Document:

MORTGAGE, DEED OF TRUST,
                   SECURITY AGREEMENT, FINANCING STATEMENT AND
                            ASSIGNMENT OF PRODUCTION
                                      FROM
                       QUEST CHEROKEE, LLC, AS MORTGAGOR,
            TO GUGGENHEIM CORPORATE FUNDING, LLC, AS COLLATERAL AGENT
                       FOR SECURED PARTIES, AS MORTGAGEE,
                             DATED NOVEMBER 14, 2005

THIS MORTGAGE IS, AMONG OTHER THINGS,  A FINANCING  STATEMENT  UNDER THE UNIFORM
COMMERCIAL  CODE  COVERING  MINERALS,   AS-EXTRACTED  COLLATERAL  AND  THE  LIKE
(INCLUDING  OIL  AND  GAS),  ACCOUNTS  RESULTING  FROM  THE  SALE  OF  MINERALS,
AS-EXTRACTED  COLLATERAL  AND THE LIKE  (INCLUDING OIL AND GAS), AND GOODS WHICH
ARE, OR ARE TO BECOME, FIXTURES ON THE REAL/IMMOVABLE PROPERTY HEREIN DESCRIBED.
THE OIL AND GAS INTERESTS OR ACCOUNTS INCLUDED IN THE MORTGAGED PROPERTY WILL BE
FINANCED AT THE WELLHEADS LOCATED ON THE  REAL/IMMOVABLE  PROPERTY  DESCRIBED IN
EXHIBIT A ATTACHED HERETO. THIS MORTGAGE IS TO BE RECORDED IN THE REAL ESTATE OR
COMPARABLE  RECORDS OF THE COUNTY OR PARISH RECORDER OF EACH COUNTY OR PARISH IN
EACH  STATE IN WHICH IS  SITUATED  ANY OF THE  COLLATERAL  COVERED  HEREBY.  THE
REAL/IMMOVABLE  PROPERTY  SUBJECT  HERETO IS  DESCRIBED  IN  EXHIBIT A  ATTACHED
HERETO.

THIS MORTGAGE CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.

MORTGAGOR OWNS A RECORD INTEREST IN THE MORTGAGED PROPERTY.
----------------------------------------------------------

A POWER  OF SALE HAS  BEEN  GRANTED  IN THIS  MORTGAGE.  A POWER OF SALE,  WHERE
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PERMITTED BY LAW, MAY ALLOW MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT
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WITHOUT GOING TO COURT IN A FORECLOSURE  ACTION UPON DEFAULT BY MORTGAGOR  UNDER
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THIS MORTGAGE.
-------------

EMPLOYER IDENTIFICATION NUMBER OF MORTGAGOR:               200470965

ORGANIZATIONAL IDENTIFICATION NUMBER OF MORTGAGOR:         3739332

THE  MAXIMUM  AMOUNT  SECURED  BY  THIS  MORTGAGE  AT  ANY  ONE  TIME  SHALL  BE
$200,000,000.

<PAGE>

                            MORTGAGE, DEED OF TRUST,
                     SECURITY AGREEMENT, FINANCING STATEMENT
                          AND ASSIGNMENT OF PRODUCTION

     THIS MORTGAGE,  DEED OF TRUST, SECURITY AGREEMENT,  FINANCING STATEMENT AND
ASSIGNMENT  OF  PRODUCTION  (this  "Mortgage")  is from QUEST  CHEROKEE,  LLC, a
Delaware limited liability company,  as Mortgagor  ("Mortgagor"),  to GUGGENHEIM
CORPORATE  FUNDING,  LLC, as collateral agent  ("Collateral  Agent") for Secured
Parties  (as  hereinafter  defined).  In its  capacity as  Collateral  Agent for
Secured Parties, GUGGENHEIM CORPORATE FUNDING, LLC is hereinafter referred to as
"Mortgagee."  The  addresses of Mortgagor and Mortgagee are set forth in Section
7.14 hereof.

                                R E C I T A L S:

     WHEREAS,  pursuant to the terms of the Credit  Agreement  (defined  below),
Mortgagor  is required to execute and deliver this  Mortgage  pursuant to which,
among  other  things,  the  Mortgaged  Property  (defined  below) is granted and
assigned by Mortgagor to  Mortgagee to further  secure the Secured  Indebtedness
(defined below);

     NOW,  THEREFORE,  in  consideration of the sum of $10.00 and other good and
valuable consideration,  in hand paid by Mortgagee,  the receipt and adequacy of
which are hereby  acknowledged  and  confessed by  Mortgagor,  Mortgagor  hereby
agrees as follows:

                                    ARTICLE 1
                                   DEFINITIONS
                                   -----------

     Section 1.1  Certain  Defined  Terms.  For all  purposes of this  Mortgage,
unless the context otherwise requires:

     "Accounts and Contract  Rights" means all accounts  (including  accounts in
the form of joint interest  billings  under  applicable  operating  agreements),
contract rights and general  intangibles of Mortgagor now or hereafter existing,
or hereafter acquired by, or on behalf of, Mortgagor,  or Mortgagor's successors
in  interest,  relating  to  or  arising  from  the  ownership,   operation  and
development  of  the  Mortgaged  Property  and to  the  production,  processing,
treating,  sale, purchase,  exchange or transportation of Hydrocarbons  (defined
below) produced or to be produced from or attributable to the Mortgaged Property
or any units or pooled interest units in which all or a portion of the Mortgaged
Property  forms a part,  together  with all accounts  and  proceeds  accruing to
Mortgagor  attributable to the sale of Hydrocarbons  produced from the Mortgaged
Property or any units or pooled  interest units in which all or a portion of the
Mortgaged Property forms a part.

     "Article"  means  and  refer  to  an  Article  of  this  Mortgage,   unless
specifically indicated otherwise.

     "Borrower" means, collectively, Mortgagor and Quest Resource Corporation, a
Nevada corporation.

<PAGE>

     "Code"  means  the  Uniform  Commercial  Code  in  effect  in  each  of the
jurisdictions where the Mortgaged Property or a portion thereof is situated.

     "Collateral  Agent" means  Mortgagee in its  capacity as  Collateral  Agent
under the Intercreditor Agreement.

     "Commitments"  has  the  meaning  ascribed  to  such  term  in  the  Credit
Agreement.

     "Contested Collateral Lien Conditions" means, with respect to any Permitted
Encumbrance  of the type  described  in  clauses  (a),  (b),  (d) and (h) of the
definition of Permitted Encumbrances, the following conditions:

             (a) Mortgagor shall cause any proceeding instituted contesting such
Lien to stay the sale or forfeiture of any portion of the  Collateral on account
of such Lien;

             (b) at the option and at the request of the Collateral  Agent,   to
the extent such Lien is in an amount in excess of $100,000, the appropriate Loan
Party shall maintain cash reserves in an amount  sufficient to pay and discharge
such Lien and the  Collateral  Agent's  reasonable  estimate of all interest and
penalties related thereto; and

             (c) such Lien shall in all respects be subject and  subordinate  in
priority to the Lien and security interest created and evidenced by the Security
Documents,  except if and to the  extent  that the law or  regulation  creating,
permitting  or  authorizing  such  Lien  provides  that  such Lien is or must be
superior to the Lien and security interest created and evidenced by the Security
Documents.

     "Credit  Agreement"  means  collectively  (i) that certain Senior Revolving
Credit  Agreement,  dated as of November 14, 2005,  by and among  Mortgagor  and
Quest Resource  Corporation,  collectively as borrower,  the Senior Lenders, and
Guggenheim  Corporate  Funding,  LLC,  as  Administrative  Agent for the  Senior
Lenders,  and (ii) that  certain  Second Lien Term Loan  Agreement,  dated as of
November  14,  2005,  by and among  Mortgagor  and Quest  Resource  Corporation,
collectively as borrower,  the  Subordinate  Lenders,  and Guggenheim  Corporate
Funding, LLC, as Administrative Agent for the Subordinate Lenders.

     "Effective Date" means November 14, 2005.

     "Event of  Default"  means any Event of  Default  under and as  defined  in
either Credit Agreement.

     "Exhibit  A" means,  unless  specifically  indicated  otherwise,  Exhibit A
attached hereto and incorporated herein by reference for all purposes.

     "GAAP" means generally accepted accounting  principles in the United States
applied on a consistent basis.

     "Gas  Balancing  Agreement"  means any  agreement  or  arrangement  whereby
Mortgagor,  or any other  party  having an interest  in any  Hydrocarbons  to be
produced  from Oil and Gas

                                       2
<PAGE>

Leases in which  Mortgagor  owns an interest,  has a right to take more than its
proportionate share of production therefrom.

     "Hydrocarbons"  means oil, gas,  coalbed methane gas,  casinghead gas, drip
gasoline, natural gasoline, condensate, distillate,  as-extracted collateral and
all  other  liquid  or  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.

     "Intercreditor  Agreement" means that certain Intercreditor Agreement dated
as of November 14, 2005, between the Lenders,  the  Administrative  Agents under
the Credit Agreement and such other parties from time to time a party thereto.

     "Lands" means the lands described in Exhibit A and shall include any lands,
the  description of which is contained in Exhibit A or incorporated in Exhibit A
by reference to another instrument or document,  including,  without limitation,
all lands  described in the Oil and Gas Leases  listed on Exhibit A hereto,  and
shall  also  include  any lands now or  hereafter  unitized,  pooled,  spaced or
otherwise  combined,  whether  by  statute,  order,  agreement,  declaration  or
otherwise,  with lands the  description of which is contained in Exhibit A or is
incorporated in Exhibit A by reference.

     "Lenders" means (a) the financial  institutions that have become a party to
the  Credit  Agreement  pursuant  to a  Lender  Addendum  and (b) any  financial
institution  that has  become a party to the  Credit  Agreement  pursuant  to an
Assignment  and  Assumption,  other  than,  in each  case,  any  such  financial
institution that has ceased to be a party to the Credit Agreement pursuant to an
Assignment and Assumption.

     "Lien" means any  mortgage,  deed of trust,  collateral  assignment,  lien,
pledge, charge, security interest or other encumbrance.

     "Loans" means the loans made under the Credit Agreement.

     "Loan  Documents"   means,  this  Mortgage,   the  Credit  Agreement,   the
Intercreditor Agreement, the Letters of Credit, the Notes (if any), the Security
Documents,  the Swap Agreements,  and the other documents executed in connection
therewith.

     "Loan Parties" means Mortgagor and Quest Resource Corporation. ------------

     "Material  Adverse  Effect"  means an event  that has or  causes,  or could
reasonably be expected to have or cause,  (a) a material  adverse  effect on the
business, property, results of operations,  prospects or condition, financial or
otherwise, or material agreements of Borrower and their Subsidiaries, taken as a
whole; (b) a material impairment of the ability of the Loan Parties to fully and
timely perform any of their obligations under any Loan Document;  (c) a material
impairment of the rights of or benefits or remedies  available to the Lenders or
the Collateral  Agent under any Loan Document;  or (d) a material adverse effect
on the Collateral or

                                       3
<PAGE>

the Liens in favor of the Collateral  Agent (for its benefit and for the benefit
of the other Secured Parties) on the Collateral or the priority of such Liens.

     "Mortgaged  Property"  shall have the  meaning  stated in Article 2 of this
Mortgage.

     "Net Revenue Interest" means Mortgagor's share of all Hydrocarbons produced
from the  Lands,  after  deducting  the  appropriate  proportionate  part of all
lessors' royalties, overriding royalties, production payments and other payments
out of or measured by  production  which  burden  Mortgagor's  share of all such
production,  subject to  non-consent  provisions  contained  in joint  operating
agreements.

     "Notes" means any notes evidencing the Secured Indebtedness issued pursuant
to the Credit Agreement.

     "Obligations" means (a) obligations of Mortgagor and the other Loan Parties
from time to time arising under or in respect of the due and punctual payment of
(i) the  principal of and premium,  if any,  and  interest  (including  interest
accruing  during the pendency of any  bankruptcy,  insolvency,  receivership  or
other similar  proceeding,  regardless  of whether  allowed or allowable in such
proceeding) under the loans under Credit Agreement,  when and as due, whether at
maturity,  by  acceleration,  upon  one or  more  dates  set for  prepayment  or
otherwise,  (ii) each payment  required to be made under the Credit Agreement in
respect of any Letter of Credit, when and as due, including interest thereon and
obligations to provide cash collateral and (iii) all other monetary obligations,
including fees,  costs,  expenses and indemnities,  whether primary,  secondary,
direct, contingent,  fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding,  regardless of whether allowed or allowable in such proceeding),  of
Mortgagor  and the other Loan Parties  under the Credit  Agreement and the other
Loan  Documents,  (b)  the  due  and  punctual  performance  of  all  covenants,
agreements,  obligations and liabilities of Mortgagor and the other Loan Parties
under or pursuant to the Credit Agreement and the other Loan Documents,  (c) the
due and punctual payment and performance of all obligations of Mortgagor and the
other  Loan  Parties  under  each Swap  Agreement  and (d) the due and  punctual
payment and  performance of all obligations in respect of overdrafts and related
liabilities owed to any Lender,  any Affiliate of a Lender,  the  Administrative
Agent  or the  Collateral  Agent  arising  from  treasury,  depositary  and cash
management services or in connection with any automated  clearinghouse  transfer
of funds.

     "Oil and Gas Leases" means oil, gas and mineral leases, oil and gas leases,
oil leases, gas leases, other mineral leases,  subleases, top leases, any rights
resulting in an ownership  interest in  Hydrocarbons  and all  operating  rights
relating to any of the foregoing  (whether operated by virtue of such leases, or
assignments  or  applicable  operating  agreements),  and  all  other  interests
pertaining to any of the foregoing,  including,  without limitation, all royalty
and overriding royalty interests,  production payments and net profit interests,
mineral fee interests, and all reversionary,  remainder,  carried and contingent
interests  relating to any of the foregoing  and all other rights  therein which
are described and/or to which reference may be made on Exhibit A.

     "Operating  Equipment" means all Personal  Property and fixtures affixed or
situated  upon all or any part of the  Mortgaged  Property,  including,  without
limitation, all surface or

                                       4
<PAGE>

subsurface machinery, equipment, facilities or other property of whatsoever kind
or nature now or hereafter  located on any of the Lands which are useful for the
production,  treatment,  storage or transportation of oil or gas, including, but
not by way of  limitation,  all oil wells,  gas wells,  water  wells,  injection
wells,  casing,  tubing,  rods,  pumping  units and  engines,  Christmas  trees,
derricks,   separators,  gun  barrels,  flow  lines,  tanks,  gas  systems  (for
gathering, treating and compression),  water systems (for treating, disposal and
injection), power plants, poles, lines, transformers,  starters and controllers,
machine shops, tools, storage yards and equipment stored therein,  buildings and
camps,  telegraph,  telephone and other communication  systems,  roads,  loading
racks and shipping facilities.

     "Permitted Encumbrances" means, with respect to the Mortgaged Property:
      ----------------------

          (a) inchoate Liens for taxes,  assessments or governmental  charges or
levies not yet due and payable or delinquent and Liens for taxes, assessments or
governmental  charges or levies,  which (i) are being contested in good faith by
appropriate  proceedings  for which adequate  reserves have been  established in
accordance  with GAAP,  which  proceedings (or orders entered in connection with
such  proceedings)  have the effect of preventing  the forfeiture or sale of the
property  subject  to any such Lien,  or (ii) in the case of any such  charge or
claim which has or may become a Lien  against any of the  Collateral,  such Lien
and the contest thereof shall satisfy the Contested Collateral Lien Conditions;

          (b) Liens in respect of property of any Company  imposed by law, which
were incurred in the ordinary course of business and do not secure  Indebtedness
for  borrowed   money,   such  as  carriers',   warehousemen's,   materialmen's,
landlords',  workmen's,  suppliers',  repairmen's and mechanics' Liens and other
similar Liens arising in the ordinary  course of business,  and (i) which do not
in the  aggregate  materially  detract  from the  value of the  property  of the
Companies, taken as a whole, and do not materially impair the use thereof in the
operation of the business of the  Companies,  taken as a whole,  (ii) which,  if
they secure  obligations  that are then due and unpaid,  are being  contested in
good faith by  appropriate  proceedings  for which  adequate  reserves have been
established in accordance  with GAAP,  which  proceedings  (or orders entered in
connection with such  proceedings)  have the effect of preventing the forfeiture
or sale of the property  subject to any such Lien,  and (iii) in the case of any
such Lien which has or may become a Lien  against  any of the  Collateral,  such
Lien and the  contest  thereof  shall  satisfy  the  Contested  Collateral  Lien
Conditions;

          (c)   easements,   rights-of-way,   restrictions   (including   zoning
restrictions), covenants, licenses, encroachments, protrusions and other similar
charges or encumbrances,  and minor title deficiencies on or with respect to any
Real  Property,  Mineral  Interest,  or  Pipeline  in each case  whether  now or
hereafter in existence,  not (i) securing Indebtedness,  (ii) individually or in
the  aggregate  materially  impairing  the value or  marketability  of such Real
Property, Mineral Interest or Pipeline or (iii) individually or in the aggregate
materially  interfering  with  the  ordinary  conduct  of  the  business  of the
Companies at such Real 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 Loan

                                       5
<PAGE>

Party  that  are  customarily  granted  in the oil and gas  industry;  provided,
however, that such defects shall not have,  individually or in the aggregate,  a
Material Adverse Effect;

          (d) Liens  arising out of lis pendens  liens from pending  litigation,
judgments,  attachments  or awards not  resulting  in an Event of Default and in
respect of which such Company  shall in good faith be  prosecuting  an appeal or
proceedings  for review in respect of which there shall be secured a  subsisting
stay of  execution  pending such appeal or  proceedings  and, in the case of any
such Lien which has or may become a Lien  against  any of the  Collateral,  such
Lien and the  contest  thereof  shall  satisfy  the  Contested  Collateral  Lien
Conditions;

          (e) Leases of the properties of any Company, in each case entered into
in the  ordinary  course of such  Company's  business so long as such Leases are
subordinate  in all respects to the Liens  granted and evidenced by the Security
Documents and do not,  individually  or in the  aggregate,  (i) interfere in any
material  respect  with the  ordinary  conduct of the business of any Company or
(ii) materially  impair the use (for its intended  purposes) or the value of the
property subject thereto;

          (f) Liens on property of a person  existing at the time such person is
acquired or merged with or into or  consolidated  with any Company to the extent
permitted hereunder (and not created in anticipation or contemplation  thereof);
provided  that such Liens do not extend to property not subject to such Liens at
the  time of  acquisition  (other  than  improvements  thereon)  and are no more
favorable to the lienholders than such existing Lien;

          (g) Liens  granted  pursuant to the  Security  Documents to secure the
Obligations; and

          (h) inchoate  statutory or operators'  Liens securing  obligations for
labor, services,  materials and supplies furnished to Mineral Interests,  which,
if they secure  obligations that are then due and unpaid, are being contested in
good faith by  appropriate  proceedings  for which  adequate  reserves have been
established in accordance  with GAAP,  which  proceedings  (or orders entered in
connection with such  proceedings)  have the effect of preventing the forfeiture
or sale of the property subject to any such Lien; and

          (i) 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.

     "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.

     "Personal  Property"  means that portion of the Mortgaged  Property that is
personal property.

                                       6
<PAGE>

     "Section"   means  and  refer  to  a  section  of  this  Mortgage,   unless
specifically indicated otherwise.

     "Secured  Indebtedness"  shall have the meaning stated in Article 3 of this
Mortgage.

     "Secured Parties" means, collectively, the Administrative Agent, each other
agent,  the Lenders and each party to a Swap Agreement  that is included  within
the definition of Secured Indebtedness.

     "Senior Lender" means a Lender under the Senior Revolving Credit Agreement.

     "Subject  Interests"  shall  have the  meaning  stated in Article 2 of this
Mortgage.

     "Subordinate  Lender"  means a Lender  under  the  Second  Lien  Term  Loan
Agreement.

     "Swap  Agreements"  means  (i) any  swap,  forward,  future  or  derivative
transaction,  collar, option, hedging contracts covering oil and gas commodities
or prices or  financial,  monetary or interest  rate  instruments  entered  into
between  Mortgagor  or any other Loan Party with a Lender or an  Affiliate  of a
Lender and (ii) such agreements to the extent entered into between  Mortgagor or
any other  Loan Party and a  counterparty  approved  under the Credit  Agreement
("Approved  Counterparty")  that executes and delivers to the Collateral Agent a
letter  agreement  in form and  substance  acceptable  to the  Collateral  Agent
pursuant to which such person (i)  appoints  the  Collateral  Agent as its agent
under the applicable Loan  Documents,  (ii) agrees to be bound by the provisions
of the  Intercreditor  Agreement  and (iii)  schedules  the  agreements  covered
thereby.

     "Well Data" means all logs,  drilling  reports,  division orders,  transfer
orders, operating agreements,  contracts and other agreements,  abstracts, title
opinions,  files, records,  seismic data, memoranda and other information in the
possession or control of Mortgagor or to which  Mortgagor has access relating to
the Lands and/or any wells located thereon.

     Section 1.2 Other Terms.  Unless otherwise defined or indicated herein, all
terms with their initial  letter  capitalized  shall have the meaning given such
terms in the Senior Credit Agreement.

                                   ARTICLE 2
                       GRANTING CLAUSE; MORTGAGED PROPERTY
                       -----------------------------------

     Mortgagor, for and in consideration of the sum of $10.00 and other good and
valuable consideration,  in hand paid by Mortgagee,  the receipt and adequacy of
which  are  hereby  acknowledged  and  confessed  by  Mortgagor,  and for and in
consideration of the debt and purposes hereinafter set forth, to secure the full
and complete  payment and performance of the Secured  Indebtedness and to secure
the performance of the covenants,  obligations,  agreements and  undertakings of
Mortgagor hereinafter described, has GRANTED, BARGAINED,  WARRANTED,  MORTGAGED,
ASSIGNED,  TRANSFERRED and CONVEYED,  and by these presents does GRANT, BARGAIN,
WARRANT,  MORTGAGE,  ASSIGN, TRANSFER and CONVEY, unto Mortgagee and Mortgagee's
successors in title and assigns,  with power of sale (to the extent permitted by
applicable law), as herein provided, for the uses and purposes

                                       7
<PAGE>

herein set forth,  with  warranties  and  covenants  of title only to the extent
provided herein and in the Credit Agreement, all of Mortgagor's right, title and
interest,  whether now owned or hereafter  acquired,  in all of the  hereinafter
described  properties,  rights and interests;  and,  insofar as such properties,
rights  and  interests  consist of  equipment,  general  intangibles,  accounts,
contact rights, inventory, goods, chattel paper, instruments,  documents, money,
fixtures,  as-extracted  collateral,  proceeds and products of collateral or any
other  Personal  Property  of a kind or  character  defined in or subject to the
applicable  provisions  of the Code,  Mortgagor  hereby  grants to  Mortgagee  a
security interest therein, whether now owned or hereafter acquired, namely:

          (1) all of those  certain  Oil and Gas  Leases and Lands (all such Oil
     and Gas Leases and Lands being herein  called the "Subject  Interests,"  as
     hereinafter  further  defined)  which are  described in Exhibit A and/or to
     which reference may be made in Exhibit A and/or which are covered by any of
     the leases  described on Exhibit A, which  Exhibit A is made a part of this
     Mortgage for all purposes, and is incorporated herein by reference as fully
     as if copied at length in the body of this Mortgage at this point;

          (2) all rights,  titles,  interests and estates now owned or hereafter
     acquired by Mortgagor in and to (A) any and all properties now or hereafter
     pooled or unitized with any of the Subject Interests, and (B) all presently
     existing or future operating  agreements and  unitization,  communitization
     and pooling  agreements  and the units  operated  thereby to the extent the
     same relate to all or any part of the Subject Interests, including, without
     limitation,  all units formed under or pursuant to any applicable laws (the
     rights,  titles,  interests  and estates  described in this clause (B) also
     being included within the term "Subject Interests" as used herein);

          (3) all presently  existing and future agreements entered into between
     Mortgagor and any third party that provide for the acquisition by Mortgagor
     of  any  interest  in  any  of the  properties  or  interests  specifically
     described  in  Exhibit  A or  which  relate  to any of the  properties  and
     interests specifically described in Exhibit A;

          (4) the Hydrocarbons  (including inventory) which are in, under, upon,
     produced or to be produced from or attributable to the Lands from and after
     the Effective Date;

          (5) the Accounts and Contract Rights;

          (6) the Operating Equipment;

          (7) the Well Data;

          (8) the rights and security  interests of Mortgagor  held by Mortgagor
     to secure the  obligation of the first  purchaser to pay the purchase price
     of the Hydrocarbons;

          (9)  all  surface  leases,   rights-of-way,   franchises,   easements,
     servitudes,    licenses,   privileges,    tenements,    hereditaments   and
     appurtenances now existing or in the future obtained in connection with any
     of the aforesaid,  and all other items of value and incident  thereto which
     Mortgagor may, at any time, have or be entitled; and

                                       8
<PAGE>

          (10) all and any different  and  additional  rights of any nature,  of
     value  or  convenience  in  the   enjoyment,   development,   operation  or
     production, in any wise, of any property or interest included in any of the
     foregoing clauses, and in all revenues,  income, rents, issues, profits and
     other benefits  arising  therefrom or from any contract now in existence or
     hereafter  entered into  pertaining  thereto,  and in all rights and claims
     accrued or to accrue for the  removal by anyone of  Hydrocarbons  from,  or
     other act causing damage to, any of such properties or interests.

     All the aforesaid properties,  rights and interests,  together with any and
all substitutions, replacements, corrections or amendments thereto, or renewals,
extensions or ratifications  thereof, or of any instrument relating thereto, and
together with any  additions  thereto which may be subjected to the Lien of this
Mortgage by means of supplements hereto, being hereinafter called the "Mortgaged
Property".

     Subject,  however,  to (i) Permitted  Encumbrances,  and (ii) the condition
that  Mortgagee  shall not be liable in any respect for the  performance  of any
covenant or obligation of Mortgagor with respect to the Mortgaged Property.

     TO  HAVE  AND TO  HOLD  the  Mortgaged  Property  unto  Mortgagee  and  its
successors,  legal representatives and assigns,  forever, subject to Section 7.3
hereof,  to secure,  in each such instance,  the payment and  performance of the
Secured Indebtedness and the Obligations.

                                   ARTICLE 3
                              SECURED INDEBTEDNESS
                              --------------------

     This Mortgage is given to secure the Loans and all of the Obligations under
and as described in the Credit Agreement, including, without limitation:

          (a) interest on all credit  outstanding  under the Credit Agreement at
the rates provided therein;

          (b) the Obligations,  including,  without limitation, the indebtedness
evidenced by the Notes, Letters of Credit, and Swap Agreements;

          (c) any sums  advanced as expenses or costs  incurred by, or on behalf
of, Mortgagee or any Secured Party (or any receiver  appointed  hereunder) which
are made or incurred  pursuant  to the terms of this  Mortgage or any other Loan
Document,  plus  interest  thereon at the  default  rate set forth in the Credit
Agreement from the date of advance or expenditure until reimbursed; and

          (d) all other and additional  debts,  obligations  and  liabilities of
every kind and  character  of Mortgagor  now  existing or  hereafter  arising in
connection  with  any  of  the  Loan  Documents  (all  of  the  obligations  and
indebtedness  referred  to in this  Article 3, and all  renewals,  refinancings,
extensions and modifications  thereof, and all substitutions  therefor, in whole
or in part, are herein sometimes referred to as the "Secured Indebtedness").

                                       9
<PAGE>

                                   ARTICLE 4
                           COVENANTS, REPRESENTATIONS,
                           ---------------------------
                     WARRANTIES AND AGREEMENTS OF MORTGAGOR
                     --------------------------------------

     Mortgagor hereby covenants, represents, warrants and agrees that:

     Section 4.1 Payment of Indebtedness. Mortgagor will duly and punctually pay
or cause to be paid when due all of the Secured Indebtedness.

     Section 4.2  Warranties.
                  ----------

          (a) Mortgagor,  to the extent of the interests specified in Exhibit A,
has good and  defensible  title,  subject  to  Permitted  Encumbrances,  to each
property right or interest  constituting the Mortgaged Property,  and has a good
and legal right to make the grant and conveyance made in this Mortgage;

          (b) Mortgagor's present Net Revenue Interest in the Mortgaged Property
is not less than that specified in Exhibit A and whether or not such interest is
specified, includes all its interests in and to the Oil and Gas Leases and Lands
described on Exhibit A; and

          (c) the Mortgaged Property is free from all Liens other than Permitted
Encumbrances.  Mortgagor  will  warrant and forever  defend  (subject to, to the
extent  the  same  are of  record  as of the  Effective  Date,  those  Permitted
Encumbrances  described in clauses (c) and (i) of the  definition  of "Permitted
Encumbrances"  set forth  above)  the  Mortgaged  Property  unto  Mortgagee  and
Mortgagee's  successors,  legal representatives and assigns against every person
whomsoever  lawfully  claiming the same or any part thereof,  and Mortgagor will
maintain  and  preserve  the Lien  hereby  created so long as any of the Secured
Indebtedness remains unpaid,  except where such failure to comply would not have
a Material Adverse Effect.

     Section 4.3 Further  Assurances.  Mortgagor  will  execute and deliver such
other and further  instruments and will do such other and further acts as in the
reasonable  discretion  of Mortgagee  may be necessary or desirable to carry out
more effectively the purposes of this Mortgage,  including, without limiting the
generality of the foregoing,  (a) prompt correction of any material defect which
may hereafter be  discovered  in the title to the  Mortgaged  Property or in the
execution and acknowledgment of this Mortgage,  any Notes, or any other document
used in connection  herewith or at any time delivered to Mortgagee in connection
with  any  Obligations,  and (b) if  required  by  Section  8.1  hereof,  prompt
execution and delivery of all division or transfer orders that in the reasonable
discretion of Mortgagee are needed to transfer effectively the assigned proceeds
of production from the Mortgaged Property to Mortgagee.

     Section 4.4 Taxes.  To the extent and in the manner  required by the Credit
Agreement,  and to the extent not prohibited by applicable  law,  Mortgagor will
promptly pay, or cause to be paid, all taxes legally  imposed upon this Mortgage
or upon the  Mortgaged  Property or upon the interest of Mortgagee  therein,  or
upon the income, profits, proceeds and other revenues thereof.

     Section 4.5  Operation of the  Mortgaged  Property.  So long as the Secured
Indebtedness or any part thereof remains unpaid:

                                       10
<PAGE>

          (a) Mortgagor  shall  maintain and operate the Subject  Interests in a
good and  workmanlike  manner and will  observe and comply with all of the terms
and  provisions,  express or implied,  of all Oil and Gas Leases relating to the
Subject  Interests  so long as such Oil and Gas Leases are capable of  producing
Hydrocarbons in paying quantities, except where such failure to comply would not
have a Material Adverse Effect;

          (b)  Mortgagor   shall  comply  with  all  contracts  and   agreements
applicable to or relating to the Mortgaged  Property or the  production and sale
of Hydrocarbons therefrom, except to the extent a failure to so comply would not
have a Material Adverse Effect;

          (c) Mortgagor  shall,  at all times,  maintain,  preserve and keep all
Operating  Equipment  used with  respect  to the  Mortgaged  Property  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 would not have a Material
Adverse  Effect;  provided  that  no  item  of  Operating  Equipment  need be so
repaired,  renewed,  replaced,  added to or improved, if Mortgagor shall in good
faith determine that such action is not necessary or desirable for the continued
efficient and profitable operation of the Subject Interests;

          (d) Mortgagor  shall cause the Mortgaged  Property to be kept free and
clear of all Liens other than Permitted Encumbrances;

          (e) Mortgagor  shall comply with the Credit  Agreement with respect to
maintenance of insurance.  All loss payable clauses or provisions in said policy
or  policies  shall be endorsed in favor of and made  payable to  Mortgagee,  as
Collateral  Agent for the benefit of the  Secured  Parties.  Mortgagee,  for the
benefit of the Secured Parties,  shall have the right to collect,  and Mortgagor
hereby assigns to Mortgagee for the benefit of the Secured Parties,  any and all
monies that may become payable under any such policies of insurance by reason of
damage, loss or destruction of any of the Mortgaged Property, and Mortgagee may,
at its election,  either apply for the benefit of the Secured Parties all or any
part of the  sums so  collected  toward  payment  of the  Secured  Indebtedness,
whether or not such Secured  Indebtedness,  or any portion thereof,  is then due
and  payable,  in such  manner  as  Mortgagee  may  elect,  or  release  same to
Mortgagor; and

          (f) Mortgagor shall not sell,  lease,  transfer,  abandon or otherwise
dispose of any portion of the Mortgaged  Property or any of Mortgagor's  rights,
titles or interests therein or thereto,  except as specifically permitted in the
Credit Agreement.

     Section 4.6 Recording. Mortgagor will promptly and at Mortgagor's sole cost
and expense,  record,  register,  deposit and file this Mortgage and every other
instrument in addition or supplemental  hereto in such offices and places and at
such times and as often as may be necessary  to preserve,  protect and renew the
Lien hereof as a perfected  Lien on real or personal  property,  as the case may
be,  subject  only to  Permitted  Encumbrances,  and the rights and  remedies of
Mortgagee,  and otherwise will do and perform all matters or things necessary or
expedient to be done or observed by reason of any law or regulation of any state
or of the United

                                       11
<PAGE>

States or of any other  competent  authority,  for the  purpose  of  effectively
operating, maintaining and preserving the Lien hereof on the Mortgaged Property.

     Section 4.7 Records,  Statements  and Reports.  Mortgagor  will keep proper
books of record and account in which  complete and correct  entries will be made
of  Mortgagor's  transactions  in accordance  with sound  accounting  principles
consistently  applied and will, to the extent required by the Credit  Agreement,
furnish or cause to be furnished to Mortgagee (a) all reports required under the
Loan  Documents,  and (b) such other  information  concerning  the  business and
affairs and financial  condition of Mortgagor as Mortgagee may from time to time
reasonably request.

     Section 4.8 No Government Approvals. Mortgagor warrants that no approval or
consent of any person is necessary to authorize  the  execution  and delivery of
this Mortgage,  or any of the other Loan Documents or the Notes, or to authorize
the observance or  performance  by Mortgagor of the covenants  herein or therein
contained.

     Section 4.9 Right of Entry. To the extent required by the Credit Agreement,
Mortgagor will permit Mortgagee, or the agents or designated  representatives of
Mortgagee,  upon reasonable notice to enter upon the Mortgaged Property, and all
parts thereof,  for the purposes of  investigating  and inspecting the condition
and operation thereof.

     The  representations  and warranties set forth in Article III of the Credit
Agreement are incorporated  herein by reference as if set forth herein, and each
such representation and warranty is true and correct.

                                   ARTICLE 5
                         ADDITIONS TO MORTGAGED PROPERTY
                         -------------------------------

     It is  understood  and  agreed  that  Mortgagor  may  periodically  subject
additional properties to the Lien of this Mortgage. In the event that additional
properties  are to be subjected to the Lien hereof,  the parties hereto agree to
execute  a  supplemental  mortgage,   satisfactory  in  form  and  substance  to
Mortgagee,  together with any security  agreement,  financing statement or other
security   instrument   required  by  Mortgagee,   all  in  form  and  substance
satisfactory  to Mortgagee and in a sufficient  number of executed  (and,  where
necessary or appropriate,  acknowledged)  counterparts  for recording  purposes.
Upon execution of such supplemental  mortgage, all additional properties thereby
subjected  to the  Lien of this  Mortgage  shall  become  part of the  Mortgaged
Property for all purposes.

                                   ARTICLE 6
                           ENFORCEMENT OF THE SECURITY
                           ---------------------------

     Section  6.1  General   Remedies.   Upon  the  occurrence  and  during  the
continuance  of an Event  of  Default,  Mortgagee  may do any one or more of the
following,  subject to and in accordance  with any  applicable  provision of the
Credit Agreement and to any mandatory  requirements or limitations of applicable
law then in force:

          (a) exercise all of the rights,  remedies,  powers and  privileges  of
Mortgagor  with respect to the Mortgaged  Property or any part thereof,  give or
withhold all consents  required

                                       12
<PAGE>

therein  which,  with  respect to the  Mortgaged  Property or any part  thereof,
Mortgagor  would  otherwise  be  entitled  to give or  withhold,  and perform or
attempt to perform any covenants in this Mortgage  which  Mortgagor is obligated
to  perform;  provided  that,  no  payment or  performance  by  Mortgagee  shall
constitute a waiver of any Event of Default,  and Mortgagee  shall be subrogated
to all  rights  and  Liens  securing  the  payment  of any debt,  claim,  tax or
assessment  for the payment of which  Mortgagee  may make an  advance,  or which
Mortgagee may pay.

          (b) execute and deliver to such person or persons as may be designated
by  Mortgagee  appropriate  powers  of  attorney  to act  for and on  behalf  of
Mortgagor  in all  transactions  with any  federal,  state or local  agency with
respect to any of the Mortgaged Property.

          (c) exercise any and all other rights or remedies granted to Mortgagee
pursuant to the provisions of any of the Loan Documents.

          (d) if Mortgagor has failed to keep or perform any covenant whatsoever
contained in any Loan Document, Mortgagee may, at its option, perform or attempt
to  perform  such  covenant.  Any  payment  made  or  expense  incurred  in  the
performance or attempted performance of any such covenant shall be a part of the
Secured Indebtedness,  and Mortgagor promises, upon demand, to pay to Mortgagee,
at the place where the Notes are  payable,  or at such other place as  Mortgagee
may direct by written  notice,  all sums so advanced or paid by Mortgagee,  with
interest at the  default  rate set forth in the Credit  Agreement  from the date
when paid or incurred by Mortgagee or any such Secured Party. No such payment by
Mortgagee shall constitute a waiver of any Event of Default.

          (e) Mortgagee  shall,  if requested by the Secured Parties as provided
in the Credit Agreement,  without notice, demand, presentment,  notice of intent
to accelerate or of acceleration,  or notice of protest, all of which are hereby
expressly waived by Mortgagor,  declare the entire unpaid balance of the Secured
Indebtedness,  or any part thereof,  immediately due and payable,  and upon such
declaration, it shall be immediately due and payable, and the Liens hereof shall
then be subject to foreclosure in accordance with applicable law.

          (f) Upon the  occurrence of an Event of Default,  this Mortgage may be
foreclosed as to the  Mortgaged  Property,  or any part  thereof,  in any manner
permitted by applicable law.

     A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE.  WHERE PERMITTED BY LAW,
     ---------------------------------------------------------------------------
A POWER OF SALE MAY ALLOW  MORTGAGEE TO TAKE THE MORTGAGED  PROPERTY AND SELL IT
--------------------------------------------------------------------------------
WITHOUT GOING TO COURT IN A FORECLOSURE  ACTION UPON DEFAULT BY MORTGAGOR  UNDER
--------------------------------------------------------------------------------
THIS MORTGAGE.
--------------

     Mortgagee  may  proceed  with  foreclosure  and sell all or any part of the
Mortgaged  Property at one or more sales, as an entirety or in parcels,  at such
place or places and  otherwise  in such  manner  and upon such  notice as may be
required  by  applicable  law,  or, in the absence of any such  requirement,  as
Mortgagee  may deem  appropriate,  and to make  conveyance  to the

                                       13
<PAGE>

purchaser  or  purchasers  thereof.  Any such sale shall be made to the  highest
bidder or bidders for cash,  at the  courthouse  door of the county  wherein the
Mortgaged  Property is situated;  provided  that, if the  Mortgaged  Property is
situated in more than one county, such sale of the Mortgaged  Property,  or part
thereof, may be made in any county wherein any part of the Mortgaged Property is
situated.  Such sale  shall be made at public  outcry,  on the day of any month,
during  the  hours of such day,  and after  written  notices  thereof  have been
publicly  posted  in such  places  and for such  time  periods  and all  persons
entitled  to notice  thereof  have been sent such  notice,  all as  required  by
applicable  law. If the  applicable law in force as of the Effective Date hereof
should  hereafter be amended to require a different notice of sale applicable to
sales of property of the nature of the Mortgaged  Property  under powers of sale
conferred  by  mortgages  or deeds of trust,  Mortgagee  may, in his or her sole
discretion, to the extent permitted by applicable law, give either the notice of
sale required by applicable law in effect on the Effective Date or the notice of
sale  prescribed  by the  amended  law;  and nothing  herein  shall be deemed to
require  Mortgagee  to do, and  Mortgagee  shall not be  required to do, any act
other than as required by applicable law in effect at the time of any such sale.
After such sale, Mortgagee shall make to the purchaser or purchasers  thereunder
good  and  sufficient  deeds,  assignments  or  bills  of  sale  in the  name of
Mortgagor,  conveying  or  transferring  the  Mortgaged  Property,  or any  part
thereof,  so sold to the purchaser or purchasers  containing  such warranties of
title  as  are  customarily  given,  which  warranties  shall  be  binding  upon
Mortgagor.

     Sale of a part of the  Mortgaged  Property  shall not  exhaust the power of
sale granted  hereby,  but sales may be made from time to time until the Secured
Indebtedness  is paid and  performed in full.  It shall not be necessary to have
present or to exhibit at any such sale any of the Personal Property. In addition
to the rights and other powers of sale granted under the preceding provisions of
this Section 6.1(f), if default is made in the payment of any installment of the
Obligations,  Mortgagee may,  subject to, and in accordance with, the applicable
provisions  of the  Credit  Agreement,  at its  option,  at once or at any  time
thereafter while any matured installment  remains unpaid,  without declaring the
entire Secured Indebtedness to be due and payable, orally or in writing, enforce
the Liens created by this Mortgage and sell the  Mortgaged  Property  subject to
such  matured  indebtedness  and the Liens  securing  its  payment,  in the same
manner,  on the same terms,  at the same place and time and after  having  given
notice in the same manner,  all as provided in the preceding  provisions of this
Section  6.1(f).  After such sale,  Mortgagee  shall make due  conveyance to the
purchaser or purchasers.  Sales made without  maturing the Secured  Indebtedness
may be  made  hereunder  whenever  there  is a  default  in the  payment  of any
installment  of the Secured  Indebtedness  without  exhausting the power of sale
granted hereby and without  affecting in any way the power of sale granted under
this Section 6.1(f), the unmatured balance of the Secured  Indebtedness  (except
as to any proceeds of any sale which  Mortgagee  may apply as  prepayment of the
Secured   Indebtedness),   or  the  Liens   securing   payment  of  the  Secured
Indebtedness. The sale or sales of less than the whole of the Mortgaged Property
shall  not  exhaust  the  power  of  sale  herein  granted,   and  Mortgagee  is
specifically  empowered to make  successive sale or sales under such power until
the whole of the Mortgaged Property shall be sold. It is intended by each of the
foregoing provisions of this Section 6.1(f) that Mortgagee may sell not only the
Subject Interests but also all other items  constituting a part of the Mortgaged
Property along with the Subject  Interests,  or any part thereof,  all as a unit
and as a part of a single sale, or may sell any part of the  Mortgaged  Property
separately from the remainder of the Mortgaged Property. If the proceeds of such
sale or sales of less than the whole of such  Mortgaged  Property  shall be less
than the aggregate of the Secured  Indebtedness and the

                                       14
<PAGE>

expense  of  enforcing  the trust  created by this  Mortgage,  the Liens of this
Mortgage  shall remain in full force and effect as to the unsold  portion of the
Mortgaged  Property just as though no sale or sale of less than the whole of the
Mortgaged Property had occurred, but Mortgagee shall have the right, at its sole
election,  to sell less than the whole of the Mortgaged  Property.  In the event
any  questions  should be raised as to the  regularity  or  validity of any sale
hereunder,  Mortgagee  shall  have the right and is  hereby  authorized  to make
resale  of said  property  so as to  remove  any  questions  or  doubt as to the
regularity or validity of the previous  sale, and as many resales may be made as
may be appropriate.  It is agreed that, in any deed or deeds given by Mortgagee,
any and all statements of fact or other recitals therein made as to the identity
of Mortgagee,  or as to the occurrence or existence of any Event of Default,  or
as to the request to sell,  notice of sale,  time,  place,  terms, and manner of
sale,  and  receipt,   distribution,  and  application  of  the  money  realized
therefrom, or as to the due and proper appointment of a substitute trustee, and,
without being limited by the foregoing, as to any other act or thing having been
duly done by Mortgagee,  shall be taken by any  Governmental  Authority as prima
facie evidence that the said statements or recitals are true and correct and are
without further question to be so accepted, and Mortgagor does hereby ratify and
confirm  any and all acts that  Mortgagee  may  lawfully  do in the  premises by
virtue hereof.

     To the extent any of the Mortgaged  Property is located within the State of
Oklahoma,  upon the  occurrence  of an Event of Default,  Mortgagee  may, at its
option, and Mortgagor hereby confers on Mortgagee for the benefit of the Secured
Parties the power to, sell the Mortgaged  Property and the interests  therein in
the manner provided for in the Oklahoma Power of Sale Mortgage  Foreclosure Act,
OKLA.  STAT.,  tit. 46, ss.ss.  40 et seq., as the same may amended from time to
time (the "Act"), or other applicable law. Such power of sale shall be exercised
by giving Mortgagor a notice of intent to foreclose by power of sale and setting
forth,  among other things,  the nature of the  breach(es) or default(s) and the
action  required to effect a cure thereof and the time period  within which such
cure may be effected all in compliance with and as may be required by the Act or
other  applicable  law. If no cure is effected within the statutory time limits,
Mortgagee may accelerate the Secured  Indebtedness  without  further notice (the
aforementioned statutory cure period shall run concurrently with any contractual
provision  for  notice  and  cure  period  before  acceleration  of the  Secured
Indebtedness)  and may then proceed in the manner and subject to and as required
by the conditions of the Act or other applicable law to serve upon Mortgagor and
other necessary parties and publish a notice of sale and to then sell and convey
the Mortgaged  Property all in accordance with the Act or other  applicable law.
The sale shall be made as an entirety  or in lots,  parcels or  divisions,  upon
such notice,  at such time and place,  in such manner and under such  conditions
all as provided for in the Act or other applicable law. The proceeds of the sale
shall be applied in the manner  provided for in the Act or other  applicable law
and in accordance with the terms of the Credit Agreement. No action of Mortgagee
based upon the provisions  contained herein or contained in the Act,  including,
without limitation,  the giving of the notice of intent to foreclose by power of
sale or service of the notice of sale,  shall constitute an election of remedies
which would preclude  Mortgagee from pursuing judicial  foreclosure before or at
any time after commencement of the power of sale foreclosure procedure.

          (g) Mortgagee  may, in lieu of or in addition to exercising  the power
of sale provided for in Section 6.1(f) hereof,  proceed by suit or suits, at law
or in equity, to enforce the payment and performance of the Secured Indebtedness
in accordance with the terms hereof, and

                                       15
<PAGE>

of the  other  Loan  Documents  evidencing  it, to  foreclose  the Liens of this
Mortgage as against all or any part of the Mortgaged  Property,  and to have all
or any part of the  Mortgaged  Property  sold under the  judgment or decree of a
court of competent jurisdiction.

          (h) To the  extent  permitted  by law,  upon the  acceleration  of the
Secured Indebtedness under the Credit Agreement, Mortgagee, as a matter of right
and without regard to the sufficiency of the Mortgaged Property, and without any
showing of  insolvency,  fraud or  mismanagement  on the part of Mortgagor,  and
without the necessity of filing any judicial or other  proceeding other than the
proceeding for  appointment of a receiver,  shall be entitled to the appointment
of a receiver or receivers of the Mortgaged Property,  or any part thereof,  and
of the income, royalties, revenues, bonuses, production payments, delay rentals,
benefits,  rents,  issues and profits thereof.  Mortgagor hereby consents to the
appointment  of  such  receiver  or  receivers  and  agrees  not to  oppose  any
application therefor by Mortgagee.

          (i) Upon the acceleration of the Secured Indebtedness under the Credit
Agreement,  Mortgagee may (without notification, if permitted by applicable law)
enter upon the Mortgaged  Property,  take possession of the Mortgaged  Property,
and remove the Personal Property,  or any part thereof, with or without judicial
process, and, in connection  therewith,  without any responsibility or liability
on the part of Mortgagee,  take possession of any property  located on or in the
Mortgaged  Property  which is not a part of the  Mortgaged  Property and hold or
store  such  property  at  Mortgagor's  expense.  If  necessary  to  obtain  the
possession provided for in this Section 6.1(i),  Mortgagee may undertake any and
all  remedies to  dispossess  Mortgagor,  including,  specifically,  one or more
actions for forcible entry and detainer, trespass to try title and restitution.

          (j) Mortgagee may require  Mortgagor to assemble any Personal Property
and any other items of the Mortgaged Property,  or any part thereof, and make it
available  to  Mortgagee  at a place  to be  designated  by  Mortgagee  which is
reasonably convenient to Mortgagor and Mortgagee.

          (k) Mortgagee may surrender the insurance policies maintained pursuant
to the Credit Agreement, or any part thereof, and receive and apply the unearned
premiums as a credit on the Secured Indebtedness,  and, in connection therewith,
Mortgagor  hereby  appoints  Mortgagee  as the  agent and  attorney-in-fact  for
Mortgagor  (with full powers of  substitution)  to collect such premiums,  which
power of attorney  shall be deemed to be a power  coupled  with an interest  and
therefore irrevocable until the release of the Liens evidenced by this Mortgage.

          (l) Mortgagee may retain the Personal  Property and any other items of
the  Mortgaged  Property,  or any  part  thereof,  in  satisfaction  or  partial
satisfaction of the Secured  Indebtedness  whenever the  circumstances  are such
that Mortgagee is entitled to do so under the Code.

          (m) Any Secured  Party shall have the right to become the purchaser at
any sale of the Mortgaged  Property held by Mortgagee or by any court,  receiver
or public officer,  and Mortgagee shall have the right to credit upon the amount
of the bid made  therefor,  the amount  payable out of the net  proceeds of such
sale to any such Secured Party. Recitals contained in any conveyance made to any
purchaser at any sale made hereunder shall conclusively  establish the

                                       16
<PAGE>

truth and accuracy of the matters therein stated,  including,  without  limiting
the  generality of the  foregoing,  nonpayment  of the unpaid  principal sum of,
interest  accrued on, and fees  payable in respect of, the Secured  Indebtedness
after the same have become due and  payable,  and  advertisement  and conduct of
such sale in the manner provided herein.

          (n) Mortgagee and any Secured Party may buy any Personal  Property and
any other items of the Mortgaged  Property,  or any part thereof, at any private
disposition if the Mortgaged  Property or the part thereof being disposed of, is
a type customarily sold in a recognized market or a type which is the subject of
widely distributed standard price quotations.

          (o)  Mortgagee  shall have and may  exercise  any and all other rights
which  Mortgagee  may have under the Code, by virtue of the Loan  Documents,  at
law, in equity or otherwise.

     Mortgagee shall have no obligation to do, or refrain from doing, any of the
acts, or to make or refrain from making any payment, referred to in this Section
6.1.

     Section 6.2 Foreclosure by Judicial Proceedings.  Upon the occurrence of an
Event of Default,  Mortgagee may proceed,  where  permitted by law, by a suit or
suits in equity or at law, whether for a foreclosure hereunder,  or for the sale
of the Mortgaged  Property,  or for the specific  performance of any covenant or
agreement  herein  contained  or in aid of the  execution  of any  power  herein
granted, or for the appointment of a receiver pending any foreclosure  hereunder
or the sale of the  Mortgaged  Property,  or for the  enforcement  of any  other
appropriate legal or equitable remedy.

     Section  6.3  Receipt  to  Purchaser.  Upon any sale by virtue of  judicial
proceedings,  the  receipt  of the  officer  making  such  sale  under  judicial
proceedings shall be sufficient  discharge to the purchaser or purchasers at any
sale for his or their purchase money,  and such purchaser or purchasers,  or his
or their  assigns or  personal  representatives,  shall not,  after  paying such
purchase money and receiving such receipt of such officer therefor, be obligated
to see to the  application of such purchase  money,  or be in any way answerable
for any loss, misapplication or non-application thereof.

     Section 6.4 Effect of Sale. Any sale or sales of the Mortgaged  Property or
portions  thereof  where  permitted  by law shall  operate  to divest all right,
title,  interest,  claim and demand  whatsoever  either at law or in equity,  of
Mortgagor  of, in and to the  premises  and the  property  sold,  and shall be a
perpetual bar, both at law and in equity,  against  Mortgagor,  and  Mortgagor's
successors,  legal  representatives or assigns,  and against any and all persons
claiming  or who  shall  thereafter  claim all or any of the  property  sold by,
through or under Mortgagor, or Mortgagor's successors, legal representatives and
assigns. Nevertheless, Mortgagor, if requested by Mortgagee to do so, shall join
in the  execution  and  delivery  of all  proper  conveyances,  assignments  and
transfers of the properties so sold.

     Section 6.5  Application of Proceeds.  The proceeds of any sale of or other
realization on the Mortgaged Property, or any part thereof,  shall be applied in
the manner required under Collateral Agent Agreement.

                                       17
<PAGE>

     Section 6.6 Mortgagor's  Waiver of Appraisement,  Marshaling,  etc. Rights.
Mortgagor  agrees, to the full extent that Mortgagor may lawfully so agree, that
Mortgagor  will  not at any  time,  insist  upon  or  plead  or,  in any  manner
whatsoever,  claim the benefit of any stay,  extension or redemption  law now or
hereafter in force, in order to prevent or hinder the enforcement or foreclosure
of this Mortgage or the absolute  sale of the Mortgaged  Property or any portion
thereof or the possession  thereof by any purchaser at any sale made pursuant to
any  provision  hereof,  or  pursuant  to the  decree of any court of  competent
jurisdiction;  but Mortgagor,  and all who may claim through or under Mortgagor,
so far as  Mortgagor  or  those  claiming  through  or  under  Mortgagor  now or
hereafter  lawfully may,  hereby waives the benefit of all such laws.  Mortgagor
and all who may claim  through or under  Mortgagor,  waives,  to the extent that
Mortgagor or those claiming  through or under  Mortgagor may lawfully do so, any
and all  rights  of  appraisement  and any and all  right to have the  Mortgaged
Property  marshaled upon any foreclosure of the Lien hereof,  or sold in inverse
order of alienation,  and agrees that any court having jurisdiction to foreclose
such Lien may sell the  Mortgaged  Property as an  entirety.  If any law in this
Section 6.6  referred to and now in force,  of which  Mortgagor  or  Mortgagor's
successor or successors  might take  advantage  despite the  provisions  hereof,
shall  hereafter  be  repealed  or cease to be in  force,  such  law  shall  not
thereafter be deemed to constitute any part of the contract herein  contained or
to preclude the operation or  application of the provisions of this Section 6.6.
Notwithstanding  the  provisions  of  Section  6.1(f) or any other  contrary  or
inconsistent  provision of this Mortgage,  in any judicial foreclosure action in
Oklahoma,  appraisement of the Mortgaged  Property located in Oklahoma is waived
or not waived, at the Mortgagee's election, which election shall be exercised at
the time any written  judgment is entered by the applicable court or at any time
prior thereto.

     Section 6.7 Mineral Leasing Act.  Notwithstanding  any other  provisions of
this Mortgage, any Oil and Gas Leases covered by this Mortgage which are subject
to the Mineral Leasing Act of 1920, as amended, and the regulations  promulgated
thereunder,  shall not be sold or otherwise  disposed of to any party other than
citizens of the United  States,  or to  associations  of such citizens or to any
corporation  organized  under  the laws of the  United  States,  or any state or
territory thereof that are qualified to own or control interests in such Oil and
Gas Leases under the provisions of such Mineral Leasing Act and regulations,  or
to persons  who may  acquire  ownership  or  interest in such Oil and Gas Leases
under the  provisions of 30 U.S.C.  ss. 184(g),  if applicable,  as such Mineral
Leasing Act or regulations are now or may be from time to time in effect.

     Section 6.8 Costs and Expenses.  All reasonable costs,  expenses (including
attorneys'  fees) and payments  incurred or made by Mortgagee in protecting  and
enforcing its rights  hereunder,  shall constitute a demand  obligation owing by
Mortgagor to the party incurring such or making such costs, expenses or payments
and shall bear  interest at a rate per annum equal to the default rate set forth
in the Credit Agreement,  all of which shall constitute a portion of the Secured
Indebtedness.

     Section 6.9  Operation of the  Mortgaged  Property by  Mortgagee.  Upon the
occurrence of an Event of Default that is continuing and the acceleration of the
Secured  Indebtedness  under the Credit Agreement,  and in addition to all other
rights  herein  conferred on Mortgagee,  Mortgagee (or any person  designated by
Mortgagee)  shall, to the extent permitted by applicable law, have the right and
power,  but not the obligation,  to enter upon and take

                                       18
<PAGE>

possession  of any of the  Mortgaged  Property,  and to exclude  Mortgagor,  and
Mortgagor's agents or servants,  wholly therefrom, and to hold, use, administer,
manage and operate the same to the extent  that  Mortgagor  shall be at the time
entitled to do any of such things and in Mortgagor's place and stead.  Mortgagee
(or any person  designated  by  Mortgagee)  may  operate  the same  without  any
liability or duty to Mortgagor in connection with such operations, except to use
ordinary care in the operation of such Mortgaged Property,  and Mortgagee or any
person  designated by Mortgagee  shall have the right to collect and receive all
Hydrocarbons  produced  and sold from the  Mortgaged  Property,  the proceeds of
which  shall be applied to the  Obligations  in the  manner  required  under the
Credit Agreement,  to make repairs,  purchase  machinery and equipment,  conduct
workover  operations,  drill additional wells and to exercise every power, right
and privilege of Mortgagor with respect to the Mortgaged  Property.  When and if
such expenses of such operation and development (including costs of unsuccessful
workover  operations  or  additional  wells)  have  been  paid  and the  Secured
Indebtedness paid and performed in full, such Mortgaged Property shall, if there
has been no sale or foreclosure thereof, be returned to Mortgagor.

     Section  6.10  Additional  Waivers.  In order  to  enforce  this  Mortgage,
Mortgagee  shall not be obligated (a) to foreclose any other mortgage or deed of
trust covering  Mortgaged  Property located in another State,  seek a deficiency
after any such foreclosure,  or otherwise enforce  Mortgagee's  rights in any of
the other  Mortgaged  Property;  or (b) to seek an  injunction  (prohibitive  or
mandatory),  the  appointment of a receiver,  an order modifying any stay in any
federal or state  bankruptcy,  reorganization  or other  insolvency  proceedings
relating to any of the Mortgaged  Property or any portion thereof,  or any other
extraordinary relief.  Mortgagor waives, to the fullest extent permitted by law,
any defense  Mortgagor may have to any liability  hereunder based on Mortgagee's
failure  or  refusal  to  prosecute,  or any  lack  of  diligence  or  delay  in
prosecuting,  any action or proceeding to enforce any other  mortgage or deed of
trust.  If  Mortgagee  elects to  enforce  this  Mortgage  before,  or  without,
enforcing its rights with respect to any Mortgaged Property covered by any other
Mortgage,  Mortgagor  waives,  to the fullest extent permitted by law, any right
Mortgagor may have, whether statutory or otherwise,  to set off the value of any
other  Mortgaged  Property,   or  any  portion  thereof,   against  the  Secured
Indebtedness.  If  Mortgagee  elects to enforce its  mortgages or deeds of trust
covering all or any portion of the Mortgaged  Property  located in other States,
or in conjunction with the enforcement of this Mortgage, Mortgagee is authorized
to  purchase  all or any part of such  other  Mortgaged  Property  at  public or
private  sale or as  otherwise  provided by  applicable  law,  and to credit the
purchase  price  against  the  Secured  Indebtedness  in such order or manner as
Mortgagee  determines in its sole discretion and to preserve  Mortgagee's rights
and Liens under this Mortgage for any portion of the Secured  Indebtedness  that
remains unpaid.  Mortgagor  waives to the fullest extent permitted by applicable
law any right to claim or seek any credit  against the Secured  Indebtedness  in
excess of the actual amount bid or received by Mortgagee in connection  with the
foreclosure of  Mortgagee's  Liens on any of the Mortgaged  Property  located in
such other States. Mortgagor further agrees that Mortgagee shall not be required
(1) to seek or obtain a  deficiency  judgment  in or  pursuant  to any action or
proceeding  to foreclose  this  Mortgage as a condition of later  enforcing  any
mortgage or deed of trust covering  Mortgaged Property located in another State,
or (2) to seek or obtain a  deficiency  judgment in or pursuant to any action or
proceeding to foreclose any such other  mortgage or deed of trust as a condition
of later enforcing this Mortgage. Notwithstanding the foregoing, if Mortgagee in
good  faith  believes  that it may be  required  either to  obtain a  deficiency
judgment to enforce this  Mortgage  after  enforcement  of a

                                       19
<PAGE>

mortgage or deed of trust covering  Mortgaged Property located in another State,
or to  enforce  another  mortgage  or deed of trust  after  enforcement  of this
Mortgage,  then Mortgagor  agrees that  Mortgagee  shall be entitled to seek and
obtain such a deficiency  judgment  notwithstanding any contrary or inconsistent
provision contained in any Loan Documents.

                                    ARTICLE 7
                                  MISCELLANEOUS
                                  -------------

     Section 7.1 Advances by Mortgagee. Each and every covenant herein contained
shall be  performed  and kept by Mortgagor  solely at  Mortgagor's  expense.  If
Mortgagor  shall fail to perform or keep any of the covenants of whatsoever kind
or nature  contained  in this  Mortgage,  Mortgagee  or any  receiver  appointed
hereunder, may, but shall not be obligated to, make advances to perform the same
on  Mortgagor's  behalf,  and  Mortgagor  hereby  agrees to repay such sums upon
demand plus  interest at a rate per annum equal to the default  rate of interest
set forth in the Credit  Agreement.  No such advance  shall be deemed to relieve
Mortgagor from any Event of Default hereunder.

     Section 7.2 Defense of Claims. Mortgagor will notify Mortgagee, in writing,
promptly of the  commencement  of any legal  proceedings of which  Mortgagor has
notice  affecting or which could adversely  effect the Lien hereof or the status
of or title to a material  portion of the Mortgaged  Property and will take such
action,  employing  attorneys  agreeable  to  Mortgagee,  as may be necessary to
preserve   Mortgagor's  or  Mortgagee's  rights  affected  thereby;  and  should
Mortgagor fail or refuse to take any such action, Mortgagee may take such action
on behalf and in the name of Mortgagor and at Mortgagor's sole cost and expense.
Moreover,  Mortgagee may take such independent action in connection therewith as
it may, in its sole  discretion,  deem proper  without any  liability or duty to
Mortgagor  except to use ordinary care,  Mortgagor hereby agreeing that all sums
advanced or all expenses  incurred in such  actions plus  interest at a rate per
annum equal to the default rate of interest  set forth in the Credit  Agreement,
will, on demand, be reimbursed to Mortgagee or any receiver appointed hereunder.

     Section  7.3  Defeasance.  If the  Secured  Indebtedness  shall be paid and
discharged in full and the Commitments shall have terminated,  then, and in that
case only,  this Mortgage  shall be null and void and the interests of Mortgagor
in the Mortgaged  Property shall become wholly clear of the Lien created hereby,
and such  Lien  shall  be  released  in due  course  at the  cost of  Mortgagor.
Mortgagee  will, at Mortgagor's  sole expense,  execute and deliver to Mortgagor
all  releases  and other  instruments  reasonably  requested of the Lien created
hereunder.  Otherwise, this Mortgage shall remain and continue in full force and
effect.

     Section 7.4 Renewals, Amendments and Other Security. Renewals, refinancings
and  extensions  of the  Secured  Indebtedness  may be  given  at any  time  and
amendments  may be made to this  Mortgage,  the  Loan  Documents  and any  other
agreements relating to any part of the Secured  Indebtedness,  and Mortgagee may
take or may hold other security for the Secured  Indebtedness.  Any amendment of
this Mortgage  shall be by written  instrument  and need be executed only by the
party  against whom  enforcement  of such  amendment is asserted.  Mortgagee may
resort first to such other security or any part thereof or first to the security
herein given or any part thereof,  or from time to time to either or both,  even
to the partial or complete abandonment of either security, and such action shall
not be a waiver of any rights  conferred by

                                       20
<PAGE>

this Mortgage,  which shall continue as a first Lien upon the Mortgaged Property
not expressly  released until all Secured  Indebtedness  secured hereby is fully
paid and discharged.

     Section 7.5 Instrument and  Assignment,  etc. This Mortgage shall be deemed
to be and may be, enforced from time to time as an assignment, chattel mortgage,
contract,   financing  statement,  real  estate  mortgage,  pledge  or  security
agreement,  and from time to time as any one or more thereof;  and to the extent
that any particular  jurisdiction wherein a portion of the Mortgaged Property is
situated  does not  recognize  or  permit  Mortgagor  to grant,  bargain,  sell,
warrant,  mortgage,  assign,  transfer or convey Mortgagor's rights,  titles and
interests to Mortgagee in the manner herein  adopted,  then, with respect to the
Mortgaged  Property located in such  jurisdiction,  Mortgagor does hereby grant,
bargain, sell, warrant,  mortgage,  assign,  transfer and convey unto Mortgagee,
the Mortgaged Property to secure the Secured Indebtedness and the Obligations of
Mortgagor contained herein.

     Section 7.6 Limitation on Interest.  Regardless of any provision  contained
in this Mortgage or any of the other Loan Documents, Secured Parties shall never
be entitled to receive,  collect, or apply, as interest on the Loans, any amount
in excess of the maximum lawful rate allowed by applicable law ("Maximum  Lawful
Rate"), and in the event any Secured Party 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 Loans are paid in full,  any remaining  excess shall promptly be paid
to Mortgagor.  In determining  whether or not the interest paid or payable under
any specific  contingency exceeds the Maximum Lawful Rate, Mortgagor and Secured
Parties shall, to the extent  permitted under  applicable law, (a)  characterize
any non-principa1 payment as an expense, fee or premium rather than as interest,
(b) exclude  voluntary  prepayments  and the effect  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,  Secured  Parties shall refund to Mortgagor the amount of such excess and,
in such event, Secured Parties 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 7.7 Unenforceable or Inapplicable  Provisions.  If any provision of
this Mortgage or in any of the other Loan Documents is invalid or  unenforceable
in any  jurisdiction,  the other  provisions  hereof or of any of the other Loan
Documents  shall remain in full force and effect in such  jurisdiction,  and the
remaining  provisions hereof shall be liberally  construed in favor of Mortgagee
in  order  to  effectuate  the  provisions  hereof,  and the  invalidity  of any
provision  hereof  in  any  jurisdiction   shall  not  affect  the  validity  or
enforceability  of any such provision in any other  jurisdiction.  Any reference
herein  contained  to  statutes  or  laws  of a state  in  which  no part of the
Mortgaged Property is situated shall be deemed inapplicable to, and not used in,
the interpretation hereof.

     Section  7.8  Rights  Cumulative.  Each and every  right,  power and remedy
herein given to Mortgagee  shall be cumulative and not  exclusive;  and each and
every right,  power and

                                       21
<PAGE>

remedy whether  specifically herein given or otherwise existing may be exercised
from time to time and so often and in such order as may be deemed  expedient  by
Mortgagee and the exercise, or the beginning of the exercise, of any such right,
power or remedy  shall not be deemed a waiver of the right to  exercise,  at the
same time and thereafter, any other right, power or remedy. No delay or omission
by Mortgagee in the exercise of any right, power or remedy shall impair any such
right,  power or remedy or  operate as a waiver  thereof or of any other  right,
power or remedy then or thereafter existing.

     Section 7.9 Waiver by  Mortgagee.  Any and all  covenants in this  Mortgage
may, from time to time, by instrument in writing signed by Mortgagee and, to the
extent  required under the Credit  Agreement,  the Secured  Parties be waived to
such extent and in such manner as Mortgagee may desire, but no such waiver shall
ever affect or impair  Mortgagee's  or any Secured  Party rights and remedies or
Liens  hereunder,  except to the  extent  specifically  stated  in such  written
instrument.

     Section  7.10  Successors  and  Assigns.  This  Mortgage  is  binding  upon
Mortgagor,  and  Mortgagor's  heirs,  devisees,  successors,  personal and legal
representatives and assigns, and shall inure to the benefit of Mortgagee and its
successors,  legal  representatives and assigns, and the provisions hereof shall
likewise be covenants running with the Lands.

     Section 7.11 Article and Section Headings. The article and section headings
in this Mortgage are inserted for convenience and shall not be considered a part
of this Mortgage or used in its interpretation.

     Section 7.12  Counterparts.  This Mortgage may be executed in any number of
counterparts,  each of which shall for all purposes be deemed to be an original,
and all of which are identical  except that, to  facilitate  recordation  in any
particular  county or parish,  counterpart  portions of Exhibit A which describe
properties  situated in counties or parishes  other than the county or parish in
which such counterpart is to be recorded may be omitted.

     Section 7.13 Special  Filing as Financing  Statements.  This Mortgage shall
likewise  be a  security  agreement  and a  financing  statement  by  virtue  of
Mortgagor,   as  debtor,   granting  to   Mortgagee,   its   successors,   legal
representatives  and  assigns,  as secured  party,  a security  interest  in all
personal property, as-extracted collateral, fixtures, accounts, contract rights,
general intangibles, inventory, goods, chattel paper, instruments, documents and
money described or referred to in granting clauses (1) through (10) of Article 2
hereof and all proceeds and products from the sale,  lease or other  disposition
of the Mortgaged  Property or any part thereof.  The addresses  shown in Section
7.14  hereof are the  addresses  of  Mortgagor  and  Mortgagee  and  information
concerning the security  interest may be obtained from Mortgagee at its address.
Without in any manner limiting the generality of any of the foregoing provisions
hereof:  (a) some portion of the goods  described or to which  reference is made
herein  are  or are to  become  fixtures  on the  Lands  described  or to  which
reference is made herein;  (b) the minerals and the like (including oil and gas)
included in the  Mortgaged  Property  and the accounts  resulting  from the sale
thereof will be financed at the  wellhead(s)  or  minehead(s)  of the well(s) or
mine(s) located on the Lands described or to which reference is made herein; and
(c) this  Mortgage  is to be filed of record,  among other  places,  in the real
estate records of each county or parish in which the Lands, or any part thereof,
are  situated,  as a  financing  statement,  but the  failure  to do

                                       22
<PAGE>

so will not otherwise  affect the validity or  enforceability  of this Mortgage.
Mortgagor  authorizes  Mortgagee  to file  such  amendments  to  this  Mortgage,
financing  statements and amendments thereto,  and continuation  statements,  as
Mortgagee  deems  reasonable or necessary to perfect and maintain the perfection
of the Liens granted herein,  including such Liens with respect to any additions
to the Mortgaged Property as provided in Article 5.

     Section  7.14  Notices.  Whenever  this  Mortgage  requires  or permits any
consent,  approval,  notice,  request or demand from one party to another,  such
consent,  approval,  notice or demand shall,  unless  otherwise  required  under
applicable  law,  be  given in  accordance  with the  provisions  of the  Credit
Agreement, addressed to the party to be notified at the address stated below (or
such other address as may have been designated in accordance with the provisions
of the Credit Agreement):

MORTGAGOR - DEBTOR                           MORTGAGEE-SECURED PARTY
Quest Cherokee, LLC                          Guggenheim Corporate Funding, LLC
5901 N. Western, Suite 200                   135 East 57th Street, 23rd Floor,
Oklahoma City, Oklahoma 73118                New York, New York 10022
Attn: Jerry D. Cash

     Section 7.15  GOVERNING  LAW.  THIS  MORTGAGE AND THE OTHER LOAN  DOCUMENTS
SHALL BE CONSTRUED IN  ACCORDANCE  WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK AND THE LAWS OF THE UNITED STATES OF AMERICA, EXCEPT TO THE EXTENT THAT
THE LAWS OF ANY STATE IN WHICH THE  MORTGAGED  PROPERTY  IS LOCATED  NECESSARILY
GOVERNS  THE  VALIDITY,  PERFECTION,  PRIORITY  AND  ENFORCEABILITY  OF, AND THE
EXERCISE OF ANY REMEDIES WITH RESPECT TO, ANY LIEN INTENDED TO BE CREATED HEREBY
ON THE MORTGAGED PROPERTY LOCATED IN SUCH STATE.

     Section 7.16 Future Advances;  Maximum Secured Amount. This Mortgage covers
not only the proceeds of the Loan, but all advances hereafter made by Lenders to
or for the benefit of Mortgagor  (the  "Future  Advances"),  including,  without
limitation,  any  amounts  advanced  by Lenders in  satisfying,  on  Mortgagor's
behalf,  any of  Mortgagor's  Obligations,  and any advances  made in accordance
herewith by  Mortgagee  or any Secured  Party to protect its  security,  and any
other  advances  by  Mortgagee  or any  Secured  Party  which  shall not, in the
aggregate exceed $200,000,000. The maximum amount secured hereby may be advanced
and repaid, and again advanced and repaid from time to time, in Secured Parties'
sole and absolute  discretion,  and this Mortgage shall become  enforceable upon
recording  and shall have  priority  over all other  parties  whose rights arose
after the recording  hereof,  with respect to all funds  advanced by any Secured
Party to Mortgagor,  regardless  of whether such funds were  advanced  before or
after  the  arising  of such  other  party's  rights.  Nothing  herein  shall be
interpreted  as  requiring  any  Secured  Party  to  make  any  Future  Advances
hereunder.  The maximum amount secured by this Mortgage at any one time shall be
$200,000,000.

     Section 7.17 Recording. Executed original counterparts of this Mortgage are
to be filed for record in the records of the jurisdictions wherein the Mortgaged
Property  is  situated,  and shall have  annexed  thereto as Exhibit A, only the
portions or divisions containing specific descriptions or the Mortgaged Property
relating  to the  Lands  located  in such  jurisdictions.

                                       23
<PAGE>

Whenever a recorded counterpart of this Mortgage contains specific  descriptions
which are less than all of the  descriptions  contained in any full  counterpart
lodged with Mortgagee, the omitted descriptions are hereby included by reference
in such recorded  counterpart as if each recorded  counterpart  conformed to any
full counterpart lodged with Mortgagee.

     Section 7.18  Subordination.  Mortgagee,  as  Administrative  Agent for the
Senior Lenders under the Senior  Revolving Credit  Agreement,  on behalf of such
Senior Lenders,  and as Administrative  Agent for the Subordinate  Lenders under
the Second Lien Term Loan Agreement,  on behalf of the Subordinate Lenders, have
entered  into the  Collateral  Agent  Agreement,  pursuant  to which the  Senior
Lenders and Subordinate  Lenders have appointed  Mortgagee,  as Collateral Agent
for the Lenders,  subject to the terms thereof and subject to the  Intercreditor
Agreement.  Mortgagor,  Mortgagee  and Secured  Parties agree that all Liens and
Security  Interests  granted by this Mortgage  shall, to the extent set forth in
the Intercreditor Agreement, create a first and prior lien and security interest
to secure the Secured  Indebtedness  arising under the Senior Credit  Agreement,
Swap Agreements and Second Lien Term Loan  Agreement,  in the priority set forth
therein.

                                   ARTICLE 8
                            ASSIGNMENT OF PRODUCTION

     Section 8.1  Assignment.  For the purpose of further  securing  the Secured
Indebtedness and the performance of Mortgagor's  covenants hereunder,  Mortgagor
does  hereby  TRANSFER,  ASSIGN,  AND CONVEY unto  Mortgagee  any and all of the
interests of Mortgagor in and to the Hydrocarbons  that may be produced from, or
attributable  to,  the  Mortgaged  Property  on and  after the  Effective  Date,
together with the proceeds of the sale thereof and  attributable  thereto.  This
assignment  is made  upon the  following  terms  and  conditions:  (a)  pipeline
companies  and others  purchasing  the oil, gas,  minerals and other  substances
listed  above  produced  and  to be  produced  from  said  property  are  hereby
authorized  and directed to pay directly to Mortgagee the interests of Mortgagor
in and  to the  proceeds  of the  sale  of the  oil,  gas,  minerals  and  other
substances  listed  above  produced,  to be produced  and  attributable  to said
property,  and to continue such payments  until they have been  furnished with a
release  hereof  executed in writing by Mortgagee,  and the receipt of Mortgagee
for monies so paid to it shall be a full and  complete  release,  discharge  and
acquittance to any such pipeline  company or other  purchaser,  to the extent of
all amounts so paid,  (b) Mortgagee is hereby  authorized to receive and collect
the proceeds of the sale of the oil, gas,  minerals and other substances  listed
above assigned to it hereunder,  and to apply the funds so received first toward
the payment of the expenses, if any, incurred in the collection thereof, then in
such order as provided in the Credit Agreement toward the payment of the Secured
Indebtedness,  any  balance  remaining  after the full and final  payment of the
Secured Indebtedness to be held subject to the order of Mortgagor, (c) Mortgagee
shall have the right, at its sole option, at any time, and from time to time, to
release  to, or on the  order  of,  Mortgagor  all or any  portion  of the funds
assigned to Mortgagee hereunder, and no such releases shall affect or impair the
Lien of this Mortgage or the validity and effect of the assignment  contained in
this Article 8, (d) Mortgagee shall never be under any obligation to enforce the
collection of the funds  assigned to it  hereunder,  nor shall it ever be liable
for failure to exercise  diligence in the collection of such funds, but it shall
only be accountable for the sums that it shall actually  receive,  (e) Mortgagor
covenants to cause all pipeline  companies or other  purchasers of the oil, gas,
minerals and other  substances  listed above

                                       24
<PAGE>

produced from and  attributable to said property,  to pay promptly to Mortgagee,
at the  office of  Mortgagee  at the  address of  Mortgagee  stated  above,  the
interests of Mortgagor in and to the proceeds of the sale thereof,  and (f) upon
the full and  final  payment  of the  Secured  Indebtedness,  Mortgagee,  at the
request of Mortgagor,  and at Mortgagor's  sole cost and expense,  shall execute
and   deliver  to   Mortgagor   a   reassignment   hereof,   without   recourse,
representations or warranties.  Notwithstanding the foregoing provisions of this
Section  8.1,  so  long as no  Event  of  Default  has  occurred  and  shall  be
continuing, Mortgagor may continue to receive from the purchasers of production,
all such Hydrocarbons and proceeds of the sale thereof, subject, however, to the
Liens  created under this  Mortgage.  If an Event of Default has occurred and is
continuing,  Mortgagee may exercise all rights and remedies  granted  hereunder,
including,   without   limitation,   the  right  to  obtain  possession  of  all
Hydrocarbons  and  proceeds of the sale  thereof  then held by  Mortgagor  or to
receive directly from the purchasers all other  Hydrocarbons and proceeds of the
sale thereof.

     Section 8.2 Power of Attorney.  In  consideration of the Loans evidenced by
the Notes,  Mortgagor  hereby  designates and appoints  Mortgagee as Mortgagor's
true and lawful  agent and  attorney-in-fact  (with full power of  substitution,
either  generally or for such limited periods or purposes as Mortgagee may, from
time to time, prescribe),  with full power and authority,  for and on behalf and
in the name of  Mortgagor,  upon the  occurrence  of an Event of Default that is
continuing,  to  execute,  acknowledge  and deliver  all such  division  orders,
transfer orders, certificates and any and all other documents of every nature as
may,  from time to time,  be  necessary or proper to  effectuate  the intent and
purpose of the assignment  contained in Section 8.1 hereof.  Mortgagor  shall be
bound thereby as fully and effectively as if Mortgagor had personally  executed,
acknowledged and delivered any such division order, transfer order,  certificate
or other documents. The powers and authorities herein conferred on Mortgagee may
be exercised by Mortgagee  through any person who, at the time of the  execution
of a particular  instrument,  is the  president,  a senior  vice-president  or a
vice-president of Mortgagee. The power of attorney conferred by this Section 8.2
is granted for a valuable  consideration  and hence is coupled  with an interest
and is  irrevocable  so long as the Secured  Indebtedness,  or any part thereof,
shall remain unpaid.  All persons  dealing with  Mortgagee,  any officer thereof
above designated or any substitute thereof, shall be fully protected in treating
the powers and  authorizations  conferred by this Section 8.2 as  continuing  in
full  force and  effect  until  advised  by  Mortgagee  that all of the  Secured
Indebtedness is fully and finally paid.

[Signature Page to Follow]

                                       25
<PAGE>

     IN WITNESS  WHEREOF,  Mortgagor and Mortgagee,  acting by and through their
respective  duly  authorized  officers,  have each executed this Mortgage on the
date of their  respective  acknowledgments,  to be effective as of the Effective
Date.

                                     QUEST CHEROKEE, LLC, a Delaware limited
                                     liability company

                                     By: /s/ Jerry D. Cash
                                         ---------------------------------------
                                         Jerry D. Cash, Manager

The address of Mortgagor is:

Quest Cherokee, LLC
9520 N. May, Suite 300
Oklahoma City, Oklahoma 73120
Attn: Jerry D. Cash

                                      This Mortgage was prepared by, and
                                      recorded counterparts should be
                                      returned to:

                                      Bernard F. Clark, Jr.
                                      Haynes and Boone, LLP
                                      1221 McKinney, Suite 2100
                                      Houston, Texas 77002

<PAGE>

STATE OF OKLAHOMA       )
                        )  ss.
COUNTY OF OKLAHOMA      )

     This instrument was acknowledged before me this 10 day of November, 2005 by
Jerry D. Cash,  Manager of Quest  Cherokee,  LLC, a Delaware  limited  liability
company.

(SEAL)                                  /s/ Rebecca K. Williams
                                        ----------------------------------------
                                        Printed Name: Rebecca K. Williams
                                        Notary Public, State of Oklahoma
                                        My Appointment Expires: July 6, 2008EMPLOYMENT AGREEMENT
                              --------------------

     This Agreement (the  "Agreement") is made and entered into on this 17th day
of October, 2005 (the "Effective Date"), between QUEST RESOURCE CORPORATION (the
"Company), and JERRY D. CASH ("Employee").

     1.   Agreement to Employ; Duties.
          ---------------------------

                a     Agreement to  Employ.  The Company hereby employs Employee
and Employee hereby accepts employment upon the terms and conditions hereinafter
set forth.  Employee will serve as Chief Executive  Officer and President of the
Company. In consideration of the mutual promises set forth below, the employment
agreement  entered into between  Employee and the Company dated November 7, 2002
(the "2002  Agreement")  is  terminated,  and this  Agreement  replaces the 2002
Agreement in its entirety.

                b     Duties.  Employee  agrees that so long as he is   employed
pursuant to this  Agreement,  he will: (i) to the  satisfaction  of the Company,
devote his best  efforts and his entire  business  time to further  properly the
interests  of the  Company;  (ii) at all times be subject to the  direction  and
control of the Board of Directors of the Company with respect to his  activities
on behalf of the Company; (iii) comply with all rules, orders and regulations of
the  Company  and all  statutes,  regulations,  interpretive  rulings  and other
enactments  to which the  Company is subject;  (iv)  truthfully  and  accurately
maintain  and  preserve  such  records  and make all  reports as the Company may
require;  and (v) fully  account  for all monies  which he may from time to time
have  custody  over and  deliver the same to the  Company  whenever  and however
directed to do so.

        2.    Compensation.
              ------------

                a     Base Salary.  For all services to be rendered by Employee,
the Company  shall pay  Employee a salary at the rate of Four  Hundred  Thousand
($400,000.00) and No/100 Dollars per year, in installments of equal frequency to
the Company's  standard payroll  practices.  Salary payments shall be subject to
withholding and other  applicable  taxes (e.g.,  federal and state  withholding,
FICA, earnings tax, etc).

                b     Incentive Bonus Compensation/Stock Options. Employee shall
be entitled to  participate  in an incentive  bonus plan or program and/or stock
option plan as may be  established by the Company's  Compensation  Committee for
senior executives of the Company.

     3.   Term. This Agreement shall be effective on October 17, 2005, and shall
continue

<PAGE>

thereafter  until  terminated  by either  party as  provided  in  Section 5 or 6
hereof.

     4.   Employee Benefits. Employee  shall be entitled,  during his employment
hereunder,  to receive and participate in employee benefits  available to senior
executives  of the  Company  as the  Board  of  Directors  (or the  Compensation
Committee) of the Company determines, in its sole discretion, from time to time.

     Employee  acknowledges  that the  benefits  described  above are subject to
change  in the  discretion  of the  Board  of  Directors  (or  the  Compensation
Committee) of the Company,  and that Employee is only entitled to participate in
these  benefits to the extent they are made  available  by the Company to senior
executives from time to time.

     5.   Termination of Employment  by  the  Employee.  Employee shall have the
right to terminate  his  employment at any time by providing no less than thirty
(30) days prior written Notice of Termination  to the Company.  Employee  hereby
agrees to assist in the training of his replacement, if requested.

      6.  Termination of Employment by the Company.
          ----------------------------------------

                a       Without Cause.  The  Company  may  terminate  Employee's
employment  under this Agreement at any time without cause.  In such event,  the
Company  shall  continue to pay  Employee  Base  Salary as required  pursuant to
Section 2a hereof as severance pay for a period equal to twelve (12) months from
the date of the Company's giving of Notice of Termination to Employee; provided,
however,  that  Employee  shall only be paid such  severance  pay if he signs an
agreement  containing  a  release  of  claims  against  the  Company,  in a form
substantially  similar  to that  included  in  Exhibit  A,  attached  hereto and
incorporated  herein.  Such severance pay will be paid in equal  installments on
the Company's  regular  payroll dates.  Employee will cease to be an employee of
the  Company  as of the date  Notice of  Termination  is given,  and he will not
receive  or  accrue  any  benefits  of  employment  after  such  termination  of
employment  (e.g.,  life  insurance,  health  insurance,  disability  insurance,
vacation  accrual or other  benefits  provided  pursuant  to this  Agreement  or
otherwise in conjunction with Employee's employment). Severance pay shall not be
paid to the Employee if Employee owns, manages, operates, joins, contracts with,
or is  employed  by or  connected  in any manner  with  (whether  as  principal,
partner, shareholder,  member, director, officer, employee, agent or otherwise),
any business which may be  competitive in any manner to the business  engaged in
by the Company.

                b       With Cause  The Company may terminate Employee's employ-
ment under  this  Agreement  at any time for cause  effective  immediately  upon
Notice of  Termination.  In the event the Company  terminates this Agreement for
cause on the part of Employee, Employee shall receive Base Salary for the period
to the date of his  termination.  Employee  shall  not be  entitled  to  receive
severance pay from the Company if his  employment is terminated  for cause.  For
purposes of this  Agreement,  "cause"  shall be defined to  include,  but not be
limited to, the following:  (i) any act or omission by Employee that constitutes
gross negligence or willful misconduct;  (ii) theft, dishonest acts or breach of
fiduciary  duty that  materially  enrich the Employee or  materially  damage the
Company or conviction of

                                       2
<PAGE>

a felony,  (iii) any conflict of interest,  except those consented to in writing
by the Company;  (iv) any material  failure by Employee to observe  Company work
rules,  policies  or  procedures  that is not  cured by  Employee  after 10 days
written  notice;  (v) bad faith  refusal  by  Employee  to carry out  reasonable
instruction that is not cured by Employee after 10 days written notice;  or (vi)
any material breach of this Agreement by Employee.

     7. Notice of Termination.  Any termination of Employee's  employment by the
Company  pursuant  to Section 6 or by  Employee  pursuant  to Section 5 shall be
communicated  by written Notice of  Termination to the other party hereto.  Said
Notice shall be deemed to have been duly given when  delivered  personally or by
overnight  delivery,  sent via facsimile,  or mailed by United States  certified
mail, return receipt requested, postage prepaid, addressed as follows:

           If to the Company:

                Quest Resource Corporation
                9520 North May Avenue
                Oklahoma City, Oklahoma  73120
                Attention: David Grose (or then current Chief Financial Officer)
                Facsimile: (405) 488-1156

           If to Employee:

                Jerry D. Cash
                9520 North May Avenue
                Oklahoma City, Oklahoma  73120
                Facsimile: (405) 840-9897

or at such other address as either party may designate in writing to the other.

     8. Company  Property.  Upon  termination  of this  Agreement for any reason
whatsoever,  Employee  shall  immediately  deliver  to the  Company  any and all
Company property,  including,  without limitation, all Confidential Information,
as such  Confidential  Information  is  defined in  Section  15.  From and after
termination  of this  Agreement,  Employee  shall not represent  that he has any
further authority to act as a representative of the Company, in any capacity.

     9. Intellectual  Property.  Any interest in patents,  patent  applications,
inventions, copyrights, developments and processes ("Inventions") which Employee
now or hereafter  during the period  Employee is employed by the Company may own
or develop relating to the fields in which the Company may then be engaged shall
belong to the Company; and forthwith upon request of the Company, Employee shall
execute all  assignments  and other  documents and take all such other action as
the  Company  may  reasonably  request in order to vest in the  Company  all his
right,  title and interest in and to the Inventions free and clear of all liens,
charges and encumbrances.

                                       3
<PAGE>

     10. No  Conflicts.  Employee  represents  and  warrants to the Company that
neither the execution nor delivery of this  Agreement,  nor the  performance  of
Employee's obligations hereunder,  will conflict with, or result in a breach of,
any term,  condition,  or  provision  of, or  constitute  a default  under,  any
obligation,  contract,  agreement, covenant or instrument to which Employee is a
party or under which the Employee is bound, including,  without limitation,  the
breach by Employee of a fiduciary duty to any former employers.

     11. Personnel  Policies.  The general personnel policies of the Company (as
said  policies may exist from time to time) will apply to Employee with the same
force and effect as to any other  employee of the Company,  except to the extent
such general  personnel  policies are inconsistent with the terms and provisions
of this  Agreement,  in which event the terms and  provisions of this  Agreement
shall control.

     12.  Compensation  Review.  The Company  will conduct  periodic  reviews of
Employee and his performance no less frequently than annually. While the Company
currently  anticipates  that  during  such  reviews,  it may  consider  possible
increases to Base Salary,  both  Employee and the Company  hereby agree that the
Company shall have no obligation to alter or adjust any compensation or benefits
due to Employee pursuant to the terms of this Agreement.

     13. Expense Reimbursement.  Employee shall be reimbursed by the Company for
the  reasonable  and  necessary  business  expenses  incurred by Employee in the
discharge  of  his  duties,  subject  to the  Company's  standard  policies  and
procedures related to expense reimbursement and approval thereof.

     14. Conflict of Interest. Employee shall devote his full time and attention
to the business of the Company and the diligent discharge of the duties assigned
to Employee  throughout the term of this Agreement.  Unless  consented to by the
Company, Employee will not, directly or indirectly,  have any business interests
or investments (whether as principal, partner,  shareholder,  director, officer,
employee, agent or otherwise) that: (i) are other than passive investments which
do not require Employee's direct personal time, attention,  or services; or (ii)
create any conflict of interest with the Company or with  Employee's  employment
by the Company.  For  purposes of the  foregoing,  a conflict of interest  shall
include,  but not be limited to, any direct or indirect interest in any business
or  enterprise  that is  competitive  with the  Company  or any  corporation  or
business enterprise directly or indirectly  controlling,  controlled by or under
common control with the Company.

     Notwithstanding  the foregoing,  during the period  Employee is employed by
the Company,  Employee may own up to 1% of the outstanding  equity securities of
stock in any  corporation  which is listed  upon a national  stock  exchange  or
traded in the over-the-counter market.

     15. Confidentiality;  Restrictive Covenants. Employee acknowledges that his
employment  with the Company will afford Employee an opportunity to identify the
Company's business  strategies and know-how,  enable him to establish  favorable
relations  with the Company's  customers,  business  prospects and suppliers and
provide  him with  access to other  confidential,  trade  secret or  proprietary

                                       4
<PAGE>

information  of  the  Company  (collectively,  the  "Confidential  Information")
including, without limitation,  business and marketing plans, customer files and
lists, business prospects,  sales techniques,  billing files,  software,  source
code, financial  information,  reports,  summaries,  spreadsheets,  evaluations,
drawings,  specifications,  seismic data,  reserve reports,  prospect  analyses,
geological  and  geophysical  data,  maps,  models,  interpretations,  and other
confidential  or  proprietary  information  of the  Company  whether in written,
graphic,  electronic or any other format. Employee further acknowledges that the
Company will expend considerable  amounts of time, money and other assets in the
development of this Confidential Information which is essential to its business,
and Employee  acknowledges  that his employment by the Company is conditioned on
his  promise  not  to  use  any  Confidential  Information  or  to  divulge  any
Confidential  Information  to any person or entity not  employed  by the Company
without the Company's prior written approval. Employee, therefore, agrees not to
use, disclose or in any manner reveal to any person, firm, company,  corporation
or  other  entity  any of the  Confidential  Information  conveyed  to him or in
connection  with his  employment  by the  Company  prior or  subsequent  to this
Agreement  other than for Employee to carry out his duties under this Agreement.
Anything  herein  to the  contrary  notwithstanding,  this  Agreement  shall  be
inoperative as to such portions of the Confidential Information which (i) are or
become generally  available to the public other than as a result of a disclosure
by Employee; (ii) become available to Employee on a nonconfidential basis from a
source, other than the Company or its representatives,  which has represented to
Employee (and which Employee has no reason to disbelieve after due inquiry) that
such source is  entitled  to  disclose  it, or (iii) were known to Employee on a
nonconfidential  basis  prior to  disclosure  to  Employee by the Company or its
representatives.

     Employee  further agrees that while he remains in the employ of the Company
and for a period of twelve (12) months following  termination of such employment
by  Employee  or by the  Company  for  cause,  Employee  will  not  directly  or
indirectly  (whether  through any person,  firm,  company,  corporation or other
entity,  other than the Company),  do any of the following  anywhere  within the
geographical area in which the Company does business:

          a. For his own account, for any person, firm, company,  corporation or
     other  entity,  other than the Company,  or for any other  reason,  solicit
     business or cause agents of any person, firm, company, corporation or other
     entity to  solicit  business  of a type  similar to that  solicited  by the
     Company from or for any person, firm, company,  corporation or other entity
     who was, at the effective date of the  termination  of his employment  with
     the Company,  or within a one (1) year period prior to such termination,  a
     customer of the Company,  as disclosed by the Company's  books and records,
     or solicit business from any prospective  customer of the Company with whom
     the Company has had  contact  within the one (1) year period  prior to such
     termination as disclosed by the Company's books and records;

          b. In any way, directly or indirectly,  whether  personally or through
     agents,  other  persons  or  otherwise,  divert or take away or  attempt to
     divert or take away any of such customers or  prospective  customers or any
     of the Company's  suppliers or business  prospects,  or otherwise interfere
     with or attempt to interfere with the Company's  relations with any of such
     customers, prospective customers, business prospects or suppliers; or

                                       5
<PAGE>

          c. In any other  way,  whether  personally  or through  agents,  other
     persons or otherwise, induce or attempt to induce any director, employee or
     agent of the Company to terminate his employment with the Company.

     16. Severability of Restrictive Covenants. It is understood and agreed that
the restrictions  imposed by the provisions of the foregoing Section 15 and each
subsection  thereof  are  separate  and  severable,  and it is the intent of the
parties hereto that in the event the restrictions imposed by said Section or any
subsection  should be  determined by any court of competent  jurisdiction  to be
void for any reason whatsoever,  the remaining  provisions of this Agreement and
the  restrictions  imposed by the remainder of said Section or subsection  shall
remain valid and binding upon the parties. It is also agreed and understood that
in the event any restriction contained in Section 15 should be considered by any
court of competent  jurisdiction to be unenforceable because unreasonable either
in length of time or area to which said restriction applies, it is the intent of
both parties hereto that said court reduce and reform the provisions  thereof so
as to apply to limits considered enforceable by said court.

     17. Equitable Remedies.  Recognizing that irreparable damage will result to
the  Company  in the  event of  breach  of any of the  foregoing  covenants  and
assurances  of Section 15 by  Employee,  the  Company  shall be  entitled  to an
injunction  to be issued by any court of competent  jurisdiction  enjoining  and
restraining  Employee and each and every person,  firm, company,  corporation or
other  entity  acting  in  concert  or  participating  with  Employee  from  the
continuation of such breach, and in addition thereto,  Employee shall pay to the
Company all  ascertainable  damages,  including costs and reasonable  attorneys'
fees and  expenses,  sustained  by the  Company  by reason of the breach of said
covenants and assurances.

     18. Survival of Representations. The covenants, agreements, representations
and warranties contained in or made by Employee pursuant to this Agreement shall
survive Employee's termination of employment,  irrespective of any investigation
made by or on behalf of any party.

     19. Waiver. Failure of either party to demand strict compliance with any of
the terms,  covenants or conditions  hereof shall not be deemed a waiver of such
term,  covenant or condition,  nor shall any waiver or  relinquishment by either
party of any right or power  hereunder at any one time or more times be deemed a
waiver or relinquishment of such right or power at any other time or times.

     20.  Severability.  The invalidity or  unenforceability of any provision or
provisions of this Agreement shall not affect the validity or  enforceability of
any other  provision  of this  Agreement,  which shall  remain in full force and
effect.

     21. Governing Law; Binding Effect.  This Agreement shall be governed by and
construed  in  accordance  with the laws of the State of  Oklahoma  and shall be
binding  upon  the  parties  hereto,  their  heirs,  executors,  administrators,
successors and assigns.

     22. Entire and Final Agreement.  This Agreement shall supersede any and all
agreements

                                       6
<PAGE>

of  employment,  oral or  written  (including  correspondence,  memoranda,  term
sheets,  etc.),  heretofore  existing and  contains the entire  agreement of the
parties with respect to the subject  matter  hereof.  This  Agreement may not be
modified  orally,  but only by an  agreement  in  writing,  signed  by the party
against whom the enforcement of any waiver, change,  modification,  extension or
discharge is sought.

     23. Assignment.  Neither this Agreement nor any of the rights,  obligations
or interests  arising  hereunder  may be assigned by Employee  without the prior
written  consent of the Company.  Neither this  Agreement nor any of the rights,
obligations  or  interests  arising  hereunder  may be assigned by the  Company,
without the prior written  consent of the Employee,  to a person other than: (1)
an affiliate of the Company;  or (2) any party with which the Company  merges or
consolidates,  or to whomever the Company may sell all or  substantially  of its
assets; provided,  however, that any such affiliate or successor shall expressly
assume all of the Company's  obligations  and liabilities to Employee under this
Agreement.

     24. Section Headings.  The section headings contained in this Agreement are
inserted  for purposes of  convenience  only and shall not affect the meaning or
interpretation of this Agreement.

     25. Signature Blocks.
         ----------------

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on
its behalf and  Employee  has hereunto set his hand the day and year first above
written.

"Employee"                                  "Company"

                                            QUEST RESOURCE CORPORATION
/s/ Jerry D. Cash
------------------------
Jerry D. Cash                               By:  /s/ David E. Grose
                                                 ------------------------------
                                                 David E. Grose

                                            Title: Chief Financial Officer

                                       7
<PAGE>

                                    EXHIBIT A

                                RELEASE AGREEMENT
                                -----------------

     THIS  RELEASE  AGREEMENT  ("Release")  is entered into  effective  the date
signed  below,  by and between  JERRY D. CASH  ("Employee")  and QUEST  RESOURCE
CORPORATION ("Company").

     WHEREAS,  the Company has determined  that  Employee's  employment with the
Company should end effective ________________________ ("Termination Date"); and

     WHEREAS,  the Company and Employee  desire to fully and finally resolve all
issues which might relate to Employee's employment with the Company.

     NOW THEREFORE,  in consideration of the mutual promises set forth below, it
is hereby agreed by and between Employee and Company as follows:

     A.   Payment to  Employee.  The Company  agrees to pay  Employee the sum of
          $________  (the  "Payment")  as  severance  pay,  less all  applicable
          withholdings  for state,  federal and FICA taxes. The Payment shall be
          paid  in  [insert  number  of  installments]   equal  installments  of
          $_________  on  each  regular  payroll  date  of  the  Company.   Such
          installments shall commence on the first payroll date that follows the
          expiration of the seven-day revocation period set forth in paragraph G
          below.

     B.   Employee's  Release of  Liability.  Employee  agrees to the  following
          general release:

          (a)  Employee  hereby  releases,  acquits and forever  discharges  the
          Company, its subsidiaries,  divisions, affiliates, agents, independent
          contractors, shareholders, employees, directors, and officers, and all
          of its predecessors and successors  (collectively  referred to in this
          Release  as  "Released  Parties")  of and from any and all  causes  of
          action, suits,  proceedings,  claims,  demands,  rights,  obligations,
          losses,  injury, costs,  expenses,  compensation and all other damages
          and  liabilities  of any kind or nature  whatsoever,  whether known or
          unknown,   suspected   or   unsuspected,    asserted   or   assertable
          (collectively  "Claims")  which Employee now owns or holds,  or at any
          time has owned or held, against the Released Parties arising out of or
          related to contract (express and/or implied),  tort, payment of wages,
          Title VII of the Civil  Rights  Act of 1964,  the Civil  Rights Act of
          1991, the Civil Rights Acts of 1866 and 1871,  the Age  Discrimination
          in Employment Act, as amended,  the Family Medical Leave Act, the Fair
          Labor  Standards Act, the Employee  Retirement  Income Security Act of
          1974, the Americans With  Disabilities  Act of 1991, the Equal Pay Act
          of 1963,  the  Rehabilitation  Act of 1973,  and/or any other federal,
          state or local statute,  law, ordinance,  order or principle of common
          law,  or any Claim in  relation  to  Employee's  ownership  or sale of
          Company stock or  participation  in any  compensation or

                                      A-1
<PAGE>

          stock  plan  or  any  Claim  relating  to any  other  law,  common  or
          statutory,  resulting  from any act or omission  committed  or omitted
          prior to the date this Release is signed,  and specifically  including
          Claims arising out of or in consequence of the employment relationship
          between Employee and Company, or the termination thereof.

          (b) Employee hereby represents,  warrants and agrees that Employee has
          not initiated,  nor will he initiate, any legal proceedings,  charges,
          complaints  or other  actions  in any court or  administrative  agency
          regarding the Claims  released  herein and that none of the Claims has
          been assigned,  encumbered or otherwise transferred.  Employee further
          waives any right he may have to any benefit or other  relief the Equal
          Employment Opportunity  Commission,  or similar state or local agency,
          might  seek on his  behalf,  and he agrees to  direct  such  agency to
          withdraw or dismiss any such action.

     C.   Confidentiality  of this Release.  Employee  agrees to keep the terms,
          amount  and  fact of this  Release  confidential.  Employee  will  not
          disclose any information  concerning this Release to anyone other than
          his immediate family,  tax advisor and attorney,  each of whom will be
          informed  and  bound  by  this  confidentiality  provision.   Employee
          acknowledges that revealing any information regarding the terms of his
          separation from employment or discussing the terms of this Release may
          cause the Company  injury and damage and will  constitute  a breach of
          his  obligations  under the Release and will cause a forfeiture of his
          rights hereunder.

     D.   Employee   Agreement.   The  parties   acknowledge   that   Employee's
          obligations  in  Sections  15 through 17 of the  Employment  Agreement
          entered into between  Company and Employee dated October 17, 2005 (the
          "Employment  Agreement") remain in full force and effect. This Release
          and Sections 15 through 17 of the Employment  Agreement constitute the
          entire agreement  between  Employee and the Company.  This Release may
          not be modified orally, but only by an agreement in writing, signed by
          the  party  against  whom  the  enforcement  of  any  waiver,  change,
          modification, extension or discharge is sought.

     E.   Time to  Review.  Employee  acknowledges  that he has been  given  the
          opportunity  to consider  and review this  Release with counsel of his
          choice for a reasonable  period of time, up to  twenty-one  (21) days,
          and that he understands his respective rights and obligations pursuant
          to this Release. Employee further declares he enters into this Release
          freely,  voluntarily  and  without any  pressure or coercion  from any
          person or entity, including, but not limited to, the Company or any of
          its representatives.

     F.   Time to Revoke.  Employee  understands that he has the right to revoke
          this Release  within a period of seven (7) days  following his signing
          this  Release  and that this  Release  shall not become  effective  or
          enforceable,  nor shall he receive the  Payment,  until the  seven-day
          revocation period has ended.

     G.   Governing Law;  Binding Effect.  This Release is made and entered into
          in the  State of  Oklahoma  and  shall be  interpreted,  enforced  and
          governed  by the laws of the State of  Oklahoma,  and shall be binding
          upon the  parties  hereto,  their  heirs,  executors,  administrators,
          successors and assigns.

                                      A-2
<PAGE>

     H.   Non-Admission of Liability.  Employee  understands and agrees that the
          Company  denies that he has  cognizable  claims against it. He further
          understands  and agrees that neither this Release nor any action taken
          hereunder  is to be  construed  as an  admission  by  the  Company  of
          violation  of any local,  state,  federal or common law. In fact,  the
          Employee  understands  that  the  Company  expressly  denies  any such
          violation.

     I.   Severability.  The invalidity or  unenforceability of any provision or
          provisions   of  this  Release   shall  not  affect  the  validity  or
          enforceability  of any other  provision of this  Release,  which shall
          remain in full force and effect.

     IN WITNESS  WHEREOF,  the Company has caused this Release to be executed on
its behalf to be effective the date signed below.

                                            QUEST RESOURCE CORPORATION

                                            By:
                                                --------------------------------

                                            Name:
                                                   -----------------------------

                                            Title:
                                                     ---------------------------

I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE TERMS OF THIS RELEASE,  INCLUDING
THE RELEASE OF CLAIMS  HEREIN,  AND HAVE HAD  SUFFICIENT  OPPORTUNITY TO CONSULT
WITH LEGAL COUNSEL  PRIOR TO EXECUTING  THIS RELEASE TO THE EXTENT I DEEMED SUCH
CONSULTATION  NECESSARY AND I VOLUNTARILY  ACCEPT AND AGREE TO THE TERMS OF THIS
RELEASE, INCLUDING THE RELEASE OF CLAIMS HEREIN.

                                    EMPLOYEE

Dated: _________________
                                    --------------------------------------------
                                           Jerry D. Cash

                             Current Address:
                                                     ---------------------------

                                                     ---------------------------
                             Current Telephone No.
                                                     ---------------------------

                                      A-3

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