Document:

Exhibit 4.4
                                                                    -----------

                SENIOR TERM SECOND LIEN SECURED CREDIT AGREEMENT

                          DATED AS OF DECEMBER 22, 2003

                                      AMONG

                               QUEST CHEROKEE, LLC

                                   AS BORROWER

                             BLUESTEM PIPELINE, LLC,

                                  AS GUARANTOR

                                  THE LENDERS,

                                  BANK ONE, NA,

                                    AS AGENT

                                       AND

                         BANK ONE CAPITAL MARKETS, INC.,
                      AS LEAD ARRANGER AND SOLE BOOK RUNNER

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                                Table of Contents

ARTICLE I  DEFINITIONS.........................................................1

ARTICLE II THE CREDITS........................................................21
      2.1.  Commitment........................................................21
      2.2.  Required Payments; Termination....................................21
      2.3.  Ratable Loans.....................................................21
      2.4.  Types of Advances.................................................21
      2.5.  Fee...............................................................21
      2.6.  Minimum Amount of Each Advance....................................21
      2.7.  Optional Principal Payments.......................................21
      2.8.  Method of Selecting Interest Periods for Advances.................22
      2.9.  Continuation of Outstanding Advances..............................22
      2.10. Changes in Interest Rate, etc.....................................23
      2.11. Rates Applicable After Default....................................23
      2.12. Method of Payment.................................................23
      2.13. Noteless Agreement; Evidence of Indebtedness......................23
      2.14. Telephonic Notices................................................24
      2.15. Interest Payment Dates; Interest and Fee Basis....................24
      2.16. Notification of Advances, Interest Rates,
            Prepayments and Commitment Reductions.............................24
      2.17. Lending Installations.............................................25
      2.18. Non-Receipt of Funds by the Agent.................................25
      2.19. Replacement of Lender.............................................25
      2.20. Limitation of Interest. The Borrower, the Agent and
            the Lenders intend to strictly comply with all applicable
            laws, including applicable usury laws.............................25

ARTICLE III  YIELD PROTECTION; TAXES..........................................26
      3.1.  Yield Protection..................................................26
      3.2.  Changes in Capital Adequacy Regulations...........................27
      3.3.  Availability of Types of Advances.................................27
      3.4.  Funding Indemnification...........................................28
      3.5.  Taxes.............................................................28
      3.6.  Lender Statements; Survival of Indemnity..........................29

ARTICLE IV CONDITIONS PRECEDENT...............................................30
      4.1.  Initial Advance...................................................30
      4.2.  Certificate of Effectiveness......................................33
      4.3.  Post-Closing Deliveries...........................................33

ARTICLE V  REPRESENTATIONS AND WARRANTIES.................................... 33
      5.1.  Existence and Standing............................................33
      5.2.  Authorization and Validity........................................33
      5.3.  No Conflict; Government Consent...................................34

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      5.4.  Financial Statements..............................................34
      5.5.  Material Adverse Change...........................................34
      5.6.  Taxes.............................................................34
      5.7.  Litigation and Contingent Obligations.............................34
      5.8.  Subsidiaries......................................................34
      5.9.  ERISA.............................................................35
      5.10. Accuracy of Information...........................................35
      5.11. Material Agreements...............................................35
      5.12. Compliance With Laws..............................................35
      5.13. Ownership of Properties...........................................35
      5.14. Oil and Gas Properties............................................35
      5.15. Plan Assets; Prohibited Transactions..............................36
      5.16. Environmental Matters.............................................36
      5.17. Investment Company Act............................................36
      5.18. Public Utility Holding Company Act................................36
      5.19. Post-Retirement Benefits..........................................36
      5.20. Insurance.........................................................36
      5.21. Solvency..........................................................37

ARTICLE VI COLLATERAL AND GUARANTIES..........................................37
      6.1.  Security..........................................................37
      6.2.  Guarantees........................................................38

ARTICLE VII COVENANTS.........................................................38
      7.1.  Financial and Other Reporting.....................................39
      7.2.  Use of Proceeds...................................................40
      7.3.  Notice of Default.................................................40
      7.4.  Conduct of Business; Fiscal Year..................................40
      7.5.  Taxes.............................................................41
      7.6.  Insurance.........................................................41
      7.7.  Compliance with Laws..............................................41
      7.8.  Maintenance of Properties.........................................41
      7.9.  Inspection........................................................41
      7.10. Dividends.........................................................41
      7.11. Indebtedness......................................................42
      7.12. Disqualified Stock................................................42
      7.13. Merger............................................................42
      7.14. Sale of Assets....................................................42
      7.15. Investments and Acquisitions......................................43
      7.16. Liens.............................................................44
      7.17. Affiliates........................................................45
      7.18. Amendments to Certain Agreements and Payment Restrictions.........46
      7.19. Sale and Leaseback Transactions and other
            Off-Balance Sheet Liabilities.....................................46
      7.20. Letters of Credit.................................................46
      7.21. Financial Contracts...............................................46
      7.22. Financial Covenants...............................................46
      7.23. Operation of Oil and Gas Properties...............................47

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      7.24. Title Data........................................................48
      7.25. Rate Management Transactions......................................48

ARTICLE VIII DEFAULTS.........................................................48
      8.1.  Representations and Warranties....................................48
      8.2.  Payments..........................................................48
      8.3.  Certain Covenants.................................................48
      8.4.  Other Terms and Provisions........................................48
      8.5.  Other Material Indebtedness.......................................49
      8.6.  Insolvency Proceedings............................................49
      8.7.  Appointment of Receiver...........................................49
      8.8.  Condemnation and Seizure..........................................49
      8.9.  Judgments.........................................................49
      8.10. Rate Management Obligations.......................................50
      8.11. Change of Control.................................................50
      8.12. Other Loan Documents..............................................50
      8.13. Guaranty..........................................................50
      8.14. Unfunded Liabilities..............................................50
      8.15. Multiemployer Plan Withdrawal Liability...........................50
      8.16. Reorganization or Termination of Multiemployer Plan...............50
      8.17. Environmental Laws................................................50
      8.18. Subordinate Debt Documents........................................51
      8.19. Collateral Documents..............................................51

ARTICLE IX  ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES....................51
      9.1.  Acceleration......................................................51
      9.2.  Amendments........................................................51
      9.3.  Preservation of Rights............................................52

ARTICLE X   GENERAL PROVISIONS................................................52
      10.1. Survival of Representations.......................................52
      10.2. Governmental Regulation...........................................52
      10.3. Headings..........................................................52
      10.4. Entire Agreement..................................................52
      10.5. Several Obligations; Benefits of this Agreement...................52
      10.6. Expenses; Indemnification.........................................53
      10.7. Numbers of Documents..............................................53
      10.8. Accounting........................................................53
      10.9. Severability of Provisions........................................53
      10.10 Nonliability of Lenders...........................................53
      10.11 Confidentiality...................................................54
      10.12 Nonreliance.......................................................54
      10.13 Disclosure........................................................54
      10.14 USA PATRIOT ACT NOTIFICATION......................................54

ARTICLE XI THE AGENT..........................................................55
      11.1. Appointment; Nature of Relationship...............................55

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      11.2. Powers............................................................55
      11.3. General Immunity..................................................55
      11.4. No Responsibility for Loans, Recitals, etc........................55
      11.5. Action on Instructions of Lenders.................................56
      11.6. Employment of Agents and Counsel..................................56
      11.7. Reliance on Documents; Counsel....................................56
      11.8. Agent's Reimbursement and Indemnification.........................56
      11.9. Notice of Default.................................................56
      11.10 Rights as a Lender................................................57
      11.11 Lender Credit Decision............................................57
      11.12 Successor Agent...................................................57
      11.13 Agent and Arranger Fees...........................................58
      11.14 Delegation to Affiliates..........................................58
      11.15 Execution of Collateral Documents.................................58
      11.16 Collateral Releases...............................................58

ARTICLE XII SETOFF; RATABLE PAYMENTS..........................................58
      12.1. Setoff............................................................58
      12.2. Ratable Payments..................................................58

ARTICLE XIII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS................58
      13.1. Successors and Assigns............................................58
      13.2. Participations....................................................59
      13.3. Assignments.......................................................60
      13.4. Dissemination of Information......................................61

ARTICLE XIV NOTICES...........................................................61
      14.1. Notices...........................................................61
      14.2. Change of Address.................................................61

ARTICLE XV COUNTERPARTS; CURRENCY INDEMNITY;
      NON-MERGER; MAXIMUM INTEREST RATE.......................................62
      15.1. Counterparts......................................................62

ARTICLE XVI CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL......62
      16.1. CHOICE OF LAW.....................................................62
      16.2. CONSENT TO JURISDICTION...........................................62
      16.3. WAIVER OF JURY TRIAL..............................................62

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                                    EXHIBITS
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Exhibit A-1     -    Form of Borrower's Counsel Opinion
Exhibit A-2     -    Form of Collateral Agent's Local Counsel Opinion
Exhibit B       -    Form of Compliance Certificate
Exhibit C       -    Form of Assignment and Assumption Agreement
Exhibit D       -    Form of Money Transfer Instructions
Exhibit E       -    Form of Note
Exhibit F       -    Form of Certificate of Effectiveness
Exhibit G       -    Form of Junior Subordinated Promissory Note
Exhibit H       -    Form of Borrower Pledge Agreement
Exhibit I       -    Form of Equityholders Pledge Agreement
Exhibit J       -    Form of Guaranty
Exhibit K       -    Form of Subsidiary Pledge Agreement
Exhibit L       -    Form of Certificate of Ownership Interests

                                    SCHEDULES
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Schedule 1.1-A  -    Existing Letters of Credit
Schedule 1.1-B  -    Rate Mangement Transactions
Schedule 5.7    -    Material Contingent Obligations
Schedule 5.8    -    Subsidiaries
Schedule 5.13   -    Indebtedness and Liens

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                SENIOR TERM SECOND LIEN SECURED CREDIT AGREEMENT

     This  Agreement,  dated as of December 22, 2003,  is among Quest  Cherokee,
LLC, a Delaware limited liability company,  Bluestem  Pipeline,  LLC, a Delaware
limited  liability  company,  the Lenders and Bank One, NA, having its principal
office in Chicago, Illinois, as Agent. The parties hereto agree as follows:

                                  ARTICLE III

                                  DEFINITIONS

     As used in this Agreement:

     "Acquisition" means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement,  by which Borrower or any of
its Subsidiaries (i) acquires any going business or all or substantially  all of
the assets of any firm,  corporation or limited liability  company,  or division
thereof, whether through purchase of assets, merger or otherwise,  (ii) acquires
the business, property or fixed assets of or business line or unit of any Person
consisting of Oil and Gas Properties,  or (iii) directly or indirectly  acquires
(in  one  transaction  or  as  the  most  recent  transaction  in  a  series  of
transactions)  at least a majority (in number of votes) of the  securities  of a
corporation  which have  ordinary  voting  power for the  election of  directors
(other than  securities  having such power only by reason of the  happening of a
contingency)  or a majority (by  percentage or voting power) of the  outstanding
ownership interests of a partnership or limited liability company.

     "Advance"  means the borrowing  hereunder made on the Closing Date, and any
subsequent  conversions or continuations thereof, (i) made by the Lenders on the
same  Borrowing  Date, or (ii) converted or continued by the Lenders on the same
date of conversion or continuation, consisting, in either case, of the aggregate
amount of the  several  Loans of the same Type  and,  in the case of  Eurodollar
Loans, for the same Interest Period.

     "Advance  Payment  Contract"  means any  contract  whereby any Credit Party
either  (a)  receives  or  becomes  entitled  to  receive  (either  directly  or
indirectly)  any payment (an "Advance  Payment") to be applied toward payment of
the purchase price of  Hydrocarbons  produced or to be produced from Oil and Gas
Properties  owned by any Credit Party and which Advance Payment is, or is to be,
paid in advance of actual  delivery of such  production to or for the account of
the purchaser regardless of such production, or (b) grants an option or right of
refusal to the purchaser to take delivery of such production in lieu of payment,
and, in either of the foregoing instances,  the Advance Payment is, or is to be,
applied as payment in full for such production when sold and delivered or is, or
is to be, applied as payment for a portion only of the purchase price thereof or
of a percentage  or share of such  production;  provided  that  inclusion of the
standard  "take or pay"  provision in any gas sales or purchase  contract or any
other similar contract shall not, in and of itself,  constitute such contract as
an Advance Payment Contract for the purposes hereof.

     "Affected Lender" is defined in Section 2.19.

     "Affiliate"  of any Person  means any other Person  directly or  indirectly
controlling,  controlled by or under common  control with such Person.  A Person
shall be deemed to control another Person if the

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controlling  Person owns 10% or more of any class of voting securities (or other
ownership  interests)  of  the  controlled  Person  or  possesses,  directly  or
indirectly,  the power to direct or cause the  direction  of the  management  or
policies of the  controlled  Person,  whether  through  ownership  of stock,  by
contract or otherwise.

     "Agent" means Bank One in its capacity as contractual representative of the
Lenders pursuant to Article XI, and not in its individual  capacity as a Lender,
and any successor Agent appointed pursuant to Article XI.

     "Aggregate  Commitment"  means the aggregate of the  Commitments of all the
Lenders, as reduced from time to time pursuant to the terms hereof.

     "Agreement" means this credit  agreement,  as it may be amended or modified
and in effect from time to time.

     "Agreement  Accounting  Principles"  means  generally  accepted  accounting
principles  as in effect in the  United  States  of  America  from time to time,
applied  in a manner  consistent  with  that  used in  preparing  the  financial
statements referred to in Section 5.4.

     "Alternate  Base Rate"  means,  for any day, a rate of  interest  per annum
equal to the  higher of (i) the Prime  Rate for such day and (ii) the sum of the
Federal Funds  Effective  Rate for such day plus one half of one percent  (.50%)
per annum.

     "Annualized  Consolidated  EBITDA" means,  for purposes of calculating  the
financial  ratios set forth in Section 7.22 for each Rolling Period ending on or
prior to November  30,  2004,  Borrower's  actual  Consolidated  EBITDA for such
Rolling  Period  multiplied by the factor  determined for such Rolling Period in
accordance with the table below:

                 Rolling Period Ending    Factor
                 -------------------------------------
                 May 31, 2004             2.4
                 August 31, 2004          1.5
                 November 30, 2004        1.09

     "Applicable Margin" means, with respect to Eurodollar Advances, six percent
(6.00%)  per  annum,  and with  respect  to  Floating  Rate  Advances,  four and
three-quarter percent (4.75%) per annum.

     "Approved  Counterparty"  means, at any time and from time to time, (i) any
Person engaged in the business of writing hedges for commodity, interest rate or
currency risk that is acceptable to the Senior  Revolving  Agent and has, at the
time Borrower or any Guarantor  enters into a Rate Management  Transaction  with
such  Person,  a credit  rating  of BBB or better  from S&P and (ii) the  Senior
Revolving  Agent, any Bank or any Affiliate of the Senior Revolving Agent or any
Bank.

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

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

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     "Arranger"  means Bank One Capital Markets,  Inc., a Delaware  corporation,
and its successors, in its capacity as lead arranger and sole book runner.

     "Article"  means an article of this Agreement  unless  another  document is
specifically referenced.

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

     "Bank"  means any  financial  institution  from time to time a party to the
Senior Revolving Credit Agreement as a lender and "Banks" means all Banks.

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

     "Bluestem"  means  Bluestem  Pipeline,  LLC, a Delaware  limited  liability
company, and Wholly-Owned Subsidiary of Borrower.

     "Borrower" means Quest Cherokee, LLC, a Delaware limited liability company,
and its successors and assigns.

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

     "Borrowing Date" means a date on which an Advance is made hereunder.

     "Borrowing Notice" is defined in Section 2.8.

     "Business  Day" means (i) with  respect to any  borrowing,  payment or rate
selection  of  Eurodollar  Advances,  a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago,  Illinois and New York City, New York
for the conduct of  substantially  all of their commercial  lending  activities,
interbank  wire  transfers  can be made on the  Fedwire  system and  dealings in
United States dollars are carried on in the London interbank market and (ii) for
all other  purposes,  a day  (other  than a Saturday  or Sunday) on which  banks
generally are open in Chicago,  Illinois for the conduct of substantially all of
their commercial  lending activities and interbank wire transfers can be made on
the Fedwire system.

     "Capital Expenditures" means, without duplication, any expenditures for any
purchase or other  acquisition of any asset which would be classified as a fixed
or  capital  asset  on  a  consolidated   balance  sheet  of  Borrower  and  its
Subsidiaries  prepared  in  accordance  with  Agreement  Accounting  Principles,
including oil and gas drilling and development  expenses,  but excluding (i) the
cost of assets acquired with  Capitalized  Lease  Obligations,  (ii) the cost to
purchase any Oil and Gas Properties,  (ii) expenditures of insurance proceeds to
rebuild  or  replace  any  asset  after a  casualty  loss  and  (iii)  leasehold
improvement  expenditures  on real property  (other than Oil and Gas Properties)
for which Borrower or a Subsidiary is reimbursed promptly by the lessor.

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     "Capital Lease" means any lease of any property (whether real,  personal or
mixed) that, in  conformity  with  Agreement  Accounting  Principles,  should be
accounted for as a capital lease.

     "Capital  Stock"  means any and all shares,  interests,  participations  or
other equivalents  (however  designated) of capital stock of a corporation,  any
and all equivalent  ownership  interests in a Person (other than a corporation),
including,  without limitation,  partnership interests and membership interests,
and any and all warrants, rights or options to purchase or other arrangements or
rights to acquire any of the foregoing.

     "Capitalized  Lease  Obligations"  of a  Person  means  the  amount  of the
obligations  of such  Person  under  Capital  Leases  which  would be shown as a
liability  on a  balance  sheet  of such  Person  prepared  in  accordance  with
Agreement Accounting Principles.

     "Cash  Equivalent   Investments"   means  (a)  readily   marketable  direct
obligations  of the United States of America (or  investments in mutual funds or
similar funds which invest solely in such  obligations),  (b) fully insured time
deposits and  certificates of deposit with maturities of one year or less of any
Lender,  any Bank, or any other  commercial  bank operating in the United States
having capital and surplus in excess of $100,000,000,  (c) commercial paper of a
domestic issuer if at the time of purchase such paper is rated in one of the two
highest  ratings  categories of S&P or Moody's,  and (d) mutual funds either (i)
rated AA or  higher  by S&P,  or (ii)  investing  only in  assets  listed in (a)
through (c) above.

     "Certificate of Effectiveness"  means a Certificate of Effectiveness in the
form of Exhibit F attached  hereto to be executed by Borrower and Agent upon the
satisfaction of each of the conditions precedent contained in Article IV hereof.

     "Certificate  of  Ownership  Interests"  means a  Certificate  of Ownership
Interests in the form of Exhibit L attached  hereto to be executed and delivered
by an  Authorized  Officer of  Borrower  pursuant  to clause  (xviii) of Section
4.1(a).

     "Change" is defined in Section 3.2.

     "Change of Control" means the  occurrence of any of the following,  whether
voluntary  or  involuntary,  including by operation of law: (a) any Credit Party
(other than Borrower)  shall cease to be a Wholly-Owned  Subsidiary of Borrower,
(b) for the period from the  Closing  Date until  December  22,  2006,  Cherokee
Partners shall cease,  for any reason,  to own one hundred percent (100%) of the
Class A membership  interests in Borrower,  (c) the Quest Group shall cease, for
any reason,  to own  one-hundred  percent  (100%) of the issued and  outstanding
membership or other  Capital Stock (other than the Class A membership  interests
described  in clause (b) above) in  Borrower,  or (d) Jerry Cash shall cease for
any reason to be an executive  officer of Borrower,  provided that, with respect
to this clause (d), it shall not be a "Change of Control" if Borrower appoints a
successor reasonably acceptable to the Agent within sixty (60) days thereafter.

     "Cherokee  Partners" means Cherokee Energy Partners LLC, a Delaware limited
liability company and a Wholly-Owned Subsidiary of ArcLight Energy Partners Fund
I, L.P., a Delaware limited partnership.

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

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<PAGE>

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

      "Closing  Transactions"  means the  transactions  to occur on the  Closing
Date, including, without limitation: (a) the completion of the Devon Acquisition
pursuant to the terms of the Devon Acquisition  Documents,  (b) the consummation
and closing of the conveyance and  contribution by QRC and certain other members
of the Quest  Group to Borrower of the  Contributed  Properties  pursuant to the
terms of the Contribution Documents, (c) the completion of the Equity Investment
pursuant to the terms of the Equity Investment Documents,  (d) the execution and
delivery of the Subordinate Debt Documents,  and the closing and consummation of
the transactions  contemplated  thereby  pursuant to the terms thereof,  and the
receipt by Borrower of not less than  $51,000,000,  net of  commitment  fees and
expenses deducted from the proceeds of the issuance of the Subordinate Note, and
the  application of such proceeds to finance in part the Devon  Acquisition  and
the costs and expenses  associated  therewith and with the Subordinate Debt, (e)
the  execution and delivery of the Senior  Revolver  Credit  Documents,  and the
closing and  consummation of the transactions  contemplated  thereby pursuant to
the terms thereof, and the receipt by Borrower of not more than $57,000,000 from
the issuance of the "Notes" under and as defined in the Senior  Revolving Credit
Agreement,  and the  application  of such  proceeds to finance in part the Devon
Acquisition  and the  costs  and  expenses  associated  therewith  and with such
revolving  "Notes" and the Loans,  (f) the  assignment  to, and  assumption  by,
Borrower of all Rate Management  Transactions  entered into by Devon and members
of the Quest Group with Bank One (or its  Affiliates)  prior to the date hereof,
pursuant to that certain Assignment  Agreement,  dated of even date herewith, by
and among  Devon,  as  Assignor  thereunder,  and Bank One, as  Remaining  Party
thereto, (g) repayment by Borrower in full of all obligations,  Indebtedness and
liabilities  accrued and outstanding  under the Existing Credit Agreements as of
the Closing Date,  including,  without  limitation,  (i) the entire  outstanding
principal  balance of the loans and advances  made (and as defined)  thereunder,
(ii) all  accrued  but  unpaid  interest,  and  (iii)  all  accrued  but  unpaid
commitment and other fees,  (h) the  cancellation  of all letters of credit,  if
any,  outstanding under the Existing Credit Agreements,  (i) the termination (or
assignment  and  assumption  of the  Rate  Management  Transactions  listed  and
described  on Part A of Schedule  1.1-B,  (pursuant  to an agreement in form and
substance satisfactory to Bank One), of all Rate Management Transactions entered
into by QRC pursuant to the terms of the  Existing  Credit  Agreements,  (j) the
termination  and release of the Existing  Mortgages and all other Liens securing
the  obligations,  Indebtedness and liabilities of any member of the Quest Group
under  the  Existing  Credit  Agreements  (including,  without  limitation,  the
delivery of UCC-3 releases with respect to all uniform  commercial  code filings
made under or pursuant to the Existing Credit  Agreements),  and the delivery to
QRC of all original  certificates  and stock powers pledged and delivered by QRC
and the other  members of the Quest Group  pursuant to the terms of the Existing
Credit Agreements as security for QRC's obligations thereunder,  (k) the release
of all guarantees of the obligations, Indebtedness and liabilities of any Credit
Party under the Existing Credit Agreements,  (l) the termination of the Existing
Credit  Agreements,  and the delivery to QRC of each  original  promissory  note
issued under the  Existing  Credit  Agreements  marked  "Terminated  and Paid in
Full",  (m) the  termination,  or  assignment  and  assumption  (pursuant  to an
agreement in form and substance satisfactory to Bank One) of the Rate Management
Transactions  listed  and  described  on  Part  B of  Schedule  1.1-B,  (n)  the
cancellation  (or  replacement  with  Letters of Credit  issued under the Senior
Revolving  Credit  Agreement)  of the letters of credit  listed and described on
Part A of Schedule  1.1-A,  which letters of credit  secure the Rate  Management
Transactions described in clause (m) preceding,  and (o) the payment of all fees
and expenses of Agent in connection with the credit facilities provided herein.

                                       5
<PAGE>

     "Code" means the Internal  Revenue  Code of 1986,  as amended,  reformed or
otherwise modified from time to time.

     "Collateral  Agency  Agreement"  means that certain  Collateral  Agency and
Intercreditor  Agreement dated as of the date hereof by and among the Collateral
Agent, the Senior Revolving Agent and Banks party to the Senior Revolving Credit
Agreement,  Agent,  the Lenders,  Borrower  and  Bluestem as amended,  modified,
supplemented or restated from time to time.

     "Collateral  Agent" means Bank One, NA, in its capacity as collateral agent
under the  Collateral  Agency  Agreement,  and any  successor  Collateral  Agent
appointed pursuant to the terms of the Collateral Agency Agreement.

     "Collateral Documents" means, collectively,  this Agreement, all Mortgages,
Security  Agreements,  Assignments of Production and Financing  Statements,  the
Equityholders  Pledge Agreement and other collateral  documents covering the Oil
and  Gas  Properties  and  related  personal  property,  equipment,  oil and gas
inventory and proceeds of the foregoing,  all Guaranties,  all pledge agreements
and all collateral  assignments of notes and Liens,  all such documents to be in
form and substance reasonably satisfactory to Agent.

     "Commitment"  means, for each Lender, the obligation of such Lender to make
Loans not exceeding the amount set forth opposite its signature below, as it may
be modified as a result of any assignment that has become effective  pursuant to
Section 13.3.2 or as otherwise  modified from time to time pursuant to the terms
hereof.

     "Consolidated"  or   "consolidated",   when  used  with  reference  to  any
accounting term, means the amount described by such accounting term,  determined
on a  consolidated  basis in accordance  with Agreement  Accounting  Principles,
after elimination of intercompany items.

     "Consolidated  EBITDA"  means,  for  any  Person  for any  period,  without
duplication:  (a) Consolidated Net Income of such Person for such period;  plus,
to the extent deducted in the calculation of  Consolidated  Net Income,  (b) the
sum of (i) income or  franchise  Taxes paid or accrued;  (ii)  Consolidated  Net
Interest Expense;  (iii) amortization,  depletion and depreciation expense; (iv)
any non-cash losses or charges on any Rate Management Transaction resulting from
the  requirements  of SFAS 133 for that period;  and (v) other non-cash  charges
(excluding  accruals for cash expenses made in the ordinary course of business);
less, to the extent included in the calculation of Consolidated Net Income,  (c)
the sum of (i) the income of any Person (other than wholly-owned Subsidiaries of
such  Person)  unless  such  income  is  received  by  such  Person  in  a  cash
distribution;  (ii) gains or losses from sales or other  dispositions  of assets
(other than Hydrocarbons  produced in the normal course of business);  (iii) any
non-cash  gains  on  any  Rate   Management   Transaction   resulting  from  the
requirements  of  SFAS  133  for  that  period;   and  (iv)   extraordinary   or
non-recurring  gains or non-recurring  losses.  Notwithstanding  anything to the
contrary contained herein, all calculations of Consolidated  EBITDA shall be for
any applicable period of determination  during which Borrower has consummated an
acquisition or disposition (to the extent permitted  hereunder) of properties or
assets,  calculated and determined on a pro forma basis (such  calculation to be
acceptable to, and approved by, Agent) as if such acquisition or disposition was
consummated on the first day of such applicable period.

     "Consolidated  Funded Debt" means, as of any date, without  duplication and
with respect to any Person,  (i) all obligations  for borrowed  money,  (ii) all
obligations evidenced by bonds, debentures, notes, or other similar instruments,
(iii) all other indebtedness (including obligations under Capital Leases, other

                                       6
<PAGE>

than usual and customary oil, gas and mineral leases) on which interest  charges
are customarily paid or accrued, (iv) all guarantees of indebtedness,  including
reimbursement obligations with respect to letters of credit, (v) the unfunded or
unreimbursed  portion of all  letters of credit  issued for the  account of such
Person,  (vi) any amount owed by such Person  representing the deferred purchase
price of  property  or  services  other than  accounts  payable  incurred in the
ordinary  course of business and in accordance  with  customary  trade terms and
which are not more than 120 days past the invoice date,  and (vii) all liability
as a general partner of a partnership for obligations of that partnership of the
nature described in (i) through (vi) preceding, but excluding, Subordinate Debt.

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

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

     "Contingent  Obligation"  of a Person means any  agreement,  undertaking or
arrangement by which such Person  assumes,  guarantees,  endorses,  contingently
agrees to purchase or provide funds for the payment of, or otherwise  becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other  Person,  or  otherwise  assures any  creditor of such other Person
against loss,  including,  without  limitation,  any comfort  letter,  operating
agreement, take-or-pay contract or the obligations of any such Person as general
partner of a partnership with respect to the liabilities of the partnership.

     "Contributed  Properties" means,  collectively,  all Oil and Gas Properties
and related assets  contributed and conveyed to Borrower by members of the Quest
Group on or prior to the Closing Date, which properties and assets are described
on Annex I of Exhibit A to the Certificate of Ownership Interests (as defined in
the Senior Revolving Credit Agreement).

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

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

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

     "Controlled  Group" means all members of a controlled group of corporations
or  other  business  entities  and all  trades  or  businesses  (whether  or not
incorporated)  under common control which,  together with Borrower or any of its
Subsidiaries, are treated as a single employer under Section 414 of the Code.

                                       7
<PAGE>

     "Conversion/Continuation Notice" is defined in Section 2.9.

     "Crude Oil" means all crude oil and condensate.

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

     "Default" means an event described in Article VIII.

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

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

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

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

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

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

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

     "Disqualified Stock" means any Capital Stock which, by its terms (or by the
terms  of  any  security  into  which  it is  convertible  or  for  which  it is
exchangeable),  or upon the  happening of any event,  matures or is  mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder  thereof,  in whole or in part,  on or prior to
the Facility Termination Date.

     "Dollar", "Dollars" and the sign "$" mean lawful money of the United States
of America.

                                       8
<PAGE>

      "Domestic  Subsidiary"  means, with respect to any Person, a Subsidiary of
such Person that is  incorporated  or formed under the laws of the United States
of America or the District of Columbia.

     "Environmental Laws" means any and all federal,  state,  provincial,  local
and foreign statutes, laws, judicial decisions, regulations,  ordinances, rules,
judgments, orders, decrees, plans, injunctions,  permits,  concessions,  grants,
franchises, licenses, agreements and other governmental restrictions relating to
(i) the  protection of the  environment,  (ii) the effect of the  environment on
human  health,   (iii)   emissions,   discharges  or  releases  of   pollutants,
contaminants, hazardous substances or wastes into surface water, ground water or
land,  or  (iv)  the  manufacture,  processing,  distribution,  use,  treatment,
storage, disposal, transport or handling of pollutants,  contaminants, hazardous
substances or wastes or the clean-up or other remediation thereof.

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

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

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

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

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended from time to time, and any rule or regulation issued thereunder.

     "Eurodollar  Advance" means an Advance which,  except as otherwise provided
in Section 2.11, bears interest at the applicable Eurodollar Rate.

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

     "Eurodollar  Loan"  means a Loan  which,  except as  otherwise  provided in
Section 2.11, bears

                                       9
<PAGE>

interest at the applicable Eurodollar Rate.

     "Eurodollar  Rate"  means,  with  respect to a  Eurodollar  Advance for the
relevant  Interest  Period a per annum rate of interest  (based on a year of 360
days)  equal to, the sum of (i) the  quotient  of (a) the  Eurodollar  Base Rate
applicable  to such  Interest  Period,  divided  by (b) one  minus  the  Reserve
Requirement  (expressed as a decimal)  applicable to such Interest Period,  plus
(ii) the Applicable Margin.

     "Excluded  Taxes" means,  in the case of each Lender or applicable  Lending
Installation  and the  Agent,  taxes  imposed on its  overall  net  income,  and
franchise taxes imposed on it, by (i) the  jurisdiction  under the laws of which
such Lender or the Agent is incorporated  or organized or (ii) the  jurisdiction
in which  the  Agent's  or such  Lender's  principal  executive  office  or such
Lender's applicable Lending Installation is located.

     "Exhibit" refers to an exhibit  attached to this Agreement,  unless another
document is specifically referenced.

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

     "Existing  Letter of Credit"  means the  letters  of credit  issued for the
account of Borrower and  outstanding  on the date hereof and described on Part A
of Schedule 1.1-A hereof.

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

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

     "Facility Termination Date" means December 22, 2008.

     "Federal  Funds  Effective  Rate" means,  for any day, an interest rate per
annum equal to the  weighted  average of the rates on  overnight  Federal  funds
transactions  with  members of the Federal  Reserve  System  arranged by Federal
funds  brokers on such day, as published  for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York,  or, if such rate is not so  published  for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions  received by the Agent from three Federal
funds  brokers  of  recognized  standing  selected  by the  Agent  in  its  sole
discretion.

     "Financial   Contract"  of  a  Person  means  (i)  any  exchange-traded  or
over-the-counter  futures,  forward,  swap or option contract or other financial
instrument   with  similar   characteristics,   or  (ii)  any  Rate   Management
Transaction.

                                       10
<PAGE>

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

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

     "Floating  Rate"  means,  for any day,  a rate per  annum  equal to (i) the
Alternate Base Rate for such day plus (ii) the Applicable  Margin,  in each case
changing when and as the Alternate Base Rate changes.

     "Floating  Rate  Advance"  means an  Advance  which,  except  as  otherwise
provided in Section 2.11, bears interest at the Floating Rate.

     "Floating  Rate Loan" means a Loan which,  except as otherwise  provided in
Section 2.11, bears interest at the Floating Rate.

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

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

     "Guarantor"  means  Bluestem  and  after  the date  hereof,  each  Domestic
Subsidiary of Borrower,  that  hereafter  executes and delivers to the Agent and
the Lenders, a Guaranty.

     "Guaranty"  means a Guaranty,  substantially in the form of Exhibit J to be
executed by each  Subsidiary  of Borrower in favor of the Agent and the Lenders,
pursuant to which such Subsidiary  guaranties payment and performance in full of
the  Obligations  as it may be amended or  modified  and in effect  from time to
time.

     "Highest Lawful Rate" shall mean, on any day, the maximum  nonusurious rate
of interest  permitted for that day by whichever of applicable  federal or Texas
law permits the higher  interest rate,  stated as a rate per annum. On each day,
if any, that Chapter 303 of the Texas Finance  Code, as amended  (formerly  Tex.
Rev. Civ. Stat. Ann. Art. 5069-1D.003) establishes the Highest Lawful Rate, such
rate shall be the  "indicated  (weekly) rate ceiling" (as defined in Chapter 303
of the Texas Finance Code, as amended) for that day.

     "Hydrocarbons"  means  all  Crude  Oil and  Natural  Gas  produced  from or
attributable to the Oil and Gas Properties of Borrower and its Subsidiaries.

     "Immaterial  Title  Deficiencies"  means,  with  respect to the Oil and Gas
Properties  of  Borrower  and its  Subsidiaries,  defects  or  clouds  on title,
discrepancies in reported net revenue and working interest ownership percentages
and other  Liens,  defects,  discrepancies  and  similar  matters  which do not,
individually  or in the  aggregate,  affect  the  greater  of (i)  Oil  and  Gas
Properties with a Recognized  Value (as defined in the Senior  Revolving  Credit
Agreement)  greater than four percent (4%) of such Recognized  Value of all such
Oil and Gas Properties and (ii) Oil and Gas Properties  with a Recognized  Value
greater than three percent (3%) of the  Recognized  Value of all of such Oil and
Gas Properties.

                                       11
<PAGE>

     "Indebtedness" of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations  representing the deferred purchase price of Property or
services  (other than accounts  payable  arising in the ordinary  course of such
Person's  business  payable  on terms  customary  in the trade and which are not
outstanding  more than one hundred  twenty  (120) days past the  invoice  date),
(iii)  obligations,  whether or not assumed,  secured by Liens or payable out of
the proceeds or production  from Property now or hereafter  owned or acquired by
such Person,  (iv)  obligations  which are evidenced by notes,  acceptances,  or
other  instruments,  (v)  obligations  of such Person to purchase  securities or
other  Property  arising  out of or in  connection  with the sale of the same or
substantially similar securities or Property, (vi) Contingent Obligations, (vii)
Capitalized Lease  Obligations,  (viii) Letters of Credit,  (xi) Rate Management
Obligations  and (x) any other  obligation  for borrowed  money or other similar
financial accommodation which in accordance with Agreement Accounting Principles
would be shown as a liability on the consolidated balance sheet of such Person.

     "Initial Title Required Reserve Value" means Oil and Gas Properties  having
a Proved  Reserves  that have a Recognized  Value of not less than forty percent
(40%) of the  Recognized  Value  of all  Proved  Reserves  of  Borrower  and its
Subsidiaries.

     "Interest Period" means, with respect to a Eurodollar  Advance, a period of
one,  two,  three or, if  available,  six months  commencing  on a Business  Day
selected by the Borrower pursuant to this Agreement.  Such Interest Period shall
end on the day which corresponds numerically to such date one, two, three or six
months  thereafter,  provided,  however,  that if there  is no such  numerically
corresponding  day in such next,  second,  third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next,  second,  third
or sixth  succeeding  month.  If an Interest Period would otherwise end on a day
which  is not a  Business  Day,  such  Interest  Period  shall  end on the  next
succeeding  Business  Day,  provided,  however,  that  if said  next  succeeding
Business Day falls in a new calendar  month,  such Interest  Period shall end on
the immediately preceding Business Day.

     "Investment"  of a Person means any loan,  advance (other than  commission,
travel and similar  advances  to officers  and  employees  made in the  ordinary
course of business), extension of credit (other than accounts receivable arising
in the  ordinary  course  of  business  on  terms  customary  in the  trade)  or
contribution of capital by such Person; stocks, bonds, mutual funds, partnership
interests,  notes,  debentures  or other  securities  owned by such Person;  any
deposit accounts and certificate of deposit owned by such Person; and structured
notes,  derivative  financial  instruments  and  other  similar  instruments  or
contracts owned by such Person.

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

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

     "Lenders" means the lending  institutions  listed on the signature pages of
this Agreement and their respective successors and assigns.

     "Lending  Installation"  means,  with respect to a Lender or the Agent, the
office,  branch,  Subsidiary  or Affiliate of such Lender or the Agent listed on
the  signature  pages hereof or  otherwise  selected by such Lender or the Agent
pursuant to Section 2.17.

                                       12
<PAGE>

     "Letter  of  Credit"  of a  Person  means a letter  of  credit  or  similar
instrument  which is issued  upon the  application  of such Person or upon which
such Person is an account party or for which such Person is in any way liable.

     "Lien"  means any lien  (statutory  or other),  mortgage,  charge,  pledge,
hypothecation,  assignment,  deposit  arrangement,  encumbrance  or  preference,
priority or other security agreement or preferential  arrangement of any kind or
nature whatsoever  (including,  without limitation,  the interest of a vendor or
lessor  under any  conditional  sale,  Capital  Lease or other  title  retention
agreement).

     "Loan" means, with respect to a Lender, such Lender's loan made pursuant to
Article II (or any conversion or continuation thereof).

     "Loan Documents" means, collectively, this Agreement, the Collateral Agency
Agreement,  any Notes issued pursuant to Section 2.13, the Collateral  Documents
and the Guaranty.

     "March 2004 Operating  Statement" has the meaning given such term in clause
(viii) of Section 7.1

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

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

     "Material  Gas  Imbalance"   means,  with  respect  to  all  Gas  Balancing
Agreements  to which  any  Credit  Party is a party or by which  any Oil and Gas
Properties owned by any Credit Party is bound, a net gas imbalance to any Credit
Party in excess of $750,000.

     "Material  Indebtedness" means  Indebtedness,  other than indebtedness with
respect to Rate Management Obligations or the Subordinate Debt Documents,  in an
outstanding  principal  amount of  $1,500,000  or more in the  aggregate (or the
equivalent thereof in any currency other than Dollars).

     "Material  Indebtedness  Agreement"  means any  agreement  under  which any
Material  Indebtedness  was  created or is governed  or which  provides  for the
incurrence  of  Indebtedness  in  an  amount  which  would  constitute  Material
Indebtedness  (whether or not an amount of  Indebtedness  constituting  Material
Indebtedness is outstanding thereunder).

     "Moody's" means Moody's Investors Service, Inc.

     "Mortgages" means all mortgages,  deeds of trust,  amendments to mortgages,
security agreements,  assignments of production,  pledge agreements,  collateral
mortgages,  collateral  chattel  mortgages,  collateral  assignments,  financing
statements and other documents, instruments and agreements evidencing, creating,
perfecting  or  otherwise  establishing  the Liens  required by Section 6.1. All
Mortgages  shall  be in form  and  substance  satisfactory  to Agent in its sole
discretion.

                                       13
<PAGE>

     "Multiemployer  Plan"  means a Plan  maintained  pursuant  to a  collective
bargaining agreement or any other arrangement to which Borrower or any member of
the Controlled  Group is a party to which more than one employer is obligated to
make contributions.

     "Natural  Gas" means all natural gas,  distillate  or sulphur,  natural gas
liquids and all products  recovered in the processing of natural gas (other than
condensate)  including,  without limitation,  natural gasoline,  coalbed methane
gas, casinghead gas,  iso-butane,  normal butane,  propane and ethane (including
such methane allowable in commercial ethane).

     "Non-Consenting Lender" is defined in Section 2.19.

     "Non-U.S. Lenders" is defined in Section 3.5(iv).

     "Note" is defined in Section 2.13.

     "Obligations" means all unpaid principal of and accrued and unpaid interest
on the Loans,  all  accrued and unpaid  fees and all  expenses,  reimbursements,
indemnities  and other  obligations  of the  Borrower  to the  Lenders or to any
Lender,  the Agent or any  indemnified  party arising  under the Loan  Documents
including reasonable attorneys' fees.

     "Off-Balance  Sheet  Liability"  of  a  Person  means  (i)  any  repurchase
obligation  or  liability  of such  Person  with  respect to  accounts  or notes
receivable sold by such Person,  (ii) any liability under any Sale and Leaseback
Transaction  which  is not a  Capital  Lease,  (iii)  any  liability  under  any
so-called  "synthetic lease" transaction  entered into by such Person,  (iv) any
Material Gas Imbalance, (v) any Advance Payment Contract, or (vi) any obligation
arising with respect to any other transaction which is the functional equivalent
of or takes the place of borrowing but which does not  constitute a liability on
the balance  sheets of such Person,  but excluding  from the  foregoing  clauses
(iii) through (vi) Operating Leases and usual and customary oil, gas and mineral
leases.

     "Oil  and Gas  Properties"  means  oil,  gas  and  mineral  properties  and
interests and related personal  properties  including  interests in oil, gas and
mineral leases,  working  interests,  royalty  interests and overriding  royalty
interests.

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

     "Operating  Lease" of a Person  means any lease of  Property  (other than a
Capital  Lease or an oil,  gas or mineral  lease) by such Person as lessee which
has an original term (including any required renewals and any renewals effective
at the option of the lessor) of one year or more.

     "Other Taxes" is defined in Section 3.5(ii).

     "Participants" is defined in Section 13.2.1.

                                       14
<PAGE>

      "Payment  Date" means the last day of each  calendar  month in the case of
Floating  Rate Loans and, in the case of Eurodollar  Loans,  the last day of the
applicable Interest Period, and if such Interest Period is longer than three (3)
months,  at three (3) month  intervals  following the first day of such Interest
Periods.

      "PBGC" means the Pension Benefit  Guaranty  Corporation,  or any successor
thereto.

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

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

      "Person"  means any natural  person,  corporation,  firm,  joint  venture,
partnership, limited liability company, association,  enterprise, trust or other
entity or  organization,  or any  government  or  political  subdivision  or any
agency, department or instrumentality thereof.

      "Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum  funding  standards  under Section 412 of the
Code as to which  Borrower  or any member of the  Controlled  Group may have any
liability.

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

      "Ponderosa"  means  Ponderosa Gas Pipeline  Company,  Inc., a
Kansas corporation, which is a Wholly-Owned Subsidiary of QRC.

      "Prime  Rate"  means a rate per annum  equal to the prime rate of interest
announced from time to time by Bank One or its parent (which is not  necessarily
the lowest rate charged to any  customer),  changing when and as said prime rate
changes.

      "Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person including any Oil and Gas Properties.

      "Proved  Developed  Non-Producing  Present  Value" or "PDNP Present Value"
means, with respect to any Oil and Gas Properties,  including Target Properties,
the  present  value  discounted  at ten  percent  (10%) of future  net  revenues
attributable  to all PDNP Reserves from such Oil and Gas  Properties  calculated
based on a Qualified Reserve Report.

      "Proved  Developed  Producing Present Value" or "PDP Present Value" means,
with respect to any Oil and Gas Properties,  including  Target  Properties,  the
present   value   discounted  at  ten  percent  (10%)  of  future  net  revenues
attributable  to all PDP Reserves  from such Oil and Gas  Properties  calculated
based on a Qualified Reserve Report.

                                       15
<PAGE>

      "Proved  Reserves"  has the  meaning  given  that term in the  definitions
promulgated  by the  Society of  Petroleum  Evaluation  Engineers  and the World
Petroleum  Congress  as in effect  at the time in  question;  "Proved  Developed
Producing   Reserves"  or  "PDP  Reserves"   means  Proved  Reserves  which  are
categorized as both  "Developed"  and "Producing" in such  definitions;  "Proved
Developed Non-Producing Reserves" or "PDNP Reserves" means Proved Reserves which
are categorized as both "Developed" and "Non-Producing" in such definitions; and
"Proved Undeveloped  Reserves" or "PUD Reserves" means Proved Reserves which are
categorized as "Undeveloped" in such definitions.

      "Proved  Reserves  Present  Value" means,  with respect to any Oil and Gas
Properties,  including Target Properties,  the sum of the PDP Present Value, the
PDNP  Present  Value and the PUD  Present  Value of such Oil and Gas  Properties
based on a  Qualified  Reserve  Report;  provided,  however,  in the  event  the
quotient of (i) the PDP Present Value divided by (ii) the sum of the PDP Present
Value,  the PDNP Present Value and PUD Present Value is less than 0.60, then the
Proved Reserves Present Value shall be an amount  determined by dividing the PDP
Present Value by 0.60.

      "Proved  Undeveloped  Present  Value" or "PUD Present  Value" means,  with
respect to any Oil and Gas Properties,  including Target Properties, the present
value discounted at ten percent (10%) of future net revenues attributable to all
PUD Reserves from such Oil and Gas  Properties  calculated  based on a Qualified
Reserve Report.

      "PSI" means Producers Service Incorporated, a Kansas corporation, which is
a Wholly-Owned Subsidiary of Ponderosa.

      "Purchasers" is defined in Section 13.3.1.

      "QES"   means   Quest   Energy   Service,   Inc.,   a  Kansas
corporation, which is a Wholly-Owned Subsidiary of QRC.

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

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

      "Qualified  Reserve  Report"  means,  with  respect  to any  Oil  and  Gas
Properties, including Target Properties, a Reserve Report prepared in accordance
with  the  guidelines  established  from  time  to  time  by the  United  States
Securities and Exchange Commission and acceptable to the Agent, except that, (i)
for all  Natural  Gas and Crude Oil to be sold from such Oil and Gas  Properties
other than Natural Gas and Crude Oil described in the following clause (ii), the
sales  price for the first five years  after the  effective  date of such report
shall be the  equivalent  "strip  price" for five year swaps for Natural Gas and
Crude Oil as reflected in the New York Mercantile  Exchange as of the settlement
of the last trading day for the contract  month  coincident  with the  effective
date of the Reserve  Report and  thereafter the purchase price shall be fixed at
the sales  price in effect at the end of such five year  period (in each case as
adjusted for  appropriate  quality,  transportation  and location  differentials
approved by the Required Lenders);  (ii) for all Natural Gas and Crude Oil to be
sold from such Target  Properties  on a fixed  price basis  pursuant to any bona
fide contract or with respect to which the price has been hedged pursuant to any
New York  Mercantile  Exchange  contract or bona fide price swap,  cap, floor or
collar agreement or any other hedge or derivative  arrangement,  the sales price
will be the fixed price (as adjusted for appropriate quality, transportation and
location  differentials  approved  by the  Required  Lenders)  for  the  volumes
indicated in

                                       16
<PAGE>

the contract,  agreement or arrangement;  and (iii) projected operating expenses
will be adjusted to reflect an increase at the rate of 3% per annum beginning on
the  first  anniversary  of the  effective  date  of the  Reserve  Report.  Each
Qualified  Reserve  Report  required to be  delivered  by August 31 of each year
pursuant  to clause  (iii) of  Section  7.1 shall be  prepared  by the  Approved
Petroleum  Engineer.  Each other Reserve  Report shall be prepared by either (i)
the Approved  Petroleum  Engineer,  or (ii)  Borrower's  in-house  staff.  Until
superseded,  the Existing  Reserve  Report and the Devon Reserve Report (each as
adjusted to the extent  required  under the  definition  of  "Qualified  Reserve
Report") shall be considered a Qualified Reserve Report.

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

      "Quest Oil & Gas" means Quest Oil & Gas Corporation, a Kansas corporation,
which is a Wholly-Owned Subsidiary of QRC.

      "Rate  Management   Transaction"  means  any  transaction   (including  an
agreement  with  respect  thereto)  now  existing  or  hereafter  entered by the
Borrower  or any  subsidiary  which is a rate swap,  basis  swap,  forward  rate
transaction,  commodity  swap,  commodity  option,  equity or equity index swap,
equity or equity index  option,  bond  option,  interest  rate  option,  foreign
exchange transaction,  cap transaction,  floor transaction,  collar transaction,
forward  transaction,  currency  swap  transaction,   cross-currency  rate  swap
transaction,  currency  option or any other similar  transaction  (including any
option with respect to any of these  transactions)  or any combination  thereof,
whether  linked to one or more interest  rates,  foreign  currencies,  commodity
prices, equity prices or other financial measures.

      "Rate Management Obligations" of a Person means any and all obligations of
such  Person,  whether  absolute or  contingent  and  howsoever  and  whensoever
created, arising, evidenced or acquired (including all renewals,  extensions and
modifications  thereof and substitutions  therefor),  under (i) any and all Rate
Management  Transactions,  and  (ii)  any  and  all  cancellations,  buy  backs,
reversals, terminations or assignments of any Rate Management Transactions.

      "Recognized  Value"  means,  with respect to Oil and Gas  Properties,  the
Proved Reserves  Present Value  attributed to such Oil and Gas Properties  based
upon the most recent Qualified Reserve Report.

      "Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation  or official  interpretation  of said Board of Governors  relating to
reserve requirements applicable to member banks of the Federal Reserve System.

      "Recognized Value  Properties" means all Oil and Gas Properties  evaluated
in the Qualified  Reserve Report for the purpose of establishing  the Recognized
Value;  provided that the Recognized Value Properties as of the Closing Date are
described in the legal  descriptions  of Oil and Gas Properties  attached to the
Certificate  of  Ownership  Interests,  and  constitute  all of the  Contributed
Properties,  the Devon Properties and the other Oil and Gas Properties described
in the Existing Reserve Report and the Devon Reserve Report.

      "Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve  System  as from  time to time in  effect  and any  successor  or  other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of  purchasing  or carrying  margin
stocks applicable to member banks of the Federal Reserve System.

                                       17
<PAGE>

      "Reportable  Event" means a reportable event as defined in Section 4043 of
ERISA and the  regulations  issued under such  section,  with respect to a Plan,
excluding,  however,  such events as to which the PBGC has by regulation  waived
the  requirement of Section  4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event,  provided,  however, that a failure to meet the
minimum funding  standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.

      "Reports" is defined in Section 10.6.

      "Required  Lenders"  means at any time that  there are less than three (3)
Lenders, all Lenders and, at all other times, Lenders in the aggregate having at
least sixty-six and two-thirds percent (66 2/3%) of the Aggregate Commitment or,
if the  Aggregate  Commitment  has been  terminated,  Lenders  in the  aggregate
holding at least  sixty-six  and  two-thirds  percent (66 2/3%) of the aggregate
unpaid principal amount of the outstanding Advances.

      "Required  Reserve  Value"  means  Proved  Reserves  of  Borrower  and its
Subsidiaries  that have a Recognized  Value of not less than sixty-five  percent
(65%) of the  Recognized  Value of all Proved  Reserves held by Borrower and its
Subsidiaries.

      "Reserve  Report" means an engineering  analysis of Oil and Gas Properties
owned or to be acquired by Borrower, in form and substance reasonably acceptable
to the Agent, prepared in accordance with customary and prudent practices in the
petroleum  engineering  industry and Financial Account Standards Board Statement
69.

      "Reserve  Requirement"  means,  with  respect to an Interest  Period,  the
maximum  aggregate  reserve  requirement  (including  all  basic,  supplemental,
marginal and other reserves) which is imposed under Regulation D on eurocurrency
liabilities.

      "Risk-Based Capital Guidelines" is defined in Section 3.2.

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

      "S&P" means Standard and Poor's Ratings Services, a division of The McGraw
Hill Companies, Inc.

      "Sale  and  Leaseback  Transaction"  means any sale or other  transfer  of
Property by any Person with the intent to lease such Property as lessee.

      "Schedule" refers to a specific schedule to this Agreement, unless another
document is specifically referenced.

      "Section"  means a numbered  section  of this  Agreement,  unless  another
document is specifically referenced.

                                       18
<PAGE>

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

      "Senior  Revolving  Credit  Agreement" means that certain Senior Revolving
Credit Agreement dated as of December 22, 2003 among Borrower,  Senior Revolving
Agent and Banks  pursuant to which Banks  therein  agree to make a  $200,000,000
revolving  loan available to Borrower,  as amended,  modified,  supplemented  or
restated as permitted hereunder.

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

      "Senior  Revolving  Notes"  means  notes  issued  pursuant  to the  Senior
Revolving Credit Agreement, as amended, modified,  supplemented or restated from
time to time in compliance herewith.

      "Single  Employer Plan" means a Plan  maintained by Borrower or any member
of  the  Controlled  Group  for  employees  of  Borrower  or any  member  of the
Controlled Group.

      "Stated Rate" is defined in Section 2.20.

      "STP Cherokee" means STP Cherokee, Inc., an Oklahoma corporation, which is
a Wholly-Owned Subsidiary of QRC.

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

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

      "Subordinate Note" means one or more Junior Subordinated  Promissory Notes
in the form of Exhibit G attached  hereto to be executed by Borrower and payable
to the  order of the  Holders,  in an  original  aggregate  principal  amount of
$51,000,000, as amended, modified, supplemented or restated from time to time in
compliance herewith.

      "Subordinate  Note  Purchase  Agreement"  means that certain Note Purchase
Agreement dated of even date herewith, by and among Borrower and the Holders, as
amended,  modified,  supplemented  or restated  from time to time in  compliance
herewith.

      "Subsidiary"  of a Person means (i) any  corporation  more than 50% of the
outstanding  securities  having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its  Subsidiaries or by such Person and one or more of its  Subsidiaries,  or
(ii) any partnership,  limited liability company, association,  joint venture or
similar business  organization  more than 50% of the ownership  interests having
ordinary voting power of which shall at the

                                       19
<PAGE>

time be so  owned  or  controlled.  Unless  otherwise  expressly  provided,  all
references herein to a "Subsidiary" shall mean a Subsidiary of Borrower.

      "Subsidiary  Pledge  Agreement" means a Pledge Agreement  substantially in
the form of Exhibit K attached hereto (with applicable conforming changes) to be
executed by each  existing  and/or  future  Subsidiary of Borrower to the extent
such Subsidiary owns any  outstanding  Capital Stock of any other  Subsidiary of
Borrower  (for  purposes of this  definition  and Section  6.1(d)  hereof,  such
Subsidiary  is  referred  to herein and  therein as an  "Indirect  Subsidiary"),
pursuant to which such  Subsidiary  shall pledge to  Collateral  Agent,  for the
ratable  benefit of Lenders,  all of the issued and  outstanding  Capital  Stock
owned by such Subsidiary of each Indirect Subsidiary described therein to secure
the Obligations.

      "Substantial  Portion" means, with respect to the Property of the Borrower
and  its   Subsidiaries,   Property  which  represents  more  than  10%  of  the
consolidated  assets of the Borrower and its  Subsidiaries  or property which is
responsible  for more than 10% of the  consolidated  net sales, in each case, as
would be shown in the consolidated  financial statements of the Borrower and its
Subsidiaries  as at the  beginning of the  twelve-month  period  ending with the
month in which such  determination is made (or if financial  statements have not
been delivered  hereunder for that month which begins the  twelve-month  period,
then  the  financial  statements  delivered  hereunder  for the  quarter  ending
immediately prior to that month).

      "Target  Properties" means any Oil and Gas Properties that Borrower or any
of its  Subsidiaries  proposes to acquire  pursuant  to clause  (iii) of Section
7.15.

      "Taxes"  means  any and all  present  or  future  taxes,  duties,  levies,
imposts, deductions,  charges or withholdings,  and any and all liabilities with
respect to the foregoing, but excluding Excluded Taxes and Other Taxes.

      "Terminated Lender" is defined in Section 2.19.

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

      "Transferee" is defined in Section 13.4.

      "Type" means,  with respect to any Advance,  its nature as a Floating Rate
Advance or a Eurodollar  Advance and with  respect to any Loan,  its nature as a
Floating Rate Loan or a Eurodollar Loan.

      "Unfunded  Liabilities"  means the  amount  (if any) by which the  present
value of all vested and  unvested  accrued  benefits  under all Single  Employer
Plans  exceeds the fair market  value of all such Plan assets  allocable to such
benefits,  all  determined  as of the then most recent  valuation  date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.

      "Unmatured  Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.

      "Wholly-Owned  Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly,  by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more  Wholly-Owned  Subsidiaries of
such Person, or (ii) any partnership,  limited liability  company,  association,
joint venture or similar business  organization 100% of the ownership  interests
having ordinary voting power of which

                                       20
<PAGE>

shall at the time be so owned or controlled.

      The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.

                                  ARTICLE II.

                                  THE CREDITS

     2.1. Commitment.  Each Lender severally agrees, on the terms and conditions
set forth in this Agreement,  to make, on the date of this  Agreement,  Loans to
the  Borrower in an amount equal to the amount of its  Commitment.  The Borrower
may make only one borrowing under the Commitments  which shall be on the date of
the initial Advance.  Any amount borrowed under the Commitments and subsequently
repaid or prepaid may not be reborrowed.  Subject to Section 2.7, clause (ii) of
Section  7.14,  and Section 9.1 all amounts owed  hereunder  with respect to the
Loans shall be paid in full on the  Facility  Termination  Date.  Each  Lender's
Commitment shall terminate immediately and without further action on the date of
the  initial  Advance  after  giving  effect  to the  funding  of such  Lender's
Commitment on such date.

     2.2. Required Payments;  Termination.  In addition to any payments required
under clause (ii) of Section 7.14 and Section 9.1, any outstanding  Advances and
all  other  unpaid  Obligations  shall  be paid in full by the  Borrower  on the
Facility Termination Date.

     2.3. Ratable Loans. Each Advance hereunder shall consist of Loans made from
the several  Lenders  ratably in proportion  to the ratio that their  respective
Commitments bear to the Aggregate Commitment.

     2.4. Types of Advances.  Except for the initial  Advance,  unless a Default
has occurred  and is  continuing  or the Borrower is subject to liability  under
Sections  3.1 or 3.2 as a result of Advances  being  Eurodollar  Advances or the
Agent suspends the availability of Eurodollar  Advances pursuant to Section 3.3,
all Advances shall be Eurodollar Advances selected by the Borrower in accordance
with Sections 2.8 and 2.9. The initial Advance shall be a Floating Rate Advance,
provided that on the date of the initial Advance,  Borrower  delivers to Agent a
Conversion/Continuation Notice requesting that, no later than three (3) Business
Days  after  the  delivery  of such  notice,  such  Advance  be  converted  to a
Eurodollar Advance with an Interest Period of one (1) month.

     2.5. Fee. On the date hereof,  the Borrower  agrees to pay to the Agent, to
the Arranger and to each Lender the closing and other fees in the amounts agreed
upon among QRC, the Agent, the Arranger and the Lenders.

     2.6.  Minimum Amount of Each Advance.  The initial  Advance shall be in the
amount of the  aggregate  Commitment  and  thereafter  shall be in the aggregate
amount of all Eurodollar Loans of all Lenders.

     2.7. Optional Principal  Payments.  The Borrower may from time to time pay,
subject to the  payment  of any  funding  indemnification  amounts  required  by
Section  3.4 and the  premium set forth in the  following  sentence,  all of the
outstanding  Advances,  or, in a minimum  aggregate  amount of $1,000,000 or any
integral  multiple of $100,000 in excess  thereof,  any portion of the Advances,
upon three (3) Business Days' prior notice to the Agent.  The Borrower shall pay
to Agent (in  addition to the accrued  interest on the  principal  amount  being
prepaid), for the benefit of the Lenders, as liquidated damages for the loss of

                                       21
<PAGE>

the bargain and not as a penalty (i) an amount  equal to two percent (2%) of the
amount of any  outstanding  Advances  prepaid  during the  period  from the date
hereof  until June 22, 2004 and (ii) an amount  equal to one percent (1%) of the
amount of any outstanding  Advances in excess of $17,500,000  prepaid during the
period from June 23, 2004 to and  including  December 22, 2004.  Notwithstanding
the foregoing, no premium amount shall be payable with respect to any prepayment
of outstanding Advances after December 22, 2004.

     2.8. Method of Selecting Interest Periods for Advances.  The Borrower shall
select the Interest Period  applicable to each  Eurodollar  Advance from time to
time; provided,  that the Borrower shall not be permitted to have outstanding at
any one time  Eurodollar  Advances  with  more than two (2)  different  Interest
Periods  and  during  the first  sixty  (60) days  after the  Closing  Date each
Interest  Period shall be a one month Interest  Period.  The Borrower shall give
the Agent  irrevocable  notice (a "Borrowing  Notice") not later than 10:00 a.m.
(Chicago,  Illinois  time) at least three (3) Business Days before the Borrowing
Date for each  Eurodollar  Advance  (except  that,  in  respect  of the  initial
Advance, may not be later than 10:00 a.m. on the Closing Date), specifying:

          (i) the  Borrowing  Date,  which  shall  be a  Business  Day,  of such
     Advance,

          (ii) the aggregate amount of such Advance,

          (iii) the Type of Advance selected, and

          (iv) in the  case of each  Eurodollar  Advance,  the  Interest  Period
     applicable thereto.

Not later than noon (Chicago, Illinois time) on the initial Borrowing Date, each
Lender shall make available its Loan or Loans in funds immediately  available in
Chicago, Illinois to the Agent at its address specified pursuant to Article XIV.
The Agent will make the funds so  received  from the  Lenders  available  to the
Borrower at the Agent's aforesaid address.

     2.9.  Continuation of Outstanding  Advances.  Each Eurodollar Advance shall
continue as a Eurodollar  Advance until the end of the then applicable  Interest
Period  therefor,  at which time such Eurodollar  Advance shall be automatically
converted into a Floating Rate Advance unless (x) such Eurodollar  Advance is or
was repaid in accordance  with Section 2.7 or (y) the Borrower  shall have given
the Agent a  Conversion/Continuation  Notice requesting that, at the end of such
Interest Period,  such Eurodollar  Advance continue as a Eurodollar  Advance for
the same or another  Interest Period;  provided,  that the Borrower shall not be
permitted to have outstanding at any one time Eurodollar Advances with more than
two  (2)  different  Interest  Periods.   The  Borrower  shall  give  the  Agent
irrevocable notice (a "Conversion/Continuation  Notice") of each continuation of
a Eurodollar Advance not later than 10:00 a.m. (Chicago, Illinois time) at least
three  (3)  Business  Days  prior  to the  date of the  requested  continuation,
specifying:

          (i) the  requested  date,  which  shall  be a  Business  Day,  of such
     conversion or continuation,

          (ii)  the  aggregate  amount  and Type of the  Advance  which is to be
     converted or continued, and

          (iii) the  amount of such  Advance  which is to be  converted  into or
     continued as a Eurodollar  Advance and the duration of the Interest  Period
     applicable thereto.

                                       22
<PAGE>

     2.10.  Changes in Interest Rate, etc. Each Floating Rate Advance shall bear
interest on the outstanding  principal  balance  thereof,  for each day from and
including the date of such Advance is made or is automatically  converted from a
Eurodollar  Advance into a Floating Rate Advance pursuant to Section 2.9 hereof,
at a rate per annum equal to the Floating Rate for such day. Changes in the rate
of interest on that portion of any Advance maintained as a Floating Rate Advance
will take effect  immediately  with each change in the Alternate Base Rate. Each
Eurodollar  Advance  shall bear  interest on the  outstanding  principal  amount
thereof  from and  including  the first day of the  Interest  Period  applicable
thereto  to (but not  including)  the last day of such  Interest  Period  at the
interest rate determined by the Agent as applicable to such  Eurodollar  Advance
based upon the Borrower's selections under Sections 2.8 and 2.9 and otherwise in
accordance with the terms hereof.  No Interest Period may end after the Facility
Termination Date.

     2.11.  Rates  Applicable  After  Default.  Notwithstanding  anything to the
contrary  contained  in Section 2.8, 2.9 or 2.10,  during the  continuance  of a
Default the  Required  Lenders may, at their  option,  by notice to the Borrower
(which   notice  may  be  revoked  at  the  option  of  the   Required   Lenders
notwithstanding  any provision of Section 9.2 requiring unanimous consent of the
Lenders  to changes  in  interest  rates),  declare  that (i) no Advance  may be
continued as a Eurodollar Advance with an Interest Period greater than one month
or (ii) all Eurodollar Advances shall convert to Floating Rate Advances.  During
the  continuance  of a Default the  Required  Lenders may, at their  option,  by
notice  to the  Borrower  (which  notice  may be  revoked  at the  option of the
Required  Lenders   notwithstanding  any  provision  of  Section  9.2  requiring
unanimous consent of the Lenders to changes in interest rates), declare that, to
the extent permitted by law, (i) each Eurodollar Advance shall bear interest for
the remainder of the applicable Interest Period at the rate otherwise applicable
to such  Interest  Period plus 2% per annum and (ii) each  Floating Rate Advance
shall bear  interest  at a rate per annum equal to the  Floating  Rate in effect
from time to time plus 2% per annum,  provided that, during the continuance of a
Default  under  Section 8.6 or 8.7, the interest  rates set forth in clauses (i)
and (ii) above shall be  applicable  to all  Advances  without  any  election or
action on the part of the Agent or any Lender.

     2.12. Method of Payment. All payments of the Obligations hereunder shall be
made, without setoff, deduction (except to the extent required by applicable law
or with respect to Taxes,  but always subject to the obligations of the Borrower
under Section 3.5 hereof),  or counterclaim,  in immediately  available funds to
the Agent at the Agent's  address  specified  pursuant to Article XIV, or at any
other Lending Installation of the Agent specified in writing by the Agent to the
Borrower,  by noon  (Chicago,  Illinois  time) on the date when due and shall be
applied  ratably by the Agent among the Lenders.  Each payment  delivered to the
Agent for the account of any Lender shall be delivered  promptly by the Agent to
such  Lender in the same type of funds that the Agent  received  at its  address
specified pursuant to Article XIV or at any Lending Installation  specified in a
notice received by the Agent from such Lender.

     2.13. Noteless Agreement;  Evidence of Indebtedness.  (i) Each Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Lender resulting from each Loan made by
such Lender from time to time,  including  the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.

          (ii) The Agent  shall also  maintain  accounts in which it will record
     (a) the  amount of each  Loan  made  hereunder,  the Type  thereof  and the
     Interest  Period with respect  thereto,  (b) the amount of any principal or
     interest  due and payable or to become due and payable from the Borrower to
     each Lender  hereunder  and (c) the amount of any sum received by the Agent
     hereunder from the Borrower and each Lender's share thereof.

                                       23
<PAGE>

          (iii) The entries  maintained in the accounts  maintained  pursuant to
     paragraphs  (i) and  (ii)  above  shall  be  prima  facie  evidence  of the
     existence  and  amounts  of the  Obligations  therein  recorded;  provided,
     however,  that the  failure  of the Agent or any  Lender to  maintain  such
     accounts or any error therein shall not in any manner affect the obligation
     of the Borrower to repay the Obligations in accordance with their terms.

          (iv)  Any  Lender  may  request  that  its  Loans  be  evidenced  by a
     promissory note in substantially the form of Exhibit E (a "Note").  In such
     event, the Agent shall prepare,  and the Borrower shall execute and deliver
     to such Lender such Note payable to the order of such  Lender.  Thereafter,
     the Loans  evidenced by such Note and interest  thereon  shall at all times
     (prior to any assignment pursuant to Section 13.3) be represented by one or
     more Notes payable to the order of the payee named  therein,  except to the
     extent  that  any  such  Lender  subsequently  returns  any  such  Note for
     cancellation  and  requests  that such  Loans once  again be  evidenced  as
     described in paragraphs (i) and (ii) above.

     2.14.  Telephonic  Notices.  The Borrower hereby authorizes the Lenders and
the Agent to extend, convert or continue Advances and to transfer funds based on
telephonic notices made by any person or persons the Agent or any Lender in good
faith believes to be acting on behalf of the Borrower,  it being understood that
the    foregoing    authorization    is    specifically    intended   to   allow
Conversion/Continuation Notices to be given telephonically.  The Borrower agrees
to deliver promptly to the Agent a written confirmation, if such confirmation is
requested by the Agent or any Lender,  of each  telephonic  notice  signed by an
Authorized Officer. If the written  confirmation differs in any material respect
from the action taken by the Agent and the Lenders, the records of the Agent and
the Lenders shall govern absent manifest error.

     2.15. Interest Payment Dates;  Interest and Fee Basis.  Interest accrued on
each  Eurodollar  Advance  shall be payable on each Payment Date, on any date on
which the Eurodollar  Advance is prepaid,  whether by acceleration or otherwise,
and at  maturity.  In the  event the Agent has  suspended  the  availability  of
Eurodollar  Advances  pursuant  to  Section  3.3 or the  Borrower  is subject to
liability  under  Section  3.1 or 3.2 as a result of Advances  being  Eurodollar
Advances or the  Obligations  become  immediately  due and payable in accordance
with Section  9.1,  interest  accrued on each  Floating  Rate  Advance  shall be
payable on each Payment Date, commencing with the first such date to occur after
the date of such suspension, liability or acceleration, on any date on which the
Floating Rate Advance is prepaid,  whether due to acceleration or otherwise, and
at  maturity.  Interest  accrued on that  portion of the  outstanding  principal
amount of any Floating Rate Advance converted into a Eurodollar Advance on a day
other than a Payment Date shall be payable on the date of  conversion.  Interest
on Eurodollar  Advances shall be calculated for actual days elapsed on the basis
of a 360-day year and on Floating Rate Advances on the basis of a 365 or 366 day
year, as  applicable.  Interest  shall be payable for the day an Advance is made
but not for the day of any  payment  on the amount  paid if payment is  received
prior to noon (Chicago,  Illinois time) at the place of payment.  If any payment
of principal of or interest on an Advance shall become due on a day which is not
a Business Day, such payment shall be made on the next  succeeding  Business Day
and,  in the  case of a  principal  payment,  such  extension  of time  shall be
included in computing interest in connection with such payment.

     2.16. Notification of Advances,  Interest Rates, Prepayments and Commitment
Reductions. Promptly after receipt thereof, the Agent will notify each Lender of
the  contents  of each  Conversion/Continuation  Notice,  and  repayment  notice
received by it hereunder. The Agent will notify each Lender of the interest rate
applicable  to each  Eurodollar  Advance  promptly  upon  determination  of such
interest rate and at any time a Floating Rate Advance is outstanding,  will give
each Lender prompt notice of each change in the Alternate Base Rate.

                                       24
<PAGE>

     2.17. Lending  Installations.  Subject to Section 3.6, each Lender may book
its Loans at any Lending Installation selected by such Lender and may change its
Lending  Installation from time to time. All terms of this Agreement shall apply
to any such Lending  Installation  and the Loans and any Notes issued  hereunder
shall  be  deemed  held by each  Lender  for the  benefit  of any  such  Lending
Installation.  Each Lender may, by written  notice to the Agent and the Borrower
in accordance  with Article XIV,  designate  replacement  or additional  Lending
Installations  through which Loans will be made by it and for whose account Loan
payments are to be made.

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

     2.19. Replacement of Lender. In the event that (i) the Borrower is required
pursuant to Section 3.1, 3.2 or 3.5 to make any additional payment to any Lender
or if any Lender's  obligation to make or continue  Eurodollar Advances shall be
suspended pursuant to Section 3.3 (any Lender so affected an "Affected Lender"),
and,  if such  amounts  continue  to be  charged  or such  suspension  is  still
effective,  or (ii) in  connection  with any proposed  amendment,  modification,
termination,  waiver or consent  with respect to any of the  provisions  of this
Agreement or any other Loan Document as contemplated by Section 9.2, the consent
of Required  Lenders (or the consent of Bank One, as a Lender,  at any time that
there are less than three (3) Lenders)  shall have been obtained but the consent
of one or more of such other  Lenders  (each a  "Non-Consenting  Lender")  whose
consent is required  has not been  obtained;  then,  the  Borrower  may elect to
replace such Affected Lender or Non-Consenting Lender (a "Terminated Lender") as
a Lender party to this Agreement, provided that, with respect to the replacement
of an Affected Lender,  no Default or Unmatured  Default shall have occurred and
be  continuing  at the time of such  replacement,  and  provided  further  that,
concurrently with the replacement of any Terminated  Lender, (x) another bank or
other entity which is reasonably  satisfactory  to the Agent shall agree,  as of
such date,  to purchase for cash the Advances and other  Obligations  due to the
Terminated Lender pursuant to an assignment substantially in the form of Exhibit
C and to become a Lender for all purposes under this Agreement and to assume all
obligations  of the  Terminated  Lender to be  terminated as of such date and to
comply with the requirements of Section 13.3 applicable to assignments,  and (y)
the Borrower shall pay to such Terminated Lender in same day funds on the day of
such replacement (A) all amounts that are due to such Terminated Lender pursuant
to Sections  3.1, 3.2 and 3.5, and (B) an amount,  if any,  equal to the payment
which  would have been due to such Lender on the day of such  replacement  under
Section 3.4 had the Loans of such  Terminated  Lender been  prepaid on such date
rather than sold to the replacement  Lender. The Lenders agree that a Terminated
Lender will not be entitled to receive  liquidated  damages  pursuant to Section
2.7 as a result of its assignment under this Section 2.19.

     2.20.  Limitation  of  Interest.  The  Borrower,  the Agent and the Lenders
intend to strictly comply with all applicable laws,  including  applicable usury
laws. Accordingly,  the provisions of this Section 2.20 shall govern and control
over every other provision of this Agreement or any other Loan

                                       25
<PAGE>

Document which conflicts or is inconsistent with this Section 2.20, even if such
provision  declares  that it controls.  As used in this Section  2.20,  the term
"interest"  includes  the  aggregate  of all  charges,  fees,  benefits or other
compensation  which constitute  interest under applicable law, provided that, to
the maximum extent  permitted by applicable law, (a) any  non-principal  payment
shall be characterized as an expense or as compensation for something other than
the use,  forbearance  or detention  of money and not as  interest,  and (b) all
interest at any time  contracted  for,  reserved,  charged or received  shall be
amortized,  prorated,  allocated and spread, in equal parts during the full term
of the  Obligations.  In no event  shall the  Borrower  or any  other  Person be
obligated to pay, or any Lender have any right or privilege to reserve,  receive
or retain,  (a) any  interest  in excess of the  maximum  amount of  nonusurious
interest  permitted  under the laws of the State of Texas or the applicable laws
(if any) of the United  States or of any other  applicable  state,  or (b) total
interest  in  excess  of the  amount  which  such  Lender  could  lawfully  have
contracted for,  reserved,  received,  retained or charged had the interest been
calculated  for the full term of the  Obligations at the Highest Lawful Rate. On
each day, if any,  that the interest  rate (the "Stated  Rate") called for under
this  Agreement or any other Loan Document  exceeds the Highest Lawful Rate, the
rate at which interest shall accrue shall automatically be fixed by operation of
this sentence at the Highest Lawful Rate for that day, and shall remain fixed at
the  Highest  Lawful  Rate for each day  thereafter  until the  total  amount of
interest accrued equals the total amount of interest which would have accrued if
there were no such  ceiling  rate as is imposed  by this  sentence.  Thereafter,
interest  shall accrue at the Stated Rate unless and until the Stated Rate again
exceeds the Highest Lawful Rate when the provisions of the immediately preceding
sentence shall again  automatically  operate to limit the interest accrual rate.
The daily  interest  rates to be used in  calculating  interest  at the  Highest
Lawful Rate shall be determined by dividing the  applicable  Highest Lawful Rate
per annum by the number of days in the calendar year for which such  calculation
is being made.  None of the terms and provisions  contained in this Agreement or
in any other Loan Document which directly or indirectly relate to interest shall
ever be construed  without  reference to this Section  2.20,  or be construed to
create a contract to pay for the use,  forbearance  or  detention of money at an
interest  rate  in  excess  of the  Highest  Lawful  Rate.  If the  term  of any
Obligation is shortened by reason of acceleration of maturity as a result of any
Default  or by any  other  cause,  or by  reason of any  required  or  permitted
prepayment,  and if for that (or any  other)  reason  any  Lender  at any  time,
including but not limited to, the stated  maturity,  is owed or received (and/or
has received)  interest in excess of interest  calculated at the Highest  Lawful
Rate,  then  and in any such  event  all of any such  excess  interest  shall be
canceled automatically as of the date of such acceleration,  prepayment or other
event which produces the excess,  and, if such excess  interest has been paid to
such  Lender,  it shall be  credited  pro  tanto  against  the  then-outstanding
principal balance of the Borrower's obligations to such Lender,  effective as of
the date or dates when the event occurs  which causes it to be excess  interest,
until such excess is exhausted or all of such  principal has been fully paid and
satisfied,  whichever  occurs first,  and any  remaining  balance of such excess
shall be promptly  refunded to its payor.  Chapter 346 of the Texas Finance Code
(which  regulates  certain  revolving  credit accounts  (formerly Tex. Rev. Civ.
Stat. Ann. Art. 5069, Ch. 15)) shall not apply to this Agreement or to any Loan,
nor  shall  this  Agreement  or any Loan be  governed  by or be  subject  to the
provisions of such Chapter 346 in any manner whatsoever.

                                  ARTICLE III

                            YIELD PROTECTION; TAXES

     3.1.  Yield  Protection.  If, on or after the date of this  Agreement,  the
adoption of any law or any governmental or quasi-governmental  rule, regulation,
policy,  guideline or directive (whether or not having the force of law), or any
change in the  interpretation or  administration  thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged with the
interpretation  or  administration  thereof,  or  compliance  by any  Lender  or
applicable Lending Installation

                                       26
<PAGE>

with any  request or  directive  (whether or not having the force of law) of any
such authority, central bank or comparable agency:

          (i) subjects any Lender or any applicable Lending  Installation to any
     Taxes,  or changes  the basis of  taxation  of  payments  (other  than with
     respect to Excluded Taxes) to any Lender in respect of its Loans, or

          (ii) imposes or increases or deems applicable any reserve, assessment,
     insurance charge, special deposit or similar requirement against assets of,
     deposits  with or for the account of, or credit  extended by, any Lender or
     any applicable  Lending  Installation  (other than reserves and assessments
     taken  into  account  in  determining   the  interest  rate  applicable  to
     Eurodollar Advances), or

          (iii)  imposes any other  condition the result of which is to increase
     the cost to any Lender or any applicable  Lending  Installation  of making,
     funding or  maintaining  its Loans or reduces any amount  receivable by any
     Lender or any applicable Lending Installation in connection with its Loans,
     or requires any Lender or any applicable  Lending  Installation to make any
     payment  calculated  by  reference  to the amount of Loans held or interest
     received by it, by an amount deemed material by such Lender,

and the result of any of the foregoing is to increase the cost to such Lender or
applicable Lending Installation of making or maintaining its Loans or Commitment
or  to  reduce  the  return  received  by  such  Lender  or  applicable  Lending
Installation  in connection  with such  Eurodollar  Loans or  Commitment,  then,
within 15 days of demand by such  Lender  provided  such  demand is made  within
ninety (90) days of the  incurrence of such  increased  cost, the Borrower shall
pay such Lender such additional amount or amounts as will compensate such Lender
for such increased cost or reduction in amount received.

     3.2. Changes in Capital Adequacy  Regulations.  If a Lender  determines the
amount of capital  required or expected to be  maintained  by such  Lender,  any
Lending  Installation of such Lender or any corporation  controlling such Lender
is  increased  as a result of a Change,  then,  within 15 days of demand by such
Lender,  the Borrower  shall pay such Lender the amount  necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Lender determines is attributable to this Agreement, its Loans or its
Commitment  to make Loans  hereunder  (after  taking into account such  Lender's
policies as to capital  adequacy).  "Change" means (i) any change after the date
of this Agreement in the Risk-Based  Capital  Guidelines or (ii) any adoption of
or change in any other law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not having the force
of law) after the date of this  Agreement  which  affects  the amount of capital
required or expected to be maintained by any Lender or any Lending  Installation
or any corporation controlling any Lender. "Risk-Based Capital Guidelines" means
(i) the risk-based capital guidelines in effect in the United States on the date
of this  Agreement,  including  transition  rules,  and (ii)  the  corresponding
capital  regulations  promulgated by regulatory  authorities  outside the United
States  implementing  the July 1988  report of the Basle  Committee  on  Banking
Regulation and  Supervisory  Practices  Entitled  "International  Convergence of
Capital Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.

     3.3.  Availability  of Types of  Advances.  If any Lender  determines  that
maintenance of its Eurodollar  Loans at a suitable  Lending  Installation  would
violate any  applicable  law,  rule,  regulation,  or directive,  whether or not
having the force of law, or if the Required Lenders  determine that (i) deposits
of a type and maturity  appropriate  to match fund  Eurodollar  Advances are not
available or (ii) the interest rate  applicable to Eurodollar  Advances does not
accurately reflect the cost of making or maintaining

                                       27
<PAGE>

Eurodollar Advances, then the Agent shall suspend the availability of Eurodollar
Advances and require any affected  Eurodollar Advances to be repaid or converted
to Floating Rate Advances, subject to the payment of any funding indemnification
amounts required by Section 3.4.

     3.4. Funding Indemnification. If any payment of a Eurodollar Advance occurs
on a date which is not the last day of the applicable  Interest Period,  whether
because of acceleration, prepayment or otherwise, or a Eurodollar Advance is not
made on the date  specified by the Borrower for any reason other than default by
the  Lenders,  the  Borrower  will  indemnify  each  Lender for any loss or cost
incurred by it resulting therefrom,  including,  without limitation, any loss or
cost in  liquidating  or employing  deposits  acquired to fund or maintain  such
Eurodollar Advance.

     3.5.  Taxes.  (i) All payments by the Borrower to or for the account of any
Lender or the Agent  hereunder or under any Note shall be made free and clear of
and without  deduction for any and all Taxes.  If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum  payable  hereunder  to
any Lender or the Agent,  (a) the sum payable shall be increased as necessary so
that after making all required deductions  (including  deductions  applicable to
additional sums payable under this Section 3.5) such Lender or the Agent (as the
case may be) receives an amount  equal to the sum it would have  received had no
such deductions been made, (b) the Borrower shall make such deductions,  (c) the
Borrower  shall  pay the full  amount  deducted  to the  relevant  authority  in
accordance  with  applicable law and (d) the Borrower shall furnish to the Agent
the original copy of a receipt  evidencing  payment thereof within 30 days after
such payment is made.

          (ii) In  addition,  the Borrower  hereby  agrees to pay any present or
     future stamp or documentary  taxes and any other excise or property  taxes,
     charges or similar  levies which arise from any payment  made  hereunder or
     under any Note or from the  execution  or delivery  of, or  otherwise  with
     respect to, this Agreement or any Note ("Other Taxes").

          (iii)  The  Borrower  hereby  agrees to  indemnify  the Agent and each
     Lender  for the full  amount of Taxes or Other  Taxes  (including,  without
     limitation,  any Taxes or Other Taxes imposed on amounts payable under this
     Section  3.5)  paid  by  the  Agent  or  such  Lender  as a  result  of its
     Commitment, any Loans made by it hereunder, or otherwise in connection with
     its participation in this Agreement and any liability (including penalties,
     interest and expenses) arising therefrom or with respect thereto.  Payments
     due under this indemnification shall be made within 30 days of the date the
     Agent or such Lender makes demand therefor pursuant to Section 3.6.

          (iv) Each Lender that is not incorporated under the laws of the United
     States of America or a state thereof (each a "Non-U.S. Lender") agrees that
     it will, not more than ten Business Days after the date of this  Agreement,
     (i)  deliver  to the Agent  two duly  completed  copies  of  United  States
     Internal  Revenue Service Form W-8BEN or W-8ECI,  certifying in either case
     that such  Lender is  entitled  to receive  payments  under this  Agreement
     without deduction or withholding of any United States federal income taxes,
     and (ii) deliver to the Agent a United States Internal  Revenue Form W-8 or
     W-9,  as the case may be, and certify  that it is entitled to an  exemption
     from United States backup  withholding  tax. Each Non-U.S.  Lender  further
     undertakes to deliver to each of the Borrower and the Agent (x) renewals or
     additional  copies of such form (or any  successor  form) on or before  the
     date  that  such  form  expires  or  becomes  obsolete,  and (y)  after the
     occurrence  of any event  requiring  a change in the most  recent  forms so
     delivered  by it, such  additional  forms or  amendments  thereto as may be
     reasonably  requested by the Borrower or the Agent. All forms or amendments
     described  in the  preceding  sentence  shall  certify  that such Lender is
     entitled to receive  payments  under this  Agreement  without  deduction or
     withholding of

                                       28
<PAGE>

     any United States federal income taxes,  unless an event (including without
     limitation any change in treaty,  law or regulation)  has occurred prior to
     the date on which any such  delivery  would  otherwise  be  required  which
     renders all such forms inapplicable or which would prevent such Lender from
     duly  completing  and delivering any such form or amendment with respect to
     it and such  Lender  advises  the  Borrower  and the  Agent  that it is not
     capable of  receiving  payments  without any  deduction or  withholding  of
     United States federal income tax.

          (v) For any  period  during  which a  Non-U.S.  Lender  has  failed to
     provide the  Borrower  with an  appropriate  form  pursuant to clause (iv),
     above (unless such failure is due to a change in treaty, law or regulation,
     or any  change  in the  interpretation  or  administration  thereof  by any
     governmental  authority,  occurring  subsequent to the date on which a form
     originally was required to be provided),  such Non-U.S. Lender shall not be
     entitled to  indemnification  under this  Section 3.5 with respect to Taxes
     imposed by the United States; provided that, should a Non-U.S. Lender which
     is otherwise  exempt from or subject to a reduced rate of  withholding  tax
     become  subject to Taxes  because of its failure to deliver a form required
     under  clause  (iv),  above,  the  Borrower  shall  take such steps as such
     Non-U.S.  Lender shall reasonably request to assist such Non-U.S. Lender to
     recover such Taxes.

          (vi) Any Lender that is entitled to an exemption  from or reduction of
     withholding  tax with respect to payments  under this Agreement or any Note
     pursuant  to the  law of any  relevant  jurisdiction  or any  treaty  shall
     deliver to the  Borrower  (with a copy to the Agent),  at the time or times
     prescribed  by  applicable  law,  such  properly   completed  and  executed
     documentation  prescribed by applicable law as will permit such payments to
     be made without withholding or at a reduced rate.

          (vii) If the U.S.  Internal Revenue Service or any other  governmental
     authority  of the  United  States or any  other  country  or any  political
     subdivision  thereof  asserts  a claim  that  the  Agent  did not  properly
     withhold tax from amounts paid to or for the account of any Lender (because
     the appropriate form was not delivered or properly completed,  because such
     Lender  failed to  notify  the  Agent of a change  in  circumstances  which
     rendered  its  exemption  from  withholding  ineffective,  or for any other
     reason),  such Lender shall indemnify the Agent fully for all amounts paid,
     directly  or  indirectly,  by the Agent as tax,  withholding  therefor,  or
     otherwise, including penalties and interest, and including taxes imposed by
     any  jurisdiction  on amounts  payable to the Agent under this  subsection,
     together with all costs and expenses related thereto  (including  attorneys
     fees and time charges of attorneys  for the Agent,  which  attorneys may be
     employees of the Agent).  The obligations of the Lenders under this Section
     3.5(vii) shall survive the payment of the  Obligations  and  termination of
     this Agreement.

     3.6. Lender  Statements;  Survival of Indemnity.  To the extent  reasonably
possible,  each Lender shall designate an alternate  Lending  Installation  with
respect to its Loans to reduce any  liability  of the  Borrower  to such  Lender
under Sections 3.1 and 3.2 or to avoid the unavailability of Eurodollar Advances
under Section 3.3, so long as such  designation  is not, in the judgment of such
Lender,  disadvantageous  to such Lender.  Each Lender  shall  deliver a written
statement  of such Lender to the  Borrower  (with a copy to the Agent) as to the
amount due, if any, under Section 3.1, 3.2, or 3.4. Such written statement shall
set  forth  in  reasonable  detail  the  calculations  upon  which  such  Lender
determined  such  amount  and  shall be final,  conclusive  and  binding  on the
Borrower in the  absence of manifest  error.  Determination  of amounts  payable
under such Sections in connection  with a Eurodollar Loan shall be calculated as
though each Lender funded its Eurodollar  Loan through the purchase of a deposit
of the type and  maturity  corresponding  to the deposit  used as a reference in
determining the Eurodollar Rate applicable to such Loan, whether in fact that is
the case or not. Unless otherwise provided herein, the

                                       29
<PAGE>

amount  specified  in the written  statement  of any Lender  shall be payable on
demand after receipt by the Borrower of such written statement.  The obligations
of the Borrower  under  Sections 3.1, 3.2, and 3.4 shall survive  payment of the
Obligations and termination of this Agreement.

                                   ARTICLE IV

                              CONDITIONS PRECEDENT

     4.1. Initial Advance. The Lenders shall not be required to make the initial
Advance  hereunder  unless the  Borrower  has  satisfied  each of the  following
conditions:

     (a) Closing Deliveries. The Borrower shall have furnished to the Agent with
sufficient copies for the Lenders:

          (i)  Copies  of  the  articles  or  certificate  of  incorporation  or
     organization  of  the  Borrower,  each  Guarantor  and  Cherokee  Partners,
     together with all  amendments,  and a certificate  of good  standing,  each
     certified by the appropriate  governmental  officer in its  jurisdiction of
     incorporation as well as any other  information  required by Section 326 of
     the USA PATRIOT ACT or necessary  for the Agent or any Lender to verify the
     identity of Borrower or any Guarantor as required by Section 326 of the USA
     PATRIOT ACT.

          (ii) Copies, certified by the Secretary or other Authorized Officer of
     the  Borrower,  each  Guarantor  and Cherokee  Partners,  of its  Operating
     Agreement,  by-laws  and of its  Board  of  Directors'  resolutions  and of
     resolutions or actions of any other body  authorizing  the execution of the
     Loan Documents to which the Borrower or each Guarantor or Cherokee Partners
     is a party.

          (iii) An  incumbency  certificate,  executed by the Secretary or other
     Authorized  Officer of the Borrower,  each Guarantor and Cherokee Partners,
     which  shall  identify  by name and  title and bear the  signatures  of the
     Authorized Officers and any other officers of the Borrower,  each Guarantor
     and Cherokee  Partners  authorized to sign the Loan  Documents to which the
     Borrower,  such  Guarantor  or  Cherokee  Partners  is a party,  upon which
     certificate  the Agent and the  Lenders  shall be  entitled  to rely  until
     informed  of any change in  writing  by the  Borrower,  such  Guarantor  or
     Cherokee Partners.

          (iv) A  certificate,  signed by the  Chief  Financial  Officer  of the
     Borrower,  stating  that on the date of the  initial  Advance no Default or
     Unmatured Default has occurred and is continuing.

          (v) A written  opinion of the  Borrower's  counsel,  addressed  to the
     Agent and Lenders in  substantially  the form of Exhibit  A-1,  and written
     opinions  of  the  Collateral  Agent's  local  counsel,  addressed  to  the
     Collateral Agent in substantially the form of Exhibit A-2.

          (vi) Any Notes  requested by a Lender pursuant to Section 2.13 payable
     to the order of each such requesting Lender.

          (vii) The  Mortgages  to be executed on the Closing  Date  pursuant to
     Section 5.1(a) of the Senior Revolving Credit Agreement,  duly executed and
     delivered by Borrower,  together with such other assignments,  conveyances,
     amendments, agreements and

                                       30
<PAGE>

other writings,  including,  without limitation, UCC-1 financing statements, tax
affidavits and applicable  department of revenue  documentation,  creating first
and prior Liens in the Required Reserves Value.

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

          (ix) Reserved.

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

          (xi) A Guaranty duly executed and delivered by Bluestem.

          (xii) Such financing statements  (including,  without limitation,  the
     financing statements referenced in subclauses (vii), (viii), and (x) above)
     as Agent shall specify to fully evidence and perfect all Liens contemplated
     by the Loan  Documents,  all of which  shall  be  filed of  record  in such
     jurisdictions as Agent shall require in its sole discretion.

          (xiii) Written money transfer instructions,  in substantially the form
     of Exhibit D,  addressed to the Agent and signed by an Authorized  Officer,
     together with such other related money transfer authorizations as the Agent
     may have reasonably requested.

          (xiv) A report or reports  in form,  scope and  detail  acceptable  to
     Agent from  environmental  engineering  firms  acceptable  to Agent setting
     forth the results of a review of each Credit Party's Oil and Gas Properties
     and  operations  (after giving effect to the Closing  Transactions),  which
     report(s) shall not reflect the existence of facts or  circumstances  which
     would constitute a material  violation of any  Environmental  Laws or which
     are likely to result in a material liability to any Credit Party.

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

          (xvi) A letter  executed  by Devon  consenting  to the  assignment  by
     Borrower to  Collateral  Agent of all of  Borrower's  rights and  interests
     under the Devon Acquisition Agreement.

                                       31
<PAGE>

          (xvii) A Certificate  of Ownership  Interests  signed by an Authorized
     Officer of Borrower in the form of Exhibit L attached hereto.

          (xviii) The insurance certificate described in Section 5.20.

          (xix) Executed  originals (in recordable  form) of all Devon Hold Back
     Assignments  (as defined in the Senior  Revolving  Credit  Agreement) to be
     delivered to Collateral  Agent pursuant to the terms of the Devon Hold Back
     Agreement (as defined in the Senior Revolving Credit Agreement).

          (xx)  Such  other  documents  as any  Lender or its  counsel  may have
     reasonably requested.

     (b) Title  Review.  Agent or its counsel  shall have  completed a review of
title to the Initial Title Required Reserve Value of the Oil and Gas Properties,
and such review shall not have  revealed any  condition  or  circumstance  which
would reflect that the representations and warranties  contained in Section 5.14
hereof are inaccurate in any material respect.

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

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

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

     (f) Closing and Other Fees.  Borrower  shall have paid (1) to Agent for the
ratable benefit of each Lender,  and shall have paid to Agent and its Affiliates
(for their own  account),  the fees to be paid on the Closing  Date  pursuant to
Section 2.5, and (2) all fees,  expenses and  disbursements of counsel for Agent
to the extent  invoiced  on or prior to the  Closing  Date,  together  with such
additional  amounts as shall  constitute such counsel's  reasonable  estimate of
fees,  expenses and  disbursements  incurred by such counsel through the Closing
Date;  provided,  that,  such estimate  shall not  thereafter  preclude  further
settling of accounts between Borrower and Agent.

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

     (h) Rate Management Transactions. Borrower shall have entered into, or been
assigned by a member of the Quest Group or Devon,  Rate Management  Transactions
with Approved Counterparties, and on terms and conditions acceptable to Required
Lenders,  with  respect to not less than  eighty-five  percent  (85%) of Agent's
forecasted  production  from the Credit  Parties'  PDP  Reserves for a period of
three (3) years,  and which shall provide Borrower with a minimum NYMEX weighted
average price of $4.70 per MMBTU.

                                       32
<PAGE>

     (i) Representations  and Warranties.  The representations and warranties of
Borrower and each  Guarantor  under this  Agreement and the other Loan Documents
shall be true and correct in all material  respects as of such date,  as if then
made  (except to the extent that such  representations  and  warranties  related
solely to an earlier date).

     (j) No  Unmatured  Default or  Default;  No  Material  Adverse  Change.  No
Unmatured Default or Default shall have occurred and be continuing.  In the sole
discretion of the Lenders, no Material Adverse Change has occurred since May 31,
2003.

     (k) Other Matters.  All matters related to this  Agreement,  the other Loan
Documents,   the  Credit  Parties,   the  Closing   Documents  and  the  Closing
Transactions  shall be  reasonably  acceptable  to each Lender,  and each Credit
Party shall have  delivered to Agent and each Lender such evidence as they shall
request to substantiate  any matters  related to this Agreement,  the other Loan
Documents,   the  Credit  Parties,   the  Closing   Documents  and  the  Closing
Transactions as Agent or any Lender shall reasonably request.

     4.2.  Certificate of Effectiveness.  Upon satisfaction or waiver in writing
by Agent and each Lender of each of the conditions set forth in this Article IV,
Borrower and Agent shall execute the Certificate of  Effectiveness.  Each Lender
hereby  authorizes  Agent to execute the  Certificate  of  Effectiveness  on its
behalf and  acknowledges  and agrees that the  execution of the  Certificate  of
Effectiveness by Agent shall be binding on each such Lender.

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

                                   ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

     The Borrower and each Guarantor represents and warrants to the Lenders that
on the date hereof (and after giving effect to the Closing Transactions):

     5.1. Existence and Standing. Each of the Borrower and its Subsidiaries is a
corporation,   partnership  or  limited  liability  company  duly  and  properly
incorporated  or  organized,  as the case may be,  validly  existing and (to the
extent such concept  applies to such entity) in good standing  under the laws of
its  jurisdiction  of  incorporation  or  organization  and  has  all  requisite
authority to conduct its business in each  jurisdiction  wherein failure to have
such authorization may result in a Material Adverse Effect.

     5.2.  Authorization and Validity.  The Borrower and each Subsidiary has the
power and authority and legal right to execute and deliver the Loan Documents to
which it is a party and to perform its obligations thereunder. The execution and
delivery by the Borrower and each  Subsidiary of the Loan  Documents to which it
is a party and the  performance  of its  obligations  thereunder  have been duly
authorized by proper corporate or limited liability company proceedings, and the
Loan Documents to which the Borrower and each  Subsidiary is a party  constitute
legal,  valid  and  binding  obligations  of the  Borrower  and such  Subsidiary
enforceable against the Borrower and such Subsidiary in accordance with

                                       33
<PAGE>

their terms in all material respects, except as enforceability may be limited by
general  principles  of  equity  and  bankruptcy,  insolvency  or  similar  laws
affecting the enforcement of creditors' rights generally.

     5.3. No Conflict; Government Consent. Neither the execution and delivery by
the Borrower or any Subsidiary of the Loan Documents to which it is a party, nor
the consummation of the transactions therein  contemplated,  nor compliance with
the provisions thereof will violate (i) any law, rule, regulation,  order, writ,
judgment,  injunction, decree or award binding on the Borrower or any Subsidiary
or  (ii)  the  Borrower's  or  any  Subsidiary's   articles  or  certificate  of
incorporation,  partnership agreement,  certificate of partnership,  articles or
certificate  of  organization,   by-laws,   or  operating  or  other  management
agreement,  as the  case may be,  or  (iii)  the  provisions  of any  indenture,
instrument or agreement to which the Borrower or any Subsidiary is a party or is
subject,  or by which  it,  or its  Property,  is  bound,  or  conflict  with or
constitute  a default  thereunder,  or result in, or  require,  the  creation or
imposition of any Lien in, of or on the Property of the Borrower or a Subsidiary
pursuant to the terms of any such indenture,  instrument or agreement. No order,
consent, adjudication,  approval, license,  authorization,  or validation of, or
filing,  recording or  registration  with,  or exemption  by, or other action in
respect of any  governmental  or public body or  authority,  or any  subdivision
thereof,  which has not been  obtained by the  Borrower or such  Subsidiary,  is
required to be obtained by the Borrower or such  Subsidiary in  connection  with
the  execution and delivery of the Loan  Documents,  the  borrowings  under this
Agreement, the payment and performance by the Borrower of the Obligations or the
legality,  validity,  binding  effect  or  enforceability  of any  of  the  Loan
Documents.

     5.4. Financial  Statements.  The Current Financials heretofore delivered to
the Lenders were prepared in accordance with Agreement Accounting  Principles in
effect on the date such  statements  were  prepared and fairly  present,  in all
material respects,  the consolidated  financial  condition and operations of QRC
and its  Subsidiaries  at  such  date  and the  consolidated  results  of  their
operations for the period then ended.

     5.5. Reserved.

     5.6. Taxes.  Borrower and each Subsidiary have filed all United States,  as
applicable,  federal tax returns and all other tax returns which are required to
be filed and have paid all taxes due pursuant to said returns or pursuant to any
assessment received by Borrower or any Subsidiary, except such taxes, if any, as
are being  contested in good faith and as to which  adequate  reserves have been
provided in accordance with Agreement  Accounting  Principles and as to which no
Lien exists.  No tax liens have been filed and no claims are being asserted with
respect to any such taxes.  The  charges,  accruals and reserves on the books of
Borrower  and each  Subsidiary  in  respect  of any taxes or other  governmental
charges  are  adequate.  If Borrower or any  Subsidiary  is a limited  liability
company,  each such limited  liability  company  qualifies for  partnership  tax
treatment under United States federal tax law.

     5.7.  Litigation  and  Contingent  Obligations.  There  is  no  litigation,
arbitration,  governmental  investigation,  proceeding or inquiry pending or, to
the knowledge of any of their officers, threatened against or affecting Borrower
or any of its Subsidiaries which could reasonably be expected to have a Material
Adverse  Effect or which  seeks to  prevent,  enjoin or delay the  making of any
Loans.  Other than any  liability  incident to any  litigation,  arbitration  or
proceeding  which could not  reasonably  be expected to have a Material  Adverse
Effect,  neither  Borrower  nor  any  Subsidiary  has  any  material  Contingent
Obligations  not permitted  under this Agreement or provided for or disclosed in
Schedule 5.7.

     5.8.   Subsidiaries.   Schedule  5.8  contains  an  accurate  list  of  all
Subsidiaries of Borrower as of the date of this  Agreement,  setting forth their
respective  jurisdictions of organization and the percentage of their respective
Capital Stock or other ownership interests owned by the Borrower or other

                                       34
<PAGE>

Subsidiaries. All of the issued and outstanding shares of Capital Stock or other
ownership  interests of Borrower and such  Subsidiaries have been (to the extent
such  concepts  are  relevant  with respect to such  ownership  interests)  duly
authorized and issued and are fully paid and non-assessable.

     5.9. ERISA. The Unfunded Liabilities of all Single Employer Plans do not in
the aggregate  exceed  $1,500,000.  Neither Borrower nor any other member of the
Controlled  Group  has  incurred,  or  is  reasonably  expected  to  incur,  any
withdrawal  liability  to  Multiemployer  Plans in excess of  $1,500,000  in the
aggregate.  Each Plan  complies in all  material  respects  with all  applicable
requirements  of law and  regulations,  no  Reportable  Event has occurred  with
respect to any Plan,  neither  Borrower nor any other  member of the  Controlled
Group has withdrawn from any Plan or initiated steps to do so, and no steps have
been taken to reorganize or terminate any Plan.

     5.10. Accuracy of Information. No information,  exhibit or report furnished
by  Borrower  or any  Subsidiary  to the Agent or to any  Lender in  writing  in
connection  with the  negotiation  of, or compliance  with,  the Loan  Documents
contained any material  misstatement of fact or omitted to state a material fact
or any fact necessary to make the statements contained therein not misleading as
of the date it was furnished.  No  representation  is made as to the projections
other than that the  projections  are based on information  that QRC or a Credit
Party,  as applicable,  believed to be accurate and were  calculated in a manner
QRC, or a Credit Party, as applicable, believed to be accurate.

     5.11.  Material  Agreements.  Neither  Borrower  nor any  Subsidiary  is in
default in the performance, observance or fulfillment of any of the obligations,
covenants or  conditions  contained in (i) any agreement to which it is a party,
which default could  reasonably be expected to have a Material Adverse Effect or
(ii) any agreement or instrument evidencing or governing Material Indebtedness.

     5.12. Compliance With Laws. Borrower and each Subsidiary have complied with
all applicable  statutes,  rules,  regulations,  orders and  restrictions of any
domestic or foreign  government or any  instrumentality or agency thereof having
jurisdiction over the conduct of their respective businesses or the ownership of
their  respective  Property  except for any  failure  to comply  with any of the
foregoing  which could not  reasonably  be  expected to have a Material  Adverse
Effect.

     5.13. Ownership of Properties. Except as set forth on Schedule 5.13, on the
date of this Agreement,  Borrower and each Subsidiary will have good title, free
of all Liens other than those  permitted by Section 7.16, to all of the material
Property and assets  conveyed to Borrower and its  Subsidiaries  pursuant to the
Closing Transactions.

     5.14.  Oil and Gas  Properties.  Each Credit Party has good and  defensible
title to all Oil and Gas Properties  described in the most recent Reserve Report
provided to Agent,  free and clear of all Liens  except  Liens  permitted  under
Section 7.16 and Immaterial Title Deficiencies. With the exception of Immaterial
Title Deficiencies,  all such Oil and Gas Properties are valid, subsisting,  and
in full force and effect, and all rentals,  royalties, and other amounts due and
payable in respect thereof have been duly paid. Without regard to any consent or
non-consent  provisions  of any joint  operating  agreement  covering any Credit
Party's   Proved   Reserves,   and  with  the  exception  of  Immaterial   Title
Deficiencies,  such  Credit  Party's  share of (i) the  costs  for  each  Proved
Reserves  described  in the  Reserve  Report  is not  greater  than the  decimal
fraction set forth in the Reserve Report,  before and after payout,  as the case
may  be,  and  described  therein  by  the  respective   designations   "working
interests,"  "WI," "gross working  interest,"  "GWI," or similar terms, and (ii)
production from, allocated to, or attributed to each such Proved Reserves is not
less than the decimal fraction set forth in the Reserve Report, before and after
payout,  as the case may be,  and  described  therein by the  designations  "net
revenue  interest," "NRI," or similar terms. Each well drilled in respect of the
Oil and Gas Properties including each PDP Reserves described in the

                                       35
<PAGE>

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

     5.15.  Plan  Assets;  Prohibited  Transactions.  Borrower  is not an entity
deemed to hold "plan assets" within the meaning of 29 C.F.R.  ss.  2510.3-101 of
an employee  benefit plan (as defined in Section 3(3) of ERISA) which is subject
to Title I of ERISA or any plan  (within  the  meaning  of  Section  4975 of the
Code),  and  neither the  execution  of this  Agreement  nor the making of Loans
hereunder gives rise to a prohibited  transaction  within the meaning of Section
406 of ERISA or Section 4975 of the Code.

     5.16.  Environmental  Matters. In the ordinary course of its business,  the
officers of Borrower and each  Subsidiary  consider the effect of  Environmental
Laws on the  business of Borrower and its  Subsidiaries,  in the course of which
they identify and evaluate potential risks and liabilities  accruing to Borrower
or any Subsidiary due to Environmental Laws. On the basis of this consideration,
the Borrower has concluded that Environmental Laws cannot reasonably be expected
to have a Material  Adverse Effect.  Neither the Borrower nor any Subsidiary has
received  any  notice to the  effect  that its  operations  are not in  material
compliance with any of the requirements of applicable  Environmental Laws or are
the  subject  of any  federal  or state  investigation  evaluating  whether  any
remedial  action is needed to  respond  to a release  of any toxic or  hazardous
waste or substance into the environment, which non-compliance or remedial action
could reasonably be expected to have a Material Adverse Effect.

     5.17.  Investment  Company Act.  Neither  Borrower nor any Subsidiary is an
"investment  company"  or a company  "controlled"  by an  "investment  company",
within the meaning of the Investment Company Act of 1940, as amended.

     5.18.  Public  Utility  Holding  Company  Act.  Neither  Borrower  nor  any
Subsidiary  is a  "holding  company"  or a  "subsidiary  company"  of a "holding
company",  or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

     5.19.  Post-Retirement  Benefits. The present value of the expected cost of
post-retirement  medical and  insurance  benefits  payable by  Borrower  and its
Subsidiaries to its employees and former employees,  as estimated by Borrower in
accordance  with procedures and  assumptions  deemed  reasonable by the Required
Lenders, does not exceed $1,500,000.

     5.20. Insurance. The certificate signed by the President or Chief Financial
Officer  of  Borrower,  that  attests  to the  existence  and  adequacy  of, and
summarizes,  the property and casualty insurance program carried by Borrower and
its  Subsidiaries  with respect to itself and its Subsidiaries and that has been
furnished  by the  Borrower  to the  Agent  and the  Lenders,  is  complete  and
accurate.  This summary  includes the  insurer's  or insurers'  name(s),  policy
number(s),  expiration  date(s),  amount(s)  of  coverage,  type(s) of coverage,
exclusion(s),  and deductibles.  This summary also includes similar information,
and describes any reserves,  relating to any  self-insurance  program that is in
effect.

                                       36
<PAGE>

     5.21. Solvency.

          (i) Immediately after the consummation of the transactions to occur on
     the date hereof and immediately  following the making of each Loan, if any,
     made on the date hereof and after giving effect to the  application  of the
     proceeds  of such Loans,  (a) the fair value of the assets of the  Borrower
     and its  Subsidiaries on a consolidated  basis,  at a fair valuation,  will
     exceed the debts and liabilities, subordinated, contingent or otherwise, of
     the Borrower and its Subsidiaries on a consolidated  basis; (b) the present
     fair saleable value of the Property of the Borrower and its Subsidiaries on
     a consolidated  basis will be greater than the amount that will be required
     to pay the probable  liability of the  Borrower and its  Subsidiaries  on a
     consolidated  basis on their  debts  and other  liabilities,  subordinated,
     contingent  or  otherwise,  as such  debts  and  other  liabilities  become
     absolute  and  matured;   (c)  the  Borrower  and  its  Subsidiaries  on  a
     consolidated  basis  will be  able  to pay  their  debts  and  liabilities,
     subordinated, contingent or otherwise, as such debts and liabilities become
     absolute  and  matured;  and (d) the  Borrower  and its  Subsidiaries  on a
     consolidated  basis will not have unreasonably  small capital with which to
     conduct the businesses in which they are engaged as such businesses are now
     conducted and are proposed to be conducted after the date hereof.

          (ii) The Borrower does not intend to, or to permit any  Subsidiary to,
     and does not believe that it or any Subsidiary will, incur debts beyond its
     ability to pay such debts as they mature, taking into account the timing of
     and  amounts of cash to be received  by it or any such  Subsidiary  and the
     timing  of the  amounts  of  cash to be  payable  on or in  respect  of its
     Indebtedness or the Indebtedness of any such Subsidiary.

                                   ARTICLE VI

                           COLLATERAL AND GUARANTIES

     6.1. Security.

          (a) The Obligations shall be secured by first and prior Liens (subject
     only to the Liens  permitted  under Section 7.16) covering and  encumbering
     (i) one hundred percent (100%) of the Recognized Value Properties, and (ii)
     all of the issued and outstanding  Capital Stock owned by Cherokee Partners
     and each member of the Quest  Group  (other  than QRC),  Borrower  and each
     Guarantor in Borrower and each  Guarantor.  On the Closing  Date,  Borrower
     shall deliver to Collateral  Agent for the ratable  benefit of each Lender,
     the Mortgages in form and  substance  acceptable to Agent and duly executed
     by Borrower, together with such other assignments, conveyances, amendments,
     agreements  and  other  writings,   including,  without  limitation,  UCC-1
     financing statements (each duly authorized and executed,  as applicable) as
     Agent shall deem necessary or  appropriate  to grant,  evidence and perfect
     first and prior Liens  (subject only to the Liens  permitted  under Section
     7.16) in the Recognized Value Properties and other interests of each Credit
     Party  required  by  this  Section  6.1(a).   Borrower  hereby   authorizes
     Collateral Agent, and its agents,  successors and assigns,  to file any and
     all  necessary  financing  statements  under the Uniform  Commercial  Code,
     assignments or  continuation  statements as necessary from time to time (in
     Agent's  discretion)  to  perfect  (or  continue  perfection  of) the Liens
     granted pursuant to the Loan Documents.

          (b) From time to time  after  the  Closing  Date and at such  times as
     Agent or Required Lenders shall request (including,  without limitation, in
     connection with any title and curative

                                       37
<PAGE>

review and work performed  after the Closing Date in connection with the Closing
Transactions),  Borrower  and  each  Guarantor  shall  execute  and  deliver  to
Collateral Agent, for the ratable benefit of each Lender,  Mortgages in form and
substance  acceptable  to  Agent  and duly  executed  by  Borrower  and any such
Guarantor (as  applicable)  together with such other  assignments,  conveyances,
amendments,  agreements and other writings, including, without limitation, UCC-1
financing statements (each duly authorized and executed, as applicable) as Agent
shall deem  necessary or  appropriate  to grant,  evidence and perfect the Liens
required by Section 6.1(a)  preceding with respect to any Oil and Gas Properties
acquired by Borrower  and each  Guarantor  subsequent  to the last date on which
Borrower or any such  Guarantor  was  required to execute and deliver  Mortgages
pursuant  to this  Section  6.1(b) or which,  for any other  reason  are not the
subject of valid,  enforceable,  perfected first priority Liens (subject only to
Liens permitted under Section 7.16) in favor of Collateral Agent for the ratable
benefit of Lenders.

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

          (d) To the extent  required  or  contemplated  by the terms of Section
     6.1(a)(ii)  or Section  7.15,  Borrower  shall,  and shall  cause  Cherokee
     Partners  and each  member  of the  Quest  Group  (other  than  QRC) or any
     Indirect  Subsidiary (as applicable),  to execute and deliver to Collateral
     Agent a Pledge  Agreement,  together  with (i) all  certificates  (or other
     evidence acceptable to Agent) evidencing the issued and outstanding Capital
     Stock of Borrower  and any such  Guarantor of every class owned by Cherokee
     Partners  and each such  member of the Quest  Group  (other  than QRC),  or
     Borrower or such Indirect  Subsidiary (as  applicable)  which shall be duly
     endorsed or accompanied by stock powers executed in blank (as  applicable),
     and (ii) such UCC-1  financing  statements as Agent shall deem necessary or
     appropriate  to grant,  evidence and perfect the Liens  required by Section
     6.1(a) in the issued and  outstanding  Capital  of  Borrower  and each such
     Guarantor.

     6.2. Guarantees.  Payment and performance of the Obligations shall be fully
guaranteed by each Subsidiary  pursuant to a Guaranty,  and Borrower shall cause
any such Subsidiary to execute and deliver to Agent and Lenders such Guaranty.

                                  ARTICLE VII

                                   COVENANTS

     During  the term of this  Agreement,  unless  the  Required  Lenders  shall
otherwise consent in writing:

                                       38
<PAGE>

     7.1. Financial and Other Reporting.  Borrower will maintain, for itself and
cause each Subsidiary to maintain for itself, a system of accounting established
and administered in accordance with Agreement Accounting Principles, and furnish
to the Agent:

          (i)  Within 90 days after the close of each of its  Fiscal  Years,  an
     unqualified  (except for  qualifications  relating to changes in accounting
     principles  or  practices   reflecting  changes  in  Agreement   Accounting
     Principles  and required or approved by  Borrower's  independent  certified
     public accountants) audit report certified by independent  certified public
     accountants  acceptable to the Agent, prepared in accordance with Agreement
     Accounting  Principles  on  a  consolidated  basis  for  Borrower  and  its
     Subsidiaries,  including a consolidated balance sheet as of the end of such
     period,  related profit and loss and reconciliation of surplus  statements,
     and a statement of cash flows and  beginning  with Fiscal Year 2005 setting
     forth in each case in comparative  form the figures for the previous Fiscal
     Year, accompanied by any management letter prepared by said accountants.

          (ii)  Within 45 days  after  the close of each of the first  three (3)
     Fiscal  Quarters of each  Fiscal Year of  Borrower,  for  Borrower  and its
     Subsidiaries, consolidated unaudited balance sheets as at the close of each
     such period and consolidated  profit and loss and reconciliation of surplus
     statements  and a statement  of cash flows for such Fiscal  Quarter and for
     the period from the beginning of such Fiscal Year to the end of such Fiscal
     Quarter,  all certified by its Chief Financial Officer,  and beginning with
     Fiscal Year 2005 setting forth in each case in comparative form the figures
     for  the  previous   Fiscal  Year,   except  for   footnotes  and  year-end
     adjustments.

          (iii) As soon as delivered,  copies of any Reserve Report delivered to
     the Senior  Revolving  Agent or Banks  pursuant  to the terms of the Senior
     Revolving  Credit  Agreement.  As soon as available  and in any event on or
     before  February 15 and August 31 of each calendar year,  beginning  August
     31,  2004,  a  Qualified  Reserve  Report  with  respect to the Oil and Gas
     Properties of Borrower and its Subsidiaries  prepared as of the immediately
     preceding November 30 and May 31, respectively,  and on the dates and times
     as required under Section  7.22.2 with respect to any proposed  acquisition
     under  clause  (iii)  of  Section  7.15 or  with  respect  to any  proposed
     disposition under clause (ii) of Section 7.14.

          (iv) Together with the financial statements required under clauses (i)
     and (ii) of Section  7.1,  and on October 1 and April 1 of each year (other
     than April 1, 2004) with  respect to the  financial  covenant  set forth in
     Section  7.22.2,  a compliance  certificate  in  substantially  the form of
     Exhibit  B  signed  by  an  Authorized  Officer  of  Borrower  showing  the
     calculations  necessary to determine  compliance with this Agreement (other
     than the financial covenant set forth in Section 7.22.2 which compliance is
     determined  on  October  1, and April 1 of each year  (other  than April 1,
     2004)) and stating that, to the knowledge of the  Authorized  Officers,  no
     Default or Unmatured Default exists, or if any Default or Unmatured Default
     exists, stating the nature and status thereof.

          (v) As soon as possible and in any event within 10 days after  receipt
     by the Borrower or any Subsidiary, a copy of (a) any notice or claim to the
     effect that Borrower or any Subsidiary is or may be liable to any Person as
     a result of the release by Borrower, any Subsidiary, or any other Person of
     any toxic or hazardous waste or substance into the environment, and (b) any
     notice  alleging  any  violation  of  any  national,  provincial  or  local
     environmental,  health or  safety  law or  regulation  by  Borrower  or any
     Subsidiary,  which, in either case,  could reasonably be expected to have a
     Material Adverse Effect.

                                       39
<PAGE>

          (vi) Within 270 days after the close of each Fiscal  Year, a statement
     of the  Unfunded  Liabilities  of  each  Single  Employer  Plan  (if  any),
     certified as correct by an actuary enrolled under ERISA.

          (vii)  As soon as  possible  and in any  event  within  10 days  after
     Borrower knows that any  Reportable  Event has occurred with respect to any
     Plan,  a  statement,  signed by the chief  financial  officer of  Borrower,
     describing said Reportable Event and the action which Borrower  proposes to
     take with respect thereto.

          (viii) No later  than  sixty  (60) days  after the end of each  month,
     commencing with January, 2004, (a) lease operating statements setting forth
     production volumes,  revenues,  expenses,  and cash flow and product prices
     for all oil and gas properties owned by Borrower for such month,  each such
     statement  to be  accompanied  by a management  discussion  and analysis of
     major variances from the preceding monthly report delivered hereunder,  and
     (b) drilling  reports  setting forth (1) a list of new wells drilled during
     such month,  (2) a list of wells requiring  pipeline  connections,  and the
     status of such connections,  and (3) gas and water production on a per diem
     basis  from  each  well,  provided,  that,  with  respect  to  the  initial
     statements  and reports  for the month of March 2004 (the "March  Operating
     Statement"),  in addition to the  information  set forth in clauses (a) and
     (b) of this clause (ix) of Section 7.1, the March Operating Statement shall
     include a summary  of recent  drilling  activity  with  respect  to the PDP
     Reserves and such other  information  as Agent or any Lender may reasonably
     request.

          (ix) At Agent's  request,  copies of any  financial or other report or
     notice delivered to the Senior Revolving Agent or the Banks pursuant to the
     Senior Revolving  Credit  Agreement not otherwise  delivered to the Lenders
     pursuant to this Section 7.1.

          (x) Promptly notify the Agent of the remediation of any defects in the
     Contributed Properties, including obtaining any consents not obtained as of
     the Closing Date.

          (xi) Such other information (including  non-financial  information) as
     the Agent may from time to time reasonably request.

     If any  information  which is required to be  furnished  to the Agent under
this Section 7.1 is required by law or  regulation to be filed with a government
body on an  earlier  date,  then the  information  required  hereunder  shall be
furnished to the Agent at such earlier date.

     7.2.  Use of Proceeds.  The  Borrower  will use the proceeds of the initial
Advances for (i) refinancing certain  indebtedness of QRC assumed by Borrower or
secured  by  Property   contributed   to   Borrower,   including   the  Existing
Indebtedness,  (ii) funding the Devon  Acquisition and (iii) working capital and
other general corporate purposes.

     7.3.  Notice of Default.  Immediately  upon any  Authorized  Officer of any
Credit Party  becoming  aware of such  Default or Unmatured  Default or any such
development,  the Borrower and each Guarantor will give prompt notice in writing
to the Agent and Lenders of the  occurrence of any Default or Unmatured  Default
and of any other development,  financial or otherwise, which could reasonably be
expected to have a Material Adverse Effect.

     7.4. Conduct of Business;  Fiscal Year.  Borrower will, and will cause each
Subsidiary  to,  carry on and conduct its  business  in  substantially  the same
manner and in  substantially  the same fields of  enterprise  as it is presently
conducted and do all things necessary to remain duly incorporated or

                                       40
<PAGE>

organized,  validly  existing  and (to the extent such  concept  applies to such
entity) in good  standing  as a  domestic  corporation,  partnership  or limited
liability  company in its jurisdiction of incorporation or organization,  as the
case may be, and  maintain  all  requisite  authority to conduct its business in
each  jurisdiction in which its business is conducted  except wherein failure to
maintain  such  authority  would not  reasonably  be expected to have a Material
Adverse Effect.  Borrower shall not, nor shall it permit any of its Subsidiaries
to change its Fiscal Year-end from May 31.

     7.5.  Taxes.  Borrower will, and will cause each Subsidiary to, timely file
complete and correct  national and  applicable  foreign,  provincial,  state and
local tax returns  required by law and pay when due all taxes,  assessments  and
governmental  charges  and levies upon it or its  income,  profits or  Property,
except wherein failure to pay such taxes,  assessments and governmental  charges
could not reasonably be expected to cause a Material Adverse Effect, those which
are being contested in good faith by appropriate proceedings and with respect to
which  adequate  reserves  have  been set  aside in  accordance  with  Agreement
Accounting Principles.

     7.6.  Insurance.  Borrower will, and will cause each other Credit Party to,
at all times maintain or cause to be maintained insurance covering such risks as
are  customarily  carried by business  similarly  situated,  including,  without
limitation,  the following:  (a) workmen's compensation insurance (to the extent
required and  applicable);  (b)  employer's  liability  insurance (to the extent
required  and  applicable);  (c)  comprehensive  general  public  liability  and
property damage insurance (d) insurance against losses  customarily  insured and
(e) comprehensive automobile liability insurance.

     7.7.  Compliance  with Laws.  Borrower will, and will cause each Subsidiary
to,  comply  with  all  laws,  rules,  regulations,  orders,  writs,  judgments,
injunctions,  decrees  or awards to which it may be subject  including,  without
limitation,  all  Environmental  Laws except wherein failure to comply with such
Environmental  Laws could not reasonably be expected to have a Material  Adverse
Effect.

     7.8.  Maintenance  of  Properties.  Borrower  will,  and  will  cause  each
Subsidiary to, do all things necessary to maintain,  preserve,  protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection  therewith  may be  properly  conducted  at all times.  In  addition,
Borrower  will and will cause each  Subsidiary  to (i) take or cause to be taken
whatever  actions are necessary or desirable to prevent an event or condition of
default by Borrower or any Guarantor under the provisions of any gas purchase or
sales contract or any other  contract,  agreement or lease  comprising a part of
the Oil and Gas  Properties  of such  Borrower or Guarantor  which default could
reasonably be expected to result in a Material Adverse Effect;  and (ii) furnish
Agent upon request evidence  reasonably  satisfactory to Agent that there are no
Liens,  claims or  encumbrances on the Oil and Gas Properties of Borrower or any
Guarantor, except Liens permitted under Section 7.16.

     7.9.  Inspection.  Borrower will, and will cause each Subsidiary to, permit
the Agent and the Lenders,  by their respective  representatives  and agents, to
inspect any of the Property,  books and  financial  records of Borrower and each
Subsidiary,  to  examine  and make  copies  of the books of  accounts  and other
financial  records of Borrower and each Subsidiary,  and to discuss the affairs,
finances and accounts of Borrower and each Subsidiary with, and to be advised as
to the same by, their respective officers upon advance notice at such reasonable
times and intervals as the Agent or any Lender may reasonably designate.

     7.10.  Dividends.  Borrower will not, nor will it permit any Subsidiary to,
declare or pay any  dividends  or make any  distributions  on its Capital  Stock
(other than dividends payable in its own common

                                       41
<PAGE>

stock)or  redeem,  repurchase or otherwise  acquire or retire any of its Capital
Stock at any time outstanding, except,

          (i) any  Subsidiary  of the Borrower may declare and pay  dividends or
     make  distributions to the Borrower or to a Wholly-Owned  Subsidiary of the
     Borrower; and

          (ii)  so long as  Borrower  is a  limited  liability  company  for tax
     purposes, it may make cash tax distributions,  to be designated as such, to
     its members,  no more frequently than quarterly and within twenty (20) days
     of each  quarterly  estimated  payment  date  for  individuals  or  shortly
     thereafter  if  computations  are not  complete  at or near  the  quarterly
     estimated  payment  dates,  that are used by such  Persons to pay  federal,
     state and local income taxes (or estimates thereof) then due and owing with
     respect  to the net  income  of  Borrower  (calculated  using  the  highest
     federal,  state and local effective marginal income tax rates applicable to
     an  individual)  and taking  into  account  losses of  Borrower  from prior
     periods; provided no Default or Unmatured Default exists at the time of any
     such dividend or distribution or would occur as a result thereof.

     7.11.  Indebtedness.  Borrower will not, nor will it permit any  Subsidiary
to, create, incur or suffer to exist any Indebtedness, except:

          (i) The Loans and the Guaranties.

          (ii)  Indebtedness  existing  on the  date  hereof  and  described  in
     Schedule 5.14.

          (iii)   Indebtedness   arising  under  Rate  Management   Transactions
     permitted under clause (v) of Section 7.15.

          (iv)  Indebtedness  of Borrower and any  Guarantor  arising  under the
     Senior Revolving Credit Documents.

          (v) Indebtedness of Borrower and any of its Subsidiaries arising under
     the Subordinate Debt Documents.

          (vi) Other  unsecured  Indebtedness  of Borrower and its  Subsidiaries
     that together  with the  Indebtedness  permitted  under clause (ii) of this
     Section 7.11 does not exceed $2,500,000 in outstanding  principal amount in
     the aggregate at any time.

          (vii)  Indebtedness  arising under  renewals or extensions of (but not
     increases in the principal amount) of the Indebtedness  described in any of
     the foregoing clauses (iv) through (vi).

     7.12.  Disqualified  Stock.  The Borrower  will not, nor will it permit any
Subsidiary to, issue any Disqualified Stock.

     7.13.  Merger.  Borrower  will not,  nor will it permit any  Subsidiary  of
Borrower to merge or consolidate  with or into any other Person,  except that so
long as no Default or Unmatured  Default has occurred and is continuing or would
be caused thereby,  any Subsidiary may merge into the Borrower or a Wholly-Owned
Subsidiary.

     7.14. Sale of Assets.  Borrower will not, nor will it permit any Subsidiary
to,  lease,  sell or  otherwise  dispose of its  Property  to any other  Person,
except:

                                       42
<PAGE>

          (i) Sales of Hydrocarbons in the ordinary course of business.

          (ii) Provided no Default or Unmatured  Default  exists or would result
     therefrom,  the  sale,  lease,  transfer,  abandonment,  exchange  or other
     disposition  of other  assets;  provided,  that (1) Borrower  shall provide
     Agent with not less than ten (10) Business Days notice of such sale, lease,
     transfer,  abandonment,  exchange  or other  disposition  pursuant  to this
     clause (ii),  and (2) the  aggregate  value  (which,  in the case of assets
     consisting of Oil and Gas Properties, shall be the Recognized Value of such
     Oil and Gas Properties,  and in the case of any exchange,  shall be the net
     Recognized  Value  realized or resulting  from such exchange) of all assets
     sold, leased, transferred,  abandoned,  exchanged,  reassigned or otherwise
     disposed of  pursuant  to this clause (ii) in any period  between the dates
     for the delivery of the  Qualified  Reserve  Report  required  under clause
     (iii) of Section  7.1 on February  15 and August 31 of each  calendar  year
     shall not exceed five percent (5%) of the  Recognized  Value then in effect
     provided,  further that upon the consummation of such lease,  sale or other
     disposition,  Borrower or such Subsidiary  applies the entire net proceeds,
     promptly  upon the  receipt  thereof,  to the  payment of the  Indebtedness
     evidenced by the Senior Revolving Credit Agreement as a permanent reduction
     of such  Indebtedness  if such net  proceeds  are required to be applied to
     term loan Indebtedness pursuant to the terms of the Senior Revolving Credit
     Agreement  or to  Lenders  to repay  the  Loans if all of the  Indebtedness
     evidenced by the Senior  Revolving  Credit  Agreement has been paid in full
     and all financing commitments thereunder have been terminated.  In no event
     will  Borrower or any other Credit  Party sell,  transfer or dispose of any
     Capital  Stock in any Guarantor nor will any Credit Party issue or sell any
     Capital Stock or any option, warrant or other right to acquire such Capital
     Stock or security  convertible  into such Capital Stock to any Person other
     than the  Credit  Party  which is the direct  parent of such  issuer on the
     Closing Date or in the case of a Subsidiary  created or acquired  after the
     Closing  Date in  accordance  with this  Agreement  any issuance of Capital
     Stock on the date of, and in connection with, its acquisition or creation.

          (iii)  Dispositions of Oil and Gas Properties  permitted under Section
     7.23 and  equipment and related items that are obsolete or no longer useful
     in the Credit Parties' business.

     7.15.  Investments and Acquisitions.  Borrower will not, nor will it permit
any Subsidiary to, make or suffer to exist any  Investments  (including  without
limitation,  loans and advances to, and other Investments in, Subsidiaries),  or
commitments  therefor,  or to  create  any  Subsidiary  or to become or remain a
partner in any partnership or joint venture, or to make any Acquisition, except:

          (i) Cash Equivalent Investments.

          (ii)  Existing  Investments  in Bluestem  (including  the  Investments
     contemplated  by  the  Closing   Transactions)  and  other  Investments  in
     existence on the date hereof and described in Schedule 5.8.

          (iii) So long as no Default or  Unmatured  Default has occurred and is
     continuing  or would  be  caused  thereby,  Investments  consisting  of the
     Acquisition of Oil and Gas Properties; provided that not less than ten (10)
     Business  Days  prior to the  date of any such  Acquisition  or  series  of
     Acquisitions  in which the aggregate  purchase  price  exceeds  $5,000,000,
     Borrower  delivers  to  Agent  (a) a  certificate  executed  by  the  Chief
     Executive Officer or the Chief Financial Officer of Borrower demonstrating,
     in  reasonable  detail,  that after giving  effect to such  Acquisition  or
     series of Acquisitions,  Borrower will be in compliance with Section 7.22.2
     as of the date of such  Acquisition  or  series of  Acquisitions  and (b) a
     Qualified Reserve Report with respect to the Target Properties.

                                       43
<PAGE>

          (iv)  Investments by any Credit Party in a Wholly-Owned  Subsidiary of
     Borrower  that (a) has provided a Guaranty,  (b) has complied  with Section
     6.1 with respect to any Oil and Gas Properties of such Subsidiary (or to be
     contributed,  transferred  or  conveyed  to  such  Subsidiary)  and (c) the
     Capital Stock of which has been pledged to Collateral  Agent  pursuant to a
     pledge agreement containing terms and conditions  satisfactory to the Agent
     and Required Lenders.

          (v)  Investments  consisting  of  the  Rate  Management   Transactions
     required  pursuant to clause (h) of Section  4.1 and other Rate  Management
     Transactions  entered  into with  Approved  Counterparties  in the ordinary
     course of business and not for  speculative  purposes;  provided  that such
     other  Rate  Management  Transactions  (a) would  not  cause the  amount of
     Hydrocarbons  which are the  subject  of Rate  Management  Transactions  in
     existence at such time to exceed  seventy-five  percent (75%) of Borrower's
     "forecasted  production from Proved Reserves" (as defined below) during any
     applicable calendar year, as measured from the current date (a "measurement
     date"),  which Rate Management  ------------------  Transactions  shall not
     have a tenor of greater than four (4) years,  (b)  together  with any other
     Rate  Management  Transactions  then in effect  for the  purpose of hedging
     Borrower's  interest rate exposure  would cause the notional  amount of all
     such Rate Management Transactions then in effect for such purpose to exceed
     one  hundred  percent  (100%)  of the  total  Consolidated  Funded  Debt of
     Borrower  projected to be  outstanding  for any period covered by such Rate
     Management  Transaction,  or (c) is for the  purpose of hedging the foreign
     currency risk associated with the Credit  Parties'  operations,  if any. As
     used in this clause (v) of Section 7.15, "forecasted production from Proved
     Reserves"  means  the  forecasted  production  for  oil  and  gas  for  the
     applicable  calendar year as reflected in the most recent Qualified Reserve
     Report  delivered to Agent  pursuant to clause (iii) of Section 7.1,  after
     giving  effect to any pro forma  adjustments  for the  consummation  of any
     acquisitions or  dispositions  between the effective date of such Qualified
     Reserve Report and the measurement date.

          (vi)  Investments with Persons not an Affiliate of a Credit Party that
     are (a)  customary  in the oil and gas  business,  (b) made in the ordinary
     course  of such  Credit  Party's  business,  and (c) made in the form of or
     pursuant to operating agreements, farm-in agreements,  farm-out agreements,
     development agreements,  unitization agreements,  joint bidding agreements,
     services contracts and other similar agreements.

          (vii) Investments  consisting of demand deposit accounts at commercial
     banks established and maintained in the ordinary course of business.

          (viii)Other Investments not otherwise described in clauses (i) through
     (vii) above;  provided that, the aggregate amount of all other  Investments
     made pursuant to this clause (v)  outstanding  at any time shall not exceed
     $1,500,000 (measured on a cost basis).

     7.16.  Liens.  Borrower  will not,  nor will it permit any  Subsidiary  to,
create, incur, or suffer to exist any Lien in, of or on the Property of Borrower
or any Subsidiary, except:

          (i) Liens for taxes,  assessments or governmental charges or levies on
     its Property if the same shall not at the time be  delinquent or thereafter
     can be paid without  penalty,  or are being  contested in good faith and by
     appropriate  proceedings and for which adequate reserves in accordance with
     Agreement Accounting Principles shall have been set aside on its books.

          (ii)  Liens  imposed  by  law,  such  as  carriers',   warehousemen's,
     mechanics'  and  landlords'  liens and other  similar  liens arising in the
     ordinary  course of business which secure  payment of obligations  not more
     than 60 days past due or which are being contested in good faith

                                       44
<PAGE>

     by appropriate  proceedings and for which adequate reserves shall have been
     set aside on its books.

          (iii)  Liens  arising  out  of  pledges  or  deposits  under  worker's
     compensation  laws,  unemployment  insurance,  old age  pensions,  or other
     social security or retirement benefits, or similar legislation.

          (iv)  Utility   easements,   building   restrictions  and  such  other
     encumbrances or charges against real property as are of a nature  generally
     existing with respect to properties of a similar character and which do not
     in any material way affect the  marketability of the same or interfere with
     the use thereof in the business of the Borrower or any Guarantor.

          (v) Liens existing on the date hereof and described in Schedule 5.14.

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

          (vii) Inchoate statutory or operators' Liens securing  obligations for
     labor,  services,  materials  and supplies  furnished to Mineral  Interests
     which are not delinquent  (except to the extent permitted by Section 8.6 of
     the Senior Revolving Credit Agreement.

          (viii) Lease  burdens  payable to third  parties which are deducted in
     the  calculation  of  discounted  present  value  in  the  Reserve  Reports
     including, without limitation, any royalty, overriding royalty, net profits
     interest,  production  payment,  carried  interest or reversionary  working
     interests.

          (ix) Liens,  charges and encumbrances  upon Borrower's  assets,  other
     than Oil and Gas Properties  included in its Proved Reserves,  which in the
     aggregate, do not have a value in excess of $500,000.

          (x) Liens  securing  the  Indebtedness  permitted  under clause (i) of
     Section 7.11.

          (xi) Liens securing the  Indebtedness  permitted  under clause (ii) of
     Section 7.11.

          (xii) Liens securing the  Indebtedness  permitted under clause (iv) of
     Section 7.11.

          (xiii) Liens securing the Obligations.

          (xiv) Until May 31, 2004,  (a)  Permitted  Devon Title Defects and (b)
     Permitted Contributed Property Defects.

     7.17. Affiliates. Borrower will not, and will not permit any Subsidiary to,
enter into any transaction (including,  without limitation, the purchase or sale
of any  Property or  service)  with,  or make any  payment or  transfer  to, any
Affiliate  except  in the  ordinary  course  of  business  and  pursuant  to the
reasonable  requirements  of Borrower's or such  Subsidiary's  business and upon
fair and reasonable terms

                                       45
<PAGE>

no  less  favorable  to  Borrower  or  such  Subsidiary  than  Borrower  or such
Subsidiary would obtain in a comparable arms-length transaction. Notwithstanding
the  foregoing,  Borrower  may (a)  make  payments  to QES  pursuant  to the QES
Management  Agreement  to pay or  reimburse  QES for general and  administrative
services provided  thereunder;  provided that in no event will such payments for
any Fiscal Year exceed, in the aggregate,  the sum of (i) $3,500,000,  plus (ii)
QES's actual costs associated with field and shop employees and their first line
superiors  that perform  services  under the QES  Management  Agreement,  to the
extent such costs are  accounted for as lease  operating  expenses and (b) enter
into the Subordinate Debt Documents.

     7.18. Amendments to Certain Agreements and Payment  Restrictions.  Borrower
will not, and will not permit any  Subsidiary to terminate the Senior  Revolving
Credit Agreement or to amend the Senior Revolving Credit Agreement if the effect
of any such  amendment is to (i) increase  the maximum  principal  amount of the
commitments  under the Senior  Revolving Credit Agreement to an amount in excess
of  $200,000,000,  or (ii)  increase the  applicable  margin with respect to the
interest  rate on any of the  Indebtedness  evidenced  by the  Senior  Revolving
Credit Agreement by more than 2.00% per annum (excluding any increase  resulting
from the  application  of any default rate of  interest).  The Borrower will not
make any  amendment  or  modification  to the QES  Management  Agreement  or its
Operating  Agreement  (other  than minor  modifications  to  reflect  day-to-day
personnel  and  operational  requirements).  The Borrower will not, and will not
permit any  Subsidiary  to, make any  amendment  or  modification  to any of the
Subordinate Debt Documents,  or, except for interest  paid-in-kind in accordance
with the terms of the Subordinate Notes, directly or indirectly voluntarily pay,
prepay, defease or in substance pay, prepay, defease,  purchase,  redeem, retire
or  otherwise  acquire,  any  Indebtedness  evidenced  by the  Subordinate  Debt
Documents.

     7.19.  Sale  and  Leaseback   Transactions  and  other   Off-Balance  Sheet
Liabilities. Borrower will not, nor will it permit any Subsidiary to, enter into
or  suffer  to exist any (i) Sale and  Leaseback  Transaction  or (ii) any other
transaction  pursuant  to which it  incurs  or has  incurred  Off-Balance  Sheet
Liabilities,  except for Rate Management  Transactions permitted under the terms
of Section 7.11 and Advance  Payment  Contracts;  provided,  that the  aggregate
amount of all Advance  Payments  received by any Credit Party that have not been
satisfied  by  delivery  of  production  at any  time  does not  exceed,  in the
aggregate $750,000.

     7.20.  Letters  of  Credit.  Borrower  will  not,  nor will it  permit  any
Subsidiary  to,  apply for or become  liable upon or in respect of any Letter of
Credit,  except Letters of Credit issued pursuant to the Senior Revolving Credit
Agreement  in an  aggregate  face amount  outstanding  at any time not to exceed
$5,000,000.

     7.21.  Financial  Contracts.  Borrower  will not,  nor will it  permit  any
Subsidiary to, enter into or remain liable upon any Financial  Contract,  except
Rate Management Transactions permitted under Section 7.11.

     7.22. Financial Covenants.

          7.22.1. Leverage Ratio. Borrower will not permit its ratio, determined
     as of the end of each of  Borrower's  Fiscal  Quarters  beginning  with the
     Fiscal Quarter ending on May 31, 2004, of (i) Consolidated Funded Debt (for
     each Rolling Period ending on such date) to (ii)  Consolidated  EBITDA (for
     each Rolling Period ending on such date, or Annualized  Consolidated EBITDA
     for such Rolling  Period in the case of a Rolling Period ending on or prior
     to November 30, 2004) to be greater than 4.0 to 1.0 for each Fiscal Quarter
     ending  on or prior to  August  31,  2004,  and 3.5 to 1.0 for each  Fiscal
     Quarter ending thereafter.

                                       46
<PAGE>

          7.22.2.  Proved Reserve Present Value Ratio.  Borrower will not permit
     its ratio,  determined on October 1 and April 1 of each calendar  year, but
     as of  the  immediately  preceding  May 31 and  November  30,  respectively
     (beginning  October 1, 2004) and on the dates required under clause (ii) of
     Section  7.14 and clause  (iii) of  Section  7.15,  of (i) Proved  Reserves
     Present  Value to (ii)  Consolidated  Funded  Debt to be less  than 1.50 to
     1.00.  Borrower's compliance with the forgoing ratio on October 1 and April
     1 of each  calendar  year but as of the  immediately  preceding  May 31 and
     November  30,  respectively,  shall be  determined  based on the  Qualified
     Reserve  Report  required to be delivered to Agent pursuant to clause (iii)
     of Section 7.1 and  prepared as of such dates and  Borrower's  Consolidated
     Funded  Debt  as set  forth  in the  financial  statements  required  to be
     delivered  pursuant to clauses (i) and (ii) of Section 7.1 with  respect to
     the Fiscal Year or Fiscal  Quarters  ending as of such dates,  respectively
     (it being  acknowledged  that Borrower shall not be required to demonstrate
     compliance  with the  foregoing  ratio as of May 31 and November 30 of each
     year with the delivery of the financial  statements for the Fiscal Year and
     Fiscal  Quarter ending as of such date,  respectively,  but rather with the
     delivery  of a  compliance  certificate  on  October  1 and April 1 of each
     year(other than April 1, 2004)).  At all other times Borrower's  compliance
     with the  foregoing  ratio  shall be  determined  based on the most  recent
     Qualified  Reserve  Report  delivered to Agent  pursuant to clause (iii) of
     Section 7.1 and the Qualified Reserve Report delivered by Borrower to Agent
     with  respect to the Target  Properties  to be acquired  pursuant to clause
     (iii) of Section  7.15 or the Oil and Gas  Properties  to be sold,  leased,
     transferred,  abandoned,  exchanged  or  otherwise  disposed of pursuant to
     clause (ii) of Section  7.14, as the case may be, and  Consolidated  Funded
     Debt as set forth in the most recent financial statement delivered to Agent
     pursuant  to clause (i) or (ii) of Section  7.1 as  adjusted on a pro forma
     basis (such  calculation  to be  acceptable  to, and approved by, Agent) to
     give effect to such proposed acquisition or disposition.

     7.23. Operation of Oil and Gas Properties.

          (a)  Borrower  will,  and will  cause  each  other  Credit  Party  to,
     maintain,  develop  and  operate  its Oil & Gas  Properties  in a good  and
     workmanlike  manner,  and  observe  and  comply  with all of the  terms and
     provisions,  express or implied, of all oil and gas leases relating to such
     Oil & Gas  Properties so long as such Oil & Gas  Properties  are capable of
     producing  Hydrocarbons  and  accompanying  elements in paying  quantities,
     except  where such failure to comply  could not  reasonably  be expected to
     have a Material Adverse Effect.

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

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

                                       47
<PAGE>

     7.24. Title Data. In addition to the title information  required by Section
4.1(b) and Section 4.3,  Borrower shall,  upon the request of Required  Lenders,
cause to be  delivered  to Agent  such  title  opinions  and  other  information
regarding  title to the Oil and Gas  Properties  owned by  Borrower or any other
Credit Party as are  appropriate  to  determine  the status  thereof;  provided,
however,  that,  Lenders may not  require  Borrower  to furnish  title  opinions
(except  pursuant to Section  4.1(b) and Section 4.3) unless i) a Default  shall
have occurred and be continuing,  or ii) Required Lenders have reason to believe
that there is a defect in or encumbrance  upon Borrower's  title to such Oil and
Gas Properties that is not a permitted under Section 7.16 or an Immaterial Title
Deficiencies.

     7.25. Rate  Management  Transactions.  Once  confirmed,  no Rate Management
Transaction may be amended or modified,  or cancelled  without the prior written
consent of  Required  Lenders.  Borrower  shall  collaterally  assign all of its
right,  title and  interest  in each  agreement  or contract  evidencing  a Rate
Management  Transaction to the Collateral  Agent and shall,  if requested by the
Agent or the  Required  Lenders,  cause each such  agreement  or contract (1) to
expressly  permit such  assignment and (2) upon the occurrence of any default or
event of default under such agreement or contract,  (a) to permit the Lenders to
cure such  default or event of default  and assume the  obligations  of Borrower
under such  agreement or contract and (b) to prohibit  the  termination  of such
agreement  or contract  by the  counterparty  thereto if the Lenders  assume the
obligations  of Borrower  under such  agreement or contract and the Lenders take
the  actions  required  with the  foregoing  clause  (a). On or about April 1 or
October 1 of each year,  Borrower  shall provide to Agent and each Lender copies
of all  agreements,  documents and  instruments  evidencing the Rate  Management
Transactions  not  previously  delivered to the Agent and Lenders,  certified as
true and correct by an executive officer of Borrower, and such other information
regarding  such  Rate  Management  Transactions  as the Agent  and  Lenders  may
reasonably  request and the officers and employees of Borrower  responsible  for
managing the Rate Management  Transactions  shall be made available to the Agent
and  Lenders to  discuss,  analyze,  review and  evaluate  such Rate  Management
Transactions.

                                  ARTICLE VIII

                                    DEFAULTS

     The occurrence of any one or more of the following  events shall constitute
a Default:

     8.1. Representations and Warranties. Any representation or warranty made or
deemed  made by or on  behalf  of  Borrower  or any of its  Subsidiaries  to the
Lenders or the Agent under or in connection  with this  Agreement,  any Loan, or
any  certificate or information  delivered in connection  with this Agreement or
any other Loan Document  shall be materially  false,  incorrect or misleading on
the date as of which made.

     8.2. Payments.  Nonpayment of principal of any Loan when due, or nonpayment
of interest upon any Loan or of any  commitment fee or other  obligations  under
any of the Loan Documents  within three (3) Business Days after the same becomes
due.

     8.3. Certain  Covenants.  The breach by Borrower or any of its Subsidiaries
of any of the terms or provisions of Section 7.2, 7.6, 7.9,  7.10,  7.11,  7.12,
7.13, 7.14, 7.15, 7.16, 7.17, 7.18, 7.19, 7.20, 7.21, 7.22, 7.24 or 7.25.

     8.4.  Other  Terms and  Provisions.  The breach by  Borrower  or any of its
Subsidiaries  (other than a breach which  constitutes  a Default  under  another
Section of this Article VIII) of any of the terms or

                                       48
<PAGE>

provisions of this Agreement which is not remedied within thirty (30) days after
written notice from the Agent or any Lender.

     8.5.  Other  Material  Indebtedness.  Failure  of  Borrower  or  any of its
Subsidiaries  to pay when  due any  Material  Indebtedness;  or the  default  by
Borrower or any of its  Subsidiaries in the  performance  (beyond the applicable
grace period with respect thereto,  if any) of any term,  provision or condition
contained in any Material Indebtedness Agreement, or any other event shall occur
or condition exist, the effect of which default, event or condition is to cause,
or to permit the holder(s) of such Material  Indebtedness or the lender(s) under
any Material  Indebtedness  Agreement to cause,  such Material  Indebtedness  to
become  due prior to its stated  maturity  or any  commitment  to lend under any
Material Indebtedness  Agreement to be terminated prior to its stated expiration
date;  or any  Material  Indebtedness  of  Borrower or any  Subsidiary  shall be
declared to be due and payable or required to be prepaid or  repurchased  (other
than by a regularly  scheduled payment) prior to the stated maturity thereof; or
Borrower or any  Subsidiary  shall not pay, or admit in writing its inability to
pay, its debts generally as they become due;  provided that, with respect to any
Default  arising  under  this  Section  8.5  solely as a result of a default  by
Borrower or any  Subsidiary  in the payment or  performance  of any  obligation,
term,  provision or condition under the Senior Revolving Credit Agreement,  such
Default  shall be deemed  waived  in the event  such  default  under the  Senior
Revolving Credit Agreement is waived in accordance with the terms thereof.

     8.6. Insolvency  Proceedings.  Borrower or any Subsidiary shall (i) have an
order for  relief or a  receiving  order  entered  with  respect to it under the
bankruptcy  laws  as  now or  hereafter  in  effect  in the  United  States,  as
applicable,  (ii) make an assignment  for the benefit of creditors,  (iii) apply
for,  seek,  consent  to,  or  acquiesce  in,  the  appointment  of a  receiver,
custodian,  trustee,  examiner,  liquidator  or similar  official  for it or any
Substantial  Portion of its Property,  (iv) institute any proceeding  seeking an
order for relief under the bankruptcy  laws as now or hereafter in effect in the
United  States,  as  applicable,  or seeking  to  adjudicate  it a  bankrupt  or
insolvent,  or seeking  dissolution,  winding up,  liquidation,  reorganization,
arrangement, adjustment or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an  answer  or other  pleading  denying  the  material  allegations  of any such
proceeding  filed  against it, (v) take any corporate or  partnership  action to
authorize or effect any of the  foregoing  actions set forth in this Section 8.6
or (vi) fail to contest in good faith any appointment or proceeding described in
Section 8.7.

     8.7. Appointment of Receiver. Without the application,  approval or consent
of Borrower or any  Subsidiary,  a receiver,  trustee,  examiner,  liquidator or
similar  official  shall be  appointed  for  Borrower or any  Subsidiary  or any
Substantial  Portion  of its  Property,  or a  proceeding  described  in Section
8.6(iv)  shall  be  instituted  against  Borrower  or any  Subsidiary  and  such
appointment  continues  undischarged or such proceeding continues undismissed or
unstayed for a period of sixty (60) consecutive days.

     8.8. Condemnation and Seizure. Any court, government or governmental agency
shall condemn,  seize or otherwise  appropriate,  or take custody or control of,
all or any portion of the  Property of Borrower or any  Subsidiary  which,  when
taken  together  with all other  Property of Borrower  and the  Subsidiaries  so
condemned,  seized,  appropriated,  or taken  custody or control of,  during the
twelve-month period ending with the month in which any such action occurs, could
reasonably be expected to have a Material Adverse Effect.

     8.9.  Judgments.  Borrower or any  Subsidiary  shall fail within 30 days to
pay,  bond or otherwise  discharge  one or more (i)  judgments or orders for the
payment  of  money  in  excess  of  $1,500,000  (or the  equivalent  thereof  in
currencies other than Dollars) in the aggregate,  or (ii) nonmonetary  judgments
or orders which, individually or in the aggregate, could reasonably be

                                       49
<PAGE>

expected to have a Material Adverse Effect, which judgment(s), in any such case,
is/are not stayed on appeal or otherwise being  appropriately  contested in good
faith.

     8.10. Rate Management Obligations. Nonpayment by Borrower or any Subsidiary
of any Rate  Management  Obligation  when due or the breach by  Borrower  or any
Subsidiary of any term,  provision or condition contained in any Rate Management
Transaction or any  transaction of the type described in the definition of "Rate
Management  Transactions," whether or not any Lender or Affiliate of a Lender is
a party thereto.

     8.11. Change of Control. Any Change in Control shall occur.

     8.12. Other Loan Documents.  The occurrence of any "default", as defined in
any Loan Document  (other than this Agreement) or the breach of any of the terms
or provisions of any Loan Document (other than this Agreement), which default or
breach continues beyond any period of grace therein provided and such default or
breach  continues  for a period of thirty (30) days after the earlier of (i) the
date any  Authorized  Officer of any Credit  Party  acquires  knowledge  of such
failure,  or (ii)  written  notice of such  failure has been given to any Credit
Party by Agent or any Lender.

     8.13.  Guaranty.  Any Guaranty shall fail to remain in full force or effect
or any  action  shall be taken to  discontinue  or to assert the  invalidity  or
unenforceability of any Guaranty, or any Guarantor shall fail to comply with any
of the  terms or  provisions  of any  Guaranty  to  which it is a party,  or any
Guarantor  shall deny that it has any further  liability  under any  Guaranty to
which it is a party, or shall give notice to such effect.

     8.14. Unfunded Liabilities. The Unfunded Liabilities of all Single Employer
Plans shall exceed in the  aggregate  $1,500,000 or any  Reportable  Event shall
occur in connection with any Plan.

     8.15. Multiemployer Plan Withdrawal Liability. Borrower or any other member
of  the  Controlled  Group  shall  have  been  notified  by  the  sponsor  of  a
Multiemployer   Plan  that  it  has  incurred   withdrawal   liability  to  such
Multiemployer  Plan in an amount which,  when  aggregated with all other amounts
required to be paid to  Multiemployer  Plans by Borrower or any other  member of
the Controlled Group as withdrawal liability  (determined as of the date of such
notification),  exceeds $750,000 or requires payments  exceeding  $1,500,000 per
annum.

     8.16.  Reorganization or Termination of Multiemployer Plan. Borrower or any
other member of the Controlled  Group shall have been notified by the sponsor of
a Multiemployer  Plan that such  Multiemployer  Plan is in  reorganization or is
being  terminated,  within the  meaning of Title IV of ERISA,  if as a result of
such  reorganization  or  termination  the  aggregate  annual  contributions  of
Borrower and the other members of the Controlled Group (taken as a whole) to all
Multiemployer  Plans which are then in  reorganization  or being terminated have
been or will be increased  over the amounts  contributed  to such  Multiemployer
Plans for the respective plan years of each such  Multiemployer Plan immediately
preceding the plan year in which the  reorganization or termination occurs by an
amount exceeding $1,500,000.

     8.17. Environmental Laws. The Borrower or any of its Subsidiaries shall (i)
be the subject of any proceeding or  investigation  pertaining to the release by
the  Borrower,  any of its  Subsidiaries  or any  other  Person  of any toxic or
hazardous  waste  or  substance  into  the  environment,  or  (ii)  violate  any
Environmental  Law,  which,  in the case of an event  described in clause (i) or
clause (ii), could reasonably be expected to have a Material Adverse Effect.

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<PAGE>

     8.18.  Subordinate  Debt  Documents.  Any Credit  Party or any holder shall
repudiate  or contest  the  subordination  provisions  of the  Subordinate  Debt
Documents, or otherwise assert in writing that such subordination provisions are
not valid, binding and enforceable against any such party.

     8.19.  Collateral  Documents.  Any Collateral Document shall for any reason
fail to create a valid and perfected  security  interest second in priority only
to the "Agent" and "Lenders" under the Senior  Revolving Credit Agreement in any
collateral purported to be covered thereby,  except as permitted by the terms of
any Collateral Document, or any Collateral Document shall fail to remain in full
force or effect or any  action  shall be taken to  discontinue  or to assert the
invalidity or  unenforceability of any Collateral  Document,  or the Borrower or
any  Guarantor  shall fail to comply with any of the terms or  provisions of any
Collateral Document.

                                   ARTICLE IX

                 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

     9.1.  Acceleration.  If any Default  described in Section 8.6 or 8.7 occurs
with  respect to the  Borrower,  the  obligations  of the  Lenders to make Loans
hereunder shall  automatically  terminate and the Obligations  shall immediately
become due and payable  without any  election or action on the part of the Agent
or any Lender.  If any other Default occurs,  the Required Lenders (or the Agent
with  the  consent  of the  Required  Lenders)  may  terminate  or  suspend  the
obligations of the Lenders to make Loans  hereunder,  or declare the Obligations
to be  due  and  payable,  or  both,  whereupon  the  Obligations  shall  become
immediately due and payable,  without presentment,  demand, protest or notice of
any kind, all of which the Borrower hereby expressly waives.

     If,  within  thirty  (30) days after  acceleration  of the  maturity of the
Obligations  or  termination  of the  obligations  of the  Lenders to make Loans
hereunder  as a result of any Default  (other than any Default as  described  in
Section  8.6 or 8.7 with  respect to the  Borrower)  and before any  judgment or
decree  for the  payment of the  Obligations  due shall  have been  obtained  or
entered,  the Required Lenders (in their sole discretion) shall so direct,  then
the Agent shall, by notice to the Borrower,  rescind and annul such acceleration
and/or termination.

     9.2.  Amendments.  Subject  to the  provisions  of this  Section  9.2,  the
Required  Lenders  (or the Agent with the  consent  in  writing of the  Required
Lenders) and the Borrower may enter into agreements  supplemental hereto for the
purpose of adding or modifying any  provisions to the Loan Documents or changing
in any manner the rights of the Lenders or the Borrower hereunder or waiving any
Default hereunder; provided, however, that no such supplemental agreement shall,
without the consent of all of the Lenders:

          (i)  Extend  the  final  maturity  of any Loan or  forgive  all or any
     portion of the principal  amount thereof,  or reduce the rate or extend the
     time of payment of interest or fees thereon.

          (ii) Reduce the  percentage  specified in the  definition  of Required
     Lenders.

          (iii) Extend the Facility  Termination  Date,  or reduce the amount or
     extend the payment date for, the mandatory  payments  required under clause
     (ii) of Section 7.14, or increase the amount of the Aggregate Commitment or
     of the Commitment of any Lender hereunder, or permit the Borrower to assign
     its rights under this Agreement.

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          (iv) Amend this Section 9.2.

          (v) Release any guarantor of any Advance.

No amendment of any provision of this  Agreement  relating to the Agent shall be
effective  without the written consent of the Agent. The Agent may waive payment
of the fee required under Section  13.3.2  without  obtaining the consent of any
other party to this Agreement.

     9.3.  Preservation  of Rights.  No delay or  omission of the Lenders or the
Agent to exercise any right under the Loan Documents  shall impair such right or
be construed to be a waiver of any Default or an acquiescence  therein,  and the
making of a Loan  notwithstanding the existence of a Default or the inability of
the  Borrower  to  satisfy  the  conditions  precedent  to such  Loan  shall not
constitute  any waiver or  acquiescence.  Any single or partial  exercise of any
such right shall not preclude other or further  exercise thereof or the exercise
of any other right,  and no waiver,  amendment or other  variation of the terms,
conditions or provisions of the Loan Documents  whatsoever shall be valid unless
in writing signed by the Lenders required pursuant to Section 9.2, and then only
to the extent in such writing  specifically set forth. All remedies contained in
the Loan  Documents  or  afforded  by law shall be  cumulative  and all shall be
available to the Agent and the Lenders until the  Obligations  have been paid in
full.

                                   ARTICLE X

                               GENERAL PROVISIONS

     10.1.  Survival of  Representations.  All representations and warranties of
the Borrower and each Guarantor  contained in this  Agreement  shall survive the
making of the Loans herein contemplated.

     10.2. Governmental Regulation.  Anything contained in this Agreement to the
contrary  notwithstanding,  no Lender shall be obligated to extend credit to the
Borrower  in  violation  of  any  limitation  or  prohibition  provided  by  any
applicable statute or regulation.

     10.3. Headings.  Section headings in the Loan Documents are for convenience
of  reference  only,  and  shall not  govern  the  interpretation  of any of the
provisions of the Loan Documents.

     10.4. Entire Agreement.  The Loan Documents embody the entire agreement and
understanding  among the  Borrower,  the Agent and the Lenders and supersede all
prior  agreements  and  understandings  among  the  Borrower,  the Agent and the
Lenders relating to the subject matter thereof other than those contained in the
fee letter  described  in Section  11.13 which shall  survive and remain in full
force and effect during the term of this Agreement.

     10.5.  Several  Obligations;  Benefits of this  Agreement.  The  respective
obligations  of the  Lenders  hereunder  are several and not joint and no Lender
shall be the  partner  or agent of any other  (except to the extent to which the
Agent is authorized to act as such). The failure of any Lender to perform any of
its  obligations  hereunder  shall not relieve any other  Lender from any of its
obligations hereunder. This Agreement shall not be construed so as to confer any
right or benefit  upon any Person other than the parties to this  Agreement  and
their respective  successors and assigns,  provided,  however,  that the parties
hereto  expressly  agree  that the  Arranger  shall  enjoy the  benefits  of the
provisions  of Sections  10.6,  10.10 and 11.11 to the extent  specifically  set
forth  therein and shall have the right to enforce  such  provisions  on its own
behalf  and in its own  name to the  same  extent  as if it were a party to this
Agreement.

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<PAGE>

     10.6. Expenses; Indemnification. (i) The Borrower shall reimburse the Agent
and the  Arranger for any costs,  internal  charges and  out-of-pocket  expenses
(including  attorneys'  fees and time charges of attorneys for the Agent,  which
attorneys  may be  employees  of the Agent) paid or incurred by the Agent or the
Arranger  in  connection  with  the  investigation,   preparation,  negotiation,
execution, delivery,  syndication,  distribution (including, without limitation,
via the internet),  review, amendment,  modification,  and administration of the
Loan  Documents.  The Borrower also agrees to reimburse the Agent,  the Arranger
and the  Lenders for any costs,  internal  charges  and  out-of-pocket  expenses
(including  attorneys'  fees and time  charges of attorneys  for the Agent,  the
Arranger and the Lenders,  which  attorneys  may be employees of the Agent,  the
Arranger or the  Lenders)  paid or incurred  by the Agent,  the  Arranger or any
Lender in connection  with the collection and enforcement of the Loan Documents.
Expenses being  reimbursed by the Borrower under this Section  include,  without
limitation, costs and expenses incurred in connection with the Reports described
in the following sentence. The Borrower acknowledges that from time to time Bank
One may prepare and may  distribute to the Lenders (but shall have no obligation
or duty to prepare or to  distribute  to the Lenders)  certain  audit reports or
Reserve Reports (the "Reports") pertaining to the Borrower's assets for internal
use  by  Bank  One  from  information  furnished  to it by or on  behalf  of the
Borrower.

          (ii) The Borrower  hereby further  agrees to indemnify the Agent,  the
     Arranger,  each  Lender,  their  respective  Affiliates,  and each of their
     directors,  officers and  employees  against all losses,  claims,  damages,
     penalties,   judgments,   liabilities  and  expenses  (including,   without
     limitation,  all expenses of litigation or preparation  therefor whether or
     not the  Agent,  the  Arranger,  any  Lender  or any  Affiliate  is a party
     thereto)  which any of them may pay or incur  arising out of or relating to
     this Agreement,  the other Loan Documents,  the  transactions  contemplated
     hereby or the direct or indirect application or proposed application of the
     proceeds  of  any  Loan  hereunder  except  to the  extent  that  they  are
     determined  in a final  non-appealable  judgment  by a court  of  competent
     jurisdiction  to  have  resulted  from  the  gross  negligence  or  willful
     misconduct of the party seeking  indemnification.  The  obligations  of the
     Borrower  under this Section  10.6 shall  survive the  termination  of this
     Agreement.

     10.7. Numbers of Documents. All statements, notices, closing documents, and
requests hereunder shall be furnished to the Agent with sufficient  counterparts
so that the Agent may furnish one to each of the Lenders.

     10.8. Accounting. Except as provided to the contrary herein, all accounting
terms  used  herein  shall  be  interpreted  and all  accounting  determinations
hereunder shall be made in accordance with Agreement Accounting Principles.

     10.9.  Severability of Provisions.  Any provision in any Loan Document that
is held to be inoperative,  unenforceable, or invalid in any jurisdiction shall,
as to that  jurisdiction,  be  inoperative,  unenforceable,  or invalid  without
affecting  the  remaining  provisions  in that  jurisdiction  or the  operation,
enforceability,  or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.

     10.10.  Nonliability of Lenders.  The relationship  between the Borrower on
the one hand and the  Lenders  and the Agent on the other  hand  shall be solely
that of borrower  and lender.  Neither the Agent,  the  Arranger  nor any Lender
shall have any fiduciary  responsibilities  to the Borrower.  Neither the Agent,
the Arranger nor any Lender  undertakes  any  responsibility  to the Borrower to
review or inform the Borrower of any matter in connection  with any phase of the
Borrower's  business or operations.  The Borrower agrees that neither the Agent,
the  Arranger  nor any Lender  shall have  liability  to the  Borrower  (whether
sounding in tort,  contract or otherwise) for losses suffered by the Borrower in
connection  with,  arising out of, or in any way  related  to, the  transactions
contemplated and the relationship established by

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<PAGE>

the Loan  Documents,  or any act,  omission  or event  occurring  in  connection
therewith, unless it is determined in a final non-appealable judgment by a court
of competent jurisdiction that such losses resulted from the gross negligence or
willful  misconduct  of the party from which  recovery  is sought.  Neither  the
Agent, the Arranger nor any Lender shall have any liability with respect to, and
the  Borrower  hereby  waives,  releases and agrees not to sue for, any special,
indirect,  consequential  or  punitive  damages  suffered  by  the  Borrower  in
connection with,  arising out of, or in any way related to the Loan Documents or
the transactions contemplated thereby.

     10.11.  Confidentiality.  Each  Lender  agrees  to  hold  any  confidential
information which it may receive from the Borrower pursuant to this Agreement in
confidence, except for disclosure (i) to its Affiliates and to other Lenders and
their  respective  Affiliates,  (ii) to legal  counsel,  accountants,  and other
professional  advisors to such Lender or to a  Transferee,  (iii) to  regulatory
officials,  (iv) to any Person as  requested  pursuant to or as required by law,
regulation,  or legal  process,  (v) to any Person in connection  with any legal
proceeding  to which such  Lender is a party,  (vi) to such  Lender's  direct or
indirect  contractual  counterparties  in swap  agreements or to legal  counsel,
accountants  and  other  professional  advisors  to such  counterparties,  (vii)
permitted by Section 13.4 and (viii) to rating agencies if requested or required
by such agencies in connection with a rating relating to the Advances hereunder.
Notwithstanding anything herein to the contrary,  confidential information shall
not include,  and each Lender (and each employee,  representative or other agent
of any Lender) may disclose to any and all Persons,  without  limitation  of any
kind, the "tax treatment" and "tax structure" (in each case,  within the meaning
of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby
and all materials of any kind  (including  opinions or other tax analyses)  that
are or have been  provided to such Lender  relating to such tax treatment or tax
structure;  provided  that with  respect to any document or similar item that in
either case contains information  concerning such tax treatment or tax structure
of the  transactions  contemplated  hereby  as well as other  information,  this
sentence  shall only apply to such portions of the document or similar item that
relate to such tax treatment or tax structure.

     10.12. Nonreliance. Each Lender hereby represents that it is not relying on
or looking  to any margin  stock (as  defined  in  Regulation  U of the Board of
Governors of the Federal Reserve System) for the repayment of the Loans provided
for herein.

     10.13.  Disclosure.  The Borrower and each Lender  hereby  acknowledge  and
agree that Bank One and/or its Affiliates from time to time may hold investments
in, make other loans to or have other  relationships  with the  Borrower and its
Affiliates.

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

IMPORTANT  INFORMATION  ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.  To help the
government  fight the  funding of  terrorism  and money  laundering  activities,
Federal law requires all financial  institutions to obtain,  verify,  and record
information  that  identifies  each  person or  entity  that  opens an  account,
including  any  deposit  account,   treasury  management  account,  loan,  other
extension of credit, or other financial  services  product.  What this means for
Borrower:  When Borrower opens an account,  if Borrower is an individual,  Agent
and  the  Lenders  will  ask  for  Borrower's  name,  residential  address,  tax
identification  number,  date of birth,  and other  information  that will allow
Agent  and  the  Lenders  to  identify  Borrower,  and,  if  Borrower  is not an
individual,   Agent  and  the  Lenders  will  ask  for   Borrower's   name,  tax
identification  number,  business address, and other information that will allow
Agent and the Lenders to identify  Borrower.  Agent and the Lenders may also ask
if  Borrower  is an  individual,  to see  Borrower's  driver's  license or other
identifying documents,  and, if Borrower is not an individual, to see Borrower's
legal organizational documents or other identifying documents.

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<PAGE>

                                   ARTICLE XI

                                    THE AGENT

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

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

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

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

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<PAGE>

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

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

     11.7. Reliance on Documents;  Counsel.  The Agent shall be entitled to rely
upon any  Note,  notice,  consent,  certificate,  affidavit,  letter,  telegram,
statement,  paper or  document  believed  by it to be genuine and correct and to
have been  signed or sent by the proper  person or  persons,  and, in respect to
legal matters,  upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.

     11.8.  Agent's  Reimbursement  and  Indemnification.  The Lenders  agree to
reimburse and  indemnify  the Agent  ratably in  proportion to their  respective
Commitments (or, if the Commitments have been terminated, in proportion to their
Commitments  immediately  prior to such  termination)  (i) for any  amounts  not
reimbursed by the Borrower for which the Agent is entitled to  reimbursement  by
the Borrower under the Loan Documents,  (ii) for any other expenses  incurred by
the  Agent on  behalf  of the  Lenders,  in  connection  with  the  preparation,
execution,  delivery,  administration  and  enforcement  of the  Loan  Documents
(including,  without  limitation,  for any  expenses  incurred  by the  Agent in
connection  with any dispute  between the Agent and any Lender or between two or
more of the  Lenders)  and  (iii)  for  any  liabilities,  obligations,  losses,
damages, penalties,  actions, judgments, suits, costs, expenses or disbursements
of any kind and  nature  whatsoever  which may be  imposed  on,  incurred  by or
asserted  against  the Agent in any way  relating  to or arising out of the Loan
Documents  or any  other  document  delivered  in  connection  therewith  or the
transactions contemplated thereby (including,  without limitation,  for any such
amounts incurred by or asserted against the Agent in connection with any dispute
between the Agent and any Lender or between two or more of the Lenders),  or the
enforcement  of any of the  terms of the  Loan  Documents  or of any such  other
documents,  provided  that no Lender shall be liable for any of the foregoing to
the extent any of the foregoing is found in a final non-appealable judgment by a
court of competent  jurisdiction  to have resulted from the gross  negligence or
willful  misconduct  of the Agent.  The  obligations  of the Lenders  under this
Section 11.8 shall survive  payment of the  Obligations  and termination of this
Agreement.

     11.9. Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Unmatured  Default  hereunder  unless
the Agent has received written notice from a Lender or the Borrower referring to
this  Agreement  describing  such Default or Unmatured  Default and stating that
such notice is a "notice of default".  In the event that the Agent receives such
a notice, the Agent shall give prompt notice thereof to the Lenders.

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<PAGE>

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

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

     11.12.  Successor Agent. The Agent may resign at any time by giving written
notice thereof to the Lenders and the Borrower, such resignation to be effective
upon the  appointment  of a successor  Agent or, if no successor  Agent has been
appointed,  forty-five  days  after  the  retiring  Agent  gives  notice  of its
intention to resign.  The Agent may be removed at any time with or without cause
by written notice received by the Agent from the Required Lenders,  such removal
to be effective on the date  specified  by the Required  Lenders.  Upon any such
resignation or removal, the Required Lenders shall have the right to appoint, on
behalf of the  Borrower  and the  Lenders,  a  successor  Agent  which  shall be
approved by Borrower,  such approval not to be unreasonably  withheld;  provided
that Borrower shall not have the right to approve any successor  Agent appointed
during the continuance of any Default.. If no successor Agent shall have been so
appointed by the Required Lenders within thirty days after the resigning Agent's
giving notice of its intention to resign,  then the resigning Agent may appoint,
on behalf of the Borrower and the Lenders,  a successor  Agent.  Notwithstanding
the  previous  sentence,  the Agent may at any time  without  the consent of the
Borrower or any Lender, appoint any of its Affiliates which is a commercial bank
as a successor Agent hereunder. If the Agent has resigned or been removed and no
successor  Agent has been  appointed,  the Lenders may perform all the duties of
the Agent  hereunder and the Borrower  shall make all payments in respect of the
Obligations  to the  applicable  Lender  and for all other  purposes  shall deal
directly  with the Lenders.  No successor  Agent shall be deemed to be appointed
hereunder  until such  successor  Agent has accepted the  appointment.  Any such
successor Agent shall be a commercial bank having capital and retained  earnings
of at  least  $100,000,000.  Upon the  acceptance  of any  appointment  as Agent
hereunder by a successor Agent,  such successor Agent shall thereupon succeed to
and become  vested with all the  rights,  powers,  privileges  and duties of the
resigning or removed Agent. Upon the effectiveness of the resignation or removal
of the Agent, the resigning or removed Agent shall be discharged from its duties
and obligations hereunder and under the Loan Documents.  After the effectiveness
of the  resignation  or removal of an Agent,  the  provisions of this Article XI
shall continue in effect for the benefit of such Agent in respect of any actions
taken or omitted  to be taken by it while it was  acting as the Agent  hereunder
and under the other Loan  Documents.  In the event that there is a successor  to
the Agent by merger,  or the Agent  assigns  its duties  and  obligations  to an
Affiliate  pursuant to this Section 11.12, then the term "Prime Rate" as used in
this Agreement  shall mean the prime rate,  base rate or other analogous rate of
the new Agent.

                                       57
<PAGE>

     11.13. Agent and Arranger Fees. The Borrower agrees to pay to the Agent and
the Arranger, for their respective accounts, the fees agreed to by the Borrower,
the Agent and the  Arranger  pursuant to that  certain  letter  agreement  dated
December 12, 2003, or as otherwise agreed from time to time.

     11.14.  Delegation to  Affiliates.  The Borrower and the Lenders agree that
the Agent may  delegate  any of its duties  under this  Agreement  to any of its
Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents
and employees)  which performs duties in connection with this Agreement shall be
entitled  to  the  same  benefits  of  the  indemnification,  waiver  and  other
protective provisions to which the Agent is entitled under Articles X and XI.

     11.15.  Execution of Collateral  Documents.  The Lenders hereby empower and
authorize  the Agent to execute and deliver to the  Borrower on their behalf the
Collateral  Documents  and all related  financing  statements  and any financing
statements,  agreements,  documents  or  instruments  as shall be  necessary  or
appropriate to effect the purposes of the Collateral Documents.

     11.16.  Collateral  Releases.  The Lenders hereby empower and authorize the
Agent to execute and deliver to the  Borrower  on their  behalf any  agreements,
documents or  instruments  as shall be necessary  or  appropriate  to effect any
releases of  Collateral  which shall be  permitted by the terms hereof or of any
other Loan Document or which shall  otherwise have been approved by the Required
Lenders in writing.

                                  ARTICLE XII

                            SETOFF; RATABLE PAYMENTS

     12.1.  Setoff. In addition to, and without limitation of, any rights of the
Lenders  under  applicable  law,  if the  Borrower  becomes  insolvent,  however
evidenced,  or any Default occurs,  any and all deposits  (including all account
balances,  whether  provisional  or  final  and  whether  or  not  collected  or
available) and any other Indebtedness at any time held or owing by any Lender or
any  Affiliate of any Lender to or for the credit or account of the Borrower may
be offset and  applied  toward  the  payment  of the  Obligations  owing to such
Lender, whether or not the Obligations, or any part thereof, shall then be due.

     12.2. Ratable Payments. If any Lender, whether by setoff or otherwise,  has
payment  made to it upon its Loans  (other than  payments  received  pursuant to
Section  3.1,  3.2, or 3.4) in a greater  proportion  than that  received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender,  whether in connection with
setoff or  amounts  which  might be  subject  to setoff or  otherwise,  receives
collateral or other  protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such action
necessary such that all Lenders share in the benefits of such collateral ratably
in  proportion  to their  Loans.  In case any such payment is disturbed by legal
process, or otherwise, appropriate further adjustments shall be made.

                                  ARTICLE XIII

               BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

     13.1.  Successors  and  Assigns.  The  terms  and  provisions  of the  Loan
Documents  shall be  binding  upon and  inure to the  benefit  of the  Borrower,
Guarantors,  and  the  Lenders  and  their  respective  successors  and  assigns
permitted hereby, except that (i) the Borrower and the Guarantors shall not have

                                       58
<PAGE>

the right to assign any of their rights or obligations  under the Loan Documents
without the prior  written  consent of each Lender,  (ii) any  assignment by any
Lender must be made in compliance  with Section 13.3,  and (iii) any transfer by
Participation  must be made in  compliance  with  Section  13.2.  Any  attempted
assignment  or transfer by any party not made in  compliance  with this  Section
13.1 shall be null and void,  unless such  attempted  assignment  or transfer is
treated as a participation  in accordance  with Section  13.3.2.  The parties to
this Agreement acknowledge that clause (ii) of this Section 13.1 relates only to
absolute  assignments  and  this  Section  13.1  does not  prohibit  assignments
creating security interests,  including,  without limitation,  (x) any pledge or
assignment  by any  Lender  of  all or any  portion  of its  rights  under  this
Agreement and any Note to a Federal  Reserve Bank or (y) in the case of a Lender
which is a Fund,  any pledge or  assignment  of all or any portion of its rights
under this  Agreement and any Note to its trustee in support of its  obligations
to its trustee; provided,  however, that no such pledge or assignment creating a
security  interest  shall  release the  transferor  Lender from its  obligations
hereunder unless and until the parties thereto have complied with the provisions
of Section  13.3.  The Agent may treat the  Person  which made any Loan or which
holds any Note as the owner  thereof for all  purposes  hereof  unless and until
such Person complies with Section 13.3; provided, however, that the Agent may in
its  discretion  (but shall not be  required  to) follow  instructions  from the
Person which made any Loan or which holds any Note to direct  payments  relating
to such Loan or Note to another  Person.  Any assignee of the rights to any Loan
or any Note agrees by acceptance of such assignment to be bound by all the terms
and provisions of the Loan Documents.  Any request,  authority or consent of any
Person,  who at the time of making  such  request or giving  such  authority  or
consent is the owner of the rights to any Loan  (whether  or not a Note has been
issued in evidence  thereof),  shall be conclusive and binding on any subsequent
holder or assignee of the rights to such Loan.

     13.2. Participations.

          13.2.1.  Permitted  Participants;  Effect.  Any Lender may at any time
     sell to one or more banks or other entities ("Participants")  participating
     interests in any Loan owing to such  Lender,  any Note held by such Lender,
     any  Commitment  of such Lender or any other  interest of such Lender under
     the  Loan  Documents.  In the  event  of  any  such  sale  by a  Lender  of
     participating  interests to a Participant,  such Lender's obligations under
     the Loan Documents shall remain unchanged,  such Lender shall remain solely
     responsible  to the  other  parties  hereto  for  the  performance  of such
     obligations, such Lender shall remain the owner of its Loans and the holder
     of any Note issued to it in evidence  thereof  for all  purposes  under the
     Loan  Documents,  all amounts  payable by the Borrower under this Agreement
     shall be  determined  as if such  Lender  had not sold  such  participating
     interests, and the Borrower and the Agent shall continue to deal solely and
     directly  with such  Lender in  connection  with such  Lender's  rights and
     obligations under the Loan Documents.

          13.2.2.  Voting  Rights.  Each Lender  shall  retain the sole right to
     approve,   without  the  consent  of  any   Participant,   any   amendment,
     modification  or waiver of any provision of the Loan  Documents  other than
     any  amendment,  modification  or  waiver  with  respect  to  any  Loan  or
     Commitment in which such  Participant  has an interest  which would require
     consent of all of the  Lenders  pursuant  to the terms of Section 9.2 or of
     any other Loan Document.

          13.2.3.  Benefit of Certain Provisions.  The Borrower agrees that each
     Participant shall be deemed to have the right of setoff provided in Section
     12.1 in respect of its  participating  interest in amounts  owing under the
     Loan  Documents  to the same  extent as if the amount of its  participating
     interest  were owing  directly to it as a Lender under the Loan  Documents,
     provided  that each  Lender  shall  retain the right of setoff  provided in
     Section 12.1 with respect to the amount of participating  interests sold to
     each Participant. The Lenders agree to share with each

                                       59
<PAGE>

Participant, and each Participant, by exercising the right of setoff provided in
Section 12.1, agrees to share with each Lender,  any amount received pursuant to
the  exercise of its right of setoff,  such  amounts to be shared in  accordance
with Section 12.2 as if each  Participant  were a Lender.  The Borrower  further
agrees that each Participant  shall be entitled to the benefits of Sections 3.1,
3.2,  3.4 and 3.5 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to Section 13.3, provided that (i) a Participant
shall not be entitled to receive any greater  payment  under  Section 3.1 or 3.2
than the Lender who sold the  participating  interest to such Participant  would
have received had it retained such interest for its own account, unless the sale
of such interest to such  Participant is made with the prior written  consent of
the Borrower,  and (ii) any Participant not  incorporated  under the laws of the
United  States of  America  or any  State  thereof,  agrees  to comply  with the
provisions of Section 3.6 to the same extent as if it were a Lender.

     13.3. Assignments.

          13.3.1.  Permitted  Assignments.  Any Lender may at any time assign to
     one or more banks or other entities  ("Purchasers")  all or any part of its
     rights and obligations  under the Loan Documents.  Such assignment shall be
     substantially  in the form of  Exhibit  C or in such  other  form as may be
     agreed to by the parties  thereto.  Each such  assignment with respect to a
     Purchaser  which is not a Lender or an Affiliate of a Lender or an Approved
     Fund shall either be in an amount equal to the entire applicable Commitment
     and Loans of the  assigning  Lender or (unless each of the Borrower and the
     Agent  otherwise  consents)  be  in  an  aggregate  amount  not  less  than
     $1,000,000.  The amount of the assignment  shall be based on the Commitment
     or outstanding Loans (if the Commitment has been terminated) subject to the
     assignment,  determined  as of the  date  of such  assignment  or as of the
     "Trade Date," if the "Trade Date" is specified in the assignment.

          13.3.2.  Consents. The consent of the Borrower shall be required prior
     to an assignment  becoming  effective unless the Purchaser is a Lender,  an
     Affiliate of a Lender or an Approved Fund; provided that the consent of the
     Borrower shall not be required if a Default has occurred and is continuing.
     The consent of the Agent shall be required prior to an assignment  becoming
     effective unless the Purchaser is a Lender,  an Affiliate of a Lender or an
     Approved Fund. Any consent  required under this Section 13.3.2 shall not be
     unreasonably withheld or delayed.

          13.3.3.  Effect;  Effective Date. Upon (i) delivery to the Agent of an
     assignment,  together  with any  consents  required by Sections  13.3.1 and
     13.3.2,  and  (ii)  payment  of a $3,500  fee by the  assigning  Lender  or
     Purchaser to the Agent for processing such  assignment  (unless such fee is
     waived  by the  Agent),  such  assignment  shall  become  effective  on the
     effective date specified in such assignment. The assignment shall contain a
     representation   by  the   Purchaser   to  the  effect  that  none  of  the
     consideration  used to make the purchase of the  Commitment and Loans under
     the applicable  assignment  agreement  constitutes "plan assets" as defined
     under ERISA and that the rights and interests of the Purchaser in and under
     the Loan Documents will not be "plan assets" under ERISA.  On and after the
     effective date of such assignment, such Purchaser shall for all purposes be
     a Lender party to this Agreement and any other Loan Document executed by or
     on behalf of the Lenders and shall have all the rights and obligations of a
     Lender  under  the  Loan  Documents,  to the same  extent  as if it were an
     original  party thereto,  and the transferor  Lender shall be released with
     respect to the Commitment and Loans assigned to such Purchaser  without any
     further consent or action by the Borrower, the Lenders or the Agent. In the
     case of an  assignment  covering all of the assigning  Lender's  rights and
     obligations  under this  Agreement,  such Lender shall cease to be a Lender
     hereunder but shall continue to be entitled to the benefits

                                       60
<PAGE>

     of, and subject to, those  provisions of this  Agreement and the other Loan
     Documents  which survive  payment of the Obligations and termination of the
     applicable  agreement.  Any assignment or transfer by a Lender of rights or
     obligations  under this  Agreement  that does not comply with this  Section
     13.3 shall be treated  for  purposes  of this  Agreement  as a sale by such
     Lender of a participation in such rights and obligations in accordance with
     Section  13.2.  Upon the  consummation  of any  assignment  to a  Purchaser
     pursuant to this Section 13.3.3,  the transferor  Lender, the Agent and the
     Borrower shall, if the transferor  Lender or the Purchaser desires that its
     Loans be  evidenced by Notes,  make  appropriate  arrangements  so that new
     Notes or, as appropriate,  replacement  Notes are issued to such transferor
     Lender and new Notes or, as appropriate,  replacement  Notes, are issued to
     such  Purchaser,  in  each  case  in  principal  amounts  reflecting  their
     respective Commitments, as adjusted pursuant to such assignment.

          13.3.4.  Register.  The Agent,  acting  solely for this  purpose as an
     agent of the  Borrower,  shall  maintain  at one of its offices in Chicago,
     Illinois,  a copy of each  Assignment and Assumption  delivered to it and a
     register for the recordation of the names and addresses of the Lenders, and
     the  Commitments  of, and  principal  amounts of the Loans  owing to,  each
     Lender pursuant to the terms hereof from time to time (the "Register"). The
     entries in the Register  shall be conclusive,  and the Borrower,  the Agent
     and the  Lenders  may treat  each  Person  whose  name is  recorded  in the
     Register  pursuant  to the  terms  hereof  as a  Lender  hereunder  for all
     purposes of this  Agreement,  notwithstanding  notice to the contrary.  The
     Register  shall  be  available  for  inspection  by  the  Borrower  at  any
     reasonable time and from time to time upon reasonable prior notice.

     13.4. Dissemination of Information.  The Borrower authorizes each Lender to
disclose to any  Participant  or  Purchaser  or any other  Person  acquiring  an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective  Transferee  any and all  information  in such  Lender's  possession
concerning the creditworthiness of the Borrower and its Subsidiaries,  including
without limitation any information  contained in any Report;  provided that each
Transferee  and  prospective  Transferee  agrees to be bound by Section 10.11 of
this Agreement.

                                  ARTICLE XIV

                                    NOTICES

     14.1.  Notices.  Except as otherwise permitted by Section 2.14 with respect
to borrowing  notices,  all notices,  requests and other  communications  to any
party  hereunder  shall  be  in  writing  (including  electronic   transmission,
facsimile transmission or similar writing) and shall be given to such party: (x)
in the case of the Borrower or the Agent, at its address or facsimile number set
forth on the  signature  pages  hereof,  (y) in the case of any  Lender,  at its
address or facsimile  number set forth below its signature  hereto or (z) in the
case of any party,  at such other address or facsimile  number as such party may
hereafter  specify  for the  purpose by notice to the Agent and the  Borrower in
accordance with the provisions of this Section 14.1.  Each such notice,  request
or  other   communication   shall  be  effective   (i)  if  given  by  facsimile
transmission, when transmitted to the facsimile number specified in this Section
and  confirmation of receipt is received,  (ii) if given by mail, 72 hours after
such  communication  is deposited in the mails with first class postage prepaid,
addressed as  aforesaid,  or (iii) if given by any other means,  when  delivered
(or, in the case of electronic transmission,  received) at the address specified
in this  Section;  provided that notices to the Agent under Article II shall not
be effective until received.

     14.2.  Change of Address.  The Borrower,  the Agent and any Lender may each
change the  address  for service of notice upon it by a notice in writing to the
other parties hereto.

                                       61
<PAGE>

                                   ARTICLE XV

                                  COUNTERPARTS

     15.1.  Counterparts.  This  Agreement  may be  executed  in any  number  of
counterparts,  all of which taken together shall  constitute one agreement,  and
any of the  parties  hereto may  execute  this  Agreement  by  signing  any such
counterpart.  This Agreement shall be effective when it has been executed by the
Borrower,  the Agent and the  Lenders and each party has  notified  the Agent by
facsimile transmission or telephone that it has taken such action.

                                  ARTICLE XVI

          CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

     16.1.  CHOICE OF LAW.  THE LOAN  DOCUMENTS  (OTHER THAN THOSE  CONTAINING A
CONTRARY  EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (INCLUDING,  WITHOUT LIMITATION,  BUT OTHERWISE WITHOUT REGARD
TO THE CONFLICT OF LAW  PROVISIONS) OF THE STATE OF TEXAS,  BUT GIVING EFFECT TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

     16.2.  CONSENT TO  JURISDICTION.  THE  BORROWER AND EACH  GUARANTOR  HEREBY
IRREVOCABLY  SUBMITS  TO THE  NON-EXCLUSIVE  JURISDICTION  OF THE  COURTS OF ANY
UNITED  STATES  FEDERAL OR TEXAS STATE COURT  SITTING IN DALLAS,  TEXAS,  IN ANY
ACTION OR  PROCEEDING  ARISING OUT OF OR RELATING TO ANY LOAN  DOCUMENTS  (OTHER
THAN THOSE  CONTAINING  AN EXPRESS  CONSENT  TO  ANOTHER  JURISDICTION)  AND THE
BORROWER HEREBY  IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY  WAIVES
ANY  OBJECTION  IT MAY NOW OR  HEREAFTER  HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION  OR  PROCEEDING  BROUGHT  IN  SUCH A  COURT  OR  THAT  SUCH  COURT  IS AN
INCONVENIENT  FORUM.  NOTHING  HEREIN  SHALL LIMIT THE RIGHT OF THE AGENT OR ANY
LENDER TO BRING PROCEEDINGS  AGAINST THE BORROWER OR ANY GUARANTOR IN THE COURTS
OF ANY OTHER  JURISDICTION.  ANY  JUDICIAL  PROCEEDING  BY THE  BORROWER  OR ANY
GUARANTOR  AGAINST THE AGENT OR ANY LENDER OR ANY  AFFILIATE OF THE AGENT OR ANY
LENDER INVOLVING,  DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT
IN DALLAS, TEXAS.

     16.3.  WAIVER OF JURY TRIAL.  THE BORROWER,  EACH GUARANTOR,  THE AGENT AND
EACH LENDER  HEREBY  WAIVE TRIAL BY JURY IN ANY JUDICIAL  PROCEEDING  INVOLVING,
DIRECTLY  OR  INDIRECTLY,  ANY MATTER  (WHETHER  SOUNDING  IN TORT,  CONTRACT OR
OTHERWISE)  IN ANY WAY ARISING OUT OF,  RELATED TO, OR  CONNECTED  WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

                                       62
<PAGE>

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date first above written.

                               BORROWER:

                               QUEST CHEROKEE, LLC

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

                               c/o Quest Resources Corporation
                               5901 N. Western, Suite 200
                               Oklahoma City, Oklahoma 73118
                               Attention:  Jerry Cash
                               Chairman and Co-Chief Executive Officer
                               Telephone:  (405) 840-9894
                               Facsimile:  (405) 840-9897

                               GUARANTOR:

                               BLUESTEM PIPELINE, LLC

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

                               c/o Quest Resources Corporation
                               5901 N. Western, Suite 200
                               Oklahoma City, Oklahoma 73118
                               Attention:  Jerry Cash
                               Chairman and Co-Chief Executive Officer
                               Telephone:  (405) 840-9894
                               Facsimile:  (405) 840-9897

<PAGE>

Commitments
-----------

$35,000,000                    BANK ONE, NA,
                               Individually and as Agent

                               By:   /s/ J. SCOTT FOWLER
                                     -------------------------------
                               Name: J. Scott Fowler
                                     -------------------------------
                               Title:Director, Capital Markets
                                     -------------------------------

                               Bank One, NA
                               Mail Code IL1-0634
                               1 Bank One Plaza
                               Chicago, Illinois 60670-0634
                               Attention: Jim Moore
                               Telephone: (312) 385-7057
                               Facsimile: (312) 732-4840

                               with a copy to:
                               Bank One, NA
                               1717 Main Street
                               Fourth Floor
                               Dallas, Texas 75201
                               Attention: J. Scott Fowler, Director
                                          Capital Markets
                               Telephone: (214) 290-2162
                               Facsimile: (214) 290-2332

<PAGE>

                                   EXHIBIT A-1
                       FORM OF BORROWER'S COUNSEL OPINION

                                   [Attached]

<PAGE>

                                   EXHIBIT A-2
                       FORM OF COLLATERAL AGENT'S OPINION

                                   [Attached]

<PAGE>

                                    EXHIBIT B

                             COMPLIANCE CERTIFICATE

To:   The Lenders parties to the
      Credit Agreement Described Below

     This  Compliance  Certificate is furnished  pursuant to that certain Senior
Term Second Lien  Secured  Credit  Agreement  dated as of December  22, 2003 (as
amended, modified, renewed or extended from time to time, the "Agreement") among
Quest Cherokee,  LLC, a Delaware  limited  liability  company (the  "Borrower"),
Bluestem Pipeline,  LLC, a Delaware limited liability company, a Guarantor,  the
lenders  party  thereto  and Bank  One,  NA, as Agent  for the  Lenders.  Unless
otherwise defined herein,  capitalized terms used in this Compliance Certificate
have the meanings ascribed thereto in the Agreement.

     THE UNDERSIGNED HEREBY CERTIFIES THAT:

     1. I am the duly elected of Borrower;

     2. I have  reviewed  the terms of the  Agreement  and I have made,  or have
caused to be made under my supervision,  a detailed  review of the  transactions
and conditions of Borrower and its  Subsidiaries  during the  accounting  period
covered by the attached financial statements;

     3. The examinations  described in paragraph 2 did not disclose,  and I have
no knowledge  of, the  existence of any  condition or event which  constitutes a
Default  or  Unmatured  Default  during or at the end of the  accounting  period
covered  by  the  attached  financial  statements  or as of  the  date  of  this
Certificate, except as set forth below; and

     4. Schedule I attached  hereto sets forth  financial data and  computations
evidencing Borrower's compliance with certain covenants of the Agreement, all of
which data and computations are true, complete and correct.

     5.  Schedule  II  attached  hereto  sets  forth  the  various  reports  and
deliveries  which are  required at this time under the  Agreement  and the other
Loan Documents and the status of compliance.

     Described below are the exceptions,  if any, to paragraph 3 by listing,  in
detail,  the nature of the  condition or event,  the period  during which it has
existed and the action which the Borrower and its  Subsidiaries  have taken,  is
taking, or proposes to take with respect to each such condition or event:

     ____________________________________________________________________

     ____________________________________________________________________

     ____________________________________________________________________

<PAGE>

     The foregoing  certifications,  together with the computations set forth in
Schedule I hereto and the financial  statements  delivered with this Certificate
in support hereof, are made and delivered this day of , .

                               ______________________________________

<PAGE>

                      SCHEDULE I TO COMPLIANCE CERTIFICATE

                      Compliance as of _________, ____ with
                       Provisions of 7.22.1 and 7.22.2 of
                                  the Agreement

<PAGE>

                      SCHEDULE II TO COMPLIANCE CERTIFICATE

                      Reports and Deliveries Currently Due

<PAGE>

                                    EXHIBIT C

                       ASSIGNMENT AND ASSUMPTION AGREEMENT

     This Assignment and Assumption (the  "Assignment and  Assumption") is dated
as of the  Effective  Date set forth  below and is entered  into by and  between
[Insert name of Assignor]  (the  "Assignor")  and [Insert name of Assignee] (the
"Assignee").  Capitalized  terms  used but not  defined  herein  shall  have the
meanings given to them in the Senior Term Second Lien Secured  Credit  Agreement
identified  below (as  amended,  the "Credit  Agreement"),  receipt of a copy of
which is hereby acknowledged by the Assignee. The Terms and Conditions set forth
in Annex 1  attached  hereto  are hereby  agreed to and  incorporated  herein by
reference  and made a part of this  Assignment  and  Assumption  as if set forth
herein in full.

     For an agreed  consideration,  the Assignor  hereby  irrevocably  sells and
assigns to the  Assignee,  and the Assignee  hereby  irrevocably  purchases  and
assumes  from the  Assignor,  subject  to and in  accordance  with the Terms and
Conditions  and the Credit  Agreement,  as of the Effective Date inserted by the
Agent as contemplated below, the interest in and to all of the Assignor's rights
and  obligations in its capacity as a Lender under the Credit  Agreement and any
other documents or instruments  delivered  pursuant  thereto that represents the
amount  and  percentage  interest  identified  below  of all  of the  Assignor's
outstanding  rights and obligations under the respective  facilities  identified
below (including,  without limitation and to the extent permitted to be assigned
under applicable law, all claims (including without limitation  contract claims,
tort claims, malpractice claims, statutory claims and all other claims at law or
in equity),  suits, causes of action and any other right of the Assignor against
any Person  whether known or unknown  arising  under or in  connection  with the
Credit Agreement,  any other documents or instruments delivered pursuant thereto
or the loan transactions governed thereby) (the "Assigned Interest").  Such sale
and  assignment  is without  recourse to the Assignor  and,  except as expressly
provided in this Assignment and Assumption,  without  representation or warranty
by the Assignor.

     1. Assignor: _____________________________________________

     2. Assignee: _____________________________________________ [and is an
                  Affiliate/Approved Fund of [identify Lender]]1

     3. Borrower(s): __________________________________________

     4. Agent: ________________________________________________, as the agent
               under the Credit Agreement.

     5. Credit Agreement: The $35,000,000 Senior Term Second Lien Secured Credit
                    Agreement dated as of _______________  among Quest Cherokee,
                    LLC ("Borrower"),  Bluestem Pipeline, LLC, the Lenders party
                    thereto,  Bank  One,  NA, , as Agent,  and the other  agents
                    party thereto.

1  Select as applicable.

<PAGE>

     6. Assigned Interest:

          Aggregate Amount of        Amount of          Percentage Assigned of
          Loans for all Lenders*     Loans Assigned*    Loans2

          $                          $                  _______%
          $                          $                  _______%
          $                          $                  _______%

     7. Trade Date: ________________________________4

     Effective  Date:  ____________________,  20__ [TO BE  INSERTED BY AGENT AND
WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE AGENT.]

     The terms set forth in this Assignment and Assumption are hereby agreed to:

                               ASSIGNOR
                               [NAME OF ASSIGNOR]

                               By:_________________________________________
                               Title:______________________________________

                               ASSIGNEE
                               [NAME OF ASSIGNEE]

                               By:_________________________________________
                               Title:______________________________________

[Consented to and]5 Accepted:

BANK ONE, NA,
as Agent

By:________________________________
Title:

*Amount to be adjusted by the  counterparties  to take into account any payments
or prepayments made between the Trade Date and the Effective Date.
2 Set forth, to at least 9 decimals,  as a percentage of the Commitment/Loans of
all Lenders thereunder.  3 Fill in the appropriate  terminology for the types of
facilities  under the  Credit  Agreement  that are  being  assigned  under  this
Assignment  (e.g.  "Term Loan  Commitment,",  etc.) 4 Insert if  satisfaction of
minimum amounts is to be determined as of the Trade Date.
5 To be added only if the  consent of the Agent is  required by the terms of the
Credit Agreement.

<PAGE>

                                     ANNEX I
                            TERMS AND CONDITIONS FOR
                            ASSIGNMENT AND ASSUMPTION

     1. Representations and Warranties.

          1.1 Assignor.  The Assignor represents and warrants that (i) it is the
legal and beneficial owner of the Assigned Interest,  (ii) the Assigned Interest
is free and clear of any lien,  encumbrance  or other adverse claim and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this  Assignment  and  Assumption  and to  consummate  the  transactions
contemplated  hereby.  Neither the Assignor nor any of its officers,  directors,
employees,  agents or attorneys  shall be  responsible  for (i) any  statements,
warranties or representations made in or in connection with the Credit Agreement
or  any  other  Loan   Document,   (ii)  the  execution,   legality,   validity,
enforceability,  genuineness, sufficiency, perfection, priority, collectibility,
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Guarantors, the Borrower, any of its Subsidiaries or Affiliates
or any  other  Person  obligated  in  respect  of any  Loan  Document,  (iv) the
performance  or  observance  by  the  Guarantors,   the  Borrower,  any  of  its
Subsidiaries  or  Affiliates  or any  other  Person  of any of their  respective
obligations under any Loan Documents,  (v) inspecting any of the property, books
or records of the  Borrower,  or any  Guarantor,  or (vi) any mistake,  error of
judgment, or action taken or omitted to be taken in connection with the Loans or
the Loan Documents.

          1.2. Assignee. The Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute and
deliver this  Assignment  and  Assumption  and to  consummate  the  transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) from
and after the Effective  Date, it shall be bound by the provisions of the Credit
Agreement as a Lender  thereunder  and, to the extent of the Assigned  Interest,
shall have the obligations of a Lender thereunder, (iii) agrees that its payment
instructions  and  notice  instructions  are as set forth in  Schedule 1 to this
Assignment and Assumption,  (iv) confirms that none of the funds, monies, assets
or other consideration being used to make the purchase and assumption  hereunder
are "plan  assets" as defined  under  ERISA and that its  rights,  benefits  and
interests in and under the Loan Documents will not be "plan assets" under ERISA,
(v) agrees to indemnify and hold the Assignor harmless against all losses, costs
and expenses  (including,  without limitation,  reasonable  attorneys' fees) and
liabilities incurred by the Assignor in connection with or arising in any manner
from the  Assignee's  non-performance  of the  obligations  assumed  under  this
Assignment and Assumption,  (vi) it has received a copy of the Credit Agreement,
together  with  copies of  financial  statements  and such other  documents  and
information  as it has deemed  appropriate  to make its own credit  analysis and
decision  to enter into this  Assignment  and  Assumption  and to  purchase  the
Assigned  Interest on the basis of which it has made such  analysis and decision
independently  and without reliance on the Agent or any other Lender,  and (vii)
attached as Schedule 1 to this  Assignment and  Assumption is any  documentation
required to be delivered by the Assignee with respect to its tax status pursuant
to the  terms of the  Credit  Agreement,  duly  completed  and  executed  by the
Assignee and (b) agrees that (i) it will,  independently and without reliance on
the Agent,  the Assignor or any other  Lender,  and based on such  documents and
information as it shall deem  appropriate at the time,  continue to make its own
credit  decisions in taking or not taking action under the Loan  Documents,  and
(ii) it will perform in accordance with their terms all of the obligations which
by the terms of the Loan  Documents  are  required  to be  performed  by it as a
Lender.

     2. Payments.  The Assignee shall pay the Assignor,  on the Effective  Date,
the  amount  agreed  to by the  Assignor  and the  Assignee.  From and after the
Effective Date, the Agent shall make all

<PAGE>

payments in respect of the Assigned Interest  (including  payments of principal,
interest, fees and other amounts) to the Assignor for amounts which have accrued
to but excluding  the Effective  Date and to the Assignee for amounts which have
accrued from and after the Effective Date.

     3. General  Provisions.  This  Assignment and  Assumption  shall be binding
upon,  and inure to the  benefit  of, the  parties  hereto and their  respective
successors  and assigns.  This  Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of Texas.

<PAGE>

                          ADMINISTRATIVE QUESTIONNAIRE

(Schedule to be supplied by Closing Unit or Trading Documentation Unit)

   (For Forms for Primary Syndication call Peterine Svoboda at 312-732-8844)
      (For Forms after Primary Syndication call Jim Bartz at 312-732-1242)

<PAGE>

              US AND NON-US TAX INFORMATION REPORTING REQUIREMENTS

    (Schedule to be supplied by Closing Unit or Trading Documentation Unit)

    (For Forms for Primary Syndication call Peterine Svoboda at 312-732-8844)
      (For Forms after Primary Syndication call Jim Bartz at 312-732-1242)

<PAGE>

                                    EXHIBIT D

                 LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION

To Bank One, NA,
as Agent (the "Agent") under the Credit Agreement
Described Below.

Re:   Senior Term Second Lien Secured Credit Agreement,  dated December 22, 2003
      (as the same may be amended or modified,  the "Credit  Agreement"),  among
      Quest Cherokee, LLC (the "Borrower"), Bluestem Pipeline, LLC, a Guarantor,
      the Lenders named therein and the Agent. Capitalized terms used herein and
      not otherwise  defined herein shall have the meanings  assigned thereto in
      the Credit Agreement.

     The Agent is specifically authorized and directed to act upon the following
money transfer instructions with respect to the proceeds of the initial Advance.

Facility Identification Number(s)_______________________________________________

Customer/Account Name___________________________________________________________

Transfer Funds To_______________________________________________________________

                 _______________________________________________________________

For Account No._________________________________________________________________

Reference/Attention To _________________________________________________________

Authorized Officer (Customer Representative)  Date______________________________

_______________________________________       __________________________________
(Please Print)                                Signature

Bank Officer Name                             Date______________________________

_______________________________________       __________________________________
(Please Print)                                Signature

   (Deliver Completed Form to Credit Support Staff For Immediate Processing)

<PAGE>

                                    EXHIBIT E

                                      NOTE

                                                                          [Date]

     Quest Cherokee, LLC, a Delaware limited liability company (the "Borrower"),
promises  to pay  to  the  order  of  ____________________________________  (the
"Lender") the aggregate  unpaid principal amount of all Loans made by the Lender
to the  Borrower  pursuant  to  Article  II of  the  Agreement  (as  hereinafter
defined),  in immediately available U.S. Dollars at the main office of Bank One,
NA, in  Chicago,  Illinois,  as Agent,  together  with  interest  on the  unpaid
principal  amount  hereof  at the  rates  and  on the  dates  set  forth  in the
Agreement.  The  Borrower  shall pay the  principal  of and  accrued  and unpaid
interest on the Loans in full on the  Facility  Termination  Date and shall make
such mandatory payments as are required to be made under the terms of Article II
of the Agreement.

     The Lender  shall,  and is hereby  authorized  to,  record on the  schedule
attached  hereto,  or to otherwise record in accordance with its usual practice,
the date and  amount  of each  Loan and the date and  amount  of each  principal
payment hereunder.

     This Note is one of the Notes  issued  pursuant  to, and is entitled to the
benefits of, the Senior Term Second Lien Secured  Credit  Agreement  dated as of
_______________,______  (which,  as it may be amended or modified  and in effect
from time to time, is herein called the  "Agreement"),  among the Borrower,  the
lenders  party  thereto,  including the Lender,  and Bank One, NA, as Agent,  to
which  Agreement  reference  is  hereby  made for a  statement  of the terms and
conditions  governing this Note,  including the terms and conditions under which
this Note may be prepaid or its maturity date accelerated.  This Note is secured
pursuant to the Collateral  Documents and is guaranteed pursuant to the Guaranty
as more specifically  described in the Agreement,  and reference is made thereto
for a statement  of the terms and  provisions  thereof.  Capitalized  terms used
herein and not otherwise defined herein are used with the meanings attributed to
them in the Agreement.

                               QUEST CHEROKEE, LLC

                               By:______________________________________________
                               Print Name:______________________________________
                               Title:___________________________________________

<PAGE>

                   SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
                                       TO
                          NOTE OF ___________________,
                          DATED ____________________,

               Principal         Maturity            Principal
               Amount of       of Interest             Amount         Unpaid
Date              Loan            Period                Paid         Balance
--------------------------------------------------------------------------------

<PAGE>

                                    EXHIBIT F
                          CERTIFICATE OF EFFECTIVENESS

                                   [Attached]

<PAGE>

                                    EXHIBIT G
                            FORM OF SUBORDINATE NOTE

                                   [Attached]

<PAGE>

                                 SCHEDULE 1.1-A
                           EXISTING LETTERS OF CREDIT

<PAGE>

                                 SCHEDULE 1.1-B
                           RATE MANGEMENT TRANSACTIONS

<PAGE>

                                  SCHEDULE 5.7

                         MATERIAL CONTINGENT LIABILITIES

None.

<PAGE>

                                  SCHEDULE 5.8

                       SUBSIDIARIES AND OTHER INVESTMENTS
                           (See Sections 5.8 and 7.15)

 Investment     Jurisdiction of          Owned        Amount of       Percent
     In           Organization            By         Investment      Ownership
--------------------------------------------------------------------------------

  Bluestem          Delaware           Borrower      $25,329,234.08    100%

<PAGE>

                                  SCHEDULE 5.13

                             INDEBTEDNESS AND LIENS
                          (See Sections 5.13 and 7.15)

                                                                       Amount
Indebtedness   Indebtedness      Property                                of
 Incurred By     Owed To      Encumbered (If Any)     Maturity      Indebtedness
--------------------------------------------------------------------------------
Borrower       Yates Center      Inventory            11/04/04        $67,332.54
               Branch Bank

Borrower       Yates Center      Equipment            02/19/08       $417,799.76
               Branch Bank

Borrower       Bank of           Building - Chanute   10/15/13        $49,661.24
               Commerce          125 & 127 W. Main

Borrower       Caterpillar       Equipment            01/06, 03/06,  $171,949.39
               Financial                              08/05, 10/06,
                                                      11/07

Borrower       Case Credit       Equipment            08/18/04         $2,245.94

Borrower       DC Financial      Equipment            07/25/05,       $34,983.78
               Services                               12/27/05

Borrower       Ford Motor        Trucks               03/24/06,      $141,935.07
               Credit                                 01/14/06,
                                                      01/18/05,
                                                      04/08/07,
                                                      07/23/07,
                                                      11/23/07

Borrower       Marilyn Lamb      Trucks               None             $8,725.00

Borrower       Chrysler          Trucks               06/23/05,       $60,885.44
               Financial                              07/13/05,
                                                      07/22/07

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

    Total                                                            $998,835.01Exhibit 4.5
                                                                     -----------

                                PLEDGE AGREEMENT
                                ----------------

     THIS PLEDGE  AGREEMENT (this  "Agreement") is made as of December 22, 2003,
by Quest Cherokee,  LLC, a Delaware limited  liability company  ("Pledgor"),  in
favor of Bank One, NA, with its main office in Chicago,  Illinois, as Collateral
Agent  (defined  below) for the benefit of Revolving  Lenders (as defined below)
and Term Lenders (defined below) (herein called "Pledgee").

                              W I T N E S S E T H:
                               - - - - - - - - - -

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

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

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

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

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

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

                                                                               1

<PAGE>

                                    ARTICLE I

                           Definitions and References
                           --------------------------

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

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

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

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

     "Equity" means shares of capital stock or a partnership,  limited liability
company,  profits, capital or member interest, or options, warrants or any other
right to substitute for or otherwise acquire the capital stock or a partnership,
limited  liability  company,   profits,  capital  or  member  interest  of  each
Subsidiary (as defined in Section 2.1(a)).

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

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

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

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

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

     "Other  Liable Party" means any Person,  other than Pledgor,  but including
each  Subsidiary,  who may now or may at any  time  hereafter  be  primarily  or
secondarily  liable for any of the Obligations or who may now or may at any time
hereafter  have  granted to Pledgee  or any Lender a Lien upon any  property  as
security for the Obligations.

                                                                               2

<PAGE>

     "Person" means any individual, corporation,  partnership, limited liability
company,  association,  trust,  other  entity or  organization,  or any court or
governmental department,  commission,  board, bureau, agency, or instrumentality
of any  nation  or of any  province,  state,  commonwealth,  nation,  territory,
possession,   county,   parish,  or  municipality,   whether  now  or  hereafter
constituted or existing.

     "Pledged Equity" has the meaning given it in Section 2.1(a).

     "Revolving Loan Papers" means the Revolving Credit Agreement, the Revolving
Notes,   this   Agreement,   each  Master  Debt  Guaranty  (as  defined  in  the
Intercreditor  Agreement) which may now or hereafter be executed,  each Security
Document (as defined in the Intercreditor  Agreement) which may now or hereafter
be executed,  all mortgages,  mortgage  amendments  and mortgage  supplements or
modifications now or at any time hereafter  delivered pursuant to Section 5.1 of
the  Revolving  Credit  Agreement,  and all  other  certificates,  documents  or
instruments delivered in connection with the Revolving Credit Agreement,  as the
foregoing may be amended from time to time.

     "Revolving  Notes" means,  collectively,  the promissory notes from time to
time  executed  by Pledgor  and  payable to the order of each  Revolving  Lender
pursuant  to the terms of the  Revolving  Credit  Agreement  and shall  include,
without  limitation,  that certain Note dated December 22, 2003,  payable to the
order of Bank One, NA, in the original principal amount of $200,000,000, bearing
interest as therein  provided and with interest and  principal  being payable as
therein provided.

     "Term Loan Papers" means the Term Credit  Agreement,  the Term Notes,  this
Agreement,  each Master Debt  Guaranty  which may now or  hereafter be executed,
each Security  Document  which may now or hereafter be executed,  all mortgages,
mortgage amendments and mortgage supplements or modifications now or at any time
hereafter  delivered  in  connection  with the  Term  Credit  Agreement,  as the
foregoing may be amended from time to time.

     "Term Notes" means,  collectively,  the promissory  notes from time to time
executed by Pledgor and payable to the order of each Term Lender pursuant to the
terms of the Term Credit Agreement.

     Section 1.2. Other  Definitions.  Reference is hereby made to the Revolving
Credit  Agreement for a statement of the terms thereof.  All  capitalized  terms
used in this Agreement which are defined in the Revolving  Credit  Agreement and
not otherwise  defined  herein shall have the same meanings  herein as set forth
therein,  except where the context  otherwise  requires.  All terms used in this
Agreement  which are defined in the Code and not otherwise  defined herein or in
the Intercreditor  Agreement shall have the same meanings herein as set forth in
the Code, except where the context otherwise requires.

     Section 1.3. Schedules. All schedules attached to this Agreement are a part
hereof for all purposes.

     Section 1.4. Amendment of Defined Instruments. Unless the context otherwise
requires or unless otherwise provided herein,  references in this Agreement to a
particular  agreement,  instrument  or  document  also refer to and  include all
renewals, extensions,

                                                                               3

<PAGE>

amendments,  modifications,  supplements or  restatements of any such agreement,
instrument  or document,  provided  that  nothing  contained in this Section 1.4
shall be  construed  to  authorize  any Person to execute or enter into any such
renewal, extension, amendment, modification, supplement or restatement.

     Section 1.5.  References  and Titles.  All  references in this Agreement to
Schedules, Articles, Sections,  subsections, and other subdivisions refer to the
Schedules,  Articles,  Sections,  subsections  and  other  subdivisions  of this
Agreement unless expressly provided otherwise. Titles appearing at the beginning
of any subdivision  are for  convenience  only and do not constitute any part of
any such  subdivision  and  shall be  disregarded  in  construing  the  language
contained in this Agreement.  The words "this  Agreement,"  "herein,"  "hereof,"
"hereby,"  "hereunder"  and words of similar import refer to this Agreement as a
whole and not to any particular  subdivision  unless  expressly so limited.  The
phrases "this Section" and "this  subsection"  and similar phrases refer only to
the Sections or subsections  hereof in which the phrase occurs. The word "or" is
not exclusive,  and the word  "including" (in all of its forms) means "including
without limitation".  Pronouns in masculine, feminine and neuter gender shall be
construed to include any other  gender,  and words in the singular form shall be
construed  to include  the plural and vice versa  unless the  context  otherwise
requires.

                                   ARTICLE II

                                Security Interest
                                -----------------

     Section 2.1. Grant of Security Interest.  As collateral security for all of
the  Obligations,  Pledgor  hereby  pledges and assigns to Pledgee and grants to
Pledgee a continuing  security interest for the benefit of Lenders in and to all
of the Pledgor's  following rights,  interests and property  (collectively,  the
"Collateral"):

     (a) all of the issued and outstanding  Equity (i) of Bluestem  described on
Schedule 1 attached hereto,  (ii) of Bluestem that Pledgor now owns or hereafter
acquires, and (iii) of any other Restricted Subsidiary of Pledgor (together with
Bluestem,   referred  to  herein   collectively  as   "Subsidiaries"   and  each
individually  a  "Subsidiary")  now owned or  hereafter  created or  acquired by
Pledgor including,  without  limitation,  the Equity of each Subsidiary owned by
Pledgor on the date hereof (all of the foregoing being herein  sometimes  called
the "Pledged Equity");

     (b) any and all  proceeds,  and all dividends  and  distributions  (cash or
otherwise)  payable  and/or  distributable  with  respect  to, all or any of the
Pledged Equity; and

     (c) all cash, securities, dividends and other property at any time and from
time to time  receivable or otherwise  distributed  in respect of or in exchange
for any or all of the  Pledged  Equity  and any other  property  substituted  or
exchanged therefor.

     Section 2.2.  Obligations  Secured. The security interest created hereby in
the  Collateral  constitutes  continuing  collateral  security  for  all  of the
following  obligations,  indebtedness and  liabilities,  whether now existing or
hereafter incurred:

                                                                               4

<PAGE>

     (a) Credit Agreement Indebtedness.  The payment by Pledgor, as and when due
and  payable,  of all  amounts  from time to time owing by  Pledgor  under or in
respect  of the  Credit  Agreements,  the Notes or any of the  other  Obligation
Documents.

     (b)  Renewals.  All  renewals,   extensions,   amendments,   modifications,
supplements, or restatements of, or substitutions for, any of the foregoing.

     (c) Performance. The due performance and observance by Bluestem and Pledgor
of all of their other obligations from time to time existing under or in respect
of any of the Obligation Documents.

     (d) Oil & Gas Hedge  Transactions.  The payment and  performance of any and
all present or future  obligations of any Credit Party according to the terms of
any  present  or  future  Oil  &  Gas  Hedge  Transaction,   including,  without
limitation, any present or future swap agreements, cap, floor, collar, exchange,
transaction,  forward  agreement  or other  exchange  or  protection  agreements
relating  to crude oil,  natural gas or other  hydrocarbons,  or any option with
respect to any such  transaction now existing or hereafter  entered into between
and/or among any Credit  Party,  Pledgee,  any Lender or any affiliate of any of
the foregoing.

                                   ARTICLE III

                    Representations, Warranties and Covenants
                    -----------------------------------------

     Section  3.1.  Representations  and  Warranties.   Pledgor  represents  and
warrants as follows:

     (a)  Ownership  and Liens.  Pledgor  has good and  marketable  title to the
Collateral free and clear of all Liens,  encumbrances or adverse claims,  except
for the Lien  created by this  Agreement.  No effective  financing  statement or
other instrument similar in effect covering all or any part of the Collateral is
on file in any  recording  office  except  such as have  been  filed in favor of
Pledgee relating to this Agreement.

     (b) No Conflicts or Consents.  Neither the ownership or the intended use of
the Collateral by Pledgor,  nor the grant of the security interest by Pledgor to
Pledgee  herein,  will (i)  conflict  with any  provision of (a) any domestic or
foreign law, statute, rule or regulation,  (b) the certificate of incorporation,
articles of  incorporation,  charter or bylaws of Pledgor or any Subsidiary,  or
(c) any agreement,  judgment,  license, order or permit applicable to or binding
upon Pledgor or any Subsidiary; or (ii) result in or require the creation of any
Lien upon any assets or  properties  of Pledgor  other than the Lien  created by
this Agreement. No consent,  approval,  authorization or order of, and no notice
to or filing with any  Subsidiary  or any other Person is required in connection
with the grant by Pledgor of the security  interest  herein,  or,  except to the
extent  required by  applicable  law,  the exercise by Pledgee of its rights and
remedies hereunder.

     (c) Security  Interest.  Pledgor has and will have at all times full right,
power and authority to grant a security interest in the Collateral to Pledgee in
the manner provided herein, free and clear of any Lien. This Agreement creates a
valid and  binding  security  interest  in favor of  Pledgee  in the  Collateral
securing the Obligations. The taking possession by Pledgee (for the

                                                                               5

<PAGE>

benefit of  Lenders)  of all  certificates,  instruments  and cash  constituting
Collateral  from  time  to time  and  the  filing  of the  financing  statements
delivered  concurrently  herewith by Pledgor to Pledgee will  perfect  Pledgee's
security interest hereunder in the Collateral securing the Obligations,  subject
to no Liens. No further or subsequent  filing,  recording,  registration,  other
public  notice or other action is necessary or desirable to perfect or otherwise
continue,  preserve or protect such security  interest  except for  continuation
statements or filings as contemplated in Section 3.3(b).  Upon completion of the
perfection acts  contemplated in this Section 3.1(c),  Pledgee will have a first
priority perfected Lien in the Collateral.

     (d) Pledged  Equity.  (i) Pledgor is the legal and beneficial  owner of the
Pledged  Equity;  (ii) the Pledged Equity is duly  authorized and issued,  fully
paid and  non-assessable  (as applicable),  and all documentary,  stamp or other
taxes or fees owing in  connection  with the  issuance,  transfer  and/or pledge
thereof   hereunder  have  been  paid;  (iii)  no  dispute,   right  of  setoff,
counterclaim  or defense  exists with  respect to all or any part of the Pledged
Equity;  (iv) the  Pledged  Equity  is free and  clear  of all  Liens,  options,
warrants, puts, calls or other rights of third Persons, and restrictions,  other
than the Lien  created  by this  Agreement;  (v)  Pledgor  has  full  right  and
authority  to pledge the Pledged  Equity for the purposes and upon the terms set
out herein;  (vi)  certificates (as applicable)  representing the Pledged Equity
have been  delivered to Pledgee,  together with a duly  executed  blank stock or
transfer power for each  certificate;  and (vii) no Subsidiary  has issued,  and
there are not  outstanding,  any  options,  warrants or other  rights to acquire
Equity of any Subsidiary.

     Section 3.2. Affirmative Covenants.  Unless Pledgee shall otherwise consent
in writing,  Pledgor  will at all times comply with the  covenants  contained in
this Section 3.2 from the date hereof and so long as any part of the Obligations
or Commitments is outstanding.

     (a) Ownership and Liens. Pledgor will maintain good title to all Collateral
free and clear of all Liens,  except for the first  priority  security  interest
created by this  Agreement.  Pledgor will cause to be  terminated  any financing
statement or other  registration with respect to the Collateral,  except such as
may  exist or as may have  been  filed in favor of (or  otherwise  assigned  to)
Pledgee.  Pledgor will defend  Pledgee's  right,  title and special property and
security interest in and to the Collateral against the claims of any Person.

     (b)  Further  Assurances.  Pledgor  will at any time and from  time to time
promptly execute and deliver all further  instruments and documents and take all
further action that may be necessary or that Pledgee may  reasonably  request in
order (i) to perfect and protect the security  interest  created or purported to
be created  hereby and the first  priority of such  security  interest;  (ii) to
enable  Pledgee to exercise  and enforce its rights and  remedies  hereunder  in
respect of the  Collateral;  or (iii) to  otherwise  effect the purposes of this
Agreement,  including: (A) authorizing and filing such financing or continuation
statements,  or  amendments  thereto,  as may be  necessary  or that Pledgee may
reasonably  request in order to  perfect  and  preserve  the  security  interest
created or purported to be created  hereby,  and (B)  furnishing to Pledgee from
time to time  statements and schedules  further  identifying  and describing the
Collateral  and such other reports in connection  with the Collateral as Pledgee
may reasonably request, all in reasonable detail.

                                                                               6

<PAGE>

     (c) Delivery of Pledged Equity. All certificates,  instruments and writings
evidencing  the Pledged  Equity shall be delivered to Pledgee on or prior to the
execution and delivery of this Agreement.  All other  certificates,  instruments
and  writings  hereafter  evidencing  or  constituting  Pledged  Equity shall be
delivered  to  Pledgee  promptly  upon the  receipt  thereof  by or on behalf of
Pledgor.  All Pledged  Equity shall be held by or on behalf of Pledgee  pursuant
hereto and shall be  delivered  in the same  manner and with the same  effect as
described  in Section 2.1 and Section  3.1.  Upon  delivery,  such Equity  shall
thereupon  constitute  "Pledged Equity" and shall be subject to the Liens herein
created,  for the purposes and upon the terms and  conditions  set forth in this
Agreement and the other Loan Papers.

     (d) Proceeds of Pledged Equity. If Pledgor shall receive,  by virtue of its
being or having been an owner of any Pledged Equity,  any (i) Equity  (including
any certificate  representing  any Equity or distribution in connection with any
increase or  reduction  of capital,  reorganization,  reclassification,  merger,
consolidation,  sale of assets,  or spinoff or  split-off),  promissory  note or
other  instrument or writing;  (ii) option or right,  whether as an addition to,
substitution  for, or in exchange for, any Pledged  Equity or  otherwise;  (iii)
dividends or other distributions payable in cash (except such dividends or other
distributions permitted to be retained by Pledgor pursuant to Section 4.7) or in
securities  or other  property;  or (iv)  dividends  or other  distributions  in
connection  with a partial or total  liquidation or dissolution or in connection
with a reduction of capital,  capital surplus or paid-in surplus,  Pledgor shall
receive the same in trust for the benefit of Pledgee,  shall  segregate  it from
Pledgor's other property,  and shall promptly deliver it to Pledgee in the exact
form received,  with any necessary  endorsement or appropriate stock or transfer
powers duly executed in blank, to be held by Pledgee as Collateral.

     (e) Status of Pledged  Equity.  The  certificates  evidencing  the  Pledged
Equity (as applicable)  shall at all times be valid and genuine and shall not be
altered.  The  Pledged  Equity at all times  shall be duly  authorized,  validly
issued,  fully paid, and non-assessable (as applicable),  shall not be issued in
violation of the  pre-emptive  rights of any Person or of any agreement by which
Pledgor or any Subsidiary is bound, and shall not be subject to any restrictions
or  conditions  with respect to the  transfer,  voting or capital of any Pledged
Equity.

     Section 3.3. Negative Covenants.  Unless Pledgee shall otherwise consent in
writing,  Pledgor will at all times comply with the covenants  contained in this
Section 3.3 from the date hereof and so long as any part of the  Obligations  or
the Commitments is outstanding.

     (a) Transfer or Encumbrance. Pledgor will not sell, assign (by operation of
law or otherwise),  transfer, exchange, lease or otherwise dispose of any of the
Collateral,  nor will Pledgor  grant a Lien upon or file or record any financing
statement or other registration with respect to the Collateral, nor will Pledgor
allow any such Lien,  financing  statement,  or other  registration  to exist or
deliver actual or constructive possession of the Collateral to any other Person.

     (b)  Financing   Statement  Filings.   Pledgor  recognizes  that  financing
statements  pertaining to the Collateral have been or may be filed where Pledgor
is organized or formed, maintains any Collateral, has its records concerning any
Collateral,  has its chief executive  office or chief place of business,  or has
its principal place of residence. Without limitation of any other

                                                                               7

<PAGE>

covenant  herein,  Pledgor will not cause or permit any change to be made in its
name,  identity  or  corporate  structure,  or  any  change  to be  made  to its
jurisdiction  of formation or  organization  unless  Pledgor shall have notified
Pledgee of such change at least thirty (30) days prior to the effective  date of
such change,  and shall have first taken all action  required by Pledgee for the
purpose of further  perfecting or protecting  the security  interest in favor of
Pledgee in the Collateral.  In any notice furnished pursuant to this subsection,
Pledgor will  expressly  state that the notice is required by this Agreement and
contains facts that may require  additional  filings of financing  statements or
other  notices for the purposes of continuing  perfection of Pledgee's  security
interest in the Collateral.

     (c) Impairment of Security Interest.  Pledgor will not take or fail to take
any action which would in any manner  impair the  enforceability  or priority of
Pledgee's security interest in any Collateral.

     (d)  Restrictions  on  Pledged  Equity.  Pledgor  will not  enter  into any
agreement  creating,  or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any Pledged Equity.

                                   ARTICLE IV

                       Remedies, Powers and Authorizations
                       -----------------------------------

     Section 4.1. Provisions Concerning the Collateral.

     (a) Additional  Financing  Statement  Filings.  Pledgor  hereby  authorizes
Pledgee to file one or more financing or continuation statements, and amendments
thereto,  relating  to the  Collateral.  Pledgor  further  agrees that a carbon,
photographic or other reproduction of this Agreement or any financing  statement
describing  any  Collateral is  sufficient  as a financing  statement and may be
filed in any jurisdiction Pledgee may deem appropriate.

     (b) Power of  Attorney.  Pledgor  hereby  irrevocably  appoints  Pledgee as
Pledgor's attorney-in-fact and proxy, with full authority in the place and stead
of Pledgor  and in the name of Pledgor or  otherwise,  from time to time to give
notification to Pledgor, any Subsidiary,  registrar,  transfer agent,  financial
intermediary,  or other Person of Pledgee's  security  interests  hereunder and,
following the occurrence  and during the  continuance of an Event of Default and
in  Pledgee's  discretion,  to take any action  (except for the  exercise of any
voting  rights  pertaining  to the Pledged  Equity or any part  thereof)  and to
execute any  instrument,  certificate or notice which Pledgee may deem necessary
or advisable to  accomplish  the purposes of this  Agreement  including:  (i) to
request or instruct  Pledgor or any  Subsidiary  (and each  registrar,  transfer
agent,  or similar  Person  acting on behalf of Pledgor  or any  Subsidiary)  to
register  the pledge or transfer  of the  Collateral  to  Pledgee;  (ii) to ask,
demand,  collect, sue for, recover,  compound,  receive and give acquittance and
receipts  for  moneys  due and to become  due under or in  respect of any of the
Collateral;   (iii)  to  receive,  indorse  and  collect  any  drafts  or  other
instruments,  documents and chattel  paper;  and (iv) to file any claims or take
any action or institute  any  proceedings  which  Pledgee may deem  necessary or
desirable for the  collection  of any of the  Collateral or otherwise to enforce
the rights of Pledgee with respect to any of the Collateral.

                                                                               8

<PAGE>

     (c)  Performance  by Pledgee.  If Pledgor fails to perform any agreement or
obligation  contained herein,  Pledgee may itself perform,  or cause performance
of,  such  agreement  or  obligation,  and the  expenses  of Pledgee  reasonably
incurred in connection therewith shall be payable by Pledgor under Section 4.4.

     (d) Collection  Rights.  Pledgee shall have the right at any time, upon the
occurrence and during the  continuance  of a Default or an Event of Default,  to
notify any or all obligors  (including  each  Subsidiary)  under any accounts or
general  intangibles  included among the Collateral of the assignment thereof to
Pledgee  and to direct such  obligors  to make  payment of all amounts due or to
become due to Pledgor thereunder directly to Pledgee and, upon such notification
and at the  expense of Pledgor  and to the extent  permitted  by law, to enforce
collection  thereof and to adjust,  settle or  compromise  the amount or payment
thereof,  in the same manner and to the same extent as Pledgor  could have done.
After  Pledgor  receives  notice that  Pledgee has given any notice  referred to
above in this subsection,  (i) all amounts and proceeds  (including  instruments
and  writings)  received  by  Pledgor in  respect  of such  accounts  or general
intangibles  shall be received  in trust for the  benefit of Pledgee  hereunder,
shall be segregated from other funds of Pledgor and shall be forthwith paid over
to Pledgee in the same form as so received (with any necessary  endorsement)  to
be held as cash  collateral  and (A)  released to Pledgor upon the remedy of all
Defaults  or  Events  of  Default,  or (B) if any Event of  Default  shall  have
occurred  and be  continuing,  applied as  specified  in Section  4.3;  and (ii)
Pledgor will not adjust,  settle or compromise the amount or payment of any such
account or general  intangible or release wholly or partly any account debtor or
obligor thereof or allow any credit or discount thereon.

     Section 4.2. Event of Default  Remedies.  If an Event of Default shall have
occurred  and be  continuing,  Pledgee may from time to time in its  discretion,
without limitation and without notice except as expressly provided below:

     (a) exercise in respect of the Collateral,  in addition to other rights and
remedies provided for herein,  under the other Obligation Documents or otherwise
available to it, all the rights and remedies of a secured party on default under
the Code (whether or not the Code applies to the affected Collateral);

     (b) require Pledgor to, and Pledgor hereby agrees that it will upon request
of Pledgee  forthwith,  assemble  all or part of the  Collateral  as directed by
Pledgee and make it available to Pledgee at a place to be  designated by Pledgee
which is reasonably convenient to both parties;

     (c) reduce its claim to judgment  against Pledgor or foreclose or otherwise
enforce,  in whole or in part,  the  security  interest  created  hereby  by any
available judicial procedure;

     (d) dispose of, at its office, on the premises of Pledgor or elsewhere, all
or any part of the  Collateral,  as a unit or in  parcels,  by public or private
proceedings,  and by way of one or more contracts (it being agreed that the sale
of any part of the  Collateral  shall not exhaust  Pledgee's  power of sale, but
sales  may be  made  from  time  to  time,  and at any  time,  until  all of the
Collateral has been sold or until the  Obligations  have been paid and performed
in full),  and at any such sale it shall not be  necessary to exhibit any of the
Collateral;

                                                                               9

<PAGE>

     (e) buy (or allow any Lender to buy) the  Collateral,  or any part thereof,
at any public sale;

     (f) buy (or allow any Lender to buy) the  Collateral,  or any part thereof,
at any  private  sale  if the  Collateral  is of a type  customarily  sold  in a
recognized  market or is of a type which is the  subject  of widely  distributed
standard price quotations; and

     (g) apply by appropriate judicial proceedings for appointment of a receiver
for the Collateral, or any part thereof, and Pledgor hereby consents to any such
appointment.

     Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten (10)  days'  notice to  Pledgor of the time and place of any public
sale or the time after  which any  private  sale is to be made shall  constitute
reasonable  notification.  Pledgee  shall not be  obligated  to make any sale of
Collateral  regardless of notice of sale having been given.  Pledgee may adjourn
any public or  private  sale from time to time by  announcement  at the time and
place fixed therefor,  and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

     Section 4.3.  Application  of Proceeds.  If any Event of Default shall have
occurred and be continuing, Pledgee may in its discretion apply any cash held by
Pledgee as Collateral,  and any cash proceeds  received by Pledgee in respect of
any sale of,  collection from, or other  realization upon all or any part of the
Collateral,  in  the  order  and  manner  contemplated  by  Section  4.4  of the
Intercreditor Agreement.

     Section 4.4. Release and Expenses. In addition to, and not in qualification
of, any similar obligations under other Obligation Documents:

     (a) Pledgor agrees to release and forever discharge Pledgee and each Lender
from and against any and all claims,  losses and  liabilities  growing out of or
resulting from this Agreement  (including  enforcement of this  Agreement).  The
foregoing  release and discharge shall apply whether or not such claims,  losses
and liabilities are in any way or to any extent owed, in whole or in part, under
any claim or theory of strict  liability or are, to any extent caused,  in whole
or in part,  by any  negligent  act or  omission  of any kind by  Pledgee or any
Lender.

     (b) Pledgor  agrees to pay on demand all  reasonable  costs and expenses of
Pledgee in connection with the preparation,  execution, delivery,  modification,
and amendment of this Agreement, and the perfection and preservation of the Lien
created under this Agreement, including, without limitation, the reasonable fees
and  expenses of counsel for Pledgee  with  respect  thereto and with respect to
advising  Pledgee as to its rights under this Agreement.  Pledgor further agrees
to pay on demand all costs and expenses of Pledgee,  if any (including,  without
limitation, reasonable attorneys' fees and expenses), in connection with the (i)
the custody, preservation, use or operation of, or the sale of, collection from,
or other realization upon, any Collateral;  and (ii) the exercise or enforcement
of any of the rights of Pledgee hereunder (whether through  negotiations,  legal
proceedings, or otherwise).

     Section  4.5.  Non-Judicial  Remedies.  In granting to Pledgee the power to
enforce its rights hereunder without prior judicial process or judicial hearing,
Pledgor expressly waives,

                                                                              10

<PAGE>

renounces  and  knowingly  relinquishes,  to the  fullest  extent  permitted  by
applicable law, any legal right which might otherwise require Pledgee to enforce
its rights by judicial  process.  In so  providing  for  non-judicial  remedies,
Pledgor recognizes and concedes that such remedies are consistent with the usage
of trade,  are  responsive  to  commercial  necessity,  and are the  result of a
bargain at arm's  length.  Nothing  herein is  intended  to  prevent  Pledgee or
Pledgor from resorting to judicial process at either party's option.

     Section  4.6.  Other  Recourse.  Pledgor  waives,  to  the  fullest  extent
permitted by applicable  law, any right to require Pledgee or Lenders to proceed
against any other  Person,  exhaust any  Collateral  or other  security  for the
Obligations,  or to have any Other  Liable Party joined with Pledgor in any suit
arising out of the Obligations or this Agreement,  or pursue any other remedy in
Pledgee's  power.  Pledgor  further waives,  to the fullest extent  permitted by
applicable  law, any and all notice of acceptance  of this  Agreement and of the
creation,  modification,  rearrangement,  renewal or extension for any period of
any of the Obligations from time to time. Pledgor further waives, to the fullest
extent  permitted  by  applicable  law,  any  defense  arising  by reason of any
disability  or other  defense  of any  Other  Liable  Party or by  reason of the
cessation from any cause  whatsoever of the liability of any Other Liable Party.
Until all of the Obligations shall have been paid in full, Pledgor shall have no
right to subrogation  and Pledgor  waives,  to the fullest  extent  permitted by
applicable  law, the right to enforce any remedy which Pledgee or any Lender has
or may hereafter have against any Other Liable Party, and waives, to the fullest
extent  permitted by applicable law, any benefit of and any right to participate
in any other  security  whatsoever  now or  hereafter  held by Pledgee.  Pledgor
authorizes  Pledgee and each  Lender,  without  notice or demand and without any
reservation of rights against Pledgor and without affecting  Pledgor's liability
hereunder or on the Obligations, from time to time to (a) take or hold any other
property of any type from any other Person as security for the Obligations,  and
exchange,  enforce,  waive and  release any or all of such other  property;  (b)
renew, extend for any period, accelerate,  modify, compromise, settle or release
any of the obligations of any Other Liable Party in respect to any or all of the
Obligations or other security for the Obligations;  (c) waive, enforce,  modify,
amend or supplement any of the  provisions of any  Obligation  Document with any
Person other than Pledgor; and (d) release or substitute any Other Liable Party.

     Section 4.7. Voting Rights, Dividends Etc. in Respect of Pledged Equity.

     (a)  So long as no Default or Event of Default shall have  occurred  and be
continuing, Pledgor may receive and retain any and all dividends,  distributions
or interest paid in respect of the Pledged Equity;  provided,  however, that any
and all

     (i)  dividends,  distributions  and interest  paid or payable other than in
     cash in respect of, and instruments and other property received, receivable
     or  otherwise  distributed  in respect of or in exchange  for,  any Pledged
     Equity,

     (ii) dividends and other  distributions  paid or payable in cash in respect
     of any Pledged Equity in connection with a partial or total  liquidation or
     dissolution or in connection  with a reduction of capital,  capital surplus
     or paid-in surplus, and

                                                                              11

<PAGE>

     (iii) cash paid,  payable or otherwise  distributed in redemption of, or in
     exchange for, any Pledged Equity,

     shall be, and shall  forthwith be delivered to Pledgee to hold as,  Pledged
Equity and shall,  if received by Pledgor,  be received in trust for the benefit
of Pledgee,  be segregated  from the other property or funds of Pledgor,  and be
forthwith  delivered to Pledgee in the exact form  received  with any  necessary
endorsement or appropriate  stock or transfer  powers duly executed in blank, to
be held by Pledgee as Collateral.

     (b) Upon the occurrence and during the continuance of a Default or an Event
of Default:

     (i)   all rights  of  Pledgor   to  receive   and  retain  the   dividends,
     distributions  and  interest  payments  which  Pledgor  would  otherwise be
     authorized to receive and retain pursuant to subsection (a) of this Section
     4.7 shall  automatically  cease, and all such rights shall thereupon become
     vested in Pledgee which shall  thereupon have the right to receive and hold
     as Pledged Equity such dividends, distributions and interest payments;

     (ii)  without limiting the generality of the foregoing,  Pledgee may at its
     option exercise any and all rights of conversion, exchange, subscription or
     any other rights,  privileges  or options  pertaining to any of the Pledged
     Equity  (except  voting  rights) as if it were the absolute  owner thereof,
     including  the right to  exchange,  in its  discretion,  any and all of the
     Pledged   Equity   upon   the   merger,   consolidation,    reorganization,
     recapitalization or other adjustment of Pledgor or any Subsidiary,  or upon
     the exercise by Pledgor or any Subsidiary of any right, privilege or option
     pertaining to any Pledged Equity, and, in connection therewith,  to deposit
     and  deliver  any  and  all of  the  Pledged  Equity  with  any  committee,
     depository,  transfer agent,  registrar or other designated agent upon such
     terms and conditions as it may determine; and

     (iii) all dividends  and  interest  payments  which are received by Pledgor
     contrary to the  provisions of subsection (b) (i) of this Section 4.7 shall
     be received in trust for the benefit of Pledgee,  shall be segregated  from
     other  funds of  Pledgor,  and shall be  forthwith  paid over to Pledgee as
     Pledged  Equity  in the  exact  form  received,  to be held by  Pledgee  as
     Collateral.

     Anything herein to the contrary  notwithstanding,  Pledgee may not exercise
     any voting rights pertaining to the Pledged Equity,  and Pledgor may at all
     times  exercise any and all voting rights  pertaining to the Pledged Equity
     or any part thereof for any purpose not inconsistent with the terms of this
     Agreement or any other Obligation  Document;  provided,  however,  upon the
     occurrence and during the  continuance of a Default or an Event of Default,
     Pledgor will not exercise or refrain from exercising any such right, as the
     case may be, if Pledgee  gives notice that,  in  Pledgee's  judgment,  such
     action would result in a Material  Adverse Change with respect to the value
     of the Pledged  Equity or the benefits to Pledgee of its security  interest
     hereunder.

     Section  4.8.  Private  Sale of Pledged  Equity.  Pledgor  recognizes  that
Pledgee may deem it  impracticable to effect a public sale of all or any part of
the Pledged  Equity and that  Pledgee may,  therefore,  determine to make one or
more private sales of any such securities to a

                                                                              12

<PAGE>

restricted  group of  purchasers  who will be  obligated  to agree,  among other
things, to acquire such securities for their own account, for investment and not
with a view to the distribution or resale thereof. Pledgor acknowledges that any
such  private  sale may be at prices and on terms less  favorable  to the seller
than the prices and other terms which might have been  obtained at a public sale
and,  notwithstanding  the  foregoing,  agrees that such private  sales shall be
deemed to have been made in a  commercially  reasonable  manner and that Pledgee
shall have no obligation to delay the sale of any such securities for the period
of  time  necessary  to  permit  Pledgor  or any  Subsidiary  to  register  such
securities  (with no obligation of Pledgor or any Subsidiary to accomplish  such
registration)  for public sale under the Securities Act of 1933, as amended (the
"Securities Act").

                                    ARTICLE V

                                  Miscellaneous
                                  -------------

     Section 5.1.  Notices.  Any notice or  communication  required or permitted
hereunder shall be given in writing,  sent by personal delivery, by telecopy, by
delivery  service with proof of delivery,  or by registered or certified  United
States mail, postage prepaid, addressed to the appropriate party as follows:

           To Pledgor:       c/o Quest Resource Corporation
                             5901 N. Western, Suite 200
                             Oklahoma City, Oklahoma 73118
                             Attn: Jerry D. Cash
                             Fax No.: (405) 840-9894

           To Pledgee:       Bank One, NA, as Collateral Agent
                             1717 Main Street, 4th Floor
                             Mail Code TX1-2448
                             Dallas, Texas  75201
                             Attn: J. Scott Fowler
                             Fax No.: (214) 290-2332

or to such  other  address  or to the  attention  of such  other  individual  as
hereafter  shall be  designated  in  writing  by the  applicable  party  sent in
accordance  herewith.  Any such notice or communication  shall be deemed to have
been given (a) in the case of personal delivery or delivery  service,  as of the
date of first  attempted  delivery  at the  address  or in the  manner  provided
herein,  (b) in the  case  of  telecopy,  upon  receipt,  or (c) in the  case of
registered or certified  United States mail, three (3) days after deposit in the
mail.

     Section 5.2.  Amendments.  No amendment of any provision of this  Agreement
shall be  effective  unless it is in writing and signed by Pledgor and  Pledgee,
and no  waiver  of any  provision  of  this  Agreement,  and no  consent  to any
departure by Pledgor  therefrom,  shall be effective unless it is in writing and
signed by Pledgee,  and then such waiver or consent  shall be effective  only in
the specific  instance  and for the specific  purpose for which given and to the
extent specified in such writing.

                                                                              13

<PAGE>

     Section 5.3.  Preservation of Rights.  No failure on the part of Pledgee or
any Lender to exercise, and no delay in exercising, any right hereunder or under
any other Obligation  Document shall operate as a waiver thereof;  nor shall any
single or  partial  exercise  of any such  right  preclude  any other or further
exercise  thereof or the exercise of any other right.  Neither the execution nor
the delivery of this  Agreement  shall in any manner  impair or affect any other
security  for the  Obligations.  The rights and  remedies of Pledgee and Lenders
provided herein and in the other Obligation  Documents are cumulative of and are
in addition to, and not  exclusive  of, any rights or remedies  provided by law.
The rights of Pledgee  and Lenders  under any  Obligation  Document  against any
party  thereto are not  conditional  or  contingent on any attempt by Pledgee or
Lenders  to  exercise  any of its or their  rights  under any  other  Obligation
Document against such party or against any other Person.

     Section 5.4.  Unenforceability.  Any provision of this  Agreement  which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be  ineffective  to  the  extent  of  such  prohibition  or  invalidity  without
invalidating the remaining  portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

     Section 5.5. Survival of Agreements.  All representations and warranties of
Pledgor  herein,  and all  covenants  and  agreements  herein shall  survive the
execution  and delivery of this  Agreement,  the  execution  and delivery of any
other Obligation Documents and the creation of the Obligations.

     Section 5.6. Other Liable Party. Neither this Agreement nor the exercise by
Pledgee  or the  failure  of Pledgee  to  exercise  any  right,  power or remedy
conferred  herein or by law shall be  construed  as  relieving  any Other Liable
Party  from  liability  on the  Obligations  or  any  deficiency  thereon.  This
Agreement  shall  continue  irrespective  of the fact that the  liability of any
Other  Liable  Party  may  have  ceased  or  irrespective  of  the  validity  or
enforceability  of any other  Obligation  Document to which Pledgor or any Other
Liable Party may be a party,  and  notwithstanding  the  reorganization,  death,
incapacity  or bankruptcy of any Other Liable  Party,  and  notwithstanding  the
reorganization  or bankruptcy  or other event or proceeding  affecting any Other
Liable Party.

     Section  5.7.  Binding  Effect and  Assignment.  This  Agreement  creates a
continuing  security  interest  in the  Collateral  and (a) shall be  binding on
Pledgor and its successors and permitted assigns, and (b) shall inure,  together
with all rights and remedies of Pledgee hereunder, to the benefit of Pledgee and
Lenders  and their  respective  successors,  transferees  and  assigns.  Without
limiting the generality of the foregoing, Pledgee and Lenders may pledge, assign
or otherwise  transfer any or all of their respective rights under any or all of
the  Obligation  Documents  to any other  Person,  and such other  Person  shall
thereupon  become  vested with all of the  benefits in respect  thereof  granted
herein or  otherwise.  None of the rights or duties of Pledgor  hereunder may be
assigned or otherwise transferred without the prior written consent of Pledgee.

     Section 5.8.  Termination.  It is  contemplated  by the parties hereto that
there may be times when no Obligations are outstanding, but notwithstanding such
occurrences,  this  Agreement  shall remain valid and shall be in full force and
effect as to subsequent outstanding  Obligations.  Upon the satisfaction in full
of the Obligations, upon the termination or expiration

                                                                              14

<PAGE>

of each Credit Agreement and any other Commitment of Lenders to extend credit to
Pledgor,  and upon  written  request for the  termination  hereof  delivered  by
Pledgor to Pledgee,  this  Agreement and the security  interest  created  hereby
shall  terminate  and all  rights to the  Collateral  shall  revert to  Pledgor.
Pledgee will,  upon Pledgor's  request and at Pledgor's  expense,  (a) return to
Pledgor such of the Collateral as shall not have been sold or otherwise disposed
of or applied  pursuant  to the terms  hereof,  and (b)  execute  and deliver to
Pledgor such  documents as Pledgor  shall  reasonably  request to evidence  such
termination.

     Section 5.9. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND  GOVERNED  BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED
STATES OF AMERICA.

     Section 5.10.  Counterparts.  This Agreement may be separately  executed in
any number of  counterparts,  all of which when so  executed  shall be deemed to
constitute one and the same Agreement.

     Section 5.11. Loan Paper. This Agreement is a "Loan Paper",  and, except as
expressly  provided  herein to the  contrary,  this  Agreement is subject to all
provisions of the Credit Agreements governing the Loan Papers.

                           [Signature Pages to Follow]

                                                                              15

<PAGE>

     IN WITNESS WHEREOF,  Pledgor has executed and delivered this Agreement,  as
of the date first above written.

                               QUEST CHEROKEE, LLC,
                               a Delaware limited liability company

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

Bluestem  hereby  acknowledges  and consents to the pledge of the Collateral and
hereby agrees to observe and perform each and every  provision of this Agreement
applicable to Bluestem.

                               BLUESTEM PIPELINE, LLC,
                               a Delaware limited liability company

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

                                [Signature Page]

<PAGE>

                                   SCHEDULE 1
                                   ----------

                                [Signature Page]

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