Document:

Exhibit 10.7 (Form of Security Agreement)

    Exhibit
      10.7

    
 

    SECURITY
      AGREEMENT

     

    SECURITY
      AGREEMENT (as amended, restated, supplemented or otherwise modified from time
      to
      time in accordance herewith and including all attachments, exhibits and
      schedules hereto, the “Agreement”),
      dated
      as of September 30, 2005, made by Quest Oil Corporation, a Nevada corporation
      (“Quest”),
      and
      its wholly owned subsidiaries, Quest Canada Corp., a Canadian company
      (“Quest
      Canada”),
      Wallstin Petroleum, LLC, a Texas limited liability company (“Wallstin”),
      and
      Petrostar Oil Services, Inc. , a Texas corporation (“Petrostar”
      and,
      together with Quest, Quest Canada and Wallstin, the “Grantor”),
      in
      favor of the secured parties listed on Exhibit
      A
      to this
      Agreement and their permitted successors and assigns (collectively, the
“Secured
      Parties”).

     

    WHEREAS,
      Quest has issued or will issue separate senior secured convertible promissory
      notes to the Secured Parties (the“Notes”)
      pursuant to a Note and Warrant Purchase Agreement, dated as of September 30,
      2005 (the “Purchase
      Agreement”),
      by
      and among Quest and the Secured Parties; and

     

    WHEREAS,
      the Secured Parties and the Grantor agree that the Grantor execute and deliver
      to the Secured Parties a security agreement providing for the grant to the
      Secured Parties of a continuing security interest in all personal property
      and
      assets of the Grantor, all in substantially the form hereof to secure all
      Obligations (hereinafter defined).

     

    NOW,
      THEREFORE, the parties agree as follows:

     

    ARTICLE
      I.   Definitions

     

    Section
      1.1.  Definition
      of Terms Used Herein.
      All
      capitalized terms used herein and not defined herein have the respective
      meanings provided therefor in the Purchase Agreement or the Notes, as
      applicable. All terms defined in the Uniform Commercial Code (hereinafter
      defined) as in effect from time to time and used herein and not otherwise
      defined herein (whether or not such terms are capitalized) have the same
      definitions herein as specified therein.

     

    Section
      1.2.  Definition
      of Certain Terms Used Herein.
      As used
      herein, the following terms have the following meanings:

     

    "Collateral"
      means
      all accounts receivable of the Grantor and all personal and fixed property
      of
      every kind and nature, including, without limitation, all furniture, fixtures,
      equipment, raw materials, inventory, as extracted collateral, or other goods,
      accounts, contract rights, rights to the payment of money, insurance refund
      claims and all other insurance claims and proceeds, tort claims, chattel paper,
      documents, instruments, securities and other investment property, deposit
      accounts, rights to proceeds of letters of credit and all general intangibles
      including, without limitation, all tax refund claims, license fees, patents,
      patent licenses, patent applications, trademarks, trademark licenses, trademark
      applications, trade names, copyrights, copyright licenses, copyright
      applications, rights to sue and recover for past infringement of patents,
      trademarks and copyrights, computer programs, computer software, engineering
      drawings, service marks, customer lists, goodwill, and all licenses, permits,
      agreements of any kind or nature pursuant to which the Grantor possesses, uses
      or has authority to possess or use property (whether tangible or intangible)
      of
      others or others possess, use or have authority to possess or use property
      (whether tangible or intangible) of the Grantor, and all recorded data of any
      kind or nature, regardless of the medium of recording including, without
      limitation, all books and records, software, writings, plans, specifications
      and
      schematics, whether now owned or hereinafter acquired by the Grantor; and all
      proceeds and products of each of the foregoing.

     

    “Default”
      means
      any event or circumstance which, with the giving of notice, the lapse of time,
      or both, would (if not cured, waived, or otherwise remedied during such time)
      constitute an Event of Default.

     

    “Event
      of Default”
      has the
      meaning specified in the Notes. 

     

    “Indemnitees”
      has the
      meaning specified in Section 7.5(b).

     

    “Lien”
      means:
      (i) any interest in property securing an obligation owed to, or a claim
      by,
      a Person other than the owner of the property, whether such interest is based
      on
      the common law, statute, or contract, and including a security interest, charge,
      claim, or lien arising from a mortgage, deed of trust, encumbrance, pledge,
      hypothecation, assignment, deposit arrangement, agreement, security agreement,
      conditional sale or trust receipt or a lease, consignment or bailment for
      security purposes; (ii) to the extent not included under clause (i),
      any
      reservation, exception, encroachment, easement, right-of-way, covenant,
      condition, restriction, lease or other title exception or encumbrance affecting
      property; and (iii) any contingent or other agreement to provide any of the
      foregoing.

     

    "Notes"
      has the
      meaning assigned to such term in the first recital of this
      Agreement.

     

    "Obligations"
      means
      all indebtedness, liabilities, obligations, covenants and duties of the Grantor
      to the Secured Parties of every kind, nature and description, direct or
      indirect, absolute or contingent, due or not due, contractual or tortious,
      liquidated or unliquidated, arising by operation of law or otherwise, now
      existing of hereafter arising under or in connection with the Notes, this
      Agreement or the other Transaction Documents.

     

    “Registered
      Organization”means
      an
      entity formed by filing a registration document with a United States
      Governmental Authority, such as a corporation, limited partnership or limited
      liability company.

     

    "Security
      Interest"
      has the
      meaning specified in Section 2.1 of this Agreement.

     

    “Uniform
      Commercial Code”
      means
      the Uniform Commercial Code from time to time in effect in the State of New
      York.

     

    
      
         

      

      
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    ARTICLE
      II.   Security
      Interest

     

    Section
      2.1.  Security
      Interest.
      As
      security for the payment and performance, in full of the Obligations, and any
      extensions, renewals, modifications or refinancings of the Obligations, the
      Grantor hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
      hypothecates and transfers to the Secured Parties, and hereby grants to the
      Secured Parties, their successors and assigns, a security interest in, all
      of
      such Grantor's right, title and interest in, to and under the Collateral and
      all
      hereinafter acquired Collateral (the "Security
      Interest").
      

     

    Section
      2.2.  No
      Assumption of Liability.
      The
      Security Interest is granted as security only and shall not subject the Secured
      Parties to, or in any way alter or modify, any obligation or liability of the
      Grantor with respect to or arising out of the Collateral.

     

    ARTICLE
      III.   Representations
      and Warranties

     

    The
      Grantor represents and warrants to the Secured Parties that:

     

    Section
      3.1.  Title
      and Authority.
      The
      Grantor has good and valid rights in and title to the Collateral with respect
      to
      which it has purported to grant a security interest hereunder and has full
      power
      and authority to grant to the Secured Parties the Security Interest and to
      execute, deliver and perform its obligations in accordance with the terms of
      this Agreement, without the consent or approval of any other Person other than
      any consent or approval which has been obtained.

     

    Section
      3.2.  Filings;
      Actions to Achieve Perfection.
      Fully
      executed Uniform Commercial Code financing statements (including fixture
      filings, as applicable) or other appropriate filings, recordings or
      registrations containing a description of the Collateral have been delivered
      to
      the Secured Parties for filing in each United States governmental, municipal
      or
      other office specified in Schedule A, which are all the filings, recordings
      and
      registrations that are necessary to publish notice of and protect the validity
      of and to establish a legal, valid and first priority perfected security
      interest in favor of the Secured Parties in respect of all Collateral in which
      the Security Interest may be perfected by filing, recording or registration
      in
      the United States (or any political subdivision thereof) and its territories
      and
      possessions, and no further or subsequent filing, refiling, recording,
      rerecording, registration or reregistration is necessary in any such
      jurisdiction, except as provided under applicable law with respect to the filing
      of continuation statements or with respect to the filing of amendments or new
      filings to reflect the change of the Grantor's name, location, identity or
      corporate structure. The Grantor’s name is listed in the preamble of this
      Agreement identically to how it appears on its articles of incorporation or
      other organizational documents.

     

    Section
      3.3.  Validity
      and Priority of Security Interest.
      The
      Security Interest constitutes (a) a legal and valid first priority security
      interest in all the Collateral securing the payment and performance of the
      Obligations, (b) subject only to the filings described in Section 3.2 above
      and
      other previously perfected security interests in the Collateral listed on
      Schedule 3.3 to this Agreement (“Existing Liens”), a perfected first priority
      security interest in all Collateral in which a security interest may be
      perfected by filing, recording or registration in the United States pursuant
      to
      the Uniform Commercial Code or other applicable law in the United States (or
      any
      political subdivision thereof) and its territories and possessions or any other
      country, state or nation (or any political subdivision thereof). The Security
      Interest is and shall be subordinate to any other Existing Lien on any of the
      Collateral.

     

    Section
      3.4.  Absence
      of Other Liens.
      The
      Grantor's Collateral is owned by the Grantor free and clear of any Lien other
      than Existing Liens. Without limiting the foregoing and except as set forth
      on
      Schedule 3.4 to this Agreement, the Grantor has not filed or consented to any
      filing of any financing statement or similar filing in favor of any Person
      other
      than the Secured Parties, nor permitted the granting or assignment of a security
      interest or permitted perfection of any security interest in the Collateral
      in
      favor of any Person other than the Secured Parties. The Grantor’s having
      possession of all instruments, certificates and cash constituting Collateral
      from time to time and the filing of financing statements in the offices referred
      to in Schedule A hereto results in the perfection of such security interest.
      Such Security Interest is, or in the case of Collateral in which the Grantor
      obtain rights after the date hereof, will be, a perfected, first priority
      security interest. Such notices, filings and all other action necessary or
      desirable to perfect and protect such security interest have been duly
      taken.

     

    Section
      3.5.  Valid
      and Binding Obligation.
      This Agreement constitutes the legal, valid and binding obligation of the
      Grantor, enforceable against the Grantor in accordance with its terms, except
      (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
      and other laws of general application affecting enforcement of creditors’ rights
      generally, (ii) as limited by laws relating to the availability of specific
      performance, injunctive relief, or other equitable remedies, and (iii) to the
      extent the indemnification provisions contained in this Agreement may be limited
      by applicable federal or state securities laws.

     

    
      
         

      

      
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    ARTICLE
      IV.   Covenants

     

    Section
      4.1.  Change
      of Name; Location of Collateral; Place of Business, State of Formation or
      Organization.

     

      The
      Grantor shall notify the Secured Parties in writing at least eleven (11) days
      prior to any change (i) in its corporate name or in any trade name used to
      identify it in the conduct of its business or in the ownership of its
      properties, (ii) in the location of its chief executive office, its principal
      place of business, any office in which it maintains books or records relating
      to
      Collateral owned by it (including the establishment of any such new office
      or
      facility), (iii) in its identity or corporate structure such that a filed filing
      made under the Uniform Commercial Code becomes misleading or (iv) in its Federal
      Taxpayer Identification Number. Furthermore, the Grantor shall not effect or
      permit any change referred to in the preceding sentence unless all filings
      have
      been made under the Uniform Commercial Code or otherwise that are required
      in
      order for the Secured Parties to continue at all times following such change
      to
      have a valid, legal and perfected first priority security interest in all the
      Collateral.

     

      Without
      limiting Section 4.1(a), without the prior written consent of the Secured
      Parties in each instance, the Grantor shall not change its (i) principal
      residence, if it is an individual, (ii) place of business, if it has only one
      place of business and is not a Registered Organization, (iii) principal place
      of
      business, if it has more than one place of business and is not a Registered
      Organization, or (iv) state of incorporation, formation or organization, if
      it
      is a Registered Organization.

     

    Section
      4.2.  Records.
      The
      Grantor shall maintain, at its own cost and expense, such complete and accurate
      records with respect to the Collateral owned by it as is consistent with its
      current practices and in accordance with such prudent and standard practices
      used in industries that are the same as or similar to those in which the Grantor
      is engaged, but in any event to include complete accounting records indicating
      all payments and proceeds received with respect to any part of the Collateral,
      and, at such time or times as the Secured Parties may reasonably request,
      promptly to prepare and deliver to the Secured Parties a duly certified schedule
      or schedules in form and detail satisfactory to the Secured Parties showing
      the
      identity, amount and location of any and all Collateral.

     

    Section
      4.3.  Periodic
      Certification; Notice of Changes.In
      the
      event there should at any time be any change in the information represented
      and
      warranted herein or in the documents and instruments executed and delivered
      in
      connection herewith, the Grantor shall immediately notify the Secured Parties
      in
      writing of such change (this notice requirement shall be in extension of and
      shall not limit or relieve the Grantor of any other covenants
      hereunder).

     

    Section
      4.4.  Protection
      of Security.The
      Grantor shall, at its own cost and expense, take any and all actions necessary
      to defend title to the Collateral against all persons and to defend the Security
      Interest of the Secured Parties in the Collateral and the priority thereof
      against any Lien. 

     

    Section
      4.5.  Inspection
      and Verification. The
      Secured Parties and such persons as the Secured Parties may reasonably designate
      shall have the right to inspect the Collateral, all records related thereto
      (and
      to make extracts and copies from such records) and the premises upon which
      any
      of the Collateral is located, to discuss the Grantor's affairs with the officers
      of the Grantor and its independent accountants and to verify under reasonable
      procedures the validity, amount, quality, quantity, value, condition and status
      of, or any other matter relating to, the Collateral, including, in the case
      of
      collateral in the possession of any third Person, by contacting any account
      debtor or third Person possessing such Collateral for the purpose of making
      such
      a verification. Out-of-pocket expenses in connection with any inspections by
      representatives of the Secured Parties shall be (a) the obligations of the
      Grantor with respect to any inspection after the Secured Parties’ demand payment
      of the Notes or (b) the obligation of the Secured Parties in any other case.
      

     

    Section
      4.6.  Taxes;
      Encumbrances. At
      their
      option, the Secured Parties may discharge, Liens other than Existing Liens
      at
      any time levied or placed on the Collateral and may pay for the maintenance
      and
      preservation of the Collateral to the extent the Grantor fails to do so and
      the
      Grantor shall reimburse the Secured Parties on demand for any payment made
      or
      any expense incurred by the Secured Parties pursuant to the foregoing
      authorization; provided, however, that nothing in this Section shall be
      interpreted as excusing the Grantor from the performance of, or imposing any
      obligation on the Secured Parties to cure or perform, any covenants or other
      obligation of the Grantor with respect to any Lien or maintenance or
      preservation of Collateral as set forth herein.

     

    Section
      4.7.  Use
      and Disposition of Collateral. The
      Grantor shall not make or permit to be made an assignment, pledge or
      hypothecation of any Collateral or shall grant any other Lien in respect of
      the
      Collateral without the prior written consent of the Secured Parties. The Grantor
      shall not make or permit to be made any transfer of any Collateral other than
      with respect to Existing Liens and other liens approved by the Secured Parties
      and the Grantor shall remain at all times in possession of the Collateral owned
      by it.

     

    Section
      4.8.  Insurance/Notice
      of Loss.
      Within a
      reasonable period of time following the date of this Agreement, Grantor, at
      its
      own expense, shall maintain or cause to be maintained insurance covering
      physical loss or damage to the Collateral as described on Schedule 4.8 to this
      Agreement. In extension of the foregoing and without limitation, such insurance
      shall be payable to the Secured Parties as loss payee under a “standard” loss
      payee clause, and the Secured Parties shall be listed as an “additional insured”
      on Grantor’s general liability insurance. Such insurance shall not be
      terminated, cancelled or not renewed for any reason, including non-payment
      of
      insurance premiums, unless the insurer shall have provided the Secured Parties
      at least 30 days prior written notice. Grantor irrevocably makes, constitutes
      and appoints the Secured Parties (and all officers, employees or agents
      designated by the Secured Parties) as its true and lawful agent and
      attorney-in-fact for the purpose, at any time following the Secured Parties’
      demand for payment of the Notes, of making, settling and adjusting claims in
      respect of Collateral under policies of insurance, endorsing the name of Grantor
      on any check, draft, instrument or other item of payment for the proceeds of
      such policies of insurance and for making all determinations and decisions
      with
      respect thereto. In the event that Grantor at any time or times shall fail
      to
      obtain or maintain any of the policies of insurance required hereby or to pay
      any premium in whole or part relating thereto, the Secured Parties may, without
      waiving or releasing any obligation or liability of Grantor hereunder, in their
      sole discretion, obtain and maintain such policies of insurance and pay such
      premium and take any other actions with respect thereto as the Secured Parties
      deem advisable. All sums disbursed by the Secured Parties in connection and
      in
      accordance with this Section, including reasonable attorneys' fees, court costs,
      expenses and other charges relating thereto, shall be payable upon demand,
      by
      Grantor to the Secured Parties and shall be additional Obligations secured
      hereby. Grantor shall promptly notify the Secured Parties if any material
      portion of the Collateral owned or held by Grantor is damaged or destroyed.
      The
      proceeds of any casualty insurance in respect of any casualty loss of any of
      the
      Collateral shall (i) so long as the Secured Parties have not demanded payment
      of
      the Notes, be disbursed to Grantor for direct application by Grantor solely
      to
      the repair or replacement of Grantor’s property so damaged or destroyed, and
      (ii) in all other circumstances, be held by the Secured Parties as cash
      collateral for the Obligations. The Secured Parties may, at their sole option,
      disburse from time to time all or any part of such proceeds so held as cash
      collateral, upon such terms and conditions as the Secured Parties may reasonably
      prescribe, for direct application by the Secured Parties solely to the repair
      or
      replacement of Grantor’s property so damaged or destroyed, or Grantor may apply
      all or any part of such proceeds to the Obligations.

     

    Section
      4.9.  Legend.
      Grantor
      shall legend, in form and manner satisfactory to the Secured Parties, its
      accounts and its books, records and documents evidencing or pertaining thereto
      with an appropriate reference to the fact that such accounts have been assigned
      to the Secured Parties and that the Secured Parties have a security interest
      therein. 

     

    
      
         

      

      
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    ARTICLE
      V.   Further
      Assurances; Power of Attorney 

     

    Section
      5.1.  Further
      Assurances.
      Grantor
      shall, at its own expense, execute, acknowledge, deliver and cause to be duly
      filed all such further instruments and documents and take all such actions
      as
      the Secured Parties may from time to time reasonably request to better assure,
      preserve, protect and perfect the Security Interest and the rights and remedies
      created hereby, including the payment of any fees and taxes required in
      connection with the execution and delivery of this Agreement, the granting
      of
      the Security Interest and the filing of any financing statements (including
      fixture filings) or other documents in connection herewith or therewith. If
      any
      amount payable under or in connection with any of the Collateral shall be or
      become evidenced by any promissory note or other instrument, such note or
      instrument shall be immediately pledged and delivered to the Secured Parties,
      duly endorsed in a manner satisfactory to the Secured Parties. 

     

    Section
      5.2.  Power
      of Attorney.

     

      Grantor
      hereby irrevocably (as a power coupled with an interest) constitutes and
      appoints the Secured Parties (and all officers, employees or agents designated
      by the Secured Parties), its attorney-in-fact with full power of substitution,
      for the benefit of the Secured Parties, 

     

    (i)
        to
      take
      all appropriate action and to execute all documents and instruments that may
      be
      necessary or desirable to accomplish the purposes of this Agreement, and without
      limiting the generality of the foregoing, Grantor hereby grants the power to
      file one or more financing statements (including fixture filings), continuation
      statements, filings with the United States Patent and Trademark Office or United
      States Copyright Office (or any successor office or any similar office in any
      other country) or other documents for the purpose of perfecting, confirming,
      continuing, enforcing or protecting the Security Interest granted by Grantor,
      without the signature of Grantor, and naming Grantor as debtor and the Secured
      Parties as secured party; and

     

    (ii)
        at
      any
      time following the Secured Parties’ demand for payment of the Notes (i) to
      receive, endorse, assign and/or deliver any and all notes, acceptances, checks,
      drafts, money orders or other evidences of payment relating to the Collateral
      or
      any part thereof; (ii) to demand, collect, receive payment of, give receipt
      for
      and give discharges and releases of all or any of the Collateral; (iii) to
      sign
      the name of Grantor on any invoice or bill of lading relating to any of the
      Collateral; (iv) to send verifications of accounts to any account debtor or
      any
      other Person liable for an account; (v) to commence and prosecute any and all
      suits, actions or proceedings at law or in equity in any court of competent
      jurisdiction to collect or otherwise realize on all or any of the Collateral
      or
      to enforce any rights in respect of any Collateral; (vi) to settle, compromise,
      compound, adjust or defend any actions, suits or proceeding relating to all
      or
      any of the Collateral; and (vii) to use, sell, assign, transfer, pledge, make
      any agreement with respect to or otherwise deal with all or any of the
      Collateral, and to do all other acts and things necessary to carry out the
      purposes of this Agree-ment, as fully and completely as though the Secured
      Parties were the absolute owner of the Collateral for all purposes; provided,
      however, that
      nothing herein contained shall be construed as requiring or obligating the
      Secured Parties to make any commitment or to make any inquiry as to the nature
      or sufficiency of any payment received by the Secured Parties, or to present
      or
      file any claim or notice, or to take any action with respect to the Collateral
      or any part thereof or the moneys due or to become due in respect thereof or
      any
      property covered thereby, and no action taken or omitted to be taken by the
      Secured Parties with respect to the Collateral or any part thereof shall give
      rise to any defense, counterclaim or offset in favor of Grantor or to any claim
      or action against the Secured Parties. 

     

      The
      provisions of this Article shall in no event relieve Grantor of any of its
      obligations hereunder with respect to the Collateral or any part thereof or
      impose any obligation on the Secured Parties to proceed in any particular manner
      with respect to the Collateral or any part thereof, or in any way limit the
      exercise by the Secured Parties of any other or further right which it may
      have
      on the date of this Agreement or hereafter, whether hereunder, by law or
      otherwise.

     

    
      
         

      

      
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    ARTICLE
      VI.   Remedies

     

    Section
      6.1.  Remedies
      upon Default. 

     

      Upon
      the
      occurrence and during the continuance of an Event of Default, Grantor agrees
      to
      deliver each item of its Collateral to the Secured Parties on demand, and it
      is
      agreed that the Secured Parties shall have the right to take any of or all
      the
      following actions at the same or different times (but at all times subject
      to
      any Existing Liens): with or without legal process and with or without prior
      notice or demand for performance, to take possession of the Collateral and
      without liability for trespass to enter any premises where the Collateral may
      be
      located for the purpose of taking possession of or removing the Collateral,
      exercise Grantor's right to bill and receive payment for completed work and,
      generally, to exercise any and all rights afforded to a secured party under
      the
      Uniform Commercial Code or other applicable law. Without limiting the generality
      of the foregoing, Grantor agrees that the Secured Parties shall have the right,
      subject to the mandatory requirements of applicable law, to sell or otherwise
      dispose of all or any part of the Collateral, at public or private sale or
      at
      any broker's board or on any securities exchange, for cash, upon credit or
      for
      future delivery as the Secured Parties shall deem appropriate. The Secured
      Parties shall be authorized at any such sale (if it deems it advisable to do
      so)
      to restrict the prospective bidders or purchasers to persons who will represent
      and agree that they are purchasing the Collateral for their own account for
      investment and not with a view to the distribution or sale thereof, and upon
      consum-mation of any such sale the Secured Parties shall have the right to
      assign, transfer and deliver to the purchaser or purchasers thereof the
      Collateral so sold. Each such purchaser at any such sale shall hold the property
      sold absolutely, free from any claim or right on the part of Grantor, and
      Grantor hereby waives (to the extent permitted by law) all rights of redemption,
      stay and appraisal which Grantor now has or may at any time in the future have
      under any rule of law or statute now existing or hereafter enacted.

     

      The
      Secured Parties shall give Grantor ten (10) days' written notice (which Grantor
      agrees is reasonable notice within the meaning of Section 9-504(3) of the
      Uniform Commercial Code) of the Secured Parties’ intention to make any sale of
      Collateral. Such notice, in the case of a public sale, shall state the time
      and
      place for such sale and, in the case of a sale at a broker's board or on a
      securities exchange, shall state the board or exchange at which such sale is
      to
      be made and the day on which the Collateral, or portion thereof, will first
      be
      offered for sale at such board or exchange. Any such public sale shall be held
      at such time or times within ordinary business hours and at such place or places
      as the Secured Parties may fix and state in the notice (if any) of such sale.
      At
      any such sale, the Collateral, or portion thereof, to be sold may be sold in
      one
      lot as an entirety or in separate parcels, as the Secured Parties may (in their
      sole and absolute discretion) determine. The Secured Parties shall not be
      obligated to make any sale of any Collateral if it shall determine not to do
      so,
      regardless of the fact that notice of sale of such Collateral shall have been
      given. The Secured Parties may, without notice or publication, adjourn any
      public or private sale or cause the same to be adjourned from time to time
      by
      announcement at the time and place fixed for sale, and such sale may, without
      further notice, be made at the time and place to which the same was so
      adjourned. In case any sale of all or any part of the Collateral is made on
      credit or for future delivery, the Collateral so sold may be retained by the
      Secured Parties until the sale price is paid by the purchaser or purchasers
      thereof, but the Secured Parties shall not incur any liability in case any
      such
      purchaser or purchasers shall fail to take up and pay for the Collateral so
      sold
      and, in case of any such failure, such Collateral may be sold again upon like
      notice. At any public (or, to the extent permitted by law, private) sale made
      pursuant to this Section, the Secured Parties may bid for or purchase, free
      (to
      the extent permitted by law) from any right of redemption, stay, valuation
      or
      appraisal on the part of Grantor (all said rights being also hereby waived
      and
      released to the extent permitted by law), the Collateral or any part thereof
      offered for sale and may make payment on account thereof by using any claim
      then
      due and payable to the Secured Parties from Grantor as a credit against the
      purchase price, and the Secured Parties may, upon compliance with the terms
      of
      sale, hold, retain and dispose of such property without further accountability
      to Grantor therefor. For purposes hereof, a written agreement to purchase the
      Collateral or any portion thereof shall be treated as a sale thereof; the
      Secured Parties shall be free to carry out such sale pursuant to such agreement
      and Grantor shall not be entitled to the return of the Collateral or any portion
      thereof subject thereto, notwithstanding the fact that after the Secured Parties
      shall have entered into such an agreement all Obligations have been paid in
      full. As an alternative to exercising the power of sale herein conferred upon
      it, the Secured Parties may proceed by a suit or suits at law or in equity
      to
      foreclose this Agreement and to sell the Collateral or any portion thereof
      pursuant to a judgment or decree of a court or courts having competent
      jurisdiction or pursuant to a proceeding by a court-appointed
      receiver.

     

    Section
      6.2.  Application
      of Proceeds.
      The
      Secured Parties shall apply the proceeds of any collection or sale of the
      Collateral, as well as any Collateral consisting of cash, as follows:

     

      FIRST,
      to
      the payment of all costs and expenses incurred by the Secured Parties in
      connection with such collection or sale or otherwise in connection with this
      Agreement or any of the Obligations, including all court costs and the fees
      and
      expenses of its agents and legal counsel, and any other costs or expenses
      incurred in connection with the exercise of any right or remedy hereunder,
      under
      the Purchase Agreement, the Notes and the other Transaction
      Documents;

     

      SECOND,
      to the payment in full of the Obligations; and

     

      THIRD,
      to
      Grantor, its successors or assigns, or to whomsoever may be lawfully entitled
      to
      receive the same, or as a court of competent jurisdiction may otherwise
      direct.

     

    Subject
      to the foregoing, the Secured Parties shall have absolute discretion as to
      the
      time of application of such proceeds, moneys or balances in accordance with
      this
      Agreement. Upon any sale of the Collateral by the Secured Parties (including
      pursuant to a power of sale granted by statute or under a judicial proceeding),
      the receipt of any such proceeds, moneys or balances by the Secured Parties
      or
      of the officer making the sale shall be a sufficient discharge to the purchaser
      or purchasers of the Collateral so sold and such purchaser or purchasers shall
      not be obligated to see to the application of any part of the purchase money
      paid over to the Secured Parties or such officer or be answerable in any way
      for
      the misapplication thereof.

     

    Section
      6.3.  Grant
      of License to Use Intellectual Property.
      For the
      purpose of enabling the Secured Parties to exercise rights and remedies under
      this Article at such time as the Secured Parties shall be lawfully entitled
      to
      exercise such rights and remedies, Grantor hereby grants to the Secured Parties
      an irrevocable, non-exclusive license (exercisable without payment of royalty
      or
      other compensation to Grantor) to use, license or sub-license any of the
      Collateral consisting of intellectual property now owned or hereafter acquired
      by Grantor, and wherever the same may be located, and including in such license
      reasonable access to all media in which any of the licensed items may be
      recorded or stored and to all computer software and programs used for the
      compilation or printout thereof. The use of such license by the Secured Parties
      may be exercised, at the option of the Secured Parties, only following the
      Secured Parties’ demand for payment of the Notes. 

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    ARTICLE
      VII.   Miscellaneous

     

    Section
      7.1.  Notices.
      All
      communications and notices hereunder to the Grantor and to the Secured Parties
      shall (except as otherwise expressly permitted herein) be in writing and
      delivered to the Grantor or the Secured Parties, as the case may be, as provided
      in the Purchase Agreement. 

     

    Section
      7.2.  Security
      Interest Absolute.
      All rights of the Secured Parties hereunder, the Security Interest and all
      obligations of Grantor hereunder shall be absolute and unconditional
      irrespective of (a) any lack of validity or enforceability of the Purchase
      Agreement, the Notes, any Transaction Document or any agreement with respect
      to
      any of the Obligations or any other agreement or instrument relating to any
      of
      the foregoing, (b) any change in the time, manner or place of payment of, or
      in
      any other term of, all or any of the Obligations, or any other amendment or
      waiver of or any consent to any departure from the Purchase Agreement, the
      Notes, any Transaction Document or any other agreement or instrument, (c) any
      exchange, release or non-perfection of any Lien on other collateral, or any
      release or amendment or waiver of or consent under or departure from any
      guarantee, securing or guaranteeing all or any of the Obligations, or (d) any
      other circumstance that might otherwise constitute a defense available to,
      or a
      discharge of, Grantor in respect of the Obligations or this Agreement.

     

    Section
      7.3.  Survival
      of Agreement.
      All covenants, agreements, representations and warranties made by Grantor herein
      and in the certificates or other instruments prepared or delivered in connection
      with or pursuant to this Agreement shall be considered to have been relied
      upon
      by the Secured Parties and shall survive the making of the loan and the
      execution and delivery to the Secured Parties of the Notes, regardless of any
      investigation made by the Secured Parties or on their behalf; and shall continue
      in full force and effect until this Agreement shall terminate.

     

    Section
      7.4.  Binding
      Effect; Several Agreement; Successors and Assigns.
      This
      Agreement shall become effective as to Grantor when a counterpart hereof
      executed on behalf of Grantor shall have been delivered to the Secured Parties
      and a counterpart hereof shall have been executed on behalf of the Secured
      Parties, and thereafter shall be binding upon Grantor and the Secured Parties
      and their respective successors and assigns, and shall inure to the benefit
      of
      Grantor, the Secured Parties and their respective successors and assigns, except
      that Grantor shall not have the right to assign or transfer its rights or
      obligations hereunder or any interest herein or in the Collateral (and any
      such
      assignment or transfer shall be void) except as expressly contemplated by this
      Agreement, the Purchase Agreement, the Notes or the other Transaction Documents.
      

    

    Section
      7.5.  Secured
      Parties’ Fees and Expense; Indemnification.

     

      Grantor
      agrees to pay upon demand to the Secured Parties the amount of any and all
      reasonable expenses, including all reasonable fees, disbursements and other
      charges of its counsel and of any experts or agents, which the Secured Parties
      may incur in connection with (i) the administration of this Agreement (including
      the customary fees and charges of the Secured Parties for any audits conducted
      by them or on their behalf with respect to the accounts inventory), (ii) the
      custody or preservation of, or the sale of, collection from or other realization
      upon any of the Collateral, (iii) the exercise, enforcement or protection of
      any
      of the rights of the Secured Parties hereunder or (iv) the failure of Grantor
      to
      perform or observe any of the provisions hereof. 

     

      Grantor
      agrees to indemnify the Secured Parties and the agent, contractors and employees
      of the Secured Parties (collectively, the “Indemnitees”)
      against, and hold each of them harmless from, any and all losses, claims,
      damages, liabilities and related expenses, including reasonable fees,
      disbursements and other charges of counsel, incurred by or asserted against
      any
      of them arising out of, in any way connected with, or as a result of, the
      execution, delivery, or performance of this Agreement or any agreement or
      instrument contemplated hereby or any claim, litigation, investigation or
      proceeding relating hereto or to the Collateral, whether or not any Indemnitee
      is a party thereto; provided that such indemnity shall not, as to any
      Indemnitee, be available to the extent that such losses, claims, damages,
      liabilities or related expenses are determined by a court of competent
      jurisdiction by final and nonappealable judgment to have resulted from the
      gross
      negligence or willful misconduct of such Indemnitee.

     

      Any
      such
      amounts payable as provided hereunder shall be additional Obligations secured
      hereby. The provisions of this Section shall remain operative and in full force
      and effect regardless of the termination of this Agreement, the Purchase
      Agreement, the Notes or the other Transaction Documents, the consummation of
      the
      transactions contemplated hereby, the repayment of any of the Obligations,
      the
      invalidity or unenforceability of any term or provision of this Agreement,
      the
      Purchase Agreement, the Notes or the other Transaction Documents, or any
      investigation made by or on behalf of the Secured Parties. All amounts due
      under
      this Section shall be payable on written demand therefor. 

     

    Section
      7.6.  GOVERNING
      LAW.
      THIS
      AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
      LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY OF THE CONFLICTS
      OF
      LAW PRINCIPLES WHICH WOULD RESULT IN THE APPLICATION OF THE SUBSTANTIVE LAW
      OF
      ANOTHER JURISDICTION. THIS AGREEMENT SHALL NOT BE INTERPRETED OR CONSTRUED
      WITH
      ANY PRESUMPTION AGAINST THE PARTY CAUSING THIS AGREEMENT TO BE
      DRAFTED.

     

    Section
      7.7.  Waivers;
      Amendment.

     

      No
      failure or delay of the Secured Parties in exercising any power or right
      hereunder shall operate as a waiver thereof, nor shall any single or partial
      exercise of any such right or power, or any abandonment or discontinuance of
      steps to enforce such a right or power, preclude any other or further exercise
      thereof or the exercise of any other right or power. The rights and remedies
      of
      the Secured Parties hereunder and under the Purchase Agreement are cumulative
      and are not exclusive of any rights or remedies that they would otherwise have.
      No waiver of any provisions of this Agreement, the Purchase Agreement, the
      Notes
      or the other Transaction Documents or consent to any departure by Grantor
      therefrom shall in any event be effective unless the same shall be permitted
      by
      paragraph (b) below, and then such waiver or consent shall be effective only
      in
      the specific instance and for the purpose for which given. No notice to or
      demand on Grantor in any case shall entitle Grantor to any other or further
      notice or demand in similar or other circumstances.

     

      Neither
      this Agreement nor any provision hereof may be waived, amended or modified
      except pursuant to an agreement or agreements, in writing entered into by the
      Secured Parties and Grantor.

     

    Section
      7.8.  WAIVER
      OF JURY TRIAL.
      EACH
      PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
      ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
      OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE
      PURCHASE AGREEMENT OR THE NOTES. EACH PARTY HERETO (A) CERTIFIES THAT NO
      REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
      OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
      SEEK
      TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
      PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE PURCHASE
      AGREEMENT AND THE NOTES, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL
      WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     

    Section
      7.9.  Severability.
      In the event any one or more of the provisions contained in this Agreement
      should be held invalid, illegal or unenforceable in any respect, the validity,
      legality and enforceability of the remaining provisions contained herein shall
      not in any way be affected or impaired thereby (it being understood that the
      invalidity of a particular provision in a particular jurisdiction shall not
      in
      and of itself affect the validity of such provision in any other jurisdiction).
      The parties shall endeavor in good-faith negotiations to replace the invalid,
      illegal or unenforceable provisions with valid provisions the economic effect
      of
      which comes as close as possible to that of the invalid, illegal or
      unenforceable provisions.

     

    Section
      7.10.  Counterparts.
      This
      Agreement may be executed in two or more counterparts, each of which shall
      constitute an original but all of which when taken together shall constitute
      but
      one contract. Each party shall be entitled to rely on a facsimile signature
      of
      any other party hereunder as if it were an original.

     

    Section
      7.11.  Jurisdiction;
      Consent to Service of Process. 

     

      Grantor
      hereby irrevocably and unconditionally submits, for itself and its property,
      to
      the nonexclusive jurisdiction of any New York State court or Federal court
      of
      the United States of America sitting in New York City, and any appellate court
      from any thereof, in any action or proceeding arising out of or relating to
      this
      Agreement, the Purchase Agreement or the Notes, or for recognition or
      enforcement of any judgment, and each of the parties hereto hereby irrevocably
      and unconditionally agrees that all claims in respect of any such action or
      proceeding may be heard and determined in such New York State or, to the extent
      permitted by law, in such Federal court. Each of the parties hereto agrees
      that
      a final judgment in any such action or proceeding shall be conclusive and may
      be
      enforced in other jurisdictions by suit on the judgment or in any other manner
      provided by law. Nothing in this Agreement shall affect any right that the
      Secured Parties may otherwise have to bring any action or proceeding relating
      to
      this Agreement, the Purchase Agreement, the Notes or the other Transaction
      Documents against Grantor or its properties in the courts of any
      jurisdiction.

     

      Grantor
      hereby irrevocably and unconditionally waives, to the fullest extent it may
      legally and effectively do so, any objection which it may now or hereafter
      have
      to the laying of venue of any suit, action or proceeding arising out of or
      relating to this Agreement, the Purchase Agreement, the Notes or the other
      Transaction Documents in any New York State or Federal court. Each of the
      parties hereto hereby irrevocably waives, to the fullest extent permitted by
      law, the defense of an inconvenient forum to the maintenance of such action
      or
      proceeding in any such court. 

     

      Each
      party to this Agreement irrevocably consents to service of process in the manner
      provided for notices in Section 7.1. Nothing in this Agreement will affect
      the
      right of any party to this Agreement to process in any other manner permitted
      by
      law.

     

    Section
      7.12.  Termination.
      This
      Agreement and the Security Interest shall terminate when all the Obligations
      have been paid in full, at which time the Secured Parties shall execute and
      deliver to Grantor, at Grantor’s expense, all Uniform Commercial Code
      termination statements and similar documents which Grantor shall reasonably
      request to evidence such termination. Any execution and delivery of termination
      statements or documents pursuant to this Section shall be without recourse
      to or
      warranty by the Secured Parties.

     

    Section
      7.13.  Prejudgment
      Remedy Waiver.
      Grantor acknowledges that this Agreement, the Purchase Agreement, the Notes
      and
      the other Transaction Documents evidence a commercial transaction and that
      it
      could, under certain circumstances have the right, to notice of and hearing
      on
      the right of the Secured Parties to obtain a prejudgment remedy, such as
      attachment, garnishment and/or replevin, upon commencing any litigation against
      Grantor. Notwithstanding, Grantor hereby waives all rights to notice, judicial
      hearing or prior court order to which it might otherwise have the right under
      any state or federal statute or constitution in connection with the obtaining
      by
      the Secured Parties of any prejudgment remedy by reason of this Agreement,
      the
      Purchase Agreement, the Notes, the other Transaction Documents or by reason
      of
      the Obligations or any renewals or extensions of the same. Grantor also waives
      any and all objection which it might otherwise assert, now or in the future,
      to
      the exercise or use by the Secured Parties of any right of setoff, repossession
      or self help as may presently exist under statute or common law.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    Section
      7.14. Collateral
      Agent.

     

    (a)  Each
      Secured Party hereby
      appoints [________________] as the Collateral Agent hereunder and each Secured
      Party authorizes the Collateral Agent to take such action as agent on its behalf
      and to exercise such powers under this Agreement and the other Transaction
      Documents as are delegated to the Collateral Agent under such agreements and
      to
      exercise such powers as are reasonably incidental thereto. Without limiting
      the
      foregoing, each Secured Party hereby authorizes the Collateral Agent to execute
      and deliver, and to perform its obligations under, each of the documents to
      which the Collateral Agent is a party relating to security for the obligations
      under the Notes, to exercise all rights, powers and remedies that the Collateral
      Agent may have under such Transaction Documents and, in the case of the
      Transaction Documents, to act as agent for the Secured Parties under such
      Transaction Documents.

     

    (b)  As
      to any matters not
      expressly provided for by this Agreement and the other document relating thereto
      (including enforcement or collection), the Collateral Agent shall not be
      required to exercise any discretion or take any action, but shall be required
      to
      act or to refrain from acting (and shall be fully protected in so acting or
      refraining from acting) upon the instructions of the Secured Parties, and such
      instructions shall be binding upon all Secured Parties; provided,
      however,
      that the
      Collateral Agent shall not be required to take any action that (i) the
      Collateral Agent in good faith believes exposes it to personal liability unless
      the Collateral Agent receives an indemnification satisfactory to it from the
      Secured Parties with respect to such action or (ii) is contrary to this
      Agreement or applicable law. The Collateral Agent agrees to give to each Secured
      Party prompt notice of each notice given to it by the Company pursuant to the
      terms of this Agreement or the other Transaction Documents.

     

    (c)  In
      performing its
      functions and duties hereunder and under the Transaction Documents and the
      other
      documents required to be executed or delivered in connection therewith, the
      Collateral Agent is acting solely on behalf of the Secured Parties and its
      duties are entirely administrative in nature. The Collateral Agent does not
      assume and shall not be deemed to have assumed any obligation other than as
      expressly set forth herein, in the Transaction Documents and any other documents
      required to be executed or delivered in connection therewith related hereto
      or
      any other relationship as the agent, fiduciary or trustee of or for any Secured
      Party or holder of any other obligation under this Agreement or the Notes.
      The
      Collateral Agent may perform any of its duties under any Transaction Document
      by
      or through its agents or employees.

     

    (d)  None
      of the Collateral
      Agent, any of its affiliates or any of their respective directors, officers,
      agents or employees shall be liable for any action taken or omitted to be taken
      by it, him, her or them under or in connection with this Agreement or the other
      Transaction Documents, except for its, his, her or their own gross negligence
      or
      willful misconduct. 

     

    (e)  Each
      Secured Party
      acknowledges that it shall, independently and without reliance upon the
      Collateral Agent or any other Secured Party conduct its own independent
      investigation of the financial condition and affairs of the Company and its
      Subsidiaries in connection with the issuance of the Securities. Each Secured
      Party also acknowledges that it shall, independently and without reliance upon
      the Collateral Agent or any other Secured Party and based on such documents
      and
      information as it shall deem appropriate at the time, continue to make its
      own
      credit decisions in taking or not taking action under this Agreement and other
      Transaction Documents.

     

    (f)  Each
      Secured Party agrees
      to indemnify the Collateral Agent and each of its affiliates, and each of their
      respective directors, officers, employees, agents and advisors (to the extent
      not reimbursed by the Borrower), from any and all liabilities, obligations,
      losses, damages, penalties, actions, judgments, suits, costs, expenses and
      disbursements (including fees, expenses and disbursements of financial and
      legal
      advisors) of any kind or nature whatsoever that may be imposed on, incurred
      by,
      or asserted against, the Collateral Agent or any of its affiliates, directors,
      officers, employees, agents and advisors in any way relating to or arising
      out
      of this Agreement or the other Transaction Documents or any action taken or
      omitted by the Collateral Agent under this Agreement or the document related
      thereto; provided,
      however,
      that no
      Secured Party shall be liable for any portion of such liabilities, obligations,
      losses, damages, penalties, actions, judgments, suits, costs, expenses or
      disbursements resulting from the Collateral Agent’s or such Affiliate’s gross
      negligence or willful misconduct.

     

    (g)  The
      Collateral Agent may
      resign at any time by giving written notice thereof to the Secured Parties
      and
      the Company. Upon any such resignation, the Secured Parties shall have the
      right
      to appoint a successor Collateral Agent. If no successor Collateral Agent shall
      have been so appointed by the Secured Parties, and shall have accepted such
      appointment, within 30 days after the retiring Collateral Agent’s giving of
      notice of resignation, then the retiring Collateral Agent may, on behalf of
      the
      Secured Parties, appoint a successor Collateral Agent, selected from among
      the
      Secured Parties. Upon the acceptance of any appointment as Collateral Agent
      by a
      successor Collateral Agent, such successor Collateral Agent shall succeed to,
      and become vested with, all the rights, powers, privileges and duties of the
      retiring Collateral Agent, and the retiring Collateral Agent shall be discharged
      from its duties and obligations under this Agreement, the Transaction Documents
      and any other documents required to be executed or delivered in connection
      therewith. Prior to any retiring Collateral Agent’s resignation hereunder as
      Collateral Agent, the retiring Collateral Agent shall take such action as may
      be
      reasonably necessary to assign to the successor Collateral Agent its rights
      as
      Collateral Agent under the Transaction Documents. After such resignation, the
      retiring Collateral Agent shall continue to have the benefit of this Agreement
      as to any actions taken or omitted to be taken by it while it was Collateral
      Agent under this Agreement, the Transaction Documents and any other documents
      required to be executed or delivered in connection therewith.

     

    (h)  Each
      Secured Party agrees
      that any action taken by the Collateral Agent in accordance with the provisions
      of this Agreement or of the other document relating thereto, and the exercise
      by
      the Collateral Agent or the Secured Parties of the powers set forth herein
      or
      therein, together with such other powers as are reasonably incidental thereto,
      shall be authorized and binding upon all of the Secured Parties.

     

    (i)  Each
      of the Secured
      Parties hereby directs, in accordance with the terms hereof, the Collateral
      Agent to release (or in the case of clause
      (ii)
      below,
      release or subordinate) any Lien held by the Collateral Agent for the benefit
      of
      the Secured Parties against any of the following: (i) all of the Collateral
      upon
      payment and satisfaction in full of all obligations under the Notes and all
      other obligations under the Transaction Documents that the Collateral Agent
      has
      been notified in writing are then due and payable; (ii) any assets that are
      subject to a Lien permitted by Section 3.2);
      and
      (iii) any part of the Collateral sold or disposed of by the Company or any
      Subsidiary if such sale or disposition is permitted by this Agreement and the
      Notes (or permitted pursuant to a waiver or consent of a transaction otherwise
      prohibited by this Agreement and the Notes). Each of the Secured Parties hereby
      directs the Collateral Agent to execute and deliver or file such termination
      and
      partial release statements and do such other things as are necessary to release
      Liens to be released pursuant to this Section 7.14 promptly upon the
      effectiveness of any such release.

     

    

     

    [SIGNATURE
      PAGES FOLLOW]

     

    
      
        
          KL2:2407596.4

           

        

        
        

      

      
        7

        
          

        

      

      
        
        

        
        

      

    

    IN
      WITNESS WHEREOF, the parties have duly executed this Security Agreement as
      of
      the day and year first written above.

     

    QUEST
      OIL CORPORATION

     

    

     

    By:_____________________________________       

    Name:
      

    Title:
      

     

    

     

    QUEST
      CANADA CORP.

     

    

     

    By:_____________________________________        

    Name:
      

    Title:
      

     

    

     

    WALLSTIN
      PETROLEUM, LLC

     

    

     

    By:_____________________________________        

    Name:
      

    Title:
      

    

     

    PETROSTAR
      OIL SERVICES, INC.

     

    

     

    By:_____________________________________        

    Name:
      

    Title:
      

    

     

    SECURED
      PARTY:

     

    

     

    By:_____________________________________        

     Name:
      

    Title:
      

    
      
        
          KL2:2407596.4

           

        

        
        

      

      
        8

        
          

        

      

      
        
        

        
          18

           

        

      

    

        Acknowledged
      and agreed:

    

        Collateral
      Agent:

    

    

    By:_____________________________________      

    Name:
      

    Title:
      

    

    
      
         

      

      
        9Exhibit 10.8 (Form of Series A Warrant)

                                                                                                                       Exhibit
      10.8

    
 

    

    THIS
      WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
      ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
      DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
      STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
      REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES
      UNDER
      THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES
      LAWS
      IS NOT REQUIRED.

    

    SERIES
      A
      WARRANT TO PURCHASE

    

    SHARES
      OF
      COMMON STOCK

    

    OF

    

    QUEST
      OIL
      CORPORATION

    

    

    Expires
      October __, 2008

    

    No.:
      W-A-05- __                                                                                                        Number
      of
      Shares: ___________

    Date
      of
      Issuance: October __, 2005

    

    

    FOR
      VALUE
      RECEIVED, the undersigned, Quest Oil Corporation., a Nevada corporation
      (together with its successors and assigns, the "Issuer"),
      hereby certifies that _______________________________ or its registered assigns
      is entitled to subscribe for and purchase, during the Term (as hereinafter
      defined), up to ____________________________________ (_____________) shares
      (subject to adjustment as hereinafter provided) of the duly authorized, validly
      issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
      price per share equal to the Warrant Price then in effect, subject, however,
      to
      the provisions and upon the terms and conditions hereinafter set forth.
      Capitalized terms used in this Warrant and not otherwise defined herein shall
      have the respective meanings specified in Section 9 hereof.

    

    1.    Term.
      The
      term of this Warrant shall commence on October __, 2005 and shall expire at
      6:00
      p.m., eastern time, on October __, 2008 (such period being the "Term").

    

    
      	2.     	
              Method
                of Exercise; Payment; Issuance of New Warrant; Transfer and
                Exchange.

            

    

    

    (a)    Time
      of Exercise.
      The
      purchase rights represented by this Warrant may be exercised in whole or in
      part
      during the Term. 

    

    (b)    Method
      of Exercise.
      The
      Holder hereof may exercise this Warrant, in whole or in part, by the surrender
      of this Warrant (with the exercise form attached hereto duly executed) at the
      principal office of the Issuer, and by the payment to the Issuer of an amount
      of
      consideration therefor equal to the Warrant Price in effect on the date of
      such
      exercise multiplied by the number of shares of Warrant Stock with respect to
      which this Warrant is then being exercised, payable at such Holder's election
      (i) by certified or official bank check or by
      wire
      transfer to an account designated by the Issuer,
      (ii) by
      "cashless exercise" in accordance with the provisions of subsection (c) of
      this
      Section 2, but only when a registration statement under the Securities Act
      providing for the resale of the Warrant Stock is not then in effect, or (iii)
      by
      a combination of the foregoing methods of payment selected by the Holder of
      this
      Warrant.

    

    (c)    Cashless
      Exercise.
      Notwithstanding any provisions herein to the contrary and commencing one (1)
      year following the Original Issue Date if (i) the Per Share Market Value of
      one
      share of Common Stock is greater than the Warrant Price (at the date of
      calculation as set forth below) and (ii) a registration statement under the
      Securities Act providing for the resale of the Warrant Stock is not then in
      effect by the date such registration statement is required to be effective
      pursuant to the Registration Rights Agreement (as defined in the Purchase
      Agreement) or not effective at any time during the Effectiveness Period (as
      defined in the Registration Rights Agreement) in accordance with the terms
      of
      the Registration Rights Agreement, in lieu of exercising this Warrant by payment
      of cash, the Holder may exercise this Warrant by a cashless exercise and shall
      receive the number of shares of Common Stock equal to an amount (as determined
      below) by surrender of this Warrant at the principal office of the Issuer
      together with the properly endorsed Notice of Exercise in which event the Issuer
      shall issue to the Holder a number of shares of Common Stock computed using
      the
      following formula:

    

    X
      = Y -
(A)(Y)

                  
       
      B

    

    
      	
              Where     

            	
                X
                = 

            	
                    
                the number of shares of Common Stock to be issued to the
                Holder.

            

    

    

    
      	 	
              Y
                =

            	
               the
                number of shares of Common Stock purchasable upon exercise of all
                of the
                Warrant or, if only a portion of the Warrant is being exercised,
                the
                portion of the Warrant being exercised.

            

    

    

    
      	 	
              A
                =

            	
               the
                Warrant Price. 

            

    

    

    B
      =   the
      Per
      Share Market Value of one share of Common Stock.

    

    (d)    Issuance
      of Stock Certificates.
      In the
      event of any exercise of this Warrant in accordance with and subject to the
      terms and conditions hereof, (i) certificates for the shares of Warrant Stock
      so
      purchased shall be dated the date of such exercise and delivered to the Holder
      hereof within a reasonable time, not exceeding three (3) Trading Days after
      such
      exercise (the “Delivery
      Date”)
      or, at
      the request of the Holder (provided that a registration statement under the
      Securities Act providing for the resale of the Warrant Stock is then in effect),
      issued and delivered to the Depository Trust Company (“DTC”)
      account on the Holder’s behalf via the Deposit Withdrawal Agent Commission
      System (“DWAC”)
      within
      a reasonable time, not exceeding three (3) Trading Days after such exercise,
      and
      the Holder hereof shall be deemed for all purposes to be the holder of the
      shares of Warrant Stock so purchased as of the date of such exercise and (ii)
      unless this Warrant has expired, a new Warrant representing the number of shares
      of Warrant Stock, if any, with respect to which this Warrant shall not then
      have
      been exercised (less any amount thereof which shall have been canceled in
      payment or partial payment of the Warrant Price as hereinabove provided) shall
      also be issued to the Holder hereof at the Issuer's expense within such
      time.

    

    (e)    Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Exercise.
      In
      addition to any other rights available to the Holder, if the Issuer fails to
      cause its transfer agent to transmit to the Holder a certificate or certificates
      representing the Warrant Stock pursuant to an exercise on or before the Delivery
      Date, and if after such date the Holder is required by its broker to purchase
      (in an open market transaction or otherwise) shares of Common Stock to deliver
      in satisfaction of a sale by the Holder of the Warrant Stock which the Holder
      anticipated receiving upon such exercise (a “Buy-In”),
      then
      the Issuer shall (1) pay in cash to the Holder the amount by which (x) the
      Holder’s total purchase price (including brokerage commissions, if any) for the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of shares of Warrant Stock that the Issuer was
      required to deliver to the Holder in connection with the exercise at issue
      times
      (B) the price at which the sell order giving rise to such purchase obligation
      was executed, and (2) at the option of the Holder, either reinstate the portion
      of the Warrant and equivalent number of shares of Warrant Stock for which such
      exercise was not honored or deliver to the Holder the number of shares of Common
      Stock that would have been issued had the Issuer timely complied with its
      exercise and delivery obligations hereunder. For example, if the Holder
      purchases Common Stock having a total purchase price of $11,000 to cover a
      Buy-In with respect to an attempted exercise of shares of Common Stock with
      an
      aggregate sale price giving rise to such purchase obligation of $10,000, under
      clause (1) of the immediately preceding sentence the Issuer shall be required
      to
      pay the Holder $1,000. The Holder shall provide the Issuer written notice
      indicating the amounts payable to the Holder in respect of the Buy-In, together
      with applicable confirmations and other evidence reasonably requested by the
      Issuer. Nothing herein shall limit a Holder’s right to pursue any other remedies
      available to it hereunder, at law or in equity including, without limitation,
      a
      decree of specific performance and/or injunctive relief with respect to the
      Issuer’s failure to timely deliver certificates representing shares of Common
      Stock upon exercise of this Warrant as required pursuant to the terms
      hereof.

     

    (f)    Transferability
      of Warrant.
      Subject
      to Section 2(h), this Warrant may be transferred by a Holder without the consent
      of the Issuer. If transferred pursuant to this paragraph, this Warrant may
      be
      transferred on the books of the Issuer by the Holder hereof in person or by
      duly
      authorized attorney, upon surrender of this Warrant at the principal office
      of
      the Issuer, properly endorsed (by the Holder executing an assignment in the
      form
      attached hereto) and upon payment of any necessary transfer tax or other
      governmental charge imposed upon such transfer. This Warrant is exchangeable
      at
      the principal office of the Issuer for Warrants to purchase the same aggregate
      number of shares of Warrant Stock, each new Warrant to represent the right
      to
      purchase such number of shares of Warrant Stock as the Holder hereof shall
      designate at the time of such exchange. All Warrants issued on transfers or
      exchanges shall be dated the Original Issue Date and shall be identical with
      this Warrant except as to the number of shares of Warrant Stock issuable
      pursuant thereto.

    

    (g)    Continuing
      Rights of Holder.
      The
      Issuer will, at the time of or at any time after each exercise of this Warrant,
      upon the request of the Holder hereof, acknowledge in writing the extent, if
      any, of its continuing obligation to afford to such Holder all rights to which
      such Holder shall continue to be entitled after such exercise in accordance
      with
      the terms of this Warrant, provided
      that if
      any such Holder shall fail to make any such request, the failure shall not
      affect the continuing obligation of the Issuer to afford such rights to such
      Holder.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    (h)    Compliance
      with Securities Laws.

    

    (i)    The
      Holder of this Warrant, by acceptance hereof, acknowledges that this Warrant
      and
      the shares of Warrant Stock to be issued upon exercise hereof are being acquired
      solely for the Holder's own account and not as a nominee for any other party,
      and for investment, and that the Holder will not offer, sell or otherwise
      dispose of this Warrant or any shares of Warrant Stock to be issued upon
      exercise hereof except pursuant to an effective registration statement, or
      an
      exemption from registration, under the Securities Act and any applicable state
      securities laws.

    

    (ii)    Except
      as
      provided in paragraph (iii) below, this Warrant and all certificates
      representing shares of Warrant Stock issued upon exercise hereof shall be
      stamped or imprinted with a legend in substantially the following
      form:

    

    THIS
      WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
      ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
      DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
      STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL
      REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES
      UNDER
      THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES
      LAWS
      IS NOT REQUIRED.

    

    (iii)    The
      Issuer agrees to reissue this Warrant or certificates representing any of the
      Warrant Stock, without the legend set forth above if at such time, prior to
      making any transfer of any such securities, the Holder shall give written notice
      to the Issuer describing the manner and terms of such transfer. Such proposed
      transfer will not be effected until: (a) either (i) the Issuer has received
      an
      opinion of counsel reasonably satisfactory to the Issuer, to the effect that
      the
      registration of such securities under the Securities Act is not required in
      connection with such proposed transfer, (ii) a registration statement under
      the
      Securities Act covering such proposed disposition has been filed by the Issuer
      with the Securities and Exchange Commission and has become effective under
      the
      Securities Act, (iii) the Issuer has received other evidence reasonably
      satisfactory to the Issuer that such registration and qualification under the
      Securities Act and state securities laws are not required, or (iv) the Holder
      provides the Issuer with reasonable assurances that such security can be sold
      pursuant to Rule 144 under the Securities Act; and (b) either (i) the Issuer
      has
      received an opinion of counsel reasonably satisfactory to the Issuer, to the
      effect that registration or qualification under the securities or "blue sky"
      laws of any state is not required in connection with such proposed disposition,
      or (ii) compliance with applicable state securities or "blue sky" laws has
      been
      effected or a valid exemption exists with respect thereto. The Issuer will
      respond to any such notice from a holder within three (3) business days. In
      the
      case of any proposed transfer under this Section 2(h), the Issuer will use
      reasonable efforts to comply with any such applicable state securities or "blue
      sky" laws, but shall in no event be required, (x) to qualify to do business
      in
      any state where it is not then qualified, (y) to take any action that would
      subject it to tax or to the general service of process in any state where it
      is
      not then subject, or (z) to comply with state securities or “blue sky” laws of
      any state for which registration by coordination is unavailable to the Issuer.
      The restrictions on transfer contained in this Section 2(h) shall be in addition
      to, and not by way of limitation of, any other restrictions on transfer
      contained in any other section of this Warrant. Whenever
      a
      certificate representing the Warrant Stock is required to be issued to a the
      Holder without a legend, in lieu of delivering physical certificates
      representing the Warrant Stock, provided the Issuer’s transfer agent is
      participating in the DTC Fast Automated Securities Transfer program, the Issuer
      shall use its reasonable best efforts to cause its transfer agent to
      electronically transmit the Warrant Stock to the Holder by crediting the account
      of the Holder's Prime Broker with DTC through its DWAC system (to the extent
      not
      inconsistent with any provisions of this Warrant or the Purchase
      Agreement). 

    

    (i)    In
      no
      event may the Holder exercise this Warrant in whole or in part unless the Holder
      is an “accredited investor” as defined in Regulation D under the Securities Act.

    

    3.    Stock
      Fully Paid; Reservation and Listing of Shares; Covenants.

    

    (a)    Stock
      Fully Paid.
      The
      Issuer represents, warrants, covenants and agrees that all shares of Warrant
      Stock which may be issued upon the exercise of this Warrant or otherwise
      hereunder will, when issued in accordance with the terms of this Warrant, be
      duly authorized, validly issued, fully paid and nonassessable and free from
      all
      taxes, liens and charges created by or through the Issuer. The Issuer further
      covenants and agrees that during the period within which this Warrant may be
      exercised, the Issuer will at all times have authorized and reserved for the
      purpose of issuance upon exercise of this Warrant a number of shares of Common
      Stock equal to at least one hundred twenty percent (120%) of the aggregate
      number of shares of Common Stock to provide for the exercise of this
      Warrant.

    

    (b)    Reservation.
      If any
      shares of Common Stock required to be reserved for issuance upon exercise of
      this Warrant or as otherwise provided hereunder require registration or
      qualification with any governmental authority under any federal or state law
      before such shares may be so issued, the Issuer will in good faith use its
      best
      efforts as expeditiously as possible at its expense to cause such shares to
      be
      duly registered or qualified. If the Issuer shall list any shares of Common
      Stock on any securities exchange or market it will, at its expense, list
      thereon, maintain and increase when necessary such listing, of, all shares
      of
      Warrant Stock from time to time issued upon exercise of this Warrant or as
      otherwise provided hereunder (provided that such Warrant Stock has been
      registered pursuant to a registration statement under the Securities Act then
      in
      effect), and, to the extent permissible under the applicable securities exchange
      rules, all unissued shares of Warrant Stock which are at any time issuable
      hereunder, so long as any shares of Common Stock shall be so listed. The Issuer
      will also so list on each securities exchange or market, and will maintain
      such
      listing of, any other securities which the Holder of this Warrant shall be
      entitled to receive upon the exercise of this Warrant if at the time any
      securities of the same class shall be listed on such securities exchange or
      market by the Issuer.

    

    (c)    Covenants.
      The
      Issuer shall not by any action including, without limitation, amending the
      Articles of Incorporation or the by-laws of the Issuer, or through any
      reorganization, transfer of assets, consolidation, merger, dissolution, issue
      or
      sale of securities or any other action, avoid or seek to avoid the observance
      or
      performance of any of the terms of this Warrant, but will at all times in good
      faith assist in the carrying out of all such terms and in the taking of all
      such
      actions as may be necessary or appropriate to protect the rights of the Holder
      hereof against dilution (to the extent specifically provided herein) or
      impairment. Without limiting the generality of the foregoing, the Issuer will
      (i) not permit the par value, if any, of its Common Stock to exceed the then
      effective Warrant Price, (ii) not amend or modify any provision of the Articles
      of Incorporation or by-laws of the Issuer in any manner that would adversely
      affect the rights of the Holders of the Warrants, (iii) take all such action
      as
      may be reasonably necessary in order that the Issuer may validly and legally
      issue fully paid and nonassessable shares of Common Stock, free and clear of
      any
      liens, claims, encumbrances and restrictions (other than as provided herein)
      upon the exercise of this Warrant, and (iv) use its best efforts to obtain
      all
      such authorizations, exemptions or consents from any public regulatory body
      having jurisdiction thereof as may be reasonably necessary to enable the Issuer
      to perform its obligations under this Warrant.

    

    (d)    Loss,
      Theft, Destruction of Warrants.
      Upon
      receipt of evidence satisfactory to the Issuer of the ownership of and the
      loss,
      theft, destruction or mutilation of any Warrant and, in the case of any such
      loss, theft or destruction, upon receipt of indemnity or security satisfactory
      to the Issuer or, in the case of any such mutilation, upon surrender and
      cancellation of such Warrant, the Issuer will make and deliver, in lieu of
      such
      lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
      representing the right to purchase the same number of shares of Common
      Stock.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    4.    Adjustment
      of Warrant Price.
      The
      price at which such shares of Warrant Stock may be purchased upon exercise
      of
      this Warrant shall be subject to adjustment from time to time as set forth
      in
      this Section 4. The Issuer shall give the Holder notice of any event described
      below which requires an adjustment pursuant to this Section 4 in accordance
      with
      the notice provisions set forth in Section 5.

    

    (a)    Recapitalization,
      Reorganization, Reclassification, Consolidation, Merger or Sale.

     

    (i)    In
      case the
      Issuer after the Original Issue Date shall do any of the following (each, a
      "Triggering
      Event"):
      (a)
      consolidate or merge with or into any other Person and the Issuer shall not
      be
      the continuing or surviving corporation of such consolidation or merger, or
      (b)
      permit any other Person to consolidate with or merge into the Issuer and the
      Issuer shall be the continuing or surviving Person but, in connection with
      such
      consolidation or merger, any Capital Stock of the Issuer shall be changed into
      or exchanged for Securities of any other Person or cash or any other property,
      or (c) transfer all or substantially all of its properties or assets to any
      other Person, or (d) effect a capital reorganization or reclassification of
      its
      Capital Stock, then, and in the case of each such Triggering Event, proper
      provision shall be made so that, upon the basis and the terms and in the manner
      provided in this Warrant, the Holder of this Warrant shall be entitled upon
      the
      exercise hereof at any time after the consummation of such Triggering Event,
      to
      the extent this Warrant is not exercised prior to such Triggering Event, to
      receive at the Warrant Price in effect at the time immediately prior to the
      consummation of such Triggering Event in lieu of the Common Stock issuable
      upon
      such exercise of this Warrant prior to such Triggering Event, the Securities,
      cash and property to which such Holder would have been entitled upon the
      consummation of such Triggering Event if such Holder had exercised the rights
      represented by this Warrant immediately prior thereto (including the right
      of a
      shareholder to elect the type of consideration it will receive upon a Triggering
      Event), subject to adjustments (subsequent to such corporate action) as nearly
      equivalent as possible to the adjustments provided for elsewhere in this Section
      4. Notwithstanding the foregoing to the contrary, this Section 4(a)(i) shall
      only apply if the surviving entity pursuant to any such Triggering Event is
      a
      public company that is
      registered pursuant to the Securities Exchange Act of 1934, as amended, and
      its
      common stock is listed or quoted on a national exchange or the OTC Bulletin
      Board. In the event that the
      surviving entity pursuant to any such Triggering Event is not a public company
      that is
      registered pursuant to the Securities Exchange Act of 1934, as amended, or
      its
      common stock is not listed or quoted on a national exchange or the OTC Bulletin
      Board, then the Holder shall have the right to demand that the Issuer pay to
      the
      Holder an amount equal to the value of this Warrant according to the
      Black-Scholes formula.

    

    (ii)    Notwithstanding
      anything contained in this Warrant to the contrary and so long as the surviving
      entity pursuant to any Triggering Event is a public company that is
      registered pursuant to the Securities Exchange Act of 1934, as amended, and
      its
      common stock is listed or quoted on a national exchange or the OTC Bulletin
      Board,
      a
      Triggering Event shall not be deemed to have occurred if, prior to the
      consummation thereof, each Person (other than the Issuer) which may be required
      to deliver any Securities, cash or property upon the exercise of this Warrant
      as
      provided herein shall assume, by written instrument delivered to, and reasonably
      satisfactory to, the Holder of this Warrant, (A) the obligations of the Issuer
      under this Warrant (and if the Issuer shall survive the consummation of such
      Triggering Event, such assumption shall be in addition to, and shall not release
      the Issuer from, any continuing obligations of the Issuer under this Warrant)
      and (B) the obligation to deliver to such Holder such Securities, cash or
      property as, in accordance with the foregoing provisions of this subsection
      (a),
      such Holder shall be entitled to receive, and such Person shall have similarly
      delivered to such Holder an opinion of counsel for such Person, which counsel
      shall be reasonably satisfactory to such Holder, or in the alternative, a
      written acknowledgement executed by the President or Chief Financial Officer
      of
      the Issuer, stating that this Warrant shall thereafter continue in full force
      and effect and the terms hereof (including, without limitation, all of the
      provisions of this subsection (a)) shall be applicable to the Securities, cash
      or property which such Person may be required to deliver upon any exercise
      of
      this Warrant or the exercise of any rights pursuant hereto. 

    

    (b)    Stock
      Dividends, Subdivisions and Combinations.
      If at
      any time the Issuer shall:

    

       (i)    make
      or
      issue or set a record date for the holders of the Common Stock for the purpose
      of entitling them to receive a dividend payable in, or other distribution of,
      shares of Common Stock, 

    

       (ii)    subdivide
      its outstanding shares of Common Stock into a larger number of shares of Common
      Stock, or

    

       (iii)   combine
      its outstanding shares of Common Stock into a smaller number of shares of Common
      Stock,

    

    then
      (1)
      the number of shares of Common Stock for which this Warrant is exercisable
      immediately after the occurrence of any such event shall be adjusted to equal
      the number of shares of Common Stock which a record holder of the same number
      of
      shares of Common Stock for which this Warrant is exercisable immediately prior
      to the occurrence of such event would own or be entitled to receive after the
      happening of such event, and (2) the Warrant Price then in effect shall be
      adjusted to equal (A) the Warrant Price then in effect multiplied by the number
      of shares of Common Stock for which this Warrant is exercisable immediately
      prior to the adjustment divided by (B) the number of shares of Common Stock
      for
      which this Warrant is exercisable immediately after such
      adjustment.

    

    (c)    Certain
      Other Distributions.
      If at
      any time the Issuer shall make or issue or set a record date for the holders
      of
      the Common Stock for the purpose of entitling them to receive any divi-dend
      or
      other distribution of:

    

    (i)    cash
      (other than a cash dividend payable out of earnings or earned surplus legally
      available for the payment of dividends under the laws of the jurisdiction of
      incorporation of the Issuer),

    

    (ii)    any
      evidences of its indebtedness, any shares of stock of any class or any other
      securities or property of any nature whatsoever (other than cash, Common Stock
      Equivalents or Additional Shares of Common Stock), or

    

    (iii)    any
      warrants or other rights to subscribe for or purchase any evidences of its
      indebtedness, any shares of stock of any class or any other securities or
      property of any nature whatsoever (other than cash, Common Stock Equivalents
      or
      Additional Shares of Common Stock), 

    

    then
      (1)
      the number of shares of Common Stock for which this Warrant is exercisable
      shall
      be adjusted to equal the product of the number of shares of Common Stock for
      which this Warrant is exercisable immediately prior to such adjustment
      multiplied by a fraction (A) the numerator of which shall be the Per Share
      Market Value of Common Stock at the date of taking such record and (B) the
      denominator of which shall be such Per Share Market Value minus the amount
      allocable to one share of Common Stock of any such cash so distributable and
      of
      the fair value (as determined in good faith by the Board of Directors of the
      Issuer and supported by an opinion from an investment banking firm of recognized
      national standing acceptable to (but not affiliated with) the Holder) of any
      and
      all such evidences of indebtedness, shares of stock, other securities or
      property or warrants or other subscription or purchase rights so distributable,
      and (2) the Warrant Price then in effect shall be adjusted to equal (A) the
      Warrant Price then in effect multiplied by the number of shares of Common Stock
      for which this Warrant is exercisable immediately prior to the adjustment
      divided by (B) the number of shares of Common Stock for which this Warrant
      is
      exercisable immediately after such adjustment. A reclassification of the Common
      Stock (other than a change in par value, or from par value to no par value
      or
      from no par value to par value) into shares of Common Stock and shares of any
      other class of stock shall be deemed a distribution by the Issuer to the holders
      of its Common Stock of such shares of such other class of stock within the
      meaning of this Section 4(c) and, if the outstanding shares of Common Stock
      shall be changed into a larger or smaller number of shares of Common Stock
      as a
      part of such reclassification, such change shall be deemed a subdivision or
      combination, as the case may be, of the outstanding shares of Common Stock
      within the meaning of Section 4(b). 

    

    (d)    Issuance
      of Additional Shares of Common Stock.
      In the
      event the Issuer shall at any time following the Original Issue Date issue
      any
      Additional Shares of Common Stock (otherwise than as provided in the foregoing
      subsections (b) through (c) of this Section 4), at a price per share less than
      the Warrant Price then in effect or without consideration, then the Warrant
      Price upon each such issuance shall be adjusted to the price equal to the
      consideration per share paid for such Additional Shares of Common
      Stock.

    

    (e)     Issuance
      of Common Stock Equivalents.
      If at
      any time the Issuer shall take a record of the holders of its Common Stock
      for
      the purpose of entitling them to receive a distribution of, or shall in any
      manner (whether directly or by assumption in a merger in which the Issuer is
      the
      surviving corporation) issue or sell, any Common Stock Equivalents, whether
      or
      not the rights to exchange or convert thereunder are immediately exercisable,
      and the price per share for which Common Stock is issuable upon such conversion
      or exchange shall be less than the Warrant Price in effect immediately prior
      to
      the time of such issue or sale, or if, after any such issuance of Common Stock
      Equivalents, the price per share for which Additional Shares of Common Stock
      may
      be issuable thereafter is amended or adjusted, and such price as so amended
      shall make be less than the Warrant Price in effect at the time of such
      amendment or adjustment, then the Warrant Price then in effect shall be adjusted
      as provided in Section 4(d). No further adjustments of the number of shares
      of
      Common Stock for which this Warrant is exercisable and the Warrant Price then
      in
      effect shall be made upon the actual issue of such Common Stock upon conversion
      or exchange of such Common Stock Equivalents.

    

    (f)    Other
      Provisions applicable to Adjustments under this Section.
      The
      following provisions shall be ap-plicable to the making of adjustments of the
      number of shares of Common Stock for which this Warrant is exercisable and
      the
      Warrant Price then in effect provided for in this Section 4:

    

    (i)    Computation
      of Consideration.
      To the
      extent that any Additional Shares of Common Stock or any Common Stock
      Equivalents (or any warrants or other rights therefor) shall be issued for
      cash
      consideration, the consideration received by the Issuer therefor shall be the
      amount of the cash received by the Issuer therefor, or, if such Additional
      Shares of Common Stock or Common Stock Equivalents are offered by the Issuer
      for
      subscription, the subscription price, or, if such Additional Shares of Common
      Stock or Common Stock Equivalents are sold to underwriters or dealers for public
      offering without a subscription offering, the initial public offering price
      (in
      any such case subtracting any amounts paid or receivable for accrued interest
      or
      accrued dividends and without taking into account any compensation, discounts
      or
      expenses paid or incurred by the Issuer for and in the underwriting of, or
      otherwise in connection with, the issuance thereof). In connection with any
      merger or consolidation in which the Issuer is the surviving corporation (other
      than any consolidation or merger in which the previously outstanding shares
      of
      Common Stock of the Issuer shall be changed to or exchanged for the stock or
      other securities of another corporation), the amount of consideration therefore
      shall be, deemed to be the fair value of such portion of the assets and business
      of the nonsurviving corporation as the Board may determine to be attributable
      to
      such shares of Common Stock or Common Stock Equivalents, as the case may be.
      Such determination of the fair value of such consideration shall be made by
      an
      Independent Appraiser. The consideration for any Additional Shares of Common
      Stock issuable pursuant to the terms of any Common Stock Equivalents shall
      be
      the consideration received by the Issuer for issuing such Common Stock
      Equivalents, plus the additional consideration, if any, payable to the Issuer
      upon the exercise of the right of conversion or exchange in such Common Stock
      Equivalents. In the event of any consolidation or merger of the Issuer in which
      the Issuer is not the surviving corporation or in which the previously
      outstanding shares of Common Stock of the Issuer shall be changed into or
      exchanged for the stock or other securities of another corporation, or in the
      event of any sale of all or substantially all of the assets of the Issuer for
      stock or other securities of any corporation, the Issuer shall be deemed to
      have
      issued a number of shares of its Common Stock for stock or securities or other
      property of the other corporation computed on the basis of the actual exchange
      ratio on which the transaction was predicated, and for a consideration equal
      to
      the fair market value on the date of such transaction of all such stock or
      securities or other property of the other corporation. In the event any
      consideration received by the Issuer for any securities consists of property
      other than cash, the fair market value thereof at the time of issuance or as
      otherwise applicable shall be as determined in good faith by the Board. In
      the
      event Common Stock is issued with other shares or securities or other assets
      of
      the Issuer for consideration which covers both, the consideration computed
      as
      provided in this Section 4(f)(i) shall be allocated among such securities and
      assets as determined in good faith by the Board.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (ii)    When
      Adjustments to Be Made.
      The
      adjustments required by this Section 4 shall be made whenever and as often
      as
      any specified event requiring an adjustment shall occur, except that any
      adjustment of the number of shares of Common Stock for which this Warrant is
      exercisable that would otherwise be required may be postponed (except in the
      case of a subdivision or combination of shares of the Common Stock, as provided
      for in Section 4(b)) up to, but not beyond the date of exercise if such
      adjustment either by itself or with other adjustments not previously made adds
      or subtracts less than one percent (1%) of the shares of Common Stock for which
      this Warrant is exercisable immediately prior to the making of such adjustment.
      Any adjustment representing a change of less than such minimum amount (except
      as
      aforesaid) which is postponed shall be carried forward and made as soon as
      such
      adjustment, together with other adjustments required by this Section 4 and
      not
      previously made, would result in a minimum adjustment or on the date of
      exercise. For the purpose of any adjustment, any specified event shall be deemed
      to have occurred at the close of business on the date of its
      occurrence.

    

    (iii)    Fractional
      Interests.
      In
      computing ad-justments under this Section 4, fractional interests in Common
      Stock shall be taken into account to the near-est one one-hundredth
      (1/100th)
      of a
      share.

    

    (iv)    When
      Adjustment Not Required.
      If the
      Issuer shall take a record of the holders of its Common Stock for the purpose
      of
      entitling them to receive a dividend or distribution or subscription or purchase
      rights and shall, thereafter and before the distribution to stockholders
      thereof, legally abandon its plan to pay or deliver such dividend, distribution,
      subscription or purchase rights, then thereafter no adjustment shall be required
      by reason of the taking of such record and any such adjustment previously made
      in respect thereof shall be rescinded and annulled.

     

    (g)    Form
      of Warrant after Adjustments.
      The
      form of this Warrant need not be changed because of any adjustments in the
      Warrant Price or the number and kind of Securities purchasable upon the exercise
      of this Warrant.

    

    (h)    Escrow
      of Warrant Stock.
      If
      after any property becomes distributable pursuant to this Section 4 by reason
      of
      the taking of any record of the holders of Common Stock, but prior to the
      occurrence of the event for which such record is taken, and the Holder
      exer-cises this Warrant, any shares of Common Stock issuable upon exercise
      by
      reason of such adjustment shall be deemed the last shares of Common Stock for
      which this Warrant is exercised (notwithstanding any other provision to the
      contrary herein) and such shares or other property shall be held in escrow
      for
      the Holder by the Issuer to be issued to the Holder upon and to the extent
      that
      the event actually takes place, upon payment of the current Warrant Price.
      Notwithstanding any other provision to the contrary herein, if the event for
      which such record was taken fails to occur or is rescinded, then such escrowed
      shares shall be cancelled by the Issuer and escrowed property
      returned.

    

    5.    Notice
      of Adjustments.
      Whenever the Warrant Price or Warrant Share Number shall be adjusted pursuant
      to
      Section 4 hereof (for purposes of this Section 5, each an "adjustment"),
      the
      Issuer shall cause its Chief Financial Officer to prepare and execute a
      certificate setting forth, in reasonable detail, the event requiring the
      adjustment, the amount of the adjustment, the method by which such adjustment
      was calculated (including a description of the basis on which the Board made
      any
      determination hereunder), and the Warrant Price and Warrant Share Number after
      giving effect to such adjustment, and shall cause copies of such certificate
      to
      be delivered to the Holder of this Warrant promptly after each adjustment.
      Any
      dispute between the Issuer and the Holder of this Warrant with respect to the
      matters set forth in such certificate may at the option of the Holder of this
      Warrant be submitted to a national or regional accounting firm reasonably
      acceptable to the Issuer and the Holder, provided
      that the
      Issuer shall have ten (10) days after receipt of notice from such Holder of
      its
      selection of such firm to object thereto, in which case such Holder shall select
      another such firm and the Issuer shall have no such right of objection. The
      firm
      selected by the Holder of this Warrant as provided in the preceding sentence
      shall be instructed to deliver a written opinion as to such matters to the
      Issuer and such Holder within thirty (30) days after submission to it of such
      dispute. Such opinion shall be final and binding on the parties hereto. The
      costs and expenses of the initial accounting firm shall be paid equally by
      the
      Issuer and the Holder and, in the case of an objection by the Issuer, the costs
      and expenses of the subsequent accounting firm shall be paid in full by the
      Issuer.

    

    6.    Fractional
      Shares.
      No
      fractional shares of Warrant Stock will be issued in connection with any
      exercise hereof, but in lieu of such fractional shares, the Issuer shall make
      a
      cash payment therefor equal in amount to the product of the applicable fraction
      multiplied by the Per Share Market Value then in effect.

    

    7.    Ownership
      Cap and Certain Exercise Restrictions.
      (a)
      Notwithstanding anything to the contrary set forth in this Warrant, at no time
      may a Holder of this Warrant exercise this Warrant if the number of shares
      of
      Common Stock to be issued pursuant to such exercise would exceed, when
      aggregated with all other shares of Common Stock owned by such Holder at such
      time, the number of shares of Common Stock which would result in such Holder
      beneficially owning (as determined in accordance with Section 13(d) of the
      Exchange Act and the rules thereunder) in excess of 4.9% of the then issued
      and
      outstanding shares of Common Stock; provided,
      however,
      that
      upon a holder of this Warrant providing the Issuer with sixty-one (61) days
      notice (pursuant to Section 13 hereof) (the "Waiver
      Notice")
      that
      such Holder would like to waive this Section 7(a) with regard to any or all
      shares of Common Stock issuable upon exercise of this Warrant, this Section
      7(a)
      will be of no force or effect with regard to all or a portion of the Warrant
      referenced in the Waiver Notice; provided,
      further,
      that
      this provision shall be of no further force or effect during the sixty-one
      (61)
      days immediately preceding the expiration of the term of this
      Warrant.

    

    (b)    The
      Holder may not exercise the Warrant hereunder to the extent such exercise would
      result in the Holder beneficially owning (as determined in accordance with
      Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.9%
      of
      the then issued and outstanding shares of Common Stock, including shares
      issuable upon exercise of the Warrant held by the Holder after application
      of
      this Section; provided,
      however,
      that
      upon a holder of this Warrant providing the Issuer with a Waiver Notice that
      such holder would like to waive this Section 7(b) with regard to any or all
      shares of Common Stock issuable upon exercise of this Warrant, this Section
      7(b)
      shall be of no force or effect with regard to those shares of Warrant Stock
      referenced in the Waiver Notice; provided,
      further,
      that
      this provision shall be of no further force or effect during the sixty-one
      (61)
      days immediately preceding the expiration of the term of this
      Warrant.

    

    8.    Call. Notwithstanding
      anything herein to the contrary, the Issuer may at any time following the
      Original Issue Date call up to one hundred percent (100%) of this Warrant then
      still outstanding by providing the Holder of this Warrant written notice
      pursuant to Section 13 (the “Call
      Notice”);
      provided,
      that,
      in
      connection with any call by the Issuer under this Section 8, (A) the Per Share
      Market Value of the Common Stock has been greater than $1.60 for a period of
      ten
      (10) consecutive Trading Days immediately prior to the date of delivery of
      the
      Call Notice (a “Call
      Notice Period”)
      and
      the
      average daily trading volume during the Call Notice Period exceeds 250,000
      shares of Common Stock;
      (B)
      a
      registration statement under the Securities Act providing for the resale of
      the
      Warrant Stock and
      the
      shares of Common Stock issuable upon conversion of the Notes (the
      “Registration
      Statement”)
      is
      then in effect and has been effective, without lapse or suspension of any kind,
      for a period of thirty (30) consecutive calendar days, (C) trading in the Common
      Stock shall not have been suspended by the Securities and Exchange Commission
      or
      the OTC Bulletin Board (or other exchange or market on which the Common Stock
      is
      trading), (D) the Issuer is in material compliance with the terms and conditions
      of this Warrant and (E) the
      Issuer is not in possession of any material non-public information;
      provided,
      further,
      that
      the Registration Statement must be effective from the date of delivery of the
      Call Notice until the date which is the later of (i) the date the Holder
      exercises the Warrant pursuant to the Call Notice and (ii) the 20th
      day
      after the Holder receives the Call Notice (the “Early
      Termination Date”).
      The
      rights and privileges granted pursuant to this Warrant with respect to the
      shares of Warrant Stock subject to the Call Notice (the “Called
      Warrant Shares”)
      shall
      expire on the Early Termination Date if this Warrant is not exercised with
      respect to such Called Warrant Shares prior to such Early Termination Date.
      In
      the event this Warrant is not exercised with respect to the Called Warrant
      Shares, the Issuer shall remit to the Holder of this Warrant (i) $.001 per
      Called Warrant Share and (ii) a new Warrant representing the number of shares
      of
      Warrant Stock, if any, which shall not have been subject to the Call Notice
      upon
      the Holder tendering to the Issuer the applicable Warrant
      certificate. 

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    9.    Definitions.
      For the
      purposes of this Warrant, the following terms have the following
      meanings:

    

    "Additional
      Shares of Common Stock"
      means
      all shares of Common Stock issued by the Issuer after the Original Issue Date,
      and all shares of Other Common, if any, issued by the Issuer after the Original
      Issue Date, except: (i) securities issued (other than for cash) in connection
      with a merger, acquisition, or consolidation, (ii) securities issued pursuant
      to
      a bona fide firm underwritten public offering of the Issuer’s securities, (iii)
      securities issued pursuant to the conversion or exercise of convertible or
      exercisable securities issued or outstanding on or prior to the date hereof
      or
      issued pursuant to the Purchase Agreement, (iv) the Warrant Stock, (v)
      securities issued in connection with bona fide strategic license agreements
      or
      other partnering arrangements so long as such issuances are not for the purpose
      of raising capital, (vi) Common Stock issued or options to purchase Common
      Stock
      granted or issued pursuant to the Issuer’s employee stock purchase plans as they
      now exist and stock incentive plans as they now exist or as may be amended
      so
      long as the aggregate number of shares of Common Stock issued pursuant to such
      stock incentive plans does not exceed 8,000,000, (vii) any warrants issued
      to
      the placement agent and its designees for the transactions contemplated by
      the
      Purchase Agreement, and (viii) the payment of any principal and accrued interest
      in shares of Common Stock pursuant to the Notes. 

    

    "Articles
      of Incorporation"
      means
      the Articles of Incorporation of the Issuer as in effect on the Original Issue
      Date, and as hereafter from time to time amended, modified, supplemented or
      restated in accordance with the terms hereof and thereof and pursuant to
      applicable law. 

    

    "Board"
      shall
      mean the Board of Directors of the Issuer.

    

    "Capital
      Stock"
      means
      and includes (i) any and all shares, interests, participations or other
      equivalents of or interests in (however designated) corporate stock, including,
      without limitation, shares of preferred or preference stock, (ii) all
      partnership interests (whether general or limited) in any Person which is a
      partnership, (iii) all membership interests or limited liability company
      interests in any limited liability company, and (iv) all equity or ownership
      interests in any Person of any other type.

    

    "Common
      Stock"
      means
      the Common Stock, par value $.001 per share, of the Issuer and any other Capital
      Stock into which such stock may hereafter be changed.

    

    "Common
      Stock Equivalent"
      means
      any Convertible Security or warrant, option or other right to subscribe for
      or
      purchase any Additional Shares of Common Stock or any Convertible
      Security.

    

    "Convertible
      Securities"
      means
      evidences of Indebtedness, shares of Capital Stock or other Securities which
      are
      or may be at any time convertible into or exchangeable for Additional Shares
      of
      Common Stock. The term "Convertible Security" means one of the Convertible
      Securities.

    

    "Governmental
      Authority"
      means
      any governmental, regulatory or self-regulatory entity, department, body,
      official, authority, commission, board, agency or instrumentality, whether
      federal, state or local, and whether domestic or foreign.

    

    "Holders"
      mean
      the Persons who shall from time to time own any Warrant. The term "Holder"
      means
      one of the Holders.

    

    "Independent
      Appraiser"
      means a
      nationally recognized or major regional investment banking firm or firm of
      independent certified public accountants of recognized standing (which may
      be
      the firm that regularly examines the financial statements of the Issuer) that
      is
      regularly engaged in the business of appraising the Capital Stock or assets
      of
      corporations or other entities as going concerns, and which is not affiliated
      with either the Issuer or the Holder of any Warrant.

    

    "Issuer"
      means
      Quest Oil Corporation, a Nevada corporation, and its successors. 

    

    "Majority
      Holders"
      means
      at any time the Holders of Warrants exercisable for a majority of the shares
      of
      Warrant Stock issuable under the Warrants at the time outstanding.

    

    “Notes”
      means
      the senior secured convertible promissory notes issued
      by
      the Issuer pursuant to the Purchase Agreement.

    

    "Original
      Issue Date"
      means
      October __, 2005.

    

    "OTC
      Bulletin Board"
      means
      the over-the-counter electronic bulletin board.

    

    "Other
      Common"
      means
      any other Capital Stock of the Issuer of any class which shall be authorized
      at
      any time after the date of this Warrant (other than Common Stock) and which
      shall have the right to participate in the distribution of earnings and assets
      of the Issuer without limitation as to amount.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    “Outstanding
      Common Stock”
      means,
      at any given time, the aggregate amount of outstanding shares of Common Stock,
      assuming full exercise, conversion or exchange (as applicable) of all options,
      warrants and other Securities which are convertible into or exercisable or
      exchangeable for, and any right to subscribe for, shares of Common Stock that
      are outstanding at such time.

    

    "Person"
      means
      an individual, corporation, limited liability company, partnership, joint stock
      company, trust, unincorporated organization, joint venture, Governmental
      Authority or other entity of whatever nature.

    

    "Per
      Share Market Value"
      means
      on any particular date (a) the last trading price per share of the Common Stock
      on such date on the OTC
      Bulletin Board or
      another registered national stock exchange on which the Common Stock is then
      listed, or if there is no such price on such date, then the closing bid price
      on
      such exchange or quotation system on the date nearest preceding such date,
      or
      (b) if the Common Stock is not listed then on the OTC Bulletin Board or any
      registered national stock exchange, the last trading price for a share of Common
      Stock in the over-the-counter market, as reported by the OTC Bulletin Board
      or
      in the National Quotation Bureau Incorporated or similar organization or agency
      succeeding to its functions of reporting prices) at the close of business on
      such date, or (c) if the Common Stock is not then reported by the OTC Bulletin
      Board or the National Quotation Bureau Incorporated (or similar organization
      or
      agency succeeding to its functions of reporting prices), then the average of
      the
      "Pink Sheet" quotes for the five (5) Trading Days preceding such date of
      determination, or (d) if the Common Stock is not then publicly traded the fair
      market value of a share of Common Stock as determined by an Independent
      Appraiser selected in good faith by the Majority Holders; provided,
      however,
      that
      the Issuer, after receipt of the determination by such Independent Appraiser,
      shall have the right to select an additional Independent Appraiser, in which
      case, the fair market value shall be equal to the average of the determinations
      by each such Independent Appraiser; and provided,
      further
      that all
      determinations of the Per Share Market Value shall be appropriately adjusted
      for
      any stock dividends, stock splits or other similar transactions during such
      period. The determination of fair market value by an Independent Appraiser
      shall
      be based upon the fair market value of the Issuer determined on a going concern
      basis as between a willing buyer and a willing seller and taking into account
      all relevant factors determinative of value, and shall be final and binding
      on
      all parties. In determining the fair market value of any shares of Common Stock,
      no consideration shall be given to any restrictions on transfer of the Common
      Stock imposed by agreement or by federal or state securities laws, or to the
      existence or absence of, or any limitations on, voting rights.

    

    "Purchase
      Agreement"
      means
      the Note and Warrant Purchase Agreement dated as of September 30, 2005, among
      the Issuer and the Purchasers.

    

    "Purchasers"
      means
      the purchasers of the Notes and
      the
      Warrants issued by the Issuer pursuant to the Purchase Agreement.

    

    "Securities"
      means
      any debt or equity securities of the Issuer, whether now or hereafter
      authorized, any instrument convertible into or exchangeable for Securities
      or a
      Security, and any option, warrant or other right to purchase or acquire any
      Security. "Security" means one of the Securities.

    

    "Securities
      Act"
      means
      the Securities Act of 1933, as amended, or any similar federal statute then
      in
      effect.

    

    "Subsidiary"
      means
      any corporation at least 50% of whose outstanding Voting Stock shall at the
      time
      be owned directly or indirectly by the Issuer or by one or more of its
      Subsidiaries, or by the Issuer and one or more of its Subsidiaries.

    

    "Term"
      has the
      meaning specified in Section 1 hereof.

    

    "Trading
      Day"
      means
      (a) a day on which the Common Stock is traded on the OTC Bulletin Board, or
      (b)
      if the Common Stock is not traded on the OTC Bulletin Board, a day on which
      the
      Common Stock is quoted in the over-the-counter market as reported by the
      National Quotation Bureau Incorporated (or any similar organization or agency
      succeeding its functions of reporting prices); provided,
      however,
      that in
      the event that the Common Stock is not listed or quoted as set forth in (a)
      or
      (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and
      any
      day which shall be a legal holiday or a day on which banking institutions in
      the
      State of New York are authorized or required by law or other government action
      to close.

    

    "Voting
      Stock"
      means,
      as applied to the Capital Stock of any corporation, Capital Stock of any class
      or classes (however designated) having ordinary voting power for the election
      of
      a majority of the members of the Board of Directors (or other governing body)
      of
      such corporation, other than Capital Stock having such power only by reason
      of
      the happening of a contingency.

    

    "Warrants"
      means
      the Warrants issued and sold pursuant to the Purchase Agreement, including,
      without limitation, this Warrant, and any other warrants of like tenor issued
      in
      substitution or exchange for any thereof pursuant to the provisions of Section
      2(c), 2(d) or 2(e) hereof or of any of such other Warrants. 

    

    "Warrant
      Price"
      initially means $0.80, as such price may be adjusted from time to time as shall
      result from the adjustments specified in this Warrant, including Section 4
      hereto.

    

    "Warrant
      Share Number"
      means
      at any time the aggregate number of shares of Warrant Stock which may at such
      time be purchased upon exercise of this Warrant, after giving effect to all
      prior adjustments and increases to such number made or required to be made
      under
      the terms hereof.

    

    "Warrant
      Stock"
      means
      Common Stock issuable upon exercise of any Warrant or Warrants or otherwise
      issuable pursuant to any Warrant or Warrants.

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    10.    Other
      Notices.
      In case
      at any time:

    

    
      	 	
              (A)

            	
              the
                Issuer shall make any distributions to the holders of Common Stock;
                or

            

    

    

    
      	 	
              (B)

            	
              the
                Issuer shall authorize the granting to all holders of its Common
                Stock of
                rights to subscribe for or purchase any shares of Capital Stock of
                any
                class or other rights; or

            

    

    

    
      	 	
              (C)

            	
              there
                shall be any reclassification of the Capital Stock of the Issuer;
                or

            

    

    

    
      	 	
              (D)

            	
              there
                shall be any capital reorganization by the Issuer;
                or

            

    

    

    
      	 	
              (E)

            	
              there
                shall be any (i) consolidation or merger involving the Issuer or
                (ii)
                sale, transfer or other disposition of all or substantially all of
                the
                Issuer's property, assets or business (except a merger or other
                reorganization in which the Issuer shall be the surviving corporation
                and
                its shares of Capital Stock shall continue to be outstanding and
                unchanged
                and except a consolidation, merger, sale, transfer or other disposition
                involving a wholly-owned Subsidiary);
                or

            

    

    

    
      	 	
              (F)

            	
              there
                shall be a voluntary or involuntary dissolution, liquidation or winding-up
                of the Issuer or any partial liquidation of the Issuer or distribution
                to
                holders of Common Stock;

            

    

    

    then,
      in
      each of such cases, the Issuer shall give written notice to the Holder of the
      date on which (i) the books of the Issuer shall close or a record shall be
      taken
      for such dividend, distribution or subscription rights or (ii) such
      reorganization, reclassification, consolidation, merger, disposition,
      dissolution, liquidation or winding-up, as the case may be, shall take place.
      Such notice also shall specify the date as of which the holders of Common Stock
      of record shall participate in such dividend, distribution or subscription
      rights, or shall be entitled to exchange their certificates for Common Stock
      for
      securities or other property deliverable upon such reorganization,
      reclassification, consolidation, merger, disposition, dissolution, liquidation
      or winding-up, as the case may be. Such notice shall be given at least twenty
      (20) days prior to the action in question and not less than ten (10) days prior
      to the record date or the date on which the Issuer's transfer books are closed
      in respect thereto. This Warrant entitles the Holder to receive copies of all
      financial and other information distributed or required to be distributed to
      the
      holders of the Common Stock.

    

    11.    Amendment
      and Waiver.
      Any
      term, covenant, agreement or condition in this Warrant may be amended, or
      compliance therewith may be waived (either generally or in a particular instance
      and either retroactively or prospectively), by a written instrument or written
      instruments executed by the Issuer and the Majority Holders; provided,
      however,
      that no
      such amendment or waiver shall reduce the Warrant Share Number, increase the
      Warrant Price, shorten the period during which this Warrant may be exercised
      or
      modify any provision of this Section 11 without the consent of the Holder of
      this Warrant. No consideration shall be offered or paid to any person to amend
      or consent to a waiver or modification of any provision of this Warrant unless
      the same consideration is also offered to all holders of the
      Warrants.

    

    12.    Governing
      Law; Jurisdiction.
      This
      Warrant shall be governed by and construed in accordance with the internal
      laws
      of the State of New York, without giving effect to any of the conflicts of
      law
      principles which would result in the application of the substantive law of
      another jurisdiction. This Warrant shall not be interpreted or construed with
      any presumption against the party causing this Warrant to be drafted. The Issuer
      and the Holder agree that venue for any dispute arising under this Warrant
      will
      lie exclusively in the state or federal courts located in New York County,
      New
      York, and the parties irrevocably waive any right to raise forum
      non conveniens
      or any
      other argument that New York is not the proper venue. The Issuer and the Holder
      irrevocably consent to personal jurisdiction in the state and federal courts
      of
      the state of New York. The Issuer and the Holder consent to process being served
      in any such suit, action or proceeding by mailing a copy thereof to such party
      at the address in effect for notices to it under this Warrant and agrees that
      such service shall constitute good and sufficient service of process and notice
      thereof. Nothing in this Section 12 shall affect or limit any right to serve
      process in any other manner permitted by law. The Issuer and the Holder hereby
      agree that the prevailing party in any suit, action or proceeding arising out
      of
      or relating to this Warrant or the Purchase Agreement, shall be entitled to
      reimbursement for reasonable legal fees from the non-prevailing party. The
      parties hereby waive all rights to a trial by jury.

    

    13.    Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earlier of (i) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile telephone number specified for
      notice prior to 5:00 p.m., eastern time, on a Trading Day, (ii) the Trading
      Day
      after the date of transmission, if such notice or communication is delivered
      via
      facsimile at the facsimile telephone number specified for notice later than
      5:00
      p.m., eastern time, on any date and earlier than 11:59 p.m., eastern time,
      on
      such date, (iii) the Trading Day following the date of mailing, if sent by
      overnight delivery by a nationally recognized overnight courier service or
      (iv)
      actual receipt by the party to whom such notice is required to be given. The
      addresses for such communications shall be with respect to the Holder of this
      Warrant or of Warrant Stock issued pursuant hereto, addressed to such Holder
      at
      its last known address or facsimile number appearing on the books of the Issuer
      maintained for such purposes, or with respect to the Issuer, addressed
      to:

    

    Quest
      Oil
      Corporation 

    1188
      West
      Georgia Street, Suite 1650

    Vancouver,
      BC, Canada V6E 4A2

    Attention:
      Chief Executive Officer

    Tel.
      No.:
      (604) 629-2461

    Fax
      No.:
      (800) 608-3562

    

    with
      copies (which copies 

    shall
      not
      constitute notice 

    to
      the
      Issuer) to:        The
      Baum
      Law Firm

    580 Second
      Street, Suite 102

    Encinitas,
      California 92024

    Attention:
      Mark L. Baum

    Tel.
      No.: (760) 230-2300, ext. 205

    Fax
      No.: (760) 230-2305

    

    Copies
      of
      notices to the Holder shall be sent to Kramer Levin Naftalis & Frankel LLP,
      1177 Avenue of the Americas, New York, New York 10036, Attention: Christopher
      S.
      Auguste, Tel. No.: (212) 715-9100, Fax. No.: (212) 715-8000. Any party hereto
      may from time to time change its address for notices by giving at least ten
      (10)
      days written notice of such changed address to the other party
      hereto.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    14.    Warrant
      Agent.
      The
      Issuer may, by written notice to each Holder of this Warrant, appoint an agent
      having an office in New York, New York for the purpose of issuing shares of
      Warrant Stock on the exercise of this Warrant pursuant to subsection (b) of
      Section 2 hereof, exchanging this Warrant pursuant to subsection (d) of Section
      2 hereof or replacing this Warrant pursuant to subsection (d) of Section 3
      hereof, or any of the foregoing, and thereafter any such issuance, exchange
      or
      replacement, as the case may be, shall be made at such office by such
      agent.

    

    15.    Remedies.
      The
      Issuer stipulates that the remedies at law of the Holder of this Warrant in
      the
      event of any default or threatened default by the Issuer in the performance
      of
      or compliance with any of the terms of this Warrant are not and will not be
      adequate and that, to the fullest extent permitted by law, such terms may be
      specifically enforced by a decree for the specific performance of any agreement
      contained herein or by an injunction against a violation of any of the terms
      hereof or otherwise.

    

    16.    Successors
      and Assigns.
      This
      Warrant and the rights evidenced hereby shall inure to the benefit of and be
      binding upon the successors and assigns of the Issuer, the Holder hereof and
      (to
      the extent provided herein) the Holders of Warrant Stock issued pursuant hereto,
      and shall be enforceable by any such Holder or Holder of Warrant
      Stock.

    

    17.    Modification
      and Severability.
      If, in
      any action before any court or agency legally empowered to enforce any provision
      contained herein, any provision hereof is found to be unenforceable, then such
      provision shall be deemed modified to the extent necessary to make it
      enforceable by such court or agency. If any such provision is not enforceable
      as
      set forth in the preceding sentence, the unenforceability of such provision
      shall not affect the other provisions of this Warrant, but this Warrant shall
      be
      construed as if such unenforceable provision had never been contained
      herein.

    

    18.    Headings.
      The
      headings of the Sections of this Warrant are for convenience of reference only
      and shall not, for any purpose, be deemed a part of this Warrant.

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
        
           

          --

          

           

          KL2:2407598.5

        

        
        

      

      
        8

        
          

        

      

      
        
        

        
          Exhibit
            10.8

          

        

      

    

    

    IN
      WITNESS WHEREOF, the Issuer has executed this Series A Warrant as of the day
      and
      year first above written.

    

    

    QUEST
      OIL
      CORPORATION

    

    

                                  
       By:________________________

                Name:

                        
      Title:

     

    
      
         

      

      
        9

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