its  main  office  in  Chicago,
Illinois,  as  Collateral  Agent  (defined  below) for the benefit of  Revolving
Lenders (as defined  below) and Term  Lenders  (defined  below)  (herein  called
"Pledgee").

     W I T N E S S E T H:

     WHEREAS,  Quest  Cherokee,   LLC,  a  Delaware  limited  liability  company
("Borrower"),  Bank One,  NA, as  Administrative  Agent  thereunder  ("Revolving
Agent"),  and the financial  institutions  described as Banks on Schedule  1.1-A
thereto  (collectively,  "Revolving Lenders") are parties to that certain Credit
Agreement (as amended, restated, supplemented or otherwise modified from time to
time, the "Revolving Credit Agreement") dated as of December 22, 2003,  pursuant
to which  Revolving  Lenders have agreed to make revolving loans and participate
in letters of credit issued on behalf of Borrower; and

     WHEREAS,  Borrower,  Bluestem  Pipeline,  LLC, a Delaware limited liability
company ("Bluestem"),  Bank One, NA, as Agent thereunder ("Term Agent"), and the
financial institutions from time to time party thereto as Lenders (collectively,
"Term  Lenders"  and,  together  with  Revolving  Lenders,  "Lenders"  and, each
individually,  a "Lender")  are parties to that certain  Senior Term Second Lien
Secured  Credit  Agreement  (as  amended,  restated,  supplemented  or otherwise
modified from time to time, the "Term Credit  Agreement" and,  together with the
Revolving Credit Agreement,  the "Credit  Agreements" and, each individually,  a
"Credit  Agreement")  dated as of  December  22,  2003,  pursuant  to which Term
Lenders have agreed to make a term loan to Borrower; and

     WHEREAS,  certain of the  relative  rights and  remedies  of the  Revolving
Lenders and Term  Lenders are set forth in that  certain  Collateral  Agency and
Intercreditor  Agreement  dated December 22, 2003 among  Revolving  Agent,  Term
Agent,  Bank One,  NA, as  Collateral  Agent  thereunder  ("Collateral  Agent"),
Lenders,  Cherokee Energy Partners,  LLC, a Delaware limited liability  company,
Bluestem and Borrower (as amended, restated,  supplemented or otherwise modified
from time to time, the "Intercreditor Agreement"); and

     WHEREAS,  it is a condition  precedent to the  extensions  of credit by the
applicable  Lenders under the applicable  Credit  Agreements  that,  among other
things,  Pledgor  shall  have  executed  and  delivered  to  Pledgee a  security
agreement  granting to Pledgee,  for the benefit of Lenders, a security interest
in the Collateral (as defined herein); and

     WHEREAS,  the board of directors of Pledgor has  determined  that Pledgor's
execution, delivery and performance of this Agreement may reasonably be expected
to benefit  Pledgor,  directly or  indirectly,  and are in the best interests of
Pledgor.

                                      E-1

<PAGE>

     NOW,  THEREFORE,  in  consideration  of the premises and in order to induce
Lenders to extend credit under the Credit Agreements, Pledgor hereby agrees with
Pledgee as follows:

                                    ARTICLE I

                           Definitions and References

     Section 1.1. General  Definitions.  As used herein, the terms defined above
shall have the meanings  indicated above, and the following terms shall have the
following meanings:

     "Code" means the Uniform  Commercial  Code as now or hereafter in effect in
the State of Texas; provided,  that if by reason of mandatory provisions of law,
the perfection or the effect of perfection or  non-perfection of any Lien in any
Collateral  is  governed  by the  Uniform  Commercial  Code  as in  effect  in a
jurisdiction  other than Texas,  "Code" means the Uniform  Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or the effect of perfection or non-perfection.

     "Collateral" has the meaning given such term in Section 2.1.

     "Commitments" means the agreement or commitment by Lenders to make loans or
otherwise extend credit to Borrower under the Credit  Agreements,  and any other
agreement,  commitment,  statement of terms or other document  contemplating the
making of loans or  advances or other  extension  of credit by Lenders to or for
the account of  Borrower  which is now or at any time  hereafter  intended to be
secured by the Collateral under this Agreement.

     "Equity" means shares of capital stock or a partnership,  limited liability
company,  profits, capital or member interest, or options, warrants or any other
right to substitute for or otherwise acquire the capital stock or a partnership,
limited  liability  company,   profits,  capital  or  member  interest  of  each
Subsidiary (as defined in Section 2.1(a)).

     "Lien" means any collateral assignment,  lien, pledge, encumbrance,  charge
or security interest.

     "Loan Papers" means,  collectively,  the Revolving Loan Papers and the Term
Loan Papers.

     "Notes" means, collectively, the Revolving Notes and the Term Notes.

     "Obligation  Documents"  means the Credit  Agreements,  the Notes, the Loan
Papers,  and all other documents and  instruments  under, by reason of which, or
pursuant  to  which,  any or all of the  Obligations  are  evidenced,  governed,
secured,  or otherwise dealt with, and all other agreements,  certificates,  and
other documents,  instruments and writings  heretofore or hereafter delivered in
connection herewith or therewith.

     "Obligations"  means all present and future  indebtedness,  obligations and
liabilities  of whatever type which are or shall be secured  pursuant to Section
2.2.

                                      E-2

<PAGE>

     "Other  Liable Party" means any Person,  other than Pledgor,  but including
each  Subsidiary,  who may now or may at any  time  hereafter  be  primarily  or
secondarily  liable for any of the Obligations or who may now or may at any time
hereafter  have  granted to Pledgee  or any Lender a Lien upon any  property  as
security for the Obligations.

     "Person" means any individual, corporation,  partnership, limited liability
company,  association,  trust,  other  entity or  organization,  or any court or
governmental department,  commission,  board, bureau, agency, or instrumentality
of any  nation  or of any  province,  state,  commonwealth,  nation,  territory,
possession,   county,   parish,  or  municipality,   whether  now  or  hereafter
constituted or existing.

     "Pledged Equity" has the meaning given it in Section 2.1(a).

     "Revolving Loan Papers" means the Revolving Credit Agreement, the Revolving
Notes,   this   Agreement,   each  Master  Debt  Guaranty  (as  defined  in  the
Intercreditor  Agreement) which may now or hereafter be executed,  each Security
Document (as defined in the Intercreditor  Agreement) which may now or hereafter
be executed,  all mortgages,  mortgage  amendments  and mortgage  supplements or
modifications now or at any time hereafter  delivered pursuant to Section 5.1 of
the  Revolving  Credit  Agreement,  and all  other  certificates,  documents  or
instruments delivered in connection with the Revolving Credit Agreement,  as the
foregoing may be amended from time to time.

     "Revolving  Notes" means,  collectively,  the promissory notes from time to
time  executed by Borrower  and  payable to the order of each  Revolving  Lender
pursuant  to the terms of the  Revolving  Credit  Agreement  and shall  include,
without  limitation,  that certain Note dated December 22, 2003,  payable to the
order of Bank One, NA, in the original principal amount of $200,000,000, bearing
interest as therein  provided and with interest and  principal  being payable as
therein provided.

     "Term Loan Papers" means the Term Credit  Agreement,  the Term Notes,  this
Agreement,  each Master Debt  Guaranty  which may now or  hereafter be executed,
each Security  Document  which may now or hereafter be executed,  all mortgages,
mortgage amendments and mortgage supplements or modifications now or at any time
hereafter  delivered  in  connection  with the  Term  Credit  Agreement,  as the
foregoing may be amended from time to time.

     "Term Notes" means,  collectively,  the promissory  notes from time to time
executed  by Borrower  and payable to the order of each Term Lender  pursuant to
the terms of the Term Credit Agreement.

     Section 1.2. Other  Definitions.  Reference is hereby made to the Revolving
Credit  Agreement for a statement of the terms thereof.  All  capitalized  terms
used in this Agreement which are defined in the Revolving  Credit  Agreement and
not otherwise  defined  herein shall have the same meanings  herein as set forth
therein,  except where the context  otherwise  requires.  All terms used in this
Agreement  which are defined in the Code and not otherwise  defined herein or in
the Intercreditor  Agreement shall have the same meanings herein as set forth in
the Code, except where the context otherwise requires.

                                      E-3

<PAGE>

     Section 1.3. Schedules. All schedules attached to this Agreement are a part
hereof for all purposes.

     Section 1.4. Amendment of Defined Instruments. Unless the context otherwise
requires or unless otherwise provided herein,  references in this Agreement to a
particular  agreement,  instrument  or  document  also refer to and  include all
renewals, extensions, amendments, modifications,  supplements or restatements of
any such agreement,  instrument or document,  provided that nothing contained in
this Section 1.4 shall be construed to authorize  any Person to execute or enter
into  any  such  renewal,  extension,  amendment,  modification,  supplement  or
restatement.

     Section 1.5.  References  and Titles.  All  references in this Agreement to
Schedules, Articles, Sections,  subsections, and other subdivisions refer to the
Schedules,  Articles,  Sections,  subsections  and  other  subdivisions  of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of any subdivision  are for  convenience  only and do not constitute any part of
any such  subdivision  and  shall be  disregarded  in  construing  the  language
contained in this Agreement.  The words "this  Agreement,"  "herein,"  "hereof,"
"hereby,"  "hereunder"  and words of similar import refer to this Agreement as a
whole and not to any particular  subdivision  unless  expressly so limited.  The
phrases "this Section" and "this  subsection"  and similar phrases refer only to
the Sections or subsections  hereof in which the phrase occurs. The word "or" is
not exclusive,  and the word  "including" (in all of its forms) means "including
without limitation".  Pronouns in masculine, feminine and neuter gender shall be
construed to include any other  gender,  and words in the singular form shall be
construed  to include  the plural and vice versa  unless the  context  otherwise
requires.

                                   ARTICLE II

                                Security Interest
                                -----------------

     Section 2.1. Grant of Security Interest.  As collateral security for all of
the  Obligations,  Pledgor  hereby  pledges and assigns to Pledgee and grants to
Pledgee a continuing  security interest for the benefit of Lenders in and to all
of the Pledgor's  following rights,  interests and property  (collectively,  the
"Collateral"):

     (a) all of the issued and outstanding  Equity (i) of  _____________________
described on Schedule 1 attached hereto, (ii) of __________________ that Pledgor
now owns or hereafter  acquires,  and (iii) of any other  Subsidiary  of Pledgor
(together with  ___________,  referred to herein  collectively as "Subsidiaries"
and each individually a "Subsidiary") now owned or hereafter created or acquired
by Pledgor including, without limitation, the Equity of each Subsidiary owned by
Pledgor on the date hereof (all of the foregoing being herein  sometimes  called
the "Pledged Equity");

     (b) any and all  proceeds,  and all dividends  and  distributions  (cash or
otherwise)  payable  and/or  distributable  with  respect  to, all or any of the
Pledged Equity; and

                                      E-4

<PAGE>

     (c) all cash, securities, dividends and other property at any time and from
time to time  receivable or otherwise  distributed  in respect of or in exchange
for any or all of the  Pledged  Equity  and any other  property  substituted  or
exchanged therefor.

     Section 2.2.  Obligations  Secured. The security interest created hereby in
the  Collateral  constitutes  continuing  collateral  security  for  all  of the
following  obligations,  indebtedness and  liabilities,  whether now existing or
hereafter incurred:

     (a) Credit Agreement Indebtedness. The payment by Borrower, as and when due
and  payable,  of all amounts  from time to time owing by  Borrower  under or in
respect  of the  Credit  Agreements,  the Notes or any of the  other  Obligation
Documents.

     (b)  Renewals.  All  renewals,   extensions,   amendments,   modifications,
supplements, or restatements of, or substitutions for, any of the foregoing.

     (c) Performance.  The due performance and observance by each Subsidiary and
Pledgor of all of their other obligations from time to time existing under or in
respect of any of the Obligation Documents.

     (d) Oil & Gas Hedge  Transactions.  The payment and  performance of any and
all present or future  obligations of any Credit Party according to the terms of
any  present  or  future  Oil  &  Gas  Hedge  Transaction,   including,  without
limitation, any present or future swap agreements, cap, floor, collar, exchange,
transaction,  forward  agreement  or other  exchange  or  protection  agreements
relating  to crude oil,  natural gas or other  hydrocarbons,  or any option with
respect to any such  transaction now existing or hereafter  entered into between
and/or among any Credit  Party,  Pledgee,  any Lender or any affiliate of any of
the foregoing.

                                   ARTICLE III

                    Representations, Warranties and Covenants
                    -----------------------------------------

     Section  3.1.  Representations  and  Warranties.   Pledgor  represents  and
warrants as follows:

     (a)  Ownership  and Liens.  Pledgor  has good and  marketable  title to the
Collateral free and clear of all Liens,  encumbrances or adverse claims,  except
for the Lien  created by this  Agreement.  No effective  financing  statement or
other instrument similar in effect covering all or any part of the Collateral is
on file in any  recording  office  except  such as have  been  filed in favor of
Pledgee relating to this Agreement.

     (b) No Conflicts or Consents.  Neither the ownership or the intended use of
the Collateral by Pledgor,  nor the grant of the security interest by Pledgor to
Pledgee  herein,  will (i)  conflict  with any  provision of (a) any domestic or
foreign law, statute, rule or regulation,  (b) the certificate of incorporation,
articles of  incorporation,  charter or bylaws of Pledgor or any Subsidiary,  or
(c) any agreement,  judgment,  license, order or permit applicable to or binding
upon Pledgor or any Subsidiary; or (ii) result in or require the creation of any
Lien upon any assets or  properties  of Pledgor  other than the Lien  created by
this Agreement. No consent, approval, authorization or order

                                      E-5

<PAGE>

of,  and no notice  to or  filing  with any  Subsidiary  or any other  Person is
required  in  connection  with the grant by  Pledgor  of the  security  interest
herein,  or, except to the extent  required by  applicable  law, the exercise by
Pledgee of its rights and remedies hereunder.

     (c) Security  Interest.  Pledgor has and will have at all times full right,
power and authority to grant a security interest in the Collateral to Pledgee in
the manner provided herein, free and clear of any Lien. This Agreement creates a
valid and  binding  security  interest  in favor of  Pledgee  in the  Collateral
securing the Obligations.  The taking  possession by Pledgee (for the benefit of
Lenders) of all certificates,  instruments and cash constituting Collateral from
time to time and the filing of the financing statements  delivered  concurrently
herewith  by  Pledgor  to  Pledgee  will  perfect  Pledgee's  security  interest
hereunder in the Collateral  securing the  Obligations,  subject to no Liens. No
further or subsequent filing,  recording,  registration,  other public notice or
other  action is  necessary  or  desirable  to  perfect or  otherwise  continue,
preserve or protect such security interest except for continuation statements or
filings as  contemplated  in Section  3.3(b).  Upon completion of the perfection
acts  contemplated  in this Section  3.1(c),  Pledgee will have a first priority
perfected Lien in the Collateral.

     (d) Pledged  Equity.  (i) Pledgor is the legal and beneficial  owner of the
Pledged  Equity;  (ii) the Pledged Equity is duly  authorized and issued,  fully
paid and  non-assessable  (as applicable),  and all documentary,  stamp or other
taxes or fees owing in  connection  with the  issuance,  transfer  and/or pledge
thereof   hereunder  have  been  paid;  (iii)  no  dispute,   right  of  setoff,
counterclaim  or defense  exists with  respect to all or any part of the Pledged
Equity;  (iv) the  Pledged  Equity  is free and  clear  of all  Liens,  options,
warrants, puts, calls or other rights of third Persons, and restrictions,  other
than the Lien  created  by this  Agreement;  (v)  Pledgor  has  full  right  and
authority  to pledge the Pledged  Equity for the purposes and upon the terms set
out herein;  (vi)  certificates (as applicable)  representing the Pledged Equity
have been  delivered to Pledgee,  together with a duly  executed  blank stock or
transfer power for each  certificate;  and (vii) no Subsidiary  has issued,  and
there are not  outstanding,  any  options,  warrants or other  rights to acquire
Equity of any Subsidiary.

     Section 3.2. Affirmative Covenants.  Unless Pledgee shall otherwise consent
in writing,  Pledgor  will at all times comply with the  covenants  contained in
this Section 3.2 from the date hereof and so long as any part of the Obligations
or Commitments is outstanding.

     (a) Ownership and Liens. Pledgor will maintain good title to all Collateral
free and clear of all Liens,  except for the first  priority  security  interest
created by this  Agreement.  Pledgor will cause to be  terminated  any financing
statement or other  registration with respect to the Collateral,  except such as
may  exist or as may have  been  filed in favor of (or  otherwise  assigned  to)
Pledgee.  Pledgor will defend  Pledgee's  right,  title and special property and
security interest in and to the Collateral against the claims of any Person.

     (b)  Further  Assurances.  Pledgor  will at any time and from  time to time
promptly execute and deliver all further  instruments and documents and take all
further action that may be necessary or that Pledgee may  reasonably  request in
order (i) to perfect and protect the security  interest  created or purported to
be created  hereby and the first  priority of such  security  interest;  (ii) to
enable  Pledgee to exercise  and enforce its rights and  remedies  hereunder  in
respect of the  Collateral;  or (iii) to  otherwise  effect the purposes of this
Agreement, including: (A) authorizing and filing such financing

                                      E-6

<PAGE>

or continuation  statements,  or amendments thereto, as may be necessary or that
Pledgee may  reasonably  request in order to perfect and  preserve  the security
interest  created or  purported  to be created  hereby,  and (B)  furnishing  to
Pledgee from time to time  statements  and  schedules  further  identifying  and
describing  the  Collateral  and  such  other  reports  in  connection  with the
Collateral as Pledgee may reasonably request, all in reasonable detail.

     (c) Delivery of Pledged Equity. All certificates,  instruments and writings
evidencing  the Pledged  Equity shall be delivered to Pledgee on or prior to the
execution and delivery of this Agreement.  All other  certificates,  instruments
and  writings  hereafter  evidencing  or  constituting  Pledged  Equity shall be
delivered  to  Pledgee  promptly  upon the  receipt  thereof  by or on behalf of
Pledgor.  All Pledged  Equity shall be held by or on behalf of Pledgee  pursuant
hereto and shall be  delivered  in the same  manner and with the same  effect as
described  in Section 2.1 and Section  3.1.  Upon  delivery,  such Equity  shall
thereupon  constitute  "Pledged Equity" and shall be subject to the Liens herein
created,  for the purposes and upon the terms and  conditions  set forth in this
Agreement and the other Loan Papers.

     (d) Proceeds of Pledged Equity. If Pledgor shall receive,  by virtue of its
being or having been an owner of any Pledged Equity,  any (i) Equity  (including
any certificate  representing  any Equity or distribution in connection with any
increase or  reduction  of capital,  reorganization,  reclassification,  merger,
consolidation,  sale of assets,  or spinoff or  split-off),  promissory  note or
other  instrument or writing;  (ii) option or right,  whether as an addition to,
substitution  for, or in exchange for, any Pledged  Equity or  otherwise;  (iii)
dividends or other distributions payable in cash (except such dividends or other
distributions permitted to be retained by Pledgor pursuant to Section 4.7) or in
securities  or other  property;  or (iv)  dividends  or other  distributions  in
connection  with a partial or total  liquidation or dissolution or in connection
with a reduction of capital,  capital surplus or paid-in surplus,  Pledgor shall
receive the same in trust for the benefit of Pledgee,  shall  segregate  it from
Pledgor's other property,  and shall promptly deliver it to Pledgee in the exact
form received,  with any necessary  endorsement or appropriate stock or transfer
powers duly executed in blank, to be held by Pledgee as Collateral.

     (e) Status of Pledged  Equity.  The  certificates  evidencing  the  Pledged
Equity (as applicable)  shall at all times be valid and genuine and shall not be
altered.  The  Pledged  Equity at all times  shall be duly  authorized,  validly
issued,  fully paid, and non-assessable (as applicable),  shall not be issued in
violation of the  pre-emptive  rights of any Person or of any agreement by which
Pledgor or any Subsidiary is bound, and shall not be subject to any restrictions
or  conditions  with respect to the  transfer,  voting or capital of any Pledged
Equity.

     Section 3.3. Negative Covenants.  Unless Pledgee shall otherwise consent in
writing,  Pledgor will at all times comply with the covenants  contained in this
Section 3.3 from the date hereof and so long as any part of the  Obligations  or
the Commitments is outstanding.

     (a) Transfer or Encumbrance. Pledgor will not sell, assign (by operation of
law or otherwise),  transfer, exchange, lease or otherwise dispose of any of the
Collateral,  nor will Pledgor  grant a Lien upon or file or record any financing
statement or other registration with respect to the Collateral, nor will Pledgor
allow any such Lien,  financing  statement,  or other  registration  to exist or
deliver actual or constructive possession of the Collateral to any other Person.

                                      E-7

<PAGE>

     (b)  Financing   Statement  Filings.   Pledgor  recognizes  that  financing
statements  pertaining to the Collateral have been or may be filed where Pledgor
is organized or formed, maintains any Collateral, has its records concerning any
Collateral,  has its chief executive  office or chief place of business,  or has
its principal  place of  residence.  Without  limitation  of any other  covenant
herein,  Pledgor  will not  cause or permit  any  change to be made in its name,
identity or corporate structure, or any change to be made to its jurisdiction of
formation or  organization  unless  Pledgor shall have notified  Pledgee of such
change at least thirty (30) days prior to the effective date of such change, and
shall have first taken all action required by Pledgee for the purpose of further
perfecting  or  protecting  the  security  interest  in favor of  Pledgee in the
Collateral.  In any notice furnished  pursuant to this subsection,  Pledgor will
expressly state that the notice is required by this Agreement and contains facts
that may require additional filings of financing statements or other notices for
the purposes of  continuing  perfection  of Pledgee's  security  interest in the
Collateral.

     (c) Impairment of Security Interest.  Pledgor will not take or fail to take
any action which would in any manner  impair the  enforceability  or priority of
Pledgee's security interest in any Collateral.

     (d)  Restrictions  on  Pledged  Equity.  Pledgor  will not  enter  into any
agreement  creating,  or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any Pledged Equity.

                                   ARTICLE IV

                       Remedies, Powers and Authorizations
                       -----------------------------------

     Section 4.1. Provisions Concerning the Collateral.

     (a) Additional  Financing  Statement  Filings.  Pledgor  hereby  authorizes
Pledgee to file one or more financing or continuation statements, and amendments
thereto,  relating  to the  Collateral.  Pledgor  further  agrees that a carbon,
photographic or other reproduction of this Agreement or any financing  statement
describing  any  Collateral is  sufficient  as a financing  statement and may be
filed in any jurisdiction Pledgee may deem appropriate.

     (b) Power of  Attorney.  Pledgor  hereby  irrevocably  appoints  Pledgee as
Pledgor's attorney-in-fact and proxy, with full authority in the place and stead
of Pledgor  and in the name of Pledgor or  otherwise,  from time to time to give
notification to Pledgor, any Subsidiary,  registrar,  transfer agent,  financial
intermediary,  or other Person of Pledgee's  security  interests  hereunder and,
following the occurrence  and during the  continuance of an Event of Default and
in  Pledgee's  discretion,  to take any action  (except for the  exercise of any
voting  rights  pertaining  to the Pledged  Equity or any part  thereof)  and to
execute any  instrument,  certificate or notice which Pledgee may deem necessary
or advisable to  accomplish  the purposes of this  Agreement  including:  (i) to
request or instruct  Pledgor or any  Subsidiary  (and each  registrar,  transfer
agent,  or similar  Person  acting on behalf of Pledgor  or any  Subsidiary)  to
register  the pledge or transfer  of the  Collateral  to  Pledgee;  (ii) to ask,
demand,  collect, sue for, recover,  compound,  receive and give acquittance and
receipts  for  moneys  due and to become  due under or in  respect of any of the
Collateral;   (iii)  to  receive,  indorse  and  collect  any  drafts  or  other
instruments, documents and chattel paper; and (iv) to file any

                                      E-8

<PAGE>

claims or take any action or institute  any  proceedings  which Pledgee may deem
necessary or desirable for the  collection of any of the Collateral or otherwise
to enforce the rights of Pledgee with respect to any of the Collateral.

     (c)  Performance  by Pledgee.  If Pledgor fails to perform any agreement or
obligation  contained herein,  Pledgee may itself perform,  or cause performance
of,  such  agreement  or  obligation,  and the  expenses  of Pledgee  reasonably
incurred in connection therewith shall be payable by Pledgor under Section 4.4.

     (d) Collection  Rights.  Pledgee shall have the right at any time, upon the
occurrence and during the  continuance  of a Default or an Event of Default,  to
notify any or all obligors  (including  each  Subsidiary)  under any accounts or
general  intangibles  included among the Collateral of the assignment thereof to
Pledgee  and to direct such  obligors  to make  payment of all amounts due or to
become due to Pledgor thereunder directly to Pledgee and, upon such notification
and at the  expense of Pledgor  and to the extent  permitted  by law, to enforce
collection  thereof and to adjust,  settle or  compromise  the amount or payment
thereof,  in the same manner and to the same extent as Pledgor  could have done.
After  Pledgor  receives  notice that  Pledgee has given any notice  referred to
above in this subsection,  (i) all amounts and proceeds  (including  instruments
and  writings)  received  by  Pledgor in  respect  of such  accounts  or general
intangibles  shall be received  in trust for the  benefit of Pledgee  hereunder,
shall be segregated from other funds of Pledgor and shall be forthwith paid over
to Pledgee in the same form as so received (with any necessary  endorsement)  to
be held as cash  collateral  and (A)  released to Pledgor upon the remedy of all
Defaults  or  Events  of  Default,  or (B) if any Event of  Default  shall  have
occurred  and be  continuing,  applied as  specified  in Section  4.3;  and (ii)
Pledgor will not adjust,  settle or compromise the amount or payment of any such
account or general  intangible or release wholly or partly any account debtor or
obligor thereof or allow any credit or discount thereon.

     Section 4.2. Event of Default  Remedies.  If an Event of Default shall have
occurred  and be  continuing,  Pledgee may from time to time in its  discretion,
without limitation and without notice except as expressly provided below:

     (a) exercise in respect of the Collateral,  in addition to other rights and
remedies provided for herein,  under the other Obligation Documents or otherwise
available to it, all the rights and remedies of a secured party on default under
the Code (whether or not the Code applies to the affected Collateral);

     (b) require Pledgor to, and Pledgor hereby agrees that it will upon request
of Pledgee  forthwith,  assemble  all or part of the  Collateral  as directed by
Pledgee and make it available to Pledgee at a place to be  designated by Pledgee
which is reasonably convenient to both parties;

     (c) reduce its claim to judgment  against Pledgor or foreclose or otherwise
enforce,  in whole or in part,  the  security  interest  created  hereby  by any
available judicial procedure;

     (d) dispose of, at its office, on the premises of Pledgor or elsewhere, all
or any part of the  Collateral,  as a unit or in  parcels,  by public or private
proceedings,  and by way of one or more contracts (it being agreed that the sale
of any part of the Collateral shall not exhaust Pledgee's power

                                      E-9

<PAGE>

of sale, but sales may be made from time to time, and at any time,  until all of
the  Collateral  has been  sold or until  the  Obligations  have  been  paid and
performed  in full),  and at any such sale it shall not be  necessary to exhibit
any of the Collateral;

     (e) buy (or allow any Lender to buy) the  Collateral,  or any part thereof,
at any public sale;

     (f) buy (or allow any Lender to buy) the  Collateral,  or any part thereof,
at any  private  sale  if the  Collateral  is of a type  customarily  sold  in a
recognized  market or is of a type which is the  subject  of widely  distributed
standard price quotations; and

     (g) apply by appropriate judicial proceedings for appointment of a receiver
for the Collateral, or any part thereof, and Pledgor hereby consents to any such
appointment.

     Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten (10)  days'  notice to  Pledgor of the time and place of any public
sale or the time after  which any  private  sale is to be made shall  constitute
reasonable  notification.  Pledgee  shall not be  obligated  to make any sale of
Collateral  regardless of notice of sale having been given.  Pledgee may adjourn
any public or  private  sale from time to time by  announcement  at the time and
place fixed therefor,  and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

     Section 4.3.  Application  of Proceeds.  If any Event of Default shall have
occurred and be continuing, Pledgee may in its discretion apply any cash held by
Pledgee as Collateral,  and any cash proceeds  received by Pledgee in respect of
any sale of,  collection from, or other  realization upon all or any part of the
Collateral,  in  the  order  and  manner  contemplated  by  Section  4.4  of the
Intercreditor Agreement.

     Section 4.4. Release and Expenses. In addition to, and not in qualification
of, any similar obligations under other Obligation Documents:

      (a)  Pledgor  agrees to release  and  forever  discharge  Pledgee and each
Lender from and against any and all claims,  losses and liabilities  growing out
of or resulting from this Agreement  (including  enforcement of this Agreement).
The  foregoing  release and  discharge  shall apply  whether or not such claims,
losses  and  liabilities  are in any way or to any extent  owed,  in whole or in
part,  under  any claim or theory of  strict  liability  or are,  to any  extent
caused,  in whole or in part,  by any  negligent  act or omission of any kind by
Pledgee or any Lender.

     (b) Pledgor  agrees to pay on demand all  reasonable  costs and expenses of
Pledgee in connection with the preparation,  execution, delivery,  modification,
and amendment of this Agreement, and the perfection and preservation of the Lien
created under this Agreement, including, without limitation, the reasonable fees
and  expenses of counsel for Pledgee  with  respect  thereto and with respect to
advising  Pledgee as to its rights under this Agreement.  Pledgor further agrees
to pay on demand all costs and expenses of Pledgee,  if any (including,  without
limitation, reasonable attorneys' fees and expenses), in connection with the (i)
the custody, preservation, use or operation of, or the sale of, collection from,
or other realization upon, any Collateral;  and (ii) the exercise or enforcement
of any of the rights of Pledgee hereunder (whether through  negotiations,  legal
proceedings, or otherwise).

E-10

<PAGE>

     Section  4.5.  Non-Judicial  Remedies.  In granting to Pledgee the power to
enforce its rights hereunder without prior judicial process or judicial hearing,
Pledgor expressly waives,  renounces and knowingly relinquishes,  to the fullest
extent  permitted  by  applicable  law,  any legal right  which might  otherwise
require Pledgee to enforce its rights by judicial  process.  In so providing for
non-judicial  remedies,  Pledgor  recognizes and concedes that such remedies are
consistent with the usage of trade, are responsive to commercial necessity,  and
are the result of a bargain  at arm's  length.  Nothing  herein is  intended  to
prevent Pledgee or Pledgor from resorting to judicial  process at either party's
option.

     Section  4.6.  Other  Recourse.  Pledgor  waives,  to  the  fullest  extent
permitted by applicable  law, any right to require Pledgee or Lenders to proceed
against any other  Person,  exhaust any  Collateral  or other  security  for the
Obligations,  or to have any Other  Liable Party joined with Pledgor in any suit
arising out of the Obligations or this Agreement,  or pursue any other remedy in
Pledgee's  power.  Pledgor  further waives,  to the fullest extent  permitted by
applicable  law, any and all notice of acceptance  of this  Agreement and of the
creation,  modification,  rearrangement,  renewal or extension for any period of
any of the Obligations from time to time. Pledgor further waives, to the fullest
extent  permitted  by  applicable  law,  any  defense  arising  by reason of any
disability  or other  defense  of any  Other  Liable  Party or by  reason of the
cessation from any cause  whatsoever of the liability of any Other Liable Party.
Until all of the Obligations shall have been paid in full, Pledgor shall have no
right to subrogation  and Pledgor  waives,  to the fullest  extent  permitted by
applicable  law, the right to enforce any remedy which Pledgee or any Lender has
or may hereafter have against any Other Liable Party, and waives, to the fullest
extent  permitted by applicable law, any benefit of and any right to participate
in any other  security  whatsoever  now or  hereafter  held by Pledgee.  Pledgor
authorizes  Pledgee and each  Lender,  without  notice or demand and without any
reservation of rights against Pledgor and without affecting  Pledgor's liability
hereunder or on the Obligations, from time to time to (a) take or hold any other
property of any type from any other Person as security for the Obligations,  and
exchange,  enforce,  waive and  release any or all of such other  property;  (b)
renew, extend for any period, accelerate,  modify, compromise, settle or release
any of the obligations of any Other Liable Party in respect to any or all of the
Obligations or other security for the Obligations;  (c) waive, enforce,  modify,
amend or supplement any of the  provisions of any  Obligation  Document with any
Person other than Pledgor; and (d) release or substitute any Other Liable Party.

     Section 4.7. Voting Rights, Dividends Etc. in Respect of Pledged Equity.

     (a) So long as no Default or Event of Default  shall have  occurred  and be
continuing, Pledgor may receive and retain any and all dividends,  distributions
or interest paid in respect of the Pledged Equity;  provided,  however, that any
and all

          (i) dividends,  distributions  and interest paid or payable other than
     in cash in  respect  of,  and  instruments  and  other  property  received,
     receivable or otherwise  distributed  in respect of or in exchange for, any
     Pledged Equity,

          (ii)  dividends  and other  distributions  paid or  payable in cash in
     respect  of any  Pledged  Equity  in  connection  with a  partial  or total
     liquidation or  dissolution  or in connection  with a reduction of capital,
     capital surplus or paid-in surplus, and

                                      E-11

<PAGE>

          (iii)cash paid, payable or otherwise  distributed in redemption of, or
     in exchange for, any Pledged Equity,

     shall be, and shall  forthwith be delivered to Pledgee to hold as,  Pledged
Equity and shall,  if received by Pledgor,  be received in trust for the benefit
of Pledgee,  be segregated  from the other property or funds of Pledgor,  and be
forthwith  delivered to Pledgee in the exact form  received  with any  necessary
endorsement or appropriate  stock or transfer  powers duly executed in blank, to
be held by Pledgee as Collateral.

     (b) Upon the occurrence and during the continuance of a Default or an Event
of Default:

          (i) all  rights of  Pledgor  to  receive  and  retain  the  dividends,
     distributions  and  interest  payments  which  Pledgor  would  otherwise be
     authorized to receive and retain pursuant to subsection (a) of this Section
     4.7 shall  automatically  cease, and all such rights shall thereupon become
     vested in Pledgee which shall  thereupon have the right to receive and hold
     as Pledged Equity such dividends, distributions and interest payments;

          (ii) without limiting the generality of the foregoing,  Pledgee may at
     its  option   exercise  any  and  all  rights  of   conversion,   exchange,
     subscription or any other rights,  privileges or options  pertaining to any
     of the Pledged  Equity  (except  voting  rights) as if it were the absolute
     owner thereof,  including the right to exchange, in its discretion, any and
     all of the Pledged Equity upon the merger,  consolidation,  reorganization,
     recapitalization or other adjustment of Pledgor or any Subsidiary,  or upon
     the exercise by Pledgor or any Subsidiary of any right, privilege or option
     pertaining to any Pledged Equity, and, in connection therewith,  to deposit
     and  deliver  any  and  all of  the  Pledged  Equity  with  any  committee,
     depository,  transfer agent,  registrar or other designated agent upon such
     terms and conditions as it may determine; and

          (iii)all dividends and interest payments which are received by Pledgor
     contrary to the  provisions of subsection (b) (i) of this Section 4.7 shall
     be received in trust for the benefit of Pledgee,  shall be segregated  from
     other  funds of  Pledgor,  and shall be  forthwith  paid over to Pledgee as
     Pledged  Equity  in the  exact  form  received,  to be held by  Pledgee  as
     Collateral.

     Anything herein to the contrary  notwithstanding,  Pledgee may not exercise
any voting rights pertaining to the Pledged Equity, and Pledgor may at all times
exercise any and all voting rights  pertaining to the Pledged Equity or any part
thereof for any purpose not inconsistent with the terms of this Agreement or any
other Obligation Document; provided, however, upon the occurrence and during the
continuance  of a Default or an Event of Default,  Pledgor  will not exercise or
refrain from  exercising  any such right,  as the case may be, if Pledgee  gives
notice  that,  in  Pledgee's  judgment,  such action  would result in a Material
Adverse  Change with respect to the value of the Pledged  Equity or the benefits
to Pledgee of its security interest hereunder.

     Section  4.8.  Private  Sale of Pledged  Equity.  Pledgor  recognizes  that
Pledgee may deem it  impracticable to effect a public sale of all or any part of
the Pledged  Equity and that  Pledgee may,  therefore,  determine to make one or
more private sales of any such  securities  to a restricted  group of purchasers
who will be obligated to agree,  among other things,  to acquire such securities
for their

                                      E-12

<PAGE>

own account,  for investment and not with a view to the  distribution  or resale
thereof. Pledgor acknowledges that any such private sale may be at prices and on
terms less  favorable  to the seller than the prices and other terms which might
have been obtained at a public sale and,  notwithstanding the foregoing,  agrees
that such  private  sales  shall be  deemed to have been made in a  commercially
reasonable manner and that Pledgee shall have no obligation to delay the sale of
any such  securities  for the period of time  necessary to permit Pledgor or any
Subsidiary  to register  such  securities  (with no obligation of Pledgor or any
Subsidiary to accomplish such registration) for public sale under the Securities
Act of 1933, as amended (the "Securities Act").

                                    ARTICLE V

                                  Miscellaneous
                                  -------------

     Section 5.1.  Notices.  Any notice or  communication  required or permitted
hereunder shall be given in writing,  sent by personal delivery, by telecopy, by
delivery  service with proof of delivery,  or by registered or certified  United
States mail, postage prepaid, addressed to the appropriate party as follows:

To Pledgor:               c/o Quest Resource Corporation
                          5901 N. Western, Suite 200
                          Oklahoma City, Oklahoma 73118
                          Attn: Jerry D. Cash
                          Fax No.: (405) 840-9894

To Pledgee:               Bank One, NA, as Collateral Agent
                          1717 Main Street, 4th Floor
                          Mail Code TX1-2448
                          Dallas, Texas 75201
                          Attn: J. Scott Fowler
                          Fax No.: (214) 290-2332

     or to such other  address or to the  attention of such other  individual as
hereafter  shall be  designated  in  writing  by the  applicable  party  sent in
accordance  herewith.  Any such notice or communication  shall be deemed to have
been given (a) in the case of personal delivery or delivery  service,  as of the
date of first  attempted  delivery  at the  address  or in the  manner  provided
herein,  (b) in the  case  of  telecopy,  upon  receipt,  or (c) in the  case of
registered or certified  United States mail, three (3) days after deposit in the
mail.

     Section 5.2.  Amendments.  No amendment of any provision of this  Agreement
shall be  effective  unless it is in writing and signed by Pledgor and  Pledgee,
and no  waiver  of any  provision  of  this  Agreement,  and no  consent  to any
departure by Pledgor  therefrom,  shall be effective unless it is in writing and
signed by Pledgee,  and then such waiver or consent  shall be effective  only in
the specific  instance  and for the specific  purpose for which given and to the
extent specified in such writing.

                                      E-13

<PAGE>

     Section 5.3.  Preservation of Rights.  No failure on the part of Pledgee or
any Lender to exercise, and no delay in exercising, any right hereunder or under
any other Obligation  Document shall operate as a waiver thereof;  nor shall any
single or  partial  exercise  of any such  right  preclude  any other or further
exercise  thereof or the exercise of any other right.  Neither the execution nor
the delivery of this  Agreement  shall in any manner  impair or affect any other
security  for the  Obligations.  The rights and  remedies of Pledgee and Lenders
provided herein and in the other Obligation  Documents are cumulative of and are
in addition to, and not  exclusive  of, any rights or remedies  provided by law.
The rights of Pledgee  and Lenders  under any  Obligation  Document  against any
party  thereto are not  conditional  or  contingent on any attempt by Pledgee or
Lenders  to  exercise  any of its or their  rights  under any  other  Obligation
Document against such party or against any other Person.

     Section 5.4.  Unenforceability.  Any provision of this  Agreement  which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be  ineffective  to  the  extent  of  such  prohibition  or  invalidity  without
invalidating the remaining  portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

     Section 5.5. Survival of Agreements.  All representations and warranties of
Pledgor  herein,  and all  covenants  and  agreements  herein shall  survive the
execution  and delivery of this  Agreement,  the  execution  and delivery of any
other Obligation Documents and the creation of the Obligations.

     Section 5.6. Other Liable Party. Neither this Agreement nor the exercise by
Pledgee  or the  failure  of Pledgee  to  exercise  any  right,  power or remedy
conferred  herein or by law shall be  construed  as  relieving  any Other Liable
Party  from  liability  on the  Obligations  or  any  deficiency  thereon.  This
Agreement  shall  continue  irrespective  of the fact that the  liability of any
Other  Liable  Party  may  have  ceased  or  irrespective  of  the  validity  or
enforceability  of any other  Obligation  Document to which Pledgor or any Other
Liable Party may be a party,  and  notwithstanding  the  reorganization,  death,
incapacity  or bankruptcy of any Other Liable  Party,  and  notwithstanding  the
reorganization  or bankruptcy  or other event or proceeding  affecting any Other
Liable Party.

     Section  5.7.  Binding  Effect and  Assignment.  This  Agreement  creates a
continuing  security  interest  in the  Collateral  and (a) shall be  binding on
Pledgor and its successors and permitted assigns, and (b) shall inure,  together
with all rights and remedies of Pledgee hereunder, to the benefit of Pledgee and
Lenders  and their  respective  successors,  transferees  and  assigns.  Without
limiting the generality of the foregoing, Pledgee and Lenders may pledge, assign
or otherwise  transfer any or all of their respective rights under any or all of
the  Obligation  Documents  to any other  Person,  and such other  Person  shall
thereupon  become  vested with all of the  benefits in respect  thereof  granted
herein or  otherwise.  None of the rights or duties of Pledgor  hereunder may be
assigned or otherwise transferred without the prior written consent of Pledgee.

     Section 5.8.  Termination.  It is  contemplated  by the parties hereto that
there may be times when no Obligations are outstanding, but notwithstanding such
occurrences,  this  Agreement  shall remain valid and shall be in full force and
effect as to subsequent outstanding  Obligations.  Upon the satisfaction in full
of the Obligations,  upon the termination or expiration of each Credit Agreement
and any other  Commitment  of  Lenders  to extend  credit to  Pledgor,  and upon
written

                                      E-14

<PAGE>

request  for the  termination  hereof  delivered  by  Pledgor to  Pledgee,  this
Agreement  and the security  interest  created  hereby shall  terminate  and all
rights to the Collateral  shall revert to Pledgor.  Pledgee will, upon Pledgor's
request and at Pledgor's  expense,  (a) return to Pledgor such of the Collateral
as shall not have been sold or otherwise  disposed of or applied pursuant to the
terms hereof,  and (b) execute and deliver to Pledgor such  documents as Pledgor
shall reasonably request to evidence such termination.

     Section 5.9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND  GOVERNED  BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED
STATES OF AMERICA.

     Section 5.10.  Counterparts.  This Agreement may be separately  executed in
any number of  counterparts,  all of which when so  executed  shall be deemed to
constitute one and the same Agreement.

     Section 5.11. Loan Paper. This Agreement is a "Loan Paper",  and, except as
expressly  provided  herein to the  contrary,  this  Agreement is subject to all
provisions of the Credit Agreements governing the Loan Papers.

     IN WITNESS WHEREOF,  Pledgor has executed and delivered this Agreement,  as
of the date first above written.

                               ____________________, a _____________

                               By:
                                  ---------------------------------
                               Name:
                                    -------------------------------
                               Title:
                                     ------------------------------

     Each  Subsidiary  hereby  acknowledges  and  consents  to the pledge of the
Collateral and hereby agrees to observe and perform each and every  provision of
this Agreement applicable to such Subsidiary.

                               ____________________, a _____________

                               By:
                                  ---------------------------------
                               Name:
                                    -------------------------------
                               Title:
                                     ------------------------------

                                      E-15

<PAGE>

                                   SCHEDULE 1
                                   ----------

                                      E-16

<PAGE>

                                   EXHIBIT F
                                   ---------

                              REQUEST FOR BORROWING
                              ---------------------

     Reference is made to that certain Credit Agreement dated as of December 22,
2003 (as from time to time amended,  modified or supplemented,  the "Agreement")
by and among Quest Cherokee, LLC, --------- a Delaware limited liability company
("Borrower"),  Bank One, NA, -------- with its main office in Chicago, Illinois,
as Administrative  Agent, and certain Banks as named and defined therein.  Terms
which are defined in the Agreement and which are used but not defined herein are
used herein with the meanings given them in the Agreement. Pursuant to the terms
of the  Agreement,  Borrower  hereby  requests  a  Borrowing  in the  amount  of
$_____________ to be advanced on ________________________, _______.

     Borrower  requests that the Borrowing to be made hereunder shall be [a Base
Rate Borrowing] [a Eurodollar  Borrowing],  shall be in the aggregate amount set
forth below, and shall have the Interest Period(s) set forth below:

      Type of Borrowing      Aggregate Amount      Interest Period

      _________________      _________________     ________________

      _________________      _________________     ________________

      _________________      _________________     ________________

     Borrower and the  Authorized  Officer of Borrower  signing this  instrument
     hereby certify that:

          (a) Such officer is the duly elected,  qualified and acting officer of
     Borrower as indicated below such officer's signature hereto.

          (b) The  representations  and  warranties  of Borrower  and each other
     Credit Party set forth in the  Agreement  and the Loan Papers  delivered to
     Administrative  Agent and Banks are true and  correct on and as of the date
     hereof, with the same effect as though such  representations and warranties
     had been made on and as of the date hereof or, if such  representations and
     warranties are expressly limited to particular dates, as of such particular
     dates.  No Material  Adverse Change has occurred with respect to any Credit
     Party  since  the date of the last  financial  reports  delivered  to Banks
     pursuant to Section 8.1 of the Agreement.

           (c) There does not exist on the date hereof,  any  condition or event
      which constitutes a Default or Event of Default, nor will any such Default
      or Event of Default exist upon  Borrower's  receipt and application of the
      proceeds requested hereby. Borrower will use the proceeds hereby requested
      in compliance with the applicable provisions of the Agreement.

          (d)  After  giving  effect  to the  Borrowing  requested  hereby,  the
     Outstanding Credit will not be in excess of the Borrowing Base.

                                      F-1

<PAGE>

          IN WITNESS  WHEREOF,  this  Request  for  Borrowing  is executed as of
     _____________, _____.

                                    QUEST CHEROKEE, LLC, a Delaware
                                    limited liability company

                                    By:
                                          -----------------------------
                                    Name:
                                          -----------------------------
                                    Title:
                                          -----------------------------

                                      F-2
<PAGE>

                                   EXHIBIT G
                                   ---------

                          REQUEST FOR LETTER OF CREDIT
                          ----------------------------

     Reference is made to that certain Credit Agreement dated as of December 22,
2003 (as from time to time amended, modified or supplemented,  the "Agreement"),
by  and  among  Quest  Cherokee,  LLC,  a  Delaware  limited  liability  company
("Borrower"),  Bank One,  NA,  with its main  office in  Chicago,  Illinois,  as
Administrative  Agent,  and certain  Banks as named and defined  therein.  Terms
which are defined in the Agreement and which are used but not defined herein are
used herein with the meanings given them in the Agreement.

     Pursuant to the terms of the Agreement,  Borrower hereby requests Bank One,
NA, as  Administrative  Agent  ("Issuer"),  to issue a Letter of Credit  for the
account of Borrower as follows:

           Type of Commitment:
           ------------------
           Requested  Amount            $________________________
           Requested Date of Issuance    ________________________
           Requested  Expiration Date    ________________________
           Summary of Terms
           (provide a brief description
           of conditions under which the
           drafts under such Letter of
           Credit are to be available)   ________________________
           Beneficiary (Name/Address)    ________________________

     Such  Letter of  Credit is more  particularly  described  in the  Letter of
Credit Application and Agreement of Issuer which is attached hereto.

     Borrower and the  Authorized  Officer of Borrower  signing this  instrument
hereby certify that:

          (a) Such officer is the duly elected,  qualified and acting officer of
     Borrower as indicated below such officer's signature hereto.

          (b) The  representations  and  warranties  of Borrower and each Credit
     Party set forth in the  Agreement  and the other Loan Papers  delivered  to
     Administrative  Agent and Banks are true and  correct on and as of the date
     hereof, with the same effect as though such  representations and warranties
     had been made on and as of the date hereof, or if such  representations and
     warranties are expressly limited to particular dates, as of such particular
     dates.  No Material  Adverse  Change has occurred  with respect to a Credit
     Party  since  the date of the last  financial  reports  delivered  to Banks
     pursuant to Section 8.1 of the Agreement.

          (c) There  does not exist on the date  hereof any  condition  or event
     which constitutes a Default or Event of Default,  nor will any such Default
     or Event of  Default  exist  upon the  issuance  of the  Letter  of  Credit
     requested  hereby.  Borrower  will use the  Letter  of  Credit  solely  for
     purposes permitted by the Agreement.

                                      G-1

<PAGE>

           (d) After the issuance of the Letter of Credit requested hereby,  the
      Outstanding Credit will not be in excess of the Borrowing Base.

     IN WITNESS  WHEREOF,  this  Request  for Letter of Credit is executed as of
________________, ___.

                                    QUEST    CHEROKEE,    LLC,    a
                                    Delaware   limited    liability
                                    company

                                    By:
                                          -------------------------
                                    Name:
                                          -------------------------
                                    Title:
                                          -------------------------

<PAGE>

                                   EXHIBIT H

                      NOTICE OF CONTINUATION OR CONVERSION

      Reference is made to that certain  Credit  Agreement  dated as of December
22,  2003  (as  from  time  to  time  amended,  modified  or  supplemented,  the
"Agreement"),  by and among Quest Cherokee,  LLC, a Delaware  limited  liability
company ("Borrower"),  Bank One, NA, with its main office in Chicago,  Illinois,
as Administrative  Agent, and certain Banks as named and defined therein.  Terms
which are defined in the Agreement and which are used but not defined herein are
used herein with the meanings given them in the Agreement.

      |_|  Reference is hereby made to the existing  Eurodollar Loan outstanding
           under the Agreement in the amount of $________ which is subject to an
           Interest Period expiring on _________________,  ____. Borrower hereby
           requests that on the  expiration of such Interest  Period the portion
           of the  principal  of such  Eurodollar  Loan which is subject to such
           Interest  Period be made the subject of |_| a Base Rate Loan or |_| a
           Eurodollar  Loan  having an  Interest  Period of  ____________  (___)
           months.

      |_|  Borrower hereby requests that on _______________,  ____, a portion of
           the  principal of the Base Rate Loan in the amount of  $_________  be
           made the subject of a  Eurodollar  Loan having an Interest  Period of
           ____________ (___) months.

      Borrower and the Authorized  Officer of Borrower  signing this  instrument
hereby certify that:

           (a) Such officer is the duly elected, qualified and acting officer of
      Borrower as indicated below such officer's signature hereto;

           (b) There does not exist on the date  hereof any  condition  or event
      which constitutes a Default or Event of Default; and

           (c) The  representations  and  warranties of Borrower and each Credit
      Party  set  forth  in the  Agreement  and the  Loan  Papers  delivered  to
      Administrative  Agent and each Bank are true and  correct on and as of the
      date  hereof,  with the same  effect as though  such  representations  and
      warranties  had  been  made  on and as of the  date  hereof  or,  if  such
      representations  and warranties are expressly limited to particular dates,
      as of such particular dates.

     IN WITNESS  WHEREOF,  this Notice of Continuation or Conversion is executed
as of ________, ____.

                                    QUEST    CHEROKEE,    LLC,    a
                                    Delaware   limited    liability
                                    company

                                    By:
                                          -------------------------
                                    Name:
                                          -------------------------
                                    Title:
                                          -------------------------

<PAGE>

                                   EXHIBIT I

                        CERTIFICATE OF FINANCIAL OFFICER

      The undersigned,  the financial officer of Quest Cherokee, LLC, a Delaware
limited  liability  company  ("Borrower"),  hereby (a) delivers this Certificate
pursuant  to  Section  8.1(c) of that  certain  Credit  Agreement  (as  amended,
modified or supplemented from time to time, the "Credit  Agreement") dated as of
December 22, 2003, by and among Borrower, Bank One, NA, as Administrative Agent,
and the  financial  institutions  listed on  Schedule  1.1-A  thereto,  as Banks
("Banks"),  and (b) certifies to Banks, with the knowledge and intent that Banks
may, without any independent investigation,  rely fully on the matters herein in
connection with the Credit Agreement, as follows:

      1. Attached hereto as Schedule I are the financial  statements of Borrower
as of and for the Fiscal  |_|Year  |_|Quarter  (check  one) ended  ____________,
____.

      2. Such financial statements are true and correct, have been prepared on a
consistent basis in accordance with GAAP (except as otherwise noted therein) and
fairly present in all material  respects the financial  condition of Borrower as
of the date  indicated  therein and the results of operations for the respective
periods indicated therein.

      3.  Attached  hereto as  Schedule  II are  detailed  calculations  used by
Borrower to establish that Borrower was in compliance  with the  requirements of
Article  X of the  Credit  Agreement  on the  date of the  financial  statements
attached as Schedule I hereto.

      4.  Unless  otherwise  disclosed  on  Schedule  III  attached  hereto  and
incorporated  herein by  reference  for all  purposes,  to the  knowledge of the
undersigned,  neither a Default nor an Event of Default has occurred which is in
existence  on the date  hereof;  provided,  that,  for any  Default  or Event of
Default  disclosed  on  Schedule  III  attached  hereto,  Borrower  is taking or
proposes  to take the action to cure such  Default or Event of Default set forth
on Schedule III.

      5. On the date  hereof  (a)  (check  one) |_|  there  is no  Material  Gas
Imbalance  or |_| the  amount  of the net gas  imbalances  under  Gas  Balancing
Agreements to which Borrower is a party or by which any Mineral  Interests owned
by Borrower or any of its Subsidiaries is bound is ____________________, and (b)
the aggregate  amount of all Advance  Payments  received  under Advance  Payment
Contracts to which any Credit Party is a party or by which any Mineral Interests
owned by  Borrower  or any  other  Credit  Party is  bound  which  have not been
satisfied by delivery of production, if any, is _______________________________.

      6. Attached  hereto as Schedule IV is a summary of the Hedge  Transactions
to which  Borrower  or any other  Credit  Party is a party on the date hereof [,
together   with  a  copy  of  each  Hedge   Agreement   evidencing   such  Hedge
Transactions]. [Borrower has previously delivered to Administrative Agent a true
and correct copy of each Hedge Agreement evidencing such Hedge Transactions, and
such Hedge  Agreements  have not been  amended or  modified  in any  respect and
represent the valid, binding and enforceable  obligations of Borrower and/or any
other Credit Party a party thereto.]

<PAGE>

      7.  Unless   otherwise   described  on  Schedule  V  attached  hereto  and
incorporated  herein by reference  for all  purposes,  the  representations  and
warranties  of  Borrower  and each  other  Credit  Party set forth in the Credit
Agreement  and the other Loan  Papers are true and correct on and as of the date
hereof,  with the same effect as though such  representations and warranties had
been  made  on  and  as of the  date  hereof,  or if  such  representations  and
warranties  are expressly  limited to particular  dates,  as of such  particular
dates.

      Unless otherwise  defined herein,  all capitalized terms used herein shall
have the meaning given such terms in the Credit Agreement.

     IN WITNESS WHEREOF,  the undersigned have duly executed this Certificate of
Financial Officer as of ___________, ____.

                                    QUEST    CHEROKEE,    LLC,    a
                                    Delaware   limited    liability
                                    company

                                    By:
                                          -------------------------
                                    Name:
                                          -------------------------
                                    Title:
                                          -------------------------

<PAGE>

                                   Schedule I

                              Financial Statements

                                (to be attached)

<PAGE>

                                   Schedule II

                             Compliance Calculations

                                (to be attached)

<PAGE>

                                  Schedule III

                            Defaults/Remedial Action

                                (to be attached)

<PAGE>

                                   Schedule IV

                 Summary of Hedge Transactions/Hedge Agreements

                                (to be attached)

<PAGE>

                                   Schedule V

                Qualifications to Representations and Warranties

                                (to be attached)

<PAGE>

                                   EXHIBIT J

                       CERTIFICATE OF OWNERSHIP INTERESTS

      This Certificate of Ownership  Interests (this  "Certificate") is executed
and delivered pursuant to that certain Credit Agreement dated as of December 22,
2003 (the  "Agreement"),  by and among Quest Cherokee,  LLC, a Delaware  limited
liability company  ("Borrower"),  Bank One, NA, with its main office in Chicago,
Illinois,  as  Administrative  Agent,  and  certain  Banks as named and  defined
therein.  Unless otherwise defined herein,  all capitalized terms shall have the
meanings given such terms in the Agreement.

      In order to induce Banks to extend credit to Borrower under the Agreement,
Borrower hereby  represents and warrants to  Administrative  Agent and each Bank
that (a) attached hereto as Exhibit A is a complete and accurate  description of
the Contributed  Properties and all other Borrowing Base Properties described in
the  Existing  Reserve  Report as of the date  hereof,  (b)  attached  hereto as
Exhibit B is a complete and accurate description of the Devon Properties and all
other Borrowing Base Properties  described in the Devon Reserve Report, (c) with
the  exception of Immaterial  Title  Deficiencies  and  Permitted  Encumbrances,
Borrower has good and defensible title to all Initial  Borrowing Base Properties
(all Borrowing Base Properties  referred to in the preceding clauses (a) and (b)
are  hereinafter  referred  to  collectively  as  the  "Initial  Borrowing  Base
Properties"),   (d)  with  the  exception  of  Immaterial  Title   Deficiencies,
Borrower's  share  of (i) the  costs  for  each of the  Initial  Borrowing  Base
Properties  is not greater  than the decimal  fraction set forth in the Existing
Reserve Report or Devon Reserve Report (as applicable), before and after payout,
as the  case  may be,  and  described  therein  by the  respective  designations
"working  interests,"  "WI," "gross working  interest,"  "GWI," or similar terms
(except in such cases where there is a corresponding increase in the net revenue
interest), and (ii) production from, allocated to, or attributed to each of such
Initial  Borrowing  Base  Properties  is not less than the decimal  fraction set
forth in the Existing  Reserve Report or Devon Reserve  Report (as  applicable),
before  and after  payout,  as the case may be,  and  described  therein  by the
designations "net revenue  interest," "NRI," or similar terms, and (e) each well
drilled in respect of each of the Initial Borrowing Base Properties described in
the Existing  Reserve  Report or Devon  Reserve  Report (as  applicable)  (A) is
capable of, and is presently,  producing Hydrocarbons in commercially profitable
quantities, and Borrower is receiving payments for its share of such production,
with no funds in respect of any thereof being presently held in suspense,  other
than any such funds  being held in  suspense  pending  delivery  of  appropriate
division orders, and (B) has been drilled,  bottomed,  completed and operated in
compliance  with  all  applicable  Laws  and no such  well  which  is  currently
producing Hydrocarbons is subject to any penalty in production by reason of such
well having produced in excess of its allowable production.

      Borrower  acknowledges  and  agrees  that  each  Bank is  relying  on this
Certificate and the representations and warranties herein contained in extending
credit under the  Agreement,  and but for  Borrower's  execution and delivery of
this Certificate, Banks would not extend credit under the Agreement.

<PAGE>

      This Certificate of Ownership  Interests is executed as of the 22nd day of
December, 2003.

                                    QUEST    CHEROKEE,    LLC,    a
                                    Delaware   limited    liability
                                    company

                                    By:
                                          ----------------------------
                                    Name:
                                          ----------------------------
                                    Title:
                                          ----------------------------

<PAGE>

                                    EXHIBIT A

<PAGE>

                                    EXHIBIT B

<PAGE>

                                   EXHIBIT K

                            ASSIGNMENT AND ACCEPTANCE

      Reference is made to that certain  Credit  Agreement  dated as of December
22, 2003 (as amended,  modified or supplemented,  the "Credit  Agreement") among
Quest Cherokee,  LLC, a Delaware limited  liability company  ("Borrower"),  Bank
One,  NA, with its main office in Chicago,  Illinois,  as  Administrative  Agent
("Administrative  Agent"),  and the  financial  institutions  listed on Schedule
1.1-A thereto,  as Banks  ("Banks").  Terms defined in the Credit  Agreement are
used herein with the same meaning.

      The "Assignor"  and the "Assignee"  referred to on Schedule 1 hereof agree
as follows:

      1.  Assignor  hereby sells and assigns to Assignee,  without  recourse and
without  representation  or warranty  except as expressly set forth herein,  and
Assignee  hereby  purchases  and assumes  from  Assignor,  an interest in and to
Assignor's  rights and obligations under the Credit Agreement and the other Loan
Papers as of the date  hereof  equal to the  percentage  interest  specified  on
Schedule 1 of all outstanding  rights and obligations under the Credit Agreement
and the other Loan  Papers.  After  giving  effect to such sale and  assignment,
Assignee's Commitment, Assignee's Commitment Percentage and the principal amount
of the Revolving Loan owing to Assignee will be as set forth on Schedule 1.

      2.  Assignor  (i)  represents  and  warrants  that  it is  the  legal  and
beneficial  owner of the interest  being  assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty  and  assumes  no  responsibility   with  respect  to  any  statements,
warranties or  representations  made in or in connection with the Loan Papers or
the execution, legality, validity, enforceability,  genuineness,  sufficiency or
value of the Loan Papers or any other instrument or document  furnished pursuant
thereto; (iii) makes no representation or warranty and assumes no responsibility
with  respect to the  financial  condition  of  Borrower or the  performance  or
observance  by Borrower of any of its  obligations  under the Loan Papers or any
other instrument or document furnished  pursuant thereto;  and (iv) attaches the
Note held by Assignor and requests that Administrative  Agent exchange such Note
for new  Notes  payable  to the  order of  Assignee  in an  amount  equal to the
Commitment  assumed by  Assignee  pursuant  hereto and to  Assignor in an amount
equal to the Commitment  retained by Assignor,  if any, as specified on Schedule
1.

      3.  Assignee  (i)  confirms  that it has  received  a copy  of the  Credit
Agreement,  together  with  copies of the  financial  statements  referred to in
Section 8.1 thereof and such other  documents and  information  as it has deemed
appropriate  to make its own credit  analysis  and  decision  to enter into this
Assignment and Acceptance;  (ii) agrees that it will,  independently and without
reliance upon any Agent,  Assignor or any other Bank and based on such documents
and information as it shall deem  appropriate at the time,  continue to make its
own credit decisions in taking or not taking action under the Credit  Agreement;
(iii) confirms that it is eligible to receive the assignments referred to herein
under Section  14.10(c) of the Credit  Agreement;  (iv) appoints and  authorizes
each  Agent to take such  action as agent on its  behalf  and to  exercise  such
powers and discretion  under the Credit  Agreement as are delegated to each such
Agent by the terms thereof, together with such

<PAGE>

powers and discretion as are reasonably  incidental thereto; and (v) agrees that
it will perform in accordance  with their terms all of the  obligations  that by
the terms of the Credit Agreement are required to be performed by it as a Bank.

      4. Following the execution of this Assignment and  Acceptance,  it will be
delivered to Administrative Agent for acceptance and recording by Administrative
Agent.  The effective date for this  Assignment and Acceptance  (the  "Effective
Date") shall be the date of acceptance  hereof by Administrative  Agent,  unless
otherwise specified on Schedule 1.

      5. Upon such acceptance and recording by  Administrative  Agent, as of the
Effective  Date, (a) Assignee  shall be a party to the Credit  Agreement and, to
the extent  provided  in this  Assignment  and  Acceptance,  have the rights and
obligations of a Bank thereunder, and (b) Assignor shall, to the extent provided
in this  Assignment and  Acceptance,  relinquish its rights and be released from
its obligations under the Credit Agreement.

      6. Upon such acceptance and recording by  Administrative  Agent,  from and
after the Effective Date, Administrative Agent shall make all payments under the
Credit  Agreement  and the Notes in  respect  of the  interest  assigned  hereby
(including,   without  limitation,  all  payments  of  principal,  interest  and
commitment fees with respect  thereto) to Assignee.  Assignor and Assignee shall
make all appropriate  adjustments in payments under the Credit Agreement and the
Notes for periods prior to the Effective Date directly between themselves.

      7. This  Assignment and Acceptance  shall be governed by, and construed in
accordance with, the laws of the State of Texas.

      8.  This  Assignment  and  Acceptance  may be  executed  in any  number of
counterparts and by different parties hereto in separate  counterparts,  each of
which when so executed  shall be deemed to be an original and all of which taken
together shall  constitute one and the same  agreement.  Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telecopier  shall
be effective as delivery of a manually  executed  counterpart of this Assignment
and Acceptance.

      IN WITNESS  WHEREOF,  Assignor and Assignee have caused Schedule 1 to this
Assignment  and  Acceptance  to be executed  by their  officers  thereunto  duly
authorized as of the date specified thereon.

<PAGE>

                                   SCHEDULE 1

                                       to

                            ASSIGNMENT AND ACCEPTANCE

Percentage interest assigned:                           ________%

Assignee's Commitment:                                  $_______

Assignee's Commitment Percentage:                       _______%

Aggregate outstanding principal amount
 of Revolving Loan assigned:                            $_______

Principal amount of Note payable to Assignee:           $_______

Principal amount of Note payable to Assignor:           $_______

        Effective Date (if other than date
               of acceptance by Administrative Agent):  *_______, ________

                                  [NAME OF ASSIGNOR], as Assignor

                                  By:__________________________
                                     Title:____________________

                                  Dated: ______________, ______

                                  [NAME OF ASSIGNEE], as Assignee

                                  By:__________________________
                                     Title:____________________

                                  Domestic Lending Office:

                                  Eurodollar Lending Office:

<PAGE>

* This date  should be no earlier  than five  Domestic  Business  Days after the
delivery of this  Assignment  and Acceptance to  Administrative  Agent unless an
earlier  date is  agreed  to by  Assignor,  Assignee,  Administrative  Agent and
Borrower.

Accepted and Approved
this ___ day of ___________, _____

BANK ONE, NA, as Administrative Agent

By:___________________________
Name:_________________________
Title:________________________

Approved this ____ day
of ____________, ______

QUEST CHEROKEE, LLC,
a Delaware limited liability company

By:_________________________
Name:_______________________
Title:______________________

<PAGE>

                                   EXHIBIT L

                          CERTIFICATE OF EFFECTIVENESS

      This Certificate of  Effectiveness  (this  "Certificate")  is executed the
22nd day of  December,  2003,  by and between  Quest  Cherokee,  LLC, a Delaware
limited liability company  ("Borrower"),  and Bank One, NA, with its main office
in Chicago,  Illinois, as Administrative Agent ("Administrative  Agent") for the
Banks under and as defined in that certain Credit  Agreement  (the  "Agreement")
dated as of December 22, 2003 by and among  Borrower,  Administrative  Agent and
the Banks named therein. This Certificate is executed pursuant to Section 6.1 of
the Agreement and is the  "Certificate  of  Effectiveness"  therein  referenced.
Unless otherwise defined herein, all terms used herein with their initial letter
capitalized  shall have the meaning given such terms in the Agreement.  Borrower
and  Administrative  Agent on behalf of itself and the Banks hereby  acknowledge
and agree as follows:

      1. Borrower has satisfied each condition precedent to the effectiveness of
the Agreement contained in Section 6.1 of the Agreement.

      2. The Agreement is effective as of the date hereof.

                               BANK  ONE,  NA,  as   Administrative
                               Agent for the Banks

                               By:/s/ J. Scott Fowler
                                  ----------------------------------
                                  J. Scott Fowler,
                                  Director, Capital Markets

                               QUEST  CHEROKEE,   LLC,  a  Delaware
                               limited liability company

                               By:    /s/ Jerry Cash
                                      ------------------------------
                               Name:  Jerry D. Cash
                                      ------------------------------
                               Title: Manager
                                      ------------------------------

<PAGE>

                                   EXHIBIT M

                                SUBORDINATE NOTE

                              [Form to be provided]

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