U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT
                    Pursuant to Section 13 or 15 (d) of the
                             Securities Act of 1934

                        Date of Report: August 18, 1999

                         COMMISSION FILE NUMBER 0-14846

                         BONNEVILLE PACIFIC CORPORATION
             (Exact Name of Registrant as specified in its charter)

 Delaware                                87-0363215
 (State or other jurisdiction of         (I.R.S. employer identification No.)
 incorporation or organization)

              50 West 300 South, Suite 300 Salt Lake City, UT 84101
                    (Address of principal executive offices)


       Registrant's telephone number, including area code: (801) 363-2520





ITEM 1.        CHANGES IN CONTROL OF REGISTRANT.

               Not Applicable.

ITEM 2.        ACQUISITION OF DISPOSITION OF ASSETS.

               Not Applicable.

ITEM 3.        BANKRUPTCY OR RECEIVERSHIP.

               Not Applicable.

ITEM 4.        CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANTS.

               Not Applicable.

ITEM 5.        OTHER EVENTS.

     On August 12, 1999 the Company  announced  that it has entered into a Stock
Purchase  Agreement  with  CEC  Resources,  Ltd.  for  the  sale  of  all of the
outstanding shares of Bonneville Pacific's wholly-owned  subsidiary,  Bonneville
Fuels Corporation (BFC). BFC is the Company's oil and gas subsidiary.  The Stock
Purchase Agreement  provides that if the transaction is completed,  the purchase
price of  approximately  $24,000,000  will be  payable in cash at  closing.  The
proposed sale of the shares of BFC is subject to certain adjustments and various
conditions  which may include,  the approval of the stockholders of the Company.
Although management believes that the sale transaction will be completed,  there
can be no assurance that the sale transaction will be closed.  Stock Purchase
Agreement dated August 11, 1999, is attached herein as Exhibit-99.


ITEM 6.        RESIGNATIONS OF REGISTRANT'S DIRECTORS.

               Not Applicable.

ITEM 7.        FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
               EXHIBITS.

               (a)  Financial statements of business acquired.
                    Not Applicable.

               (b)  Pro forma financial information.
                    Not Applicable.

               (c)  Exhibits.

                    The following exhibit is filed herewith.  The exhibit number
                    corresponds with Item 5 of Regulation S-K.

                    Exhibit No.         Description
                    -----------         -----------
                    EX-99               STOCK PURCHASE AGREEMENT
                                        DATED AS OF AUGUST 11, 1999
                                        BY AND BETWEEN
                                        BONNEVILLE PACIFIC CORPORATION,
                                        AS SELLER, AND
                                        CEC RESOURCES LTD. AS BUYER


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  Report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

August 18, 1999                    BONNEVILLE PACIFIC CORPORATION


                                   _______________________________
                                   By:  /s/ Clark M. Mower
                                        Clark M. Mower, President
                                        Principal Executive Officer


                                   _______________________________
                                   By:  /s/ R. Stephen Blackham
                                        R. Stephen Blackham
                                        Principal Financial and Accounting
                                        Officer




                            STOCK PURCHASE AGREEMENT


     THIS STOCK PURCHASE  AGREEMENT (this  "Agreement"),  dated as of August 11,
1999, is by and between Bonneville Pacific  Corporation,  a Delaware corporation
("Seller"),  and CEC Resources  Ltd., a company  organized under the laws of the
Province of Alberta, Canada ("Buyer").

     WHEREAS,  Seller  desires to sell to Buyer,  and Buyer  desires to purchase
from Seller, all of the issued and outstanding capital stock of Bonneville Fuels
Corporation,  a Colorado corporation (the "Company"),  a wholly owned subsidiary
of  Seller,  upon the  terms and  subject  to the  conditions  set forth in this
Agreement;

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the parties hereto agree as follows:


                                    ARTICLE 1
                               CERTAIN DEFINITIONS

     Section 1.1 Certain Defined Terms.  Unless the context otherwise  requires,
the  respective  terms  defined in Appendix A attached  hereto and  incorporated
herein shall, when used herein,  have the respective meanings therein specified,
with each such definition to be equally  applicable both to the singular and the
plural forms of the term so defined.

     Section 1.2 References, Gender, Number. All references in this Agreement to
an "Article,"  "Section," or "subsection'  shall be to an Article,  Section,  or
subsection of this Agreement,  unless the context requires otherwise. Unless the
context otherwise requires,  the words "this Agreement," "hereof,"  "hereunder,"
"herein,"  "hereby," or words of similar import shall refer to this Agreement as
a whole and not to a particular Article,  Section,  subsection,  clause or other
subdivision hereof.  Whenever the context requires,  the words used herein shall
include the  masculine,  feminine  and neuter  gender,  and the singular and the
plural.


                                    ARTICLE 2
                           SALE AND PURCHASE OF STOCK

     Section 2.1 Sale and Purchase.  On and subject to the terms and  conditions
of this Agreement,  Seller agrees to sell and convey to Buyer,  and Buyer agrees
to purchase from Seller, all of the issued and outstanding Company Shares.





                                    ARTICLE 3
                           PURCHASE PRICE AND PAYMENT

     Section 3.1 Purchase Price.  The purchase price for the sale and conveyance
of the Company Shares to Buyer is Twenty-Three Million Eight Hundred Fifty-Seven
Thousand  Nine  Hundred  Fifty-One  Dollars  and  no/100  ($23,857,951.00)  (the
"Purchase  Price"),  subject to adjustment in accordance  with the terms of this
Agreement.  The  "Adjusted  Purchase  Price" shall be the Purchase  Price (i) as
adjusted downward for any Environmental  Defect pursuant to Section 5.5, (ii) as
adjusted  downward for Title  Defects,  if any, in accordance  with Section 6.2,
(iii) as adjusted for undisclosed gas  imbalances,  if any,  pursuant to Section
3.3, (iv) as adjusted downward by the amount of the Deposit, and (v) as adjusted
downward for the amount of any loss of deduction pursuant to Section 8.15.

     Section  3.2  Payment.   Contemporaneously   with  the  execution  of  this
Agreement,  Buyer shall deposit with Seller an amount equal to five percent (5%)
of the Purchase Price  ($1,200,000) as a deposit hereunder (the "Deposit").  The
"Closing  Payment" shall be an amount equal to the Adjusted  Purchase  Price. At
the  Closing,  Buyer  shall wire  transfer  the Closing  Payment in  immediately
available  funds to the account  specified  by Seller to Buyer.  Seller shall be
entitled  to all  interest  and other  amounts  earned on the  Deposit  and such
amounts shall not be applied to the Adjusted Purchase Price.

     Section 3.3 Gas Imbalance Adjustments. The Purchase Price shall be:
     (a) reduced by the product  obtained by multiplying the aggregate amount of
Unscheduled (Negative) Imbalances by $2.00 per MMBtu; and

     (b) increased by the product  obtained by multiplying the aggregate  amount
of Unscheduled (Positive) Imbalances by $2.00 per MMBtu;

     provided,  however,  that  there  shall be no  adjustment  for  Unscheduled
(Negative)  Imbalances or for Unscheduled  (Positive)  Balances if the aggregate
amount of net adjustments under clauses (a) and (b) above is less than $50,000.


                                    ARTICLE 4
                         REPRESENTATIONS AND WARRANTIES

     Section 4.1  Representations  and  Warranties of Seller.  As of the date of
this Agreement, Seller represents and warrants to Buyer as follows:

     (a) Organization and Qualification of Seller.  Seller is a corporation duly
organized,  validly existing and in good standing under the laws of the State of
Delaware.


    (b)  Organization  and  Qualification  of the  Company.  The  Company  is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado and has the requisite  corporate  power to carry on its
business  as it is now being  conducted.  The  Company is duly  qualified  to do
business,  and is in good  standing,  in each  jurisdiction  in which the Assets
owned or leased  by it makes  such  qualification  necessary,  except  where the
failure to so qualify and be in good standing  will not have a Material  Adverse
Effect.

     (c) Authority.  Seller has all requisite  corporate  power and authority to
execute and deliver this Agreement and to perform its obligations hereunder. The
execution,  delivery and  performance  of this  Agreement  and the  transactions
contemplated  hereby  have been duly and  validly  authorized  by all  requisite
corporate action on the part of Seller, except as provided in Section 9.1(g).

     (d)  Enforceability.   This  Agreement  constitutes  a  valid  and  binding
agreement of Seller  enforceable  against  Seller in accordance  with its terms,
subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium and
other  similar  laws of general  application  with  respect to  creditors,  (ii)
general  principles of equity and (iii) the power of a court to deny enforcement
of remedies generally based upon public policy.

     (e) Company Shares.  The Seller holds of record and owns  beneficially  all
outstanding  Company  Shares free and clear of any  security  interests,  liens,
options, warrants,  purchase rights, or other encumbrances (except as created by
this Agreement and  restrictions on sales of stock under  applicable  securities
laws).  Upon  the  purchase  of the  Company  Shares  as  contemplated  by  this
Agreement, the Buyer will obtain good and valid title to the Company Shares free
and clear of all security interests,  liens, options, warrants, purchase rights,
or other  encumbrances  (other than those created by, through or under Buyer and
restrictions on sales of stock under applicable  securities laws). The Seller is
not a party  to any  option,  warrant,  purchase  right,  or other  contract  or
commitment  (other than this  Agreement)  that could require the Seller to sell,
transfer,  or otherwise dispose of any Company Shares. Except as created by this
Agreement,  the  Seller  is not a party to any  voting  trust,  proxy,  or other
agreement or understanding with respect to the voting, holding or disposition of
any Company Shares.


    (f) Company  Capitalization.  The entire  authorized  capital  stock of the
Company  consists  of 1,000  shares of  common  stock,  of which  only the 1,000
Company  Shares  held  beneficially  and of record by the  Seller are issued and
outstanding.  All of the issued and  outstanding  Company  Shares have been duly
authorized and are validly  issued,  fully paid and  nonassessable  and were not
issued in  violation  of the  preemptive  rights of any  person.  Except for the
Company  Shares,  there are  outstanding (i) no shares of capital stock or other
voting securities of the Company;  (ii) no securities of the Company convertible
into or exchangeable  for shares of capital stock or other voting  securities of
the Company; and (iii) no options, warrants, calls, rights (including preemptive
rights),  commitments  or  agreements  to which  the  Company  or  Seller or any
Affiliate  of  Seller  is a party or by  which  any of them is bound in any case
obligating  the Company or Seller or any Affiliate of Seller to issue,  deliver,
sell,  purchase,  redeem or  acquire,  or cause to be issued,  delivered,  sold,
purchased,  redeemed or acquired,  additional  shares of capital  stock or other
voting securities of the Company,  or obligating the Company,  the Seller or any
Affiliate  of Seller to grant,  extend or enter into any such  option,  warrant,
call, right, commitment or agreement.

     (g) Company  Financial  Statements.  Attached hereto as Schedule 4.1(g) are
the following financial  statements  (collectively the "Financial  Statements"):
(i) audited Consolidated  Financial Statements for the Company and Subsidiaries,
including Consolidated Balance Sheets - December 31, 1998 and 1997; Consolidated
Statements of Operations - For the Years Ended December 31, 1998, 1997 and 1996;
Consolidated  Statement of Stockholder=s Equity - For the Period From January 1,
1996 Through December 31, 1998; and Consolidated  Statements of Cash Flows - For
the  Years  Ended  December  31,  1998,   1997  and  1996;  and  (ii)  unaudited
Consolidated  Financial  Statements for the Company and Subsidiaries,  including
Consolidated Balance Sheet as of March 31, 1999 and 1998; Consolidated Statement
of Operations For the three months ended March 31, 1999;  Consolidated Statement
of Stockholder=s  Equity For the three months ended March 31, 1999, and the year
ended December 31, 1998; and Consolidated Statements of Cash Flows For the three
months ended March 31, 1999 and 1998 (the "Most Recent  Financial  Statements").
The  Financial  Statements  present  fairly,  in all  material  respects  and in
accordance  with GAAP  applied on a  consistent  basis  throughout  the  periods
covered, the financial condition of the Company as of such dates and the results
of operations and cash flows of the Company for such periods; provided, however,
that (1) the Most Recent  Financial  Statements  are subject to normal  year-end
adjustments  and  lack  footnotes  and  other  presentation  items  and  (2)  no
representation  or warranty is made under this  subsection  with  respect to the
title of the Company to any Subject  Interests,  any  matters  addressed  in any
Reserve  Report or in Section  3.3,  any  pending  or  threatened  Actions,  any
Plugging and Abandonment Obligations, or the existence,  non-existence or effect
of any Environmental  Condition,  Environmental  Claims,  Offsite  Environmental
Matters,  Environmental  Liabilities,  Environmental  Defects  or  Environmental
Matters.  With  respect to Plugging  and  Abandonment  Obligations,  Seller does
represent and warrant that its estimates of the Company=s  share of the costs to
plug and abandon existing wells included in the Wells or Units are in accordance
with GAAP and reflect all notices  received from any  Governmental  Authority or
any operator with respect to the plugging and abandonment of any such wells.

     (h) No  Conflict  or  Violation.  Except  for any  exceptions  set forth in
Section 4.1(i) (or Schedule 4.l(i)) , neither the execution and delivery of this
Agreement nor the  consummation of the transactions and performance of the terms
and conditions contemplated hereby by Seller will (i) conflict with or result in
a violation or breach of or default  under any provision of the  certificate  of
incorporation,  by-laws or other  similar  governing  documents of Seller or the
Company,  (ii)  conflict  with or result in a violation  or breach of or default
under any  agreement,  indenture or other  instrument  under which Seller or the
Company is bound, other than such conflicts, breaches, violations or defaults as
will not have a Material  Adverse Effect,  or (iii) violate or conflict with any
Law applicable to Seller or the Company or the properties or assets of Seller or
the Company.

    (i) Consents. Except for the consents,  filings, notices or preferential or
preemptive  rights  expressly  described  and set forth in Schedule  4.1(i) (the
AUnobtained Consents@) or the failure of which to obtain or with which to comply
will not have a Material Adverse Effect, no consent, approval,  authorization or
permit of, or filing with or  notification  to, or waiver or non-exercise of any
preferential or preemptive rights by any Person (including,  without limitation,
any consent under the Public Utility Holding Company Act of 1935, as amended) is
required for or in connection  with the execution and delivery of this Agreement
by Seller or for or in connection with the  consummation of the transactions and
performance  of the terms and  conditions  contemplated  hereby by Seller or the
Company.

     (j)  Actions.  Except as set forth on Schedule  4.1(j),  there is no Action
pending against the Company or, to the knowledge of Seller,  pending against the
Assets or threatened against the Company or the Assets, other than Actions which
are not reasonably likely to have a Material Adverse Effect.

     (k)  Compliance  With Laws.  To the  knowledge  of Seller and except as set
forth on Schedule 4.l(k), the Company is not in violation of any Law, other than
violations  of Law which are not  reasonably  likely to have a Material  Adverse
Effect;  provided that, Seller makes no  representation or warranty,  express or
implied  with  respect to any  Environmental  Law,  any Tax Law or any  employee
benefit  plans or  arrangements  except as  respectively  set forth in  Sections
4.1(p), 4.1(q) and 4.1(r).

     (l) Advisors= and Brokers=  Fees.  Seller has engaged CIBC World Markets as
its financial  advisor in connection with the transactions  contemplated by this
Agreement.  Neither  Seller nor any  Affiliate  of Seller has retained any other
advisor or broker in respect of the transactions  contemplated by this Agreement
for which Buyer or the Company are liable or shall incur any liability.

     (m)  Bankruptcy.  There are no  bankruptcy,  reorganization  or arrangement
proceedings  pending  against,  being  contemplated  by, or, to the knowledge of
Seller, threatened against Seller or the Company.

     (n) Material  Contracts.  To the knowledge of Seller,  Schedule 4.1(n) sets
forth a complete list of the following  contracts,  agreements or commitments to
which the Company is a party or by which the Company or its Assets are bound:

     (1) any written or oral contract or agreement  with Seller or any Affiliate
of Seller  relating to the provision of goods or services which will survive the
Closing;


    (2) any  contract,  agreement  or  commitment  that  commits the Company to
aggregate  expenditures  with  respect to the  Company's  interest  of more than
$100,000 in any  calendar  year,  excluding  (i) the Subject  Interests  and any
contracts or agreements  creating  interests in the Subject  Interests or in any
Wells or Units,  (ii) joint operating  agreements,  (iii) unitization or pooling
agreements, and (iv) any contracts, agreements or commitments listed pursuant to
other clauses of this Section 4.1(n);

     (3) any lease,  sublease,  installment  purchase or similar arrangement for
the use or occupancy of any land, building or other real property, excluding (i)
interests in the Subject Interests or in any Wells or Units, (ii) surface leases
not material to the operation of the Subject Interests, and (iii) leases of real
property  which  involve  aggregate  expenditures  or receipts by the Company of
$100,000 or less in any calendar year;

     (4) any indenture,  trust agreement, loan agreement or note under which the
Company has outstanding indebtedness for borrowed money or with respect to which
the Company has  guaranteed  the  obligations  of any other  Person for borrowed
money;

     (5) any agreement of surety,  guarantee or  indemnification  by the Company
outside of the ordinary course of the Company's business; and

     (6) any  covenant  not to  compete  or area of  mutual  interest  agreement
(collectively the "Material Contracts").

     (o) Events  Subsequent to Report Date.  Except in each case as set forth in
Schedule 4.1(o),  Schedule 4.1(r) and Section 7.2(b), or as otherwise  disclosed
in the  Financial  Statements,  since the Report Date the Company has engaged in
business in a manner consistent with its past practices, and to the knowledge of
Seller there has not been any:

     (1)  destruction,  damage  to, or loss of any  Assets of the  Company  that
(after  giving  effect  to  any  insurance  coverage  with  regard  thereto)  is
reasonably likely to have a Material Adverse Effect;

     (2)  change  in  accounting  policies  or  practices  (including,   without
limitation, any change in depreciation or amortization policies) by the Company,
except as required under GAAP;

     (3) sale or other  disposition  of any  properties or assets of the Company
except  (i) in the  ordinary  course  of  business  having a value of less  than
$50,000,.  or (ii) any item of personal  property or equipment having a value of
less than $25,000;

     (4)  employment  agreement  (not  terminable  at will)  entered into by the
Company or any material increases in the compensation payable to any officers or
employees  of the  Company  (other  than  increases  for  employees  who are not
officers of the Company made in the ordinary  course of business and  consistent
with past practice);


    (5) (i) dividend or other  distribution in respect of the Company Shares or
(ii) other  transactions  between the Company and the Seller or any Affiliate of
Seller;

     (6) change in any Plan or Benefit Arrangement, except as required by Law;

     (7) labor dispute, strike or similar work stoppages or, to the knowledge of
Seller,  threats thereof by or with respect to persons  employed by the Company;
or
     (8)  settlement  entered  into or  consent  made to any  order,  decree  or
judgment  relating to or arising out of any Action relating to the Company which
is reasonably likely to have a Material Adverse Effect.

     (9) notice from any Governmental  Authority or any operator with respect to
the plugging and abandonment of any Well.

     (10) material adverse change in the business or financial  condition of the
Company.  For purposes hereof a material  adverse change means an unfavorable or
adverse change or occurrence,  or the result thereof, which causes the business,
operations,  financial condition, prospects or properties of the Company and its
Subsidiaries as a whole to be materially impaired or reduced.

     (p) Environmental Matters.  Except as set forth in Schedule 4.1(p)), Seller
has no knowledge of any  Environmental  Claim or Offsite  Environmental  Matter,
other than Environmental Claims and Offsite  Environmental Matters which, either
individually or in the aggregate,  are not reasonably  likely to have a Material
Adverse Effect.


    (q) Tax  Matters.  With  respect  to the  Company,  except  as set forth in
Schedule4.1(q),  (i)  all  reports,  returns,  statements  (including,  without
limitation,  estimated  reports,  returns,  or  statements),  and other  similar
filings  required to be filed on or before the  Closing  Date by the Company (or
the common parent of the affiliated, consolidated, combined and/or unitary group
of which the Company is a member) (the "Tax  Returns") with respect to any Taxes
have been or will be timely filed with the appropriate  governmental agencies in
all  jurisdictions in which such Tax Returns are required to be filed;  (ii) the
Tax Returns are or will be true and correct in all  material  respects,  and all
Taxes reported on such returns, and all other material Taxes of the Company that
are due on or prior to the  Closing  Date  (except  those  Taxes  that are being
disputed  in good faith and for which  adequate  provision  has been made in the
Company's  Financial  Statements to the extent  required by GAAP),  have been or
will be paid;  (iii)  the  Company  (or the  common  parent  of the  affiliated,
consolidated,  combined  and/or  unitary group of which the Company is a member)
has not extended or waived the  application of any statute of limitations of any
jurisdiction  regarding the  assessment or collection of any Tax; (iv) there are
no audits, claims,  proposed or final deficiency notices,  assessments,  levies,
administrative  proceedings, or lawsuits pending or, to the knowledge of Seller,
threatened  against the Company by any taxing authority;  (v) there are no liens
for Taxes upon any of the Assets except liens for Taxes not yet delinquent; (vi)
the Company does not have any  liability  for the Taxes of any Person other than
the Company under Treasury Regulation Section 1.1502-6 (or any similar provision
of  state,  local or  foreign  tax law);  (vii) no  agreements  relating  to the
allocation or sharing of, or liability or indemnification for, Taxes exist among
the  Company  and any  other  Person;  (viii)  all Taxes  required  by law to be
withheld or  collected  by the  Company  (including,  but not limited to,  Taxes
required to be withheld  with  respect to amounts  paid or owing to any officer,
employee,  creditor,  stockholder,  independent contractor or other person) have
been timely  withheld or collected and, to the extent required by Law, have been
timely paid,  remitted or deposited to or with the relevant taxing  authority in
all  material  respects;  (ix) no closing  agreement  or  agreement  pursuant to
Section 7121 of the Code or any similar provision of any state, local or foreign
law has been entered into by or with respect to the Company, and the Company has
not agreed to make any adjustment pursuant to Section 481(a) of the Code (or any
predecessor  provision) by reason of any change in any accounting  method of the
Company, which requires the Company to include any item of income in, or exclude
any item of  deduction  from,  any Tax  Return;  (x) the Company has not filed a
consent under Section 341(f) of the Code  concerning  collapsible  corporations;
(xi) the Company has not made any material  payments nor is it obligated to make
material  payments,  nor is it a  party  to any  agreement  that  under  certain
circumstances  could obligate it to make any material  payments that will not be
deductible under Section 280G of the Code; (xii) except for Taxes resulting from
any Section 338(h)(10)  Election,  the unpaid income Taxes of the Company do not
as of the Most Recent Financial  Statements for the Company,  exceed the reserve
for Tax liability  (rather than any reserve for deferred  taxes  established  to
reflect timing differences between book and tax income) set forth on the face of
the Most Recent  Financial  Statements for the Company (rather than in any notes
thereto)  and will not  exceed  that  reserve as  adjusted  for  operations  and
transactions  through  the  Closing  Date in  accordance  with past  custom  and
practice in the filing of the Company=s Tax returns;  (xiii) the Company has not
been a member  of an  affiliated  group of  corporations  filing a  consolidated
federal  income  Tax Return  other  than a group the  common  parent of which is
Seller;  and (xiv) all material  income Taxes owed by any affiliated  group with
which Company has filed a consolidated return have been or will be paid for each
taxable period during which Company was a member of such group.

     (r) Employee Benefit Plans.


    (1) List of Plans.  Except to the extent of obligations  provided for under
Section  7.2(b),  Schedule  4.1(r)  includes a complete and accurate list of all
material  employee  benefit  plans as defined in  section  3(3) of the  Employee
Retirement  Income  Security Act of 1974, as amended  ("ERISA")  ("Plans"),  and
material  benefit  arrangements  that are not  Plans  ("Benefit  Arrangements"),
including,  but not  limited  to any  (A)  incentive  bonus  or  deferred  bonus
arrangements,  (B) arrangements  providing termination  allowance,  severance or
similar benefits, (C) equity compensation plans, (D)deferred compensation plans,
(E) employee assistance  programs,  (F) vacation policies,  and (G) stock option
plans that are currently in effect or were maintained  within three years of the
Closing  Date,  or have been  approved  before the Closing  Date but are not yet
effective, for the benefit of directors, officers, employees or former employees
(or their  beneficiaries)  of the  Company or with  respect to which the Company
would have any liability.

     (2)  Compliance.  Except as otherwise  disclosed in Schedule  4.1(r),  with
respect to each Plan  listed on  Schedule  4.1(r),  (i) the plan is in  material
compliance  with  ERISA  in all  respects,  including  but  not  limited  to the
reporting  and  disclosure  requirements  of Part 1 of  Subtitle B of Title I of
ERISA;  (ii) there has been no  transaction  described  in section 406 or 407 of
ERISA or section  4975 of the Code  relating  to the plan  unless  exempt  under
section  408 of ERISA or  section  4975 of the Code,  as  applicable;  (iii) the
bonding requirements of section 412 of ERISA have been satisfied; and (iv) there
is no litigation, action, proceeding, investigation or claim asserted or, to the
Seller's knowledge, threatened (other than the payment of benefits in the normal
course).  All group health plans maintained by the Company have been operated in
material compliance with section 4980B of the Code.

     (3) Severance Pay and Medical  Coverage.  Except as provided  under Section
7.2(b) or as disclosed on Schedule  4.1(r),  no plan,  arrangement  or agreement
with any one or more  employees  will cause,  and the  execution,  delivery  and
performance  of this  Agreement  by Seller  will not cause,  the Company to have
liability for severance pay as a result of the  consummation of the transactions
described in this Agreement.  The Company=s  liability for severance pay will be
funded  exclusively  through the Employee  Benefits  Trust  described in Section
7.2(b).  Except as provided  under  Section  7.2(b) or as  disclosed on Schedule
4.1(r), the Company does not provide employee  post-retirement  medical coverage
or contribute to or maintain any plan or  arrangement  that provides for medical
coverage  following  termination of employment  except as is required by section
4980B(f) of the Code, nor has it made any representations, agreements, covenants
or commitments to provide that coverage.

     (4)  Certain  Pension  Plans.  The  terms of all  pension  plans  listed in
Schedule  4.1(r) to this  Agreement  that are intended to qualify  under section
401(a) of the Code (i) have been  determined  by the IRS to be  qualified  under
section 401(a) of the Code or (ii) the  applicable  remedial  amendment  periods
will not have ended  before the Closing  Date.  Except as  disclosed on Schedule
4.1(r),  neither  Seller  nor the  Company  has any  knowledge  of any  event or
circumstance  that would jeopardize the tax qualified status of the Plans listed
in Schedule 4.1(r).

    (5) No  Multiemployer  Pension  Plans.  Neither  the Company nor any entity
(whether or not  incorporated)  that was at any time during the six years before
the Closing Date treated as a single  employer  together  with the Company under
section 414 of the Code has ever maintained, had any obligation to contribute to
or incurred any liability  with respect to a pension plan that is or was subject
to the provisions of Title IV of ERISA or section 412 of the Code.

     (s) Subsidiaries.  Except as set forth in Schedule 4.1(s), the Company does
not have any Subsidiaries. Each such Subsidiary is a corporation duly organized,
validly  existing  and in good  standing  under  the  laws of the  state  of its
incorporation and is duly qualified to do business,  and is in good standing, in
each  jurisdiction  in which  the  properties  owned or  leased  by it make such
qualification  necessary,  except where the failure to so qualify and be in good
standing will not have a Material  Adverse  Effect.  The Company holds of record
and owns  beneficially  all  outstanding  shares issued and  outstanding of such
Subsidiaries,  free  and  clear  of  any  security  interests,  liens,  options,
warrants,  purchase rights, or other encumbrances  (except restrictions on sales
of stock under applicable  securities  laws),  and there is no option,  warrant,
purchase  right,  or other contract or commitment that could require the Company
to  sell,  transfer,  or  otherwise  dispose  of  any  of  the  shares  of  such
Subsidiaries,  nor is the Company a party to any voting trust,  proxy,  or other
agreement or understanding with respect to the voting, holding or disposition of
such shares.

     (t) No Default.  To the knowledge of Seller,  the Company is not in default
under any term or  provision  of any of the  Material  Contracts in any material
respect.

     (u)  Royalties.  Except  (i)  for  matters  which,  individually  or in the
aggregate, are not reasonably likely to have a Material Adverse Effect, and (ii)
for  matters  which would not result in the  cancellation  or loss of title in a
Subject Interest, all royalties, overriding royalties and other similar payments
due and  payable on  production  with  respect to a Subject  Interest  have been
timely and fully paid,  except amounts that are being held in suspense for title
and other reasons  which are  customary in the industry and which  suspense will
not result in grounds for  cancellation of the Company's  rights in such Subject
Interest.

     (v)  Employees.  The Company is not a party to or subject to any collective
bargaining agreement. To the knowledge of Seller, no collective bargaining agent
has  been  certified  as a  representative  of any of the  employees  or  former
employees of the Company.  To the knowledge of Seller,  no union  organizational
campaign is currently  pending  with  respect to any of the  employees or former
employees of the Company.

     (w) Information Regarding Subject Interests.

     (1)  Except  as  set  forth  in  Schedule  4.1(w),  there  is no  contract,
commitment or agreement  binding on the Subject Interests which provides for the
approval of  specific  capital  expenditures  by the Company or Seller and under
which the Company or Seller has approved  future capital  expenditures in excess
of $100,000.


    (2) Except as set forth in Schedule 4.1(w), this Agreement and any document
executed  in  connection  herewith,  there  are no  agreements  or  arrangements
relating to the Subject  Interests  with Seller or any  Affiliate of Seller that
will be  binding  on Buyer,  the  Company  or the  Subject  Interests  after the
Closing.

     (3)  Except  as set  forth in  Schedule  4.1(w),  there  are no  contracts,
commitments or agreements for the sale or other  disposition of oil, natural gas
or natural gas liquids  attributable to the Subject  Interests  having a term in
excess of one year that are not terminable without penalty on 90 days' notice or
less.

     (x) Wells and Units. Without representing or warranting the Company's title
therein,  the Property  Schedule sets forth in all material  respects a complete
listing of all Wells and Units in which the Company owns an  interest,  together
with the locations  thereof and the Company=s Net Revenue  Interests and Working
Interests therein.

     (y) Permits. Except for those with respect to Environmental Laws, which are
addressed  exclusively in Sections  4.1(p) and 5.3, the Company has, and, to the
knowledge of Seller, each other Person who operates a Well or Unit has, obtained
all material permits, licenses, franchises,  authorities, consents and approvals
necessary for owning and  operating  the Wells and Units as presently  operated,
and all such permits, licenses, franchises,  authorities, consents and approvals
are in full force and effect, except such failures as would not, individually or
in the aggregate, have a Material Adverse Effect.

     (z) Personal Property. Subject to the repairs, maintenance and replacements
contemplated  by the capital  expenditures  referenced in Schedule  4.1(n),  all
equipment and all vehicles  owned or leased by the Company and currently used by
the Company in  connection  with the  operation of the Wells and Units have been
maintained in an operable state of repair adequate to maintain normal operations
in a manner  consistent with the Company's past practices,  except such failures
to  maintain as would not,  individually  or in the  aggregate,  have a Material
Adverse Effect.

     (aa) Public Utility  Holding  Company Act.  Except as set forth in Schedule
4.1(aa),  neither  the  Company  nor  Seller  nor any of the  Subsidiaries  is a
"holding  company"  or a  "subsidiary  company"  of a  "holding  company"  or an
"affiliate"  of  either a  "holding  company"  or a  "subsidiary  company"  of a
"holding company," in each case within the meaning of the Public Utility Holding
Company  Act of 1935,  as amended.  Further,  neither the Company nor any of the
Subsidiaries is a Apublic utility company@ or an Aelectric utility company@ or a
Agas utility  company,  A in each case within the meaning of the Public  Utility
Holding Company Act of 1935, as amended.

     (bb)  Investment  Company Act. The Company is not an  "investment  company"
within the meaning of the  Investment  Company Act of 1940, as amended,  and the
Seller is not required to register under the Investment  Company Act of 1940, as
amended.


    (cc) Seller's Knowledge.  Seller has no knowledge of any fact which results
in any  representation  or warranty of Buyer in Section 4.2 being  breached.  If
after the date of this  Agreement,  Seller  obtains  knowledge of any fact which
results  in any  representation  or  warranty  of Buyer  in  Section  4.2  being
breached,  Seller will  immediately  furnish Buyer written notice thereof.  This
Section  4.1(cc)  shall not apply to  Buyer's  representation  and  warranty  in
Section 4.2(i).

     (dd)  Representations  and  Warranties  re Company.  To the extent that the
foregoing  representations of Seller relate to the Company, such representations
and  warranties  are for the purpose of  establishing  whether  Buyer=s  closing
conditions  have been  satisfied  under Section 9.2 and shall not form the basis
for any claim, action, suit or proceeding based on a breach thereof.

     (ee) Y2K Representation and Warranty. The Company has made inquiries of the
suppliers  and  manufacturers  of  its  computer  systems,  including  equipment
supplied  by third  parties,  and has been  advised  that such  systems  are Y2K
Compliant except in the case of the Company=s property management software which
is currently under review regarding Y2K compliance.  Except for costs associated
with the items set forth on  Schedule  4.1(ee),  the cost to the  Company of the
reasonably  foreseeable  consequences  of the failure of the Company=s  computer
systems to be Y2K  Compliant  cannot be  reasonably  expected to have a Material
Adverse Effect.  For purposes  hereof,  AY2K Compliant@ means that the Company=s
computer systems,  including  equipment supplied by third parties,  will record,
process,  calculate and present  calendar  dates falling on and after January 1,
2000 and  calculate  information  dependent  on or relating to such dates in the
same manner and with the same  functionality,  data integrity and performance as
such systems record, process,  calculate and present calendar dates on or before
December 31, 1999 or calculate any information  dependent on or relating to such
dates.

     Section 4.2  Representations  and Warranties of Buyer. Buyer represents and
warrants to Seller as follows:

     (a) Organization and Qualification.  Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the Province of Alberta,
Canada, and has the requisite  corporate power to carry on its business as it is
now being conducted.

     (b)  Authority.  Buyer has all requisite  corporate  power and authority to
execute and deliver this  Agreement  and to perform its  obligations  under this
Agreement.  The  execution,  delivery and  performance of this Agreement and the
transactions  contemplated  hereby have been duly and validly  authorized by all
requisite corporate action on the part of Buyer.

     (c)  Enforceability.   This  Agreement  constitutes  a  valid  and  binding
agreement  of Buyer  enforceable  against  Buyer in  accordance  with its terms,
subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium and
other  similar  laws of general  application  with  respect to  creditors,  (ii)
general  principles of equity and (iii) the power of a court to deny enforcement
of remedies generally based upon public policy.

    (d) No Conflict or  Violation.  Neither the  execution and delivery of this
Agreement nor the  consummation of the transactions and performance of the terms
and conditions  contemplated hereby by Buyer will (i) conflict with or result in
a violation or breach of any  provision  of the  certificate  of  incorporation,
bylaws or other similar governing  documents of Buyer or any material agreement,
indenture  or other  instrument  under which  Buyer is bound or (ii)  violate or
conflict with any Law applicable to Buyer or the properties or assets of Buyer.

     (e) Consents. No consent,  approval,  authorization or permit of, or filing
with or notification to, any Person (including,  without limitation, any consent
under the Public  Utility  Holding  Company Act of 1935, as amended) is required
for or in connection  with the execution and delivery of this Agreement by Buyer
or  for  or  in  connection  with  the  consummation  of  the  transactions  and
performance of the terms and conditions contemplated hereby by Buyer, except for
such consents, approvals, authorizations, permits, filings and notifications the
failure of which to obtain or make are not reasonably  likely to have a material
adverse   effect  on  the  ability  of  Buyer  to  consummate  and  perform  the
transactions contemplated by this Agreement.

     (f) Actions.  There is no Action pending against Buyer or, to the knowledge
of Buyer,  threatened against Buyer, other than Actions which are not reasonably
likely to have a material  adverse  effect on the ability of Buyer to consummate
and perform the transactions contemplated by this Agreement.

     (g) Advisors= and Brokers=  Fees.  Neither Buyer nor any Affiliate of Buyer
has retained any advisor or broker in respect of the  transactions  contemplated
by this  Agreement for which Seller or the Company are liable or shall incur any
liability.

     (h) Qualified  Owner.  The  consummation of the  transactions  contemplated
hereby will not cause Buyer or the Company to be disqualified as an owner of any
federal or state oil, gas and mineral lease or to exceed any acreage  limitation
imposed by any statute, rule, regulation or order of governmental authority.

     (i)  Funds.  Buyer  has,  and at all  times  prior to  Closing  will  have,
sufficient  funds  available  to enable  Buyer to  consummate  the  transactions
contemplated  hereby and to pay the Closing  Payment  and all  related  fees and
expenses of Buyer.

     (j) Buyer's Knowledge.  Buyer has no knowledge of any fact which results in
any representation or warranty of Seller in Section 4.1 being breached. If after
the date of this Agreement, Buyer obtains knowledge of any fact which results in
any  representation  or warranty of Seller in Section 4.1 being breached,  Buyer
will immediately furnish Seller written notice thereof.


    (k) No Distribution.  Buyer is an experienced and knowledgeable investor in
the oil and gas  business.  Prior to  entering  into this  Agreement,  Buyer was
advised  by its  counsel  and  such  other  persons  it has  deemed  appropriate
concerning this Agreement and has relied solely on an independent  investigation
and  evaluation of, and appraisal and judgment with respect to, the geologic and
geophysical  characteristics  of the Subject  Interests,  the estimated reserves
recoverable therefrom, and the price and expense assumptions applicable thereto.
Buyer is an  "accredited  investor,"  as such term is defined in Regulation D of
the Securities Act of 1933, as amended,  and will acquire the Company Shares for
its own  account  and  not  with a view to a sale  or  distribution  thereof  in
violation  of the  Securities  Act of  1933,  as  amended,  and  the  rules  and
regulations  thereunder,  any  applicable  state  blue  sky  laws  or any  other
applicable securities laws.

     (1)  Bankruptcy.  There are no  bankruptcy,  reorganization  or arrangement
proceedings  pending  against,  being  contemplated  by, or to the  knowledge of
Buyer, threatened against Buyer.


                                    ARTICLE 5
               ACCESS TO INFORMATION; ENVIRONMENTAL MATTERS; ETC.


    Section 5.1 General Access.  Subject to Section 5.4 (which shall govern all
environmental reviews, inspections and audits), promptly following the execution
of this  Agreement  and until the Closing Date (or earlier  termination  of this
Agreement),  Seller  shall  cause  the  Company  (i) to  permit  Buyer  and  its
representatives  to have reasonable  access at reasonable times in the Company's
offices,  and in a  manner  so as not to  interfere  unduly  with  the  business
operations of the Company, to the Company's books, records, contracts, abstracts
of title, title opinions, title files, ownership maps, lease files, assignments,
division  orders,  Reserve  Reports and documents  relating to the Assets or the
Company  insofar as the same are in the  Company's  or Seller's  possession  and
insofar  as the  Company  and  Seller  may do so  without  (a)  violating  legal
constraints  or any legal  obligation or (b) waiving any  attorney/client,  work
product or like privilege and (ii), subject to any required consent of any third
Person   (other  than  an  Affiliate  of  Seller),   to  permit  Buyer  and  its
representatives  at reasonable times and at Buyer's sole risk, cost and expense,
to conduct, in the presence of Company  representatives,  reasonable inspections
of the Assets;  provided,  however,  Buyer shall repair any damage to the Assets
resulting  from  such  inspections  and Buyer  does  hereby  indemnify  and hold
harmless,  release  and agree to defend the Seller  Indemnified  Parties and the
Company  from and  against  any and all  losses,  costs,  damages,  obligations,
claims,  liabilities,  expenses and causes of action to the extent  arising from
Buyer's  inspection of the Assets,  including,  without  limitation,  claims for
personal injuries,  property damage and reasonable attorney's fees and expenses,
regardless  of the  form of  claim  whether  at  common  law,  strict  liability
negligence under any statute or regulation.  However,  except to the extent such
inspections   materially  contribute  to,  materially  aggravate  or  materially
adversely affect an Environmental  Defect, such indemnification shall not extend
to any Environmental Defect discovered in the course of such inspections,  shall
expire  upon the  Closing  and  shall not in any way  affect  or limit  Seller's
liabilities  or  responsibilities  with  respect  to any  Environmental  Defect.
Nothing  in  this   Article  V  shall  be  construed  to  permit  Buyer  or  its
representatives to have access to any files, records,  contracts or documents of
Seller relating to this transaction,  including, without limitation, any bids or
offers  received  by Seller or the Company for the sale of the Company or any of
the  Company's  assets in  competition  with the Buyer's bid or offer,  it being
agreed that any such  competing bids or offers shall be the sole property of the
Seller.

     Section 5.2 Confidential Information.  Unless and until the Closing occurs,
Buyer agrees to maintain all  information  made available to it pursuant to this
Agreement  confidential and to cause its officers,  employees,  representatives,
consultants  and advisors to maintain  all  information  made  available to them
pursuant  to this  Agreement  confidential,  all as  provided  in  that  certain
confidentiality agreement dated May 10, 1999 (the "Confidentiality  Agreement"),
by and between Seller and Buyer, the terms of which are  incorporated  herein by
reference and made a part of this Agreement.

     Section 5.3 No Warranty or Representation. Except for Seller's warranty and
representation  in Section 4.1(p),  Seller makes no warranty or  representation,
express or implied,  statutory or otherwise,  with respect to any  Environmental
Matters   (including,   without   limitation,   any   Environmental   Condition,
Environmental   Claim  or  Offsite   Environmental   Matter)  and  Buyer  hereby
acknowledges  and agrees that Buyer's sole remedy for any  Environmental  Matter
(including,   without   limitation  any  Environmental   Defect,   Environmental
Condition,  Environmental Claim or Offsite Environmental Matter) with respect to
any of the Assets or the  Company  shall be  pursuant  to the  Seller's  limited
warranty  and  representation  in Section  4.1(p))  (which shall not survive the
Closing)  and the  procedures  set forth in Sections  5.4 and 5.5.  Furthermore,
without  limiting the provisions of the  Confidentiality  Agreement (which shall
continue in full force and  effect)  and except for the express  representations
and  warranties   contained  in  Section  4.1,   Seller  makes  no  warranty  or
representation,  express,  implied,  statutory or otherwise, with respect to the
accuracy or completeness of the information, records and data now, heretofore or
hereafter made available to Buyer in connection with this Agreement,  including,
without  limitation,   any  description  of  the  Assets,  pricing  assumptions,
potential  for  production  of oil, gas or other  hydrocarbons  from the Subject
Interests, projected development costs, projected plugging and abandonment costs
or any other  matters  contained  in or  related  to the  Reserve  Reports,  any
environmental  information,  or any other material furnished to Buyer by Seller,
the Company or any other source,  including any of their  respective  directors,
officers, employees, counsel, agents or advisors.

     Section 5.4 Environmental Review and Audit.


    (a)  Environmental  Access.  For a period of forty-five (45) days following
the execution of this Agreement  (the  "Environmental  Examination  Period") and
subject to the restrictions contained in this Agreement and any required consent
or waiver of any third Person (other than an Affiliate of Seller),  Seller shall
cause the Company (i) to permit Buyer and its representatives to have reasonable
access at reasonable times in the Company's  offices,  and in a manner so as not
to interfere unduly with the business operations of the Company, to Seller's and
the Company's  environmental  files and records in the Seller's or the Company's
possession  relating to the Assets or any property formerly owned or operated by
the  Company  insofar as Seller and the  Company  may do so without  waiving any
attorney/client, work product or like privilege and (ii) to permit Buyer and the
Environmental Consultant to have reasonable access to the Assets for the purpose
of allowing Buyer and the  Environmental  Consultant to inspect and/or audit the
Assets  for any  Environmental  Defects  (collectively,  "Buyer's  Environmental
Review"), all at Buyer's sole risk, cost and expense.

     (b) Conduct of Review.  Prior to conducting Buyer's  Environmental  Review,
Buyer  shall  furnish  Seller  with a proposed  scope of  Buyer's  Environmental
Review,  including a  description  of the  activities  to be  conducted  and the
locations of such  activities.  No third  Person,  other than the  Environmental
Consultant   and  Buyer's   employees  and   attorneys,   may  conduct   Buyer's
Environmental  Review.  Buyer shall not  commence  any  activity  proposed to be
included  in  Buyer's  Environmental  Review  unless  and  until  such  activity
(including the location  thereof) has been approved in writing by Seller,  which
approval shall not be unreasonably  withheld and shall be given or denied within
two  Business  Days after  Buyer  furnishes  Seller with  reasonably  sufficient
information with respect to such activity.  Seller or its  representative  shall
have  the  right  to  be  present  during  any  inspection   (including  Buyer's
Environmental  Review) of the Assets and shall have the right, at its option and
expense, to split samples with Buyer.


    (c)  Buyer   Responsibility   for  Review.   In  connection   with  Buyer's
Environmental Review, Buyer agrees that Buyer, the Environmental  Consultant and
Buyer's  employees,  agents and contractors shall comply with all Laws and shall
exercise  due care with respect to the Assets and their  condition,  taking into
consideration the characteristics of any wastes or substances found thereon, and
in light of all  relevant  facts and  circumstances.  Specifically,  but without
limitation,   when  handling  solid  waste  or  hazardous  substances,  if  any,
discovered  during  the  inspection  of the  Assets,  Buyer,  the  Environmental
Consultant and Buyer's employees, agents and contractors shall handle such waste
or substances in  accordance  with all Laws.  Any soil or water samples taken by
Buyer from the Assets shall be managed by Buyer  consistent  with the applicable
rules and regulations of the U.S. Environmental Protection Agency and applicable
state  agencies  with  regulatory  authority,  provided,  the  Company  shall be
identified as the generator of such samples.  Promptly after completing  Buyer's
Environmental  Review,  Buyer shall,  at its sole cost and expense,  restore the
Assets to  substantially  the same  condition  the Assets were in at the time of
Buyer's entry thereon, in accordance with good engineering  practice, if changed
due to  Buyer's  Environmental  Review.  Failure  by  Buyer to  comply  with the
requirements  of this  subsection  within a reasonable  time period will entitle
(but  shall  not  obligate)  Seller or the  Company  to take any  action  deemed
necessary or  appropriate by Seller or the Company to correct such failure after
written notice to Buyer, all at Buyer's expense.  Buyer shall maintain and shall
cause its officers, employees, agents, representatives, contractors, consultants
(including  the   Environmental   Consultant)   and  advisors  to  maintain  all
information  obtained by Buyer and the Environmental  Consultant pursuant to the
Buyer's  Environmental  Review as strictly  confidential  and shall not disclose
same to any third Person without the prior written consent of Seller,  except to
the extent required by Law. Buyer shall provide  Seller's counsel with copies of
any final written reports prepared and analytical test results received by Buyer
or the Environmental  Consultant promptly following Buyer's or the Environmental
Consultant's  preparation  or receipt of same.  Buyer does hereby  indemnify and
hold harmless,  release and agree to defend the Seller  Indemnified  Parties and
the Company from and against any and all losses,  costs,  damages,  obligations,
claims, liabilities,  expenses and causes of action, including all Environmental
Liabilities,  to the extent  arising  out of any  violation  by Buyer or Buyer's
officers,   employees,   agents,   representatives,   contractors,   consultants
(including the Environmental  Consultant) and advisors of the provisions of this
subsection or from the  inspection  or testing of the Assets  conducted by or on
behalf of Buyer,  including,  without limitation,  claims for personal injuries,
property damage and reasonable  attorney's fees and expenses,  regardless of the
form of claim whether at common law, strict  liability,  negligence or under any
statute  or  regulation.  However,  except to the  extent  such  inspections  or
testings materially  contribute to, materially aggravate or materially adversely
affect an Environmental  Defect,  such  indemnification  shall not extend to any
Environmental  Defect discovered in the course of such inspections and testings,
shall expire upon the Closing and shall not in any way affect or limit  Seller's
liabilities or responsibilities with respect to any Environmental Defect.

     Section 5.5 Environmental Defects.

     (a) Buyer's Assertions of Environmental Defects. Prior to the expiration of
the Environmental  Examination Period, Buyer may notify Seller in writing of any
matters which, in Buyer's reasonable opinion,  constitute Environmental Defects.
Buyer's written notice must include (i) a specific description of each Asset (or
portion thereof) that is affected by the alleged  Environmental  Defect,  (ii) a
description of the alleged  Environmental Defect and the facts and circumstances
giving rise thereto, including all evidence compiled by Buyer which supports the
existence of such alleged  Environmental  Defect, and (iii) a calculation of the
Remediation  Amount  (itemized  in  reasonable  detail)  that  Buyer  asserts is
attributable  to  such  Environmental   Defect.   Buyer's   calculation  of  the
Remediation Amount must describe the Remediation  proposed for the Environmental
Condition that gives rise to the asserted  Environmental Defect and identify all
material  assumptions  used by the Buyer in calculating the Remediation  Amount,
including   the  standards  the  Buyer  asserts  must  be  met  to  comply  with
Environmental Laws.

     (b)  Seller's  Rights and  Elections.  If Buyer timely  notifies  Seller in
writing of any Environmental Defect as required by Section 5.5(a),  Seller shall
have the right to then or thereafter dispute the existence of such Environmental
Defect  and/or the alleged  Environmental  Defect  Amount  asserted with respect
thereto in accordance with the provisions of Section 6.5 of this  Agreement.  In
addition, Seller, at its option, shall elect, at or prior to the Closing, one of
the  following  options  with  respect to the  Assets  affected  by the  alleged
Environmental  Defect and, at Seller's option,  any other Assets which form part
of any field or other  economic  operating  unit which  includes  such  affected
Assets (collectively, the "Environmental Defect Property@):

     (i) leave  such  Environmental  Defect  Property  in the  Assets and assume
responsibility for the Remediation of such Environmental Defect;  provided that,
all costs for  Remediation  shall  first be borne by Buyer to the extent  Seller
elects to apply any of the Environmental Defect Deductible to such costs; or


    (ii) leave such Environmental  Defect Property in the Assets and reduce the
Purchase  Price  by  the  Environmental  Defect  Amount  with  respect  to  such
Environmental  Defect (taking into account any application of the  Environmental
Defect Deductible which Seller elects to make with respect thereto).

     If Seller elects the option set forth in clause (ii) above,  Buyer shall be
deemed to have assumed  responsibility  for  Remediation  of such  Environmental
Defect and such  Environmental  Defect  shall be deemed to  constitute a Company
Liability.  If Seller  elects the  option set forth in clause (i) above,  Seller
shall use  commercially  reasonable  efforts to implement such  Remediation in a
manner which is consistent with the requirements of  Environmental  Laws and the
provisions  of any  applicable  lease,  and  Seller  shall  have  access  to the
Environmental  Defect  Property after the Closing Date to implement and complete
such  Remediation  in  accordance  with this section and an Access  Agreement in
substantially   the  form  attached   hereto  as  Exhibit  5.5(b)  (the  "Access
Agreement").  Seller will be deemed to have adequately completed the Remediation
required  in the  immediately  preceding  sentence  (a) (i)  upon  receipt  of a
certificate or approval from the applicable state or federal  authority that the
Remediation has been implemented to the extent necessary to comply with existing
regulatory  requirements  or (ii) upon receipt of a certificate  from a licensed
professional  engineer if the approval or certification  specified in (i) cannot
be obtained because provision for such approval or certification is not provided
under  federal  or state law and (b) to the  extent  express  approval  from the
lessor is required under any applicable lease, upon receipt of such approval.

     (c)  Environmental  Defect Amount. If Seller elects the option set forth in
Section  5.5(b)(ii) with respect to one or more Environmental  Defects,  then as
Buyer's sole and exclusive  remedy with respect to such  Environmental  Defects,
Buyer  shall be  entitled  to  reduce  the  Purchase  Price by the  amount  (the
"Environmental  Defect  Amount@),  if any, by which the Remediation  Amount with
respect  to the  Environmental  Conditions  giving  rise to  such  Environmental
Defects  exceeds  that part,  if any, of  $500,000  (the  "Environmental  Defect
Deductible") which Seller elects to apply as an offset or deduction against such
Remediation Amount.  Seller may also apply any part of the Environmental  Defect
Deductible to the cost of any  Remediation  undertaken by Seller pursuant to the
option set forth in Section  5.5(b)(i).  Any  Remediation  costs to which Seller
elects to apply the Environmental Defect Deductible shall be borne by the Buyer.
Seller  shall have the right from time to time upon  written  notice to Buyer to
reallocate and change its application of the  Environmental  Defect  Deductible,
except to the extent of Remediation  costs already incurred or contracted for by
Buyer based on Seller's previous application thereof. It is expressly understood
and agreed that the  Environmental  Defect  Deductible  represents  an aggregate
deductible  for  Environmental  Defects which may be  apportioned as provided in
this Section  5.5(c) rather than as a separate  deductible  for each  individual
Environmental Claim.


     (d)  Waiver by Buyer.  If,  prior to the  expiration  of the  Environmental
Examination Period, the Buyer has knowledge of an Environmental  Defect and does
not  notify  Seller  in  writing  of the  existence  thereof  on or  before  the
expiration  of  the  Environmental   Examination  Period   (including,   without
limitation,  any Environmental  Defect noted or described in any oral or written
report prepared by the Environmental  Consultant),  the Buyer shall be deemed to
have waived such  Environmental  Defect and such  Environmental  Defect shall be
deemed to  constitute a Company  Liability.  In  addition,  all  conditions  and
matters  of  which  Buyer  has  knowledge   prior  to  the   expiration  of  the
Environmental  Examination Period and which would have constituted Environmental
Defects but for the $50,000 threshold  limitation set forth in the definition of
Environmental Defect shall be deemed to constitute Company Liabilities.


                                    ARTICLE 6
                                TITLE ADJUSTMENTS

     Section 6.1 No Title Warranty or  Representation.  Without limiting Buyer's
right to adjust the Purchase Price by operation of Section 6.2,  Seller makes no
warranty or  representation,  express,  implied,  statutory or  otherwise,  with
respect  to  the  Company's  title  to  any  of  the  Assets  and  Buyer  hereby
acknowledges  and  agrees  that  Buyer's  sole  remedy  for any defect of title,
including any Title Defect,  with respect to any of the Assets shall be pursuant
to the procedures set forth in this Article VI, which remedies shall cease,  and
be deemed to be finally and conclusively  satisfied,  in all respects,  upon the
Closing.

     Section 6.2 Buyer's Title Review.

     (a) Buyer's  Assertion of Title  Defects.  For a period of forty-five  (45)
days following the execution of this Agreement (the "Title Examination Period"),
Buyer  shall  have the  right to  furnish  Seller  written  notice  meeting  the
requirements  of this Section 6.2(a) (the "Title Defect  Notice")  setting forth
any matters which, in Buyer's reasonable  opinion,  constitute Title Defects and
which Buyer  asserts as a Title Defect with respect to any Well or Unit pursuant
to this Article VI. For all purposes of this Agreement, Buyer shall be deemed to
have waived any Title  Defect which Buyer fails to assert as a Title Defect by a
Title  Defect  Notice given to Seller on or before the  expiration  of the Title
Examination  Period.  To be  effective,  Buyer's  Title Defect Notice of a Title
Defect  must  include (i) a brief  description  of the matter  constituting  the
asserted  Title  Defect,  (ii) the  claimed  Title  Defect  Amount  attributable
thereto, and (iii) supporting documents reasonably necessary for Seller (as well
as any title  attorney or examiner  hired by Seller) to verify the  existence of
such asserted Title Defect. To give Seller an opportunity to commence  reviewing
and curing Title Defects,  on or before the end of each calendar week during the
Title  Examination  Period,  Buyer agrees to give Seller  written  notice of all
Title  Defects  discovered  by Buyer  during such  calendar  week,  which may be
preliminary in nature and supplemented prior to the end of the Title Examination
Period. At the same time, Buyer shall also furnish Seller with written notice of
any Seller Title Credit which is discovered  during such calendar week by any of
Buyer's employees or representatives  while conducting Buyer's title review, due
diligence or investigation with respect to any Well or Unit.

    (b) Purchase  Price  Allocations.  A portion of the Purchase Price has been
allocated to the various  Wells and Units in the manner and in  accordance  with
the respective values set forth in the Property  Schedule.  If any adjustment is
made to the  Purchase  Price  pursuant  to this  Section  6.2,  a  corresponding
adjustment  shall be made to the portion of the Purchase Price  allocated to the
affected Well or Unit in the Property Schedule.

     (c) Seller's  Rights and  Opportunity to Cure. If Buyer timely gives Seller
Title Defect Notice(s) of one or more Title Defects, Seller shall have the right
to then or  thereafter  dispute the  existence of such Title  Defect  and/or the
alleged Title Defect Amount asserted with respect thereto in accordance with the
provisions of Section 6.5 of this  Agreement.  In addition,  the following terms
and conditions shall apply with respect to any Title Defect asserted by Buyer in
a timely Title Defect Notice:

     (i) Seller shall have until two (2) days prior to the Closing  Date, at its
cost and  expense,  if it so elects  but  without  obligation,  to cure all or a
portion of such asserted  Title  Defects.  Any asserted  Title Defects which are
waived by Buyer  within  such  time  shall be  deemed  "Permitted  Encumbrances"
hereunder.   Subject  to  Sections   6.2(c)(ii)  and  6.2(c)(iii)  and  Seller's
continuing  right to dispute the  existence of a Title  Defect  and/or the Title
Defect Amount  asserted with respect thereto under Section 6.5, if Seller within
such time fails to cure any Title Defect of which Buyer has given timely written
notice as required above, and Buyer has not and does not waive same on or before
the day  immediately  preceding the Closing  Date,  the Well or Unit affected by
such uncured and unwaived Title Defect shall be a "Title Defect Property."

     (ii) If Buyer  furnishes to Seller timely Title Defect  Notice(s) of one or
more Title  Defects  and the same are not waived or cured as provided in Section
6.2(c)(i),  Seller may elect to delay the  Closing  for a period of up to thirty
(30) calendar days to afford Seller the opportunity, if it so elects, to attempt
to cure any of the properly asserted Title Defects prior to the Closing. Subject
to Section 6.2(c)(iii) and Seller's continuing right to dispute the existence of
a Title Defect  and/or the Title Defect  Amount  asserted  with respect  thereto
under  Section  6.5, if Seller  within such time period fails or refuses to cure
any Title Defect of which Buyer has given a timely Title Defect Notice and Buyer
has not waived and does not waive the same before the delayed Closing,  the Well
or Unit  affected by such  uncured and  unwaived  Title Defect shall be a "Title
Defect Property."


    (iii) If Buyer furnishes to Seller timely Title Defect  Notice(s) of one or
more Title  Defects  and the same are not waived or cured as provided in Section
6.2(c)(i) or Section  6.2(c)(ii),  as applicable,  Seller may elect to close the
transactions  contemplated hereby and retain the right to cure any of such Title
Defects after Closing (whether or not Seller elects to delay Closing pursuant to
Section  6.2(c)(ii)  above).  In such event, but subject to Seller's  continuing
right to dispute the  existence of a Title Defect and/or the Title Defect Amount
asserted with respect  thereto  under  Section 6.5, the Purchase  Price shall be
subject to reduction  pursuant to Section  6.2(d)  taking into account all Title
Defect Amounts attributable to the Title Defect Properties affected by the Title
Defects  which  Seller may elect to cure after  Closing.  Seller  shall have one
hundred  twenty  (120)  calendar  days after the Closing Date (as may be delayed
pursuant  to  Section  6.2(c)(iii)  above) in which to  attempt to cure any such
Title  Defects and to increase or restore any Seller  Title  Credits.  If Seller
cures any such Title  Defect,  then Buyer  shall  promptly  pay Seller the Title
Defect  Amount  with  respect  to the Title  Defect  that is so  cured,  but not
exceeding the  aggregate  amount of the  reductions in the Purchase  Price which
Buyer received as a result of any Title  Defects,  together with interest on the
amount due Seller  from the  Closing  Date  through  and  including  the date of
payment at the Agreed Rate.  Furthermore,  the Title Defect  Deductible shall be
restored to the extent any portion of the Title Defect Deductible was applied as
a credit  against  the Title  Defect  Amount  attributable  to such cured  Title
Defect.  If a positive balance exists in the Available  Deductible  Amount after
any restorations or increases thereof pursuant to the foregoing,  and Seller has
suffered  a  reduction  in the  Purchase  Price as a  result  of any one or more
uncured  Title  Defects,  Buyer  shall pay to Seller  an amount  (together  with
interest thereon from the Closing Date through and including the date of payment
at the Agreed  Rate) equal to the lesser of (i) the amount by which the Purchase
Price was reduced as a result of such  uncured  Title  Defects and (ii) the then
existing balance of the Available Deductible Amount.

     (d) Buyer's Title  Adjustments.  As Buyer's sole and exclusive  remedy with
respect to Title  Defects,  Buyer shall be entitled to reduce the Purchase Price
by the amount,  if any, by which the  aggregate  amount of Title Defect  Amounts
with  respect to all Title  Defect  Properties  exceeds the sum (the  "Available
Deductible  Amount")  of  $500,000  (the  "Title  Defect  Deductible")  plus the
aggregate  amount of Seller  Title  Credits  with respect to all Wells or Units.
"Title Defect Amount" shall mean, with respect to a Title Defect  Property,  the
amount by which the value of such Title Defect  Property is impaired as a result
of the existence of one or more uncured and unwaived Title Defects, which amount
shall be determined as follows and subject to the following conditions:

     (1) If the  Title  Defect  results  from the  Company  having a lesser  Net
Revenue  Interest in such Title Defect  Property  than the Net Revenue  Interest
specified  therefor in the Property  Schedule,  the Title Defect Amount shall be
equal to the product  obtained by multiplying  the portion of the Purchase Price
allocated to such Title Defect Property in the Property  Schedule by a fraction,
the  numerator  of which is the  reduction  in the Net Revenue  Interest and the
denominator of which is the Net Revenue Interest specified for such Title Defect
Property in the Property Schedule.


    (2) If the Title Defect results from the Company  having a greater  Working
Interest in a Title Defect Property than the Working Interest specified therefor
in the Property Schedule,  the Title Defect Amount shall be equal to the product
obtained by  multiplying  the portion of the  Purchase  Price  allocated to such
Title Defect Property in the Property  Schedule by a fraction,  the numerator of
which is the increase in the Working  Interest and the  denominator  of which is
the Working  Interest  specified for such Title Defect  Property in the Property
Schedule.

     (3) If the Title  Defect  results from the  existence of a lien,  the Title
Defect Amount shall be an amount sufficient to discharge such lien.

     (4) If the Title Defect results from any matter not described in paragraphs
(1), (2) or (3) above,  the Title Defect  Amount shall be an amount equal to the
difference between the value of the Title Defect Property affected by such Title
Defect  with such  Title  Defect  and the value of such  Title  Defect  Property
without  such Title  Defect  (taking  into.  account the portion of the Purchase
Price  allocated  in the  Property  Schedule  to such  Title  Defect  Property);
provided,  that if such Title Defect is reasonably  susceptible  of being cured,
the Title Defect Amount shall be the reasonable  cost and expense of curing such
Title Defect, if less.

     (5) If a Title  Defect is not  effective  or does not affect a Title Defect
Property  throughout the entire  productive life of such Title Defect  Property,
such fact shall be taken into account in determining the Title Defect Amount.

     (6) The Title Defect Amount with respect to a Title Defect  Property  shall
be determined  without  duplication  of any costs or losses  included in another
Title Defect Amount hereunder.

     (7) The Title Defect Amount  attributable  to a Title Defect Property shall
not exceed the portion of the  Purchase  Price  allocated  to such Title  Defect
Property in Section 6.2(b).

     (8) No Title Defect Amount shall be allowed on account of and to the extent
that an increase  in the  Company's  Working  Interest in a Well or Unit has the
effect of proportionately  increasing the Company's Net Revenue Interest in such
Well or Unit.

     (9) With  respect  to any Well or Unit in which  Buyer or an  Affiliate  of
Buyer  likewise  owned an undivided  interest at the  Effective  Time,  no Title
Defect  Amount  shall be allowed on account  of a Title  Defect  affecting  such
Subject Interest that also affected Buyer's or such Affiliate's interest in such
Well or Unit in the same manner at the Effective Time.

     (10)  Notwithstanding the foregoing,  if the Title Defect Amount determined
pursuant to the foregoing with respect to a Title Defect  Property is $50,000 or
less,  after taking into account any curative work  performed by or on behalf of
Seller,  then the Title Defect Amount with respect to such Title Defect Property
shall be deemed zero.


    Section 6.3  Determination  of Title  Defects.  A Well or Unit shall not be
deemed to have a "Title  Defect"  if the  following  statements  are true in all
material respects with respect to such Well or Unit as of the Closing Date:

     (a) The Company has Defensible Title thereto.

     (b) All  rentals,  Pugh clause  payments,  shut-in gas  payments  and other
similar payments (other than royalties,  overriding  royalties and other similar
payments on production) due with respect to such Well or Unit have been properly
and timely paid.

     (c)  Seller is not in  default  under  the  material  terms of any  leases,
farmout agreements or other contracts or agreements respecting such Well or Unit
which could (1) prevent the Company from  receiving  the proceeds of  production
attributable to the Company's interest therein, or (2) result in cancellation of
the Company's interest therein.

     Notwithstanding any other provision in this Agreement to the contrary,  the
following  matters  shall not be  asserted  as, and shall not  constitute  Title
Defects: (i) defects in the chain of title such as minor name discrepancies, the
mere failure to recite marital status in a document, or omissions of successions
of heirship  proceedings,  unless Buyer provides  affirmative evidence that such
failure or omission results in another  Person's  superior claim of title to the
relevant Subject  Interest or portion thereof,  (ii) defects arising out of lack
of survey, (iii) defects arising out of lack of corporate authorization,  unless
Buyer provides affirmative  evidence that such lack of authorization  results in
another  Person's  superior claim of title to the relevant  Subject  Interest or
portion thereof,  (iv) the failure to obtain or absence of any federal patent or
conveyance with respect to any lands over which any state has claimed  ownership
and which  have been  covered  by a state  lease  for more than ten  years,  (v)
defects  that have been cured by  possession  under the  applicable  statutes of
limitations  or  statutes  for  prescription  and (vi)  other  defects of a type
expected to be  encountered in the area involved and  customarily  acceptable to
prudent operators and interest owners. Furthermore, in determining the existence
of a Title  Defect,  due  consideration  shall be given  to the  length  of time
hydrocarbons have been produced from the affected property in an undisputed Apay
status@  without any adverse  claim even though such period may be less than the
period  of  possession  or  use  required   under   applicable   limitations  or
prescription statutes. (As used herein, Apay status@ shall mean payment is being
made by a third party for  production  from the  affected  Well or Unit  without
indemnity from the Company except such  indemnities as are customarily  included
in division  orders,  transfer orders,  product purchase  agreements and similar
documents  commonly  used in  connection  with  the  payment  of  proceeds  from
production.)


    Section 6.4 Seller Title Credit.  A "Seller Title Credit" shall mean,  with
respect to a Well or Unit, the amount by which the value of such Well or Unit is
enhanced by virtue of (a) the Company  having a greater Net Revenue  Interest in
such  Well or Unit  than the Net  Revenue  specified  therefor  in the  Property
Schedule,  (b) the Company having a lesser Working Interest in such Well or Unit
than the Working Interest specified  therefor in the Property  Schedule,  or (c)
such Well or Unit being subject to a lien  indebtedness  which is less than that
used for the Purchase Price  allocation in the Property  Schedule,  which amount
shall be determined as follows:

     (1) If the Seller  Title Credit  results from the Company  having a greater
Net  Revenue  Interest  in such  Well  or Unit  than  the Net  Revenue  Interest
specified  therefor in the Property  Schedule,  the Seller Title Credit shall be
equal to the product  obtained by multiplying  the portion of the Purchase Price
allocated  to such Well or Unit in the  Property  Schedule  by a  fraction,  the
numerator  of  which  is the  increase  in the  Net  Revenue  Interest  and  the
denominator of which is the Net Revenue Interest specified for such Well or Unit
in the Property Schedule.

     (2) If the Seller  Title Credit  results  from the Company  having a lesser
Working Interest in a Well or Unit than the Working Interest  specified therefor
in the Property Schedule,  the Seller Title Credit shall be equal to the product
obtained by multiplying the portion of the Purchase Price allocated to such Well
or Unit in the Property  Schedule by a fraction,  the  numerator of which is the
decrease in the Working  Interest  and the  denominator  of which is the Working
Interest specified for such Well or Unit in the Property Schedule.

     (3) If the Seller Title Credit results from a Well or Unit being subject to
lesser lien  indebtedness,  the Seller Title Credit shall be equal to the amount
of the Company's proportionate share of the reduction in such lien indebtedness;
provided  that,  if lien  indebtedness  affects more than one Well or Unit,  the
Seller Title  Credits  with  respect to such Wells or Units shall be  determined
without duplication (e.g., credit shall not be given twice to the same reduction
in  indebtedness);and  provided further, no Seller Title Credit shall be allowed
to the extent such lien  indebtedness  is paid by the  Company  after the Report
Date and is not reimbursed by Seller.

     (4) In determining  the amount of Seller Title Credits,  the principles and
methodology  set forth in paragraphs (5), (6) and (7) of Section 6.2(d) shall be
applied, mutatis mutandis.

     (5) No Seller Title Credit shall be allowed on account of and to the extent
that a decrease  in the  Company's  Working  Interest  in a Well or Unit has the
effect of proportionately  decreasing the Company's Net Revenue Interest in such
Well or Unit.

     (6)  Notwithstanding  the foregoing,  if the Seller Title Credit determined
pursuant to the  foregoing  with respect to any Well or Unit is $50,000 or less,
then the Seller Title Credit with respect thereto shall be deemed zero.


    The Title Defect  Deductible  shall be  increased  dollar for dollar by the
aggregate  amount of all Seller Title  Credits.  In  addition,  the Title Defect
Deductible  shall be restored to the extent that any portion  thereof is applied
as a credit against a Title Defect Amount  attributable  to a Title Defect which
is subsequently cured by Seller or determined not to constitute a Title Defect.

     Section  6.5  Deferred  Claims  and  Disputes.  In the event that Buyer and
Seller have not agreed upon (i) the  existence  of one or more Title  Defects or
Seller Title Credits or one or more  adjustments,  credits or offsets claimed by
Buyer or Seller  pursuant to and in  accordance  with the  requirements  of this
Article VI, or (ii) the  existence  of one or more  Environmental  Defects,  any
Remediation,  Remediation  Amount or plan therefor,  or one or more adjustments,
credits or offsets  claimed by Buyer or Seller pursuant to Section 5.5, any such
dispute or claim (a "Deferred  Adjustment  Claim") shall be settled  pursuant to
this  Section 6.5 and,  except as provided in Sections  9.1(f),  9.2(f) and 9.4,
shall not prevent or delay  Closing.  In no event shall any Title Defect Amount,
Environmental  Defect Amount or  Remediation  Amount  asserted by Buyer,  or any
Seller Title Credit asserted by Seller,  as a Deferred  Adjustment  Claim exceed
the amount  asserted by Buyer or Seller  therefor  prior to the end of the Title
Examination   Period  in  accordance  with  Section  6.2  or  the  Environmental
Examination  Period in accordance with Section 5.5, as applicable.  With respect
to each potential  Deferred  Adjustment Claim, Buyer and Seller shall deliver to
the other a written notice  describing each such potential  Deferred  Adjustment
Claim,  the  amount  in  dispute  and a  statement  setting  forth the facts and
circumstances  that support such party's  position with respect to such Deferred
Adjustment  Claim.  At  Closing,  the  Purchase  Price  shall not be adjusted on
account of, and,  except as  provided in Sections  9.1(f) and 9.2(f),  no effect
shall be given to, the Deferred  Adjustment  Claim. On or prior to the thirtieth
(30th) consecutive  calendar day following the Closing Date or, if earlier,  the
date which was the "Closing  Date" before  Closing was delayed under Section 9.4
(the "Deferred Matters Date"),  the Seller and Buyer shall attempt in good faith
to reach agreement on the Deferred Adjustment Claims and, ultimately, to resolve
by written agreement all disputes regarding the Deferred  Adjustment Claims. Any
Deferred  Adjustment  Claims which are not so resolved on or before the Deferred
Matters Date may be  submitted by either party to final and binding  arbitration
in accordance  with the  Arbitration  Procedures;  provided,  however,  that the
Seller may elect at any time to resolve all  disputes  relating to the  Deferred
Adjustment  Claims by the  payment to Buyer of the amount by which the  Purchase
Price  would have been  reduced  at  Closing on account of the Title  Defects or
Environmental  Defects which constitute  Deferred  Adjustment Claims if same did
not constitute Deferred  Adjustment Claims,  together with interest thereon from
the Closing Date to the date of such payment at the Agreed Rate. Notwithstanding
anything herein provided to the contrary,  including Section 6.2(c), but without
limiting Seller's rights under Sections 6.2(c)(ii) and 6.2(c)(iii), Seller shall
be entitled to cure any Title Defect  which  constitutes  a Deferred  Adjustment
Claim at any time  prior to the point in time when a final and  binding  written
decision of the board of arbitrators is made with respect  thereto in accordance
with the  Arbitration  Procedures.  The amount of any  reduction in the Purchase
Price to which  Buyer  becomes  entitled  under the final  and  binding  written
decision of the board of  arbitrators  shall be  promptly  refunded by Seller to
Buyer,  together  with  interest  thereon  from the Closing  Date to the date of
payment at the Agreed Rate.


    Section 6.6 No Duplication. Notwithstanding anything herein provided to the
contrary,  if a Title Defect  results from any matter which could also result in
the breach of any representation or warranty of Seller set forth in Section 4.1,
then Buyer  shall  only be  entitled  to assert  such  matter as a Title  Defect
pursuant to this  Article VI and shall be  precluded  from also  asserting  such
matter as the basis of the breach of any such representation or warranty.


                                    ARTICLE 7
                           TAXES AND EMPLOYEE BENEFITS

     Section 7.1 Tax Agreements.

     (a) Tax Return Filings and Tax Payments for 1999.  Seller shall include the
Company in its consolidated federal income Tax Return, and in those state, local
and  foreign  income Tax  Returns  that are filed on a  consolidated,  combined,
unitary or nonunitary  basis, for its tax period that includes the Closing Date,
and Seller shall be responsible for the payment of, and shall indemnify and hold
harmless the Buyer  against,  all Taxes required to be paid with respect to such
consolidated,  combined,  unitary or  nonunitary  Tax Returns.  Such Tax Returns
shall include (a) the income and gains  resulting  from the purchase and sale of
the Company Shares, including,  without limitation,  any gain or loss recognized
pursuant to any Section  338(h)(10)  Election  made  pursuant to Section  7.1(d)
below,  (b) any deferred income and gain taken into income by reason of Treasury
Regulation Section 1.1502-13 or any similar provision of state, local or foreign
law, and (c) all other items of income,  gain, loss, deduction and credit of the
Company for the period up to and  including  the Closing  Date, as determined by
closing the books of the Company as of the end of the  Closing  Date;  provided,
however,  such Tax Return shall not include any income, gain, loss, deduction or
credit of the  Company  arising  as a result  of action of Buyer or the  Company
taken after the Closing,  and all such Tax Returns shall be prepared in a manner
consistent  with past  practice  (including  any Tax  elections  and  methods of
accounting),  unless a contrary treatment is required by a change in Law (or the
judicial or administrative interpretations thereof).

     (b) Termination of Existing Income Tax Sharing Agreements. The Seller shall
cause any existing income tax sharing  agreements or  arrangements  disclosed on
Schedule  4.1(q) to be terminated as of the Closing Date.  The Company shall not
be obligated to pay the Seller (or Seller=s  successor in interest)  for any tax
benefit it receives from the  utilization  of net  operating  losses in Seller=s
consolidated return filing for any period to and including the Closing Date. The
Company shall have no liability to Seller or Seller=s  Affiliates for any income
taxes with respect to any periods ending on or prior to the Closing Date.


    (c) State and  Local  Taxes/Refunds.  Buyer  shall  prepare  or cause to be
prepared  with  respect to Taxes other than income Taxes and file or cause to be
filed any Tax  Returns of the Company  for Tax  periods  which begin  before the
Closing Date and end after the Closing  Date.  With respect to Taxes (other than
Taxes to be included by Seller in its Tax Returns as required in Section  7.1(a)
above) that are imposed on a periodic basis and are payable for a taxable period
that includes (but does not end on) the Closing Date, the Company has accrued as
of March 31, 1999,  and is continuing  to accrue  reserves for Taxes through the
Closing Date. The parties agree that such accruals will be a final settlement as
between  the  parties  for all  liabilities  relating  to such taxes and that no
adjustments or refunds will be made with respect thereto.

     (d) Section  338(h)(10)  Election.  At Buyer=s option,  Seller (or Seller=s
successor in interest) (or if applicable,  its ultimate parent corporation) will
join with Buyer in making an election under Section  338(h)(10) of the Code (and
any   corresponding   elections   under  state,   local,  or  foreign  tax  law)
(collectively, a ASection 338(h)(10) Election@) with respect to the purchase and
sale of the stock of the Company  hereunder.  Seller (or  Seller=s  successor in
interest) will pay any Tax attributable to the making of the Section  338(h)(10)
Election  and will  indemnify  the Buyer and the Company  against any  liability
arising  out of any  failure  to pay such Tax.  Seller  will also pay any state,
local or foreign  Tax (and  indemnify  Buyer and Company  against any  liability
arising out of any failure to pay such Tax)  attributable  to an election  under
state,  local,  or foreign law similar to the election  available  under Section
338(g) of the Code (or which results from the making of an election under 338(g)
of the Code)  with  respect  to the  purchase  and sale of stock of the  Company
hereunder.

     (e)  Allocation of Purchase  Price.  The parties agree to negotiate in good
faith to agree upon an allocation of the Purchase  Price for Tax purposes  among
the  Company=s  Assets as promptly as possible  after  Closing;  and the parties
further  agree  that for all income  and  franchise  tax  purposes  (and,  where
applicable, financial accounting purposes), including but not limited to section
338 of the Code, they and their  Affiliates will report  consistently  with such
allocation;  provided if no such  allocation  is agreed upon within one (1) year
following  Closing,  the parties  will not be required to report on a consistent
basis.

     Section 7.2 Employee Matters.

     (a)  Maintenance of Health  Benefit  Program.  From and after Closing,  and
until a date not earlier  than the  expiration  of the Trust  provided for under
Section  7.2(b),  Buyer  agrees to cause the  Company to (a)  maintain  equal or
greater medical  benefit  coverage under the same or better terms and conditions
as is  provided  under the  Company=s  existing  plans which plans are in effect
immediately  prior to the Closing Date and which provide benefits to current and
former  Company  employees  covered  under  such  plans  as of the  date of this
Agreement  and their  covered  dependents,  and (b) fulfill the medical  benefit
commitments described on Schedule 4.1(r).


    (b) Employee Benefits Trust. Prior to Closing,  the Company shall establish
a trust,  pursuant to an Employee Benefits Trust Agreement  substantially in the
form  attached  hereto as  Exhibit  AC,@ for the  purpose  of  providing  salary
continuation  and benefits under the Company=s  insurance  plans for the periods
provided  and in  accordance  with the terms set forth in Exhibit  AC.@ Prior to
Closing,  the Company shall fund the Employee  Benefits Trust with not more than
$1,730,000 to cover the  obligations  to such employees of the Company under the
terms of the Employee Benefits Trust Agreement, the letters describing severance
benefits dated March 30, 1999 and April 11, 1999, and each and every  employment
agreement with an employee of the Company,  and such funding shall not cause any
adjustment  in the Purchase  Price.  Unutilized  funds in the trust shall be the
property of the Company as set forth in the Employee  Benefits Trust  Agreement.
Prior to the Closing,  no change in the Employee  Benefits Trust  Agreement from
the form attached  hereto as Exhibit AC@ shall be made without the prior written
consent of Buyer, which consent shall not be unreasonably  withheld. Any payment
made  pursuant to the terms of the  Employee  Benefits  Trust shall  comply with
ERISA regulation '2510.3.2(b).

     (c) Company  Employee  Benefits.  With  respect to those  employees  of the
Company who continue their employment with the Company after the Closing Date or
are hired by the Buyer or an  Affiliate of Buyer within the six (6) month period
following  the  Closing  Date,  Buyer  shall,  or shall cause the Company or the
Buyer's  Affiliates to, take all action necessary to cause all such employees to
be covered under the employee  benefit plans and fringe benefit  arrangements of
the Company, Buyer or Buyer's Affiliates,  as the case may be, on the same basis
as those provided to employees of Buyer or its  Affiliates  who hold  comparable
positions,  as determined by Buyer in its discretion;  and further provided that
Buyer's  or its  Affiliates'  health  plans  shall not  impose  any  preexisting
condition or waiting period requirement on any such employee's  participation in
such health plan with respect to  conditions  currently  permitted to be covered
thereunder  if such  employee  enrolls  within  thirty  (30)  days of  beginning
employment  with Buyer or Buyer's  Affiliate.  Buyer or Buyer's  Affiliate shall
grant all such employees  credit for purposes of  eligibility  and vesting under
Buyer's or its  Affiliate's  employee  benefit  plans  (including  vacation  and
severance)  for their  service with the Company  prior to the Closing  Date.  If
Buyer or its Affiliates give credit under their employee  vacation plans for oil
and gas  industry  experience,  such  employees  shall be given credit for their
years of  industry  experience  prior to the  Closing  Date  for  vacation  plan
purposes  rather than for their years of service  with the Company  prior to the
Closing Date.

     (d) Severance of Employment  Relationship With Certain Employees.  As of or
prior to the  Closing  Date,  Seller  shall  cause  the  Company  to  sever  its
employment relationship with any person who is designated by Buyer in accordance
with the provisions of this Section 7.2(d). No later than ten (10) Business Days
prior to Closing,  Buyer shall provide Seller with irrevocable written notice of
which  employees  of Company  will not  continue  to be  employed by the Company
following the Closing Date. Buyer agrees to make its determination and selection
of such employees in compliance with applicable  federal and state laws.  Within
five (5) Business Days after Seller  receives such written  notice  regarding an
employee,  Seller will cause the Company to provide such  employee  with written
notice of the date of such employee's  severance of employment with the Company,
which notice shall comply with the requirements of any employment agreement,  as
applicable, and with the notice requirements of ERISA ''606 and 701.




                                    ARTICLE 8
                          COVENANTS OF SELLER AND BUYER

     Section 8.1 Conduct of Business Pending Closing. Subject to Section 8.2 and
the constraints of applicable operating agreements and other existing agreements
with third  Persons  (other than any  Affiliate  of Seller) from the date hereof
through  the  Closing,  except as  disclosed  in Schedule  8.1. or as  otherwise
consented  to or  approved  by Buyer  (which  consent or  approval  shall not be
unreasonably withheld or delayed), Seller covenants and agrees that:

     (a) Changes in Business. The Company shall not:

     (1) make any material change in the conduct of its business or operations;

     (2) except in the  ordinary  course of business  and  consistent  with past
practices,  enter into, assign, terminate or amend, in any material respect, any
contract or agreement required to be disclosed pursuant to Section 4.1(n);

     (3) declare or pay any dividends, or make any distributions, in respect of,
or issue any of, its equity securities or securities convertible into its equity
securities,  or repurchase,  redeem or otherwise  acquire any such securities or
make or propose to make any other change in its capitalization;

     (4) merge into or with or consolidate with any other corporation or acquire
all or  substantially  all of the business or assets of any corporation or other
Person;

     (5) make any change in its articles of incorporation or by-laws;

     (6) purchase any  securities of or equity  interests in any  corporation or
other  Person,  except for  investments  in  marketable  securities  made in the
ordinary course of business and consistent with prior practices;

     (7) other than  pursuant  to the  requirements  of  existing  contracts  or
commitments,  sell, lease or otherwise dispose of any of the Assets,  except (i)
Assets sold, leased or otherwise  disposed of in the ordinary course of business
having a value of less than  $50,000 and (ii) any item of  personal  property or
equipment having a value of less than $25,000;

     (8) take any  action or enter  into any  commitment  with  respect to or in
contemplation of any liquidation, dissolution, recapitalization,  reorganization
or other winding up of its business or operations;

    (9) enter into any settlement of any pending or threatened  Action,  unless
the  settlement  involves the payment of money  damages of not more than $50,000
individually  or  $500,000  in the  aggregate  (other  than  on  account  of any
insurance  deductible  of $50,000 or less) and does not impose an  injunction or
similar  equitable  relief upon the Company or  materially  impair the Company's
defense of any other  Action then pending or  threatened  against the Company of
which the Company has knowledge;

     (10)  change  its  accounting  policies  or  practices  (including  without
limitation,  any change in  depreciation or  amortization  policies),  except as
required under GAAP;

     (11) enter into any  employment  agreement not  terminable at will or grant
any  increases  in  the  compensation  of its  officers  and  employees,  except
increases to  employees  who are not  officers  made in the  ordinary  course of
business and consistent with past practices;

     (12)  create  or  change  any Plan or any  Benefit  Arrangement  except  as
contemplated in Section 7.2(b);

     (13)  incur  any   indebtedness   for  borrowed   money  or  guarantee  the
indebtedness  or  obligations  of any other Person for borrowed money except for
advances  and payments in the ordinary  course of business  under the  Company=s
existing  credit  facility  with U.S. Bank  National  Association,  et. al. (See
Schedule 4.1(n));

     (14) enter into any transactions,  agreement or contract with Seller or any
Affiliate of Seller other than in the ordinary course of business and consistent
with prior practices pursuant to agreements disclosed in Schedule 4.1(n);

     (15) except in the ordinary  course of business and  consistent  with prior
practices,  enter into any material lease (whether such lease is an operating or
capital lease);

     (16) make or rescind any material  express or deemed  election  relating to
Taxes unless it is reasonably  expected that such action will not materially and
adversely affect the Company or Buyer,  settle or compromise any material claim,
action,  suit,  litigation,  proceeding,  arbitration,  investigation,  audit or
controversy  relating  to Taxes or change  in any  material  respect  any of its
methods of reporting  income or deductions  for federal income tax purposes from
those  employed in the  preparation  of its  federal  income tax returns for the
taxable  year  ending  December  31,  1998,  except as may be required by Law or
except  for such  changes  as are not  reasonably  expected  to  materially  and
adversely affect the Company or Buyer; or

     (17)  agree  in  writing  to do any  of the  foregoing  matters  which  are
prohibited by this Section 8.1(a).


    (18) adopt,  amend,  modify or alter any Plan or Benefit Arrangement listed
in Schedule 4.1(r) or describe in Section 7.2 to increase the cost or obligation
of the Company thereunder.

     (b)  Liens.  The  Company  shall not create any  express  lien or  security
interest on any Assets,  except to the extent (i) required or permitted incident
to the  exploration,  operation or development of the Assets and the business of
the Company  pursuant to this  Section 8.1 or (ii)  required or evidenced by any
contract or agreement required to be disclosed pursuant to Section 4.1(n).

     (c) Operation of Assets. The Company shall:

     (1) cause the Assets to be maintained  and operated in the ordinary  course
of business in  accordance  with the Company's  past  practices  (including  the
repair or replacement of damaged, destroyed, obsolete, depreciated,  non-working
or  non-economical  items of equipment or other personal property without regard
to the limitation of Section 8.1(c)(3) below),  maintain  insurance now in force
with  respect to the Assets,  and pay or cause to be paid all costs and expenses
in connection therewith promptly when due;

     (2) cause,  or in the event the  Company is not  operator,  use  reasonable
efforts  to  cause,  the  Assets  to be  maintained  and  operated  in  material
compliance with all Laws;


    (3) (a) not commit to  participate in the drilling of any new well or other
new capital  expenditure  on the Assets the projected  cost of which (net to the
Company's interest and without  consideration of any cost overruns) is in excess
of $500,000 in any single instance, or (b) elect to become a nonconsenting party
with respect to any operation or capital expenditure  proposed by a third Person
if the  projected  cost of such  operation  or capital  expenditure  (net to the
Company's interest and without  consideration of any cost overruns) is in excess
of  $500,000  in any  single  instance,  or if  the  Company's  election  not to
participate  in such  operation or capital  expenditure  would cause a permanent
forfeiture  of any Well or Unit  valued in excess of  $500,000  in the  Property
Schedule,  in both cases  without the advance  written  consent of Buyer,  which
consent shall not be unreasonably withheld and which consent or non-consent must
be given by Buyer  within the lesser of (x) ten (10) days of Buyer's  receipt of
the notice  from  Seller or the Company or (y)  one-half  (2) of the  applicable
notice period within which the Company is contractually  obligated to respond to
third parties to avoid a deemed election by the Company regarding such operation
or capital  expenditure  (provided  Seller or the  Company  promptly  gives such
notice to Buyer  after  Seller or the Company  receives  it),  as  specified  in
Seller's or the Company's  notice to Buyer  requesting such consent which notice
shall set forth the Company's  recommendation  as to whether the Company  should
participate in such operation or capital expenditure;  provided that, failure by
Buyer to respond within the aforesaid applicable period shall constitute Buyer's
approval  of the  recommendation  of the  Company  set forth in such notice with
respect to such operation or capital expenditure;

     (4)  maintain  and keep the Assets in full force and effect,  except  where
such failure is due to (i) the failure to pay a delay rental,  royalty,  shut in
royalty  or other  payment  by mistake or  oversight  (including  the  Company's
negligence)   unless  caused  by  the  Company's  gross  negligence  or  willful
misconduct,  or (ii) the  failure  to  participate  in an  operation  due to the
express or deemed nonconsent of Buyer; and

     (5) use reasonable  diligence to maintain its relationships with suppliers,
customers and others having  material  business  relations with the Company with
respect to the Assets so that they will be preserved  for Buyer on and after the
Closing Date.

     (d) Contracts and Agreements. The Company shall not:

     (1) grant or create  any  Preference  Right or  Transfer  Requirement  with
respect  to the Assets  except (i) in  connection  with the  performance  by the
Company of an obligation or agreement existing on the date hereof or pursuant to
this  Agreement or (ii) in connection  with the  acquisition of Assets after the
Effective  Time if  granting  or  creating  such  Preference  Right or  Transfer
Requirement is a condition of such acquisition;

     (2)  enter  into  any  oil,  gas  or  other  hydrocarbon  sales,  exchange,
processing or  transportation  contract with respect to the Assets having a term
in excess  of one year  which is not  terminable  without  penalty  on notice of
ninety (90) days or less; or

     (3) voluntarily  relinquish the Company's position as operator with respect
to any of the Assets.


     Section 8.2 Qualifications on Conduct.

     (a) Emergencies; Legal Requirements. Seller or the Company may take (or not
take,  as the case may be) any of the actions  mentioned in Section 8.1 above if
reasonably necessary under emergency circumstances (or if required or prohibited
(as the case may be)  pursuant to Law) and  provided,  Buyer is notified as soon
thereafter as practicable.


    (b)  Non-Operated  Properties.  If the  Company  is not the  operator  of a
particular  portion of the Assets, the obligations of the Company in Section 8.1
above with  respect  to such  portion of the  Assets  which  have  reference  to
operations or activities that pursuant to existing  contracts are carried out or
performed by the  operator,  shall be construed to require only that the Company
use  reasonable  diligence  (without  being  obligated  to incur any  expense or
institute  any cause of action)  to cause the  operator  of such  portion of the
Assets to take such actions or render such performance within the constraints of
the applicable operating agreements and other applicable agreements.

     (c) Certain Operations.

     (1) Should the Company not wish to pay any lease rental or other payment or
participate  in any reworking,  deepening,  drilling,  completion,  equipping or
other  operation  on or with respect to any well or other Well or Unit which may
otherwise be required by Section 8.1 above, the Company shall give Buyer written
notice thereof at least fifteen (15) days prior to the date such rental or other
payment  is due or, in the case of an  operation,  promptly  after  the  Company
receives  notice of such proposed  operation  from the operator of such property
(or if the Company is the  operator,  at the same time the  Company  gives or is
required to give notice of such proposed  operation to the non-operators of such
property).  The Company  shall not be  obligated  to make any such payment or to
elect to participate  in any such  operation  which the Company does not wish to
make or  participate  in  unless  the  Company  receives  from  Buyer,  within a
reasonable  time prior to the date when such  payment or election is required to
be made by the Company,  (a) the written  election and agreement of Buyer (i) to
require the  Company to take such action and (ii) to pay all costs and  expenses
of the  Company  with  respect  to such  lease  rental or other  payment or such
operation and (b) the funds necessary for such payment or operation as contained
in the applicable AFE therefor or estimated by the Company.  Notwithstanding the
foregoing,  the Company  shall not be obligated to pay any lease rental or other
payment or to elect to  participate  in any  operation  if the  operator  of the
property involved recommends that such action not be taken.

     (2) If a notice delivered to Buyer pursuant to Section 8.1(c)(3) sets forth
a  recommendation  that the  Company  participate  in an  operation  or  capital
expenditure the failure in which to participate will cause the forfeiture of all
or any portion of a Subject Interest (or any interest in production attributable
thereto)  and the Buyer  timely  notifies  Seller  that it does not  desire  the
Company to participate  in same,  then the resulting  forfeiture  shall not be a
Title Defect nor shall the Subject Interest  affected be a Title Defect Property
for purposes of this Agreement.

     Section  8.3 Public  Announcements.  Prior to the  Closing  Date,  no party
hereto will issue,  or permit any agent or Affiliate  of it to issue,  any press
releases or otherwise  make, or cause any agent or Affiliate of it to make,  any
public   statements  with  respect  to  this  Agreement  and  the   transactions
contemplated  hereby  without  first  providing  a copy to the  other  party and
allowing  them the  opportunity  to comment on such press  release or statement,
except where such release or statement is deemed in good faith by the  releasing
party to be  required  by Law or under the rules  and  regulations  of any stock
exchange on which the shares of such party or any of its  Affiliates are listed.
In each case to which  such  exception  applies,  the  releasing  party will use
reasonable diligence to provide a copy of such release or statement to the other
party prior to releasing or making the same.

    Section  8.4  Actions  by  Parties.  Each  of  the  parties  agrees  to use
reasonable  diligence to satisfy the  conditions to Closing set forth in Article
IX and to refrain from taking any action  within its control which would cause a
breach by such party of a representation or warranty set forth herein; provided,
however,  that  neither  Seller  nor any  Affiliate  of Seller  (other  than the
Company)  shall be required to expend any funds or incur any costs to prevent or
cure a breach of the  representations  and  warranties  set forth in Section 4.1
with respect to the Company.

     Section 8.5 Further Assurances. Seller and Buyer each agrees that from time
to time after the Closing  Date,  each of them will execute and deliver or cause
their respective  Affiliates (including the Company) to execute and deliver such
further instruments,  and take (or cause their respective Affiliates,  including
the Company,  to take) such other  action,  as may be necessary to carry out the
purposes and intents of this Agreement.

     Section 8.6 Records and Record Keeping System. Buyer agrees to maintain (or
cause the Company to maintain) the Company  Records until the fifth  anniversary
of the Closing  Date (or for such longer  period of time as Seller  shall advise
Buyer (or the Company) is necessary in order to have Company  Records  available
with  respect to open years for tax audit  purposes),  or, if any of the Company
Records pertain to any claim or dispute pending on the fifth  anniversary of the
Closing  Date,  Buyer shall  maintain any of the Company  Records  designated by
Seller  until such claim or  dispute  is finally  resolved  and the time for all
appeals has been exhausted. In addition,  Buyer agrees to maintain (or cause the
Company to maintain) the financial record keeping system (including the computer
system) relating to the Company and Assets which exists on the Closing Date (the
"Record Keeping System") for a period of six months from the Closing Date. Buyer
shall provide (or cause the Company to provide)  Seller and its  representatives
reasonable  access  at  reasonable  times  to and the  right  to copy all or any
portion of the Company  Records and the Record  Keeping System (at Seller's sole
expense)  for the  purposes  of (i)  preparing  and  delivering  any  accounting
provided for under this  Agreement  and  adjusting,  prorating  and settling the
charges and credits provided for in this Agreement,  (ii) complying with any Law
affecting  Seller's interest in the Company Shares or the Company's  interest in
the Assets prior to the Closing Date, (iii) preparing any audit of the books and
records of any third party  relating to Seller's  interest in the Company Shares
or the Company's interest in the Assets prior to the Closing Date, or responding
to any audit  prepared by such third parties,  (iv)  preparing Tax Returns,  (v)
responding  to or  disputing  any Tax  audit  or (vi)  asserting,  defending  or
otherwise dealing with any claim or dispute under this Agreement or with respect
to the Company or the Assets.


    Section 8.7 Maintenance of Indemnification  Provisions.  In addition to and
without limiting the Company's and Buyer's respective obligations under Articles
XII and XIII,  from and after the Closing Date,  Buyer shall indemnify (or shall
cause Company and its  successors  and assigns to  indemnify)  and hold harmless
each  present and former  director  and officer of the Company as to all claims,
actions, suits,  proceedings,  or investigations arising out of or pertaining to
matters  existing or  occurring  at or prior to the  Closing  Date to the extent
provided in the Company's  certificate of  incorporation  and bylaws (or similar
governing  documents) as in effect on the date hereof (to the extent  consistent
with Law), which provisions shall survive the Closing Date and shall continue in
full force and effect for a period of not less than five years from the  Closing
Date with respect  only to the  officers and  directors of the Company as of and
prior to the  Closing;  Buyer  shall not amend (or shall  cause  Company and its
successors  and assigns not to amend)  those  provisions  for such period to the
extent such amendment  would affect the Company's  indemnity  obligations  under
this Section 8.7 with respect to the period at or prior to the Closing Date; and
Buyer shall advance (or shall cause Company and its  successors  and assigns) to
advance  expenses to each person  indemnified  hereunder  to the fullest  extent
permitted by Law and required by such  certificate of  incorporation  and bylaws
(or similar governing documents). If any claim or claims are asserted or made as
to matters subject to the foregoing  indemnity  provisions within such five year
period,  all  rights to  indemnification  in respect of any such claim or claims
shall  continue  until  the  disposition  thereof.  Buyer  shall  take all steps
necessary to assure the Company's compliance with the foregoing covenants.  This
Section 8.7 shall not prevent the dissolution,  merger or  reorganization of the
Company provided the indemnification obligations in this Section 8.7 are carried
forward to the Company's successor by merger or reorganization or are adequately
provided for in the event of a dissolution.

     Section  8.8 Minimum Net Worth.  In  addition to and without  limiting  the
Company's and Buyer's respective  obligations under Section 8.7 and Articles XII
and XIII, from and after the Closing Date, Buyer agrees to cause Company and its
successors  and  assigns to maintain a minimum net worth of not less than 50% of
the net worth of the  Company as of the  Effective  Time  during the term of the
Employee Benefits Trust Agreement provided for under Section 7.2(b).

     Section 8.9 Company  Obligations.  From and after Closing,  Buyer agrees to
cause the Company to perform and comply with each of the actions and obligations
required or stipulated in this Agreement to be performed or complied with by the
Company and not to take any action  which would  prevent  such  performance  and
compliance by the Company;  provided that, without limiting the representations,
warranties,  covenants and  agreements of the Buyer which are set forth in other
Sections of this Agreement or releasing the Buyer or any Affiliate of Buyer from
any duty, obligation or requirement under the Uniform Fraudulent Transfer Act or
any other Law, neither Buyer nor any Affiliate of Buyer (other than the Company)
shall be required to contribute  any capital to the Company by virtue of Buyer's
obligations under this Section.

     Section 8.10 Unobtained  Consents.  Seller agrees to provide all Unobtained
Consents to Buyer on the Closing Date.


    Section 8.11 Financial Statements and Reports.  From time to time following
the execution of this Agreement,  Buyer shall provide Seller with written notice
identifying  any financial  and other  information  specifically  related to the
Company  that are in  Seller=s  possession  or under its  control and that Buyer
reasonably  believes it will need before or after the  Closing.  Seller will use
its reasonable best efforts to provide Buyer, at Buyer=s expense, with copies of
the material requested at or prior to Closing, and will cooperate with Buyer, at
Buyer=s  expense,  in connection  with  furnishing any additional  financial and
other  information  that  are  in  Seller=s  possession  or  under  its  control
specifically  concerning  the Company  that Buyer may  reasonably  request  from
Seller within one year following  Closing that Buyer reasonably needs to prepare
its financial statements,  tax returns, or reports or registrations  required by
federal or state securities laws. In addition,  Seller will provide Buyer at the
Closing with written authorization for Seller=s accountants to release to Buyer,
at Buyer=s  expense,  any such  information  concerning  the  Company  needed to
prepare Buyer=s  financial  statements,  tax returns or reports or registrations
required  by federal or state  securities  laws.  Seller  shall also  obtain and
provide  to  Buyer  at  Closing  a  covenant  of  any  successor  to  Seller  or
substantially  all assets of Seller that the successor  will comply in full with
this Section 8.11, as if the successor were the Seller, for a period of one year
from the date of the Closing.

     Section 8.12 Salary Continuation and Other Employee Benefits.  On or before
the Closing  Date,  Seller  shall  provide  Buyer with  copies of  documentation
reasonably  satisfactory to Buyer that any payments  provided under the Employee
Benefits  Trust  Agreement  to any  employee  of the  Company  by  reason of the
termination  of his or her employment  during the term of the Employee  Benefits
Trust Agreement include, and are not in addition to, severance pay and insurance
benefits payable under any employment  agreement with such employee or under the
two  letters  referred to in Section  7.2(b).  Nothing in this  Section  8.12 or
elsewhere in this Agreement,  including without limitation the Employee Benefits
Trust Agreement, shall limit or otherwise affect the Company=s obligations under
the terms of any employment  agreement disclosed in Schedule 4.1(r) with respect
to matters other than the payment of such severance pay and insurance benefits.

     Section 8.13 Targeted  Incentive Plan. The Seller shall provide the Company
with funds to make all  payments  to  employees  of the Company  required  under
Seller=s Targeted Incentive Plan. The Company shall make all such payments prior
to Closing.  In  addition,  prior to or at the  Closing,  Seller  shall  provide
evidence  reasonably  satisfactory  to Buyer (i) that  Seller has  provided  the
Company  with all funds  necessary  to make all  payments  to  employees  of the
Company  required  under  Seller=s  Targeted  Incentive  Plan and (ii)  that the
Company has made all such payments.

     Section 8.14.  Approval by Buyer=s  Shareholders.  If Buyer determines that
approval of its  shareholders  is required in connection  with the  transactions
contemplated by this  Agreement,  Buyer may extend the Closing Date for up to 30
days  after  October  31,  1999,  provided  that  (i) the  approval  by  Buyer=s
shareholders shall not be a condition to closing; and (ii) in no event shall the
Closing  Date be extended by reason of this  Section 8.14 beyond the date agreed
to by Seller in an agreement  to be entered into  concerning a sale or merger of
Seller as the target date for closing such sale or merger.


    Section 8.15 Excess Parachute Payments. The Seller shall be responsible for
and shall  make all  payments  to  employees  of the  Company  that are  AExcess
Parachute  Payments@  within  the  meaning  of Code  Section  280G  and that are
attributable  to the vesting of options of the Seller,  and shall be entitled to
claim the deduction  therefor.  The Purchase Price shall be adjusted downward at
the  Closing  by an  amount  equal to the  amount of any loss of  deduction  for
AExcess Parachute Payments@ made to any employees of the Company, calculated for
each  employee of the Company  and totaled for all  employees,  and borne by the
Company calculated as follows at the Closing:

     (Company  Obligations  under the  Employee  Benefits  Trust and  Employment
Agreements  (Related to Payments in Lieu of Notice) x AExcess Parachute Payment@
Total Parachute Payment)

     Multiplied by an assumed combined federal and state income Tax rate of 40%.

     An example of this  calculation for an individual  employee using estimated
figures available on the date hereof is attached hereto as Schedule 8.15.


                                    ARTICLE 9
                               CLOSING CONDITIONS

     Section  9.1  Seller's  Closing  Conditions.  The  obligation  of Seller to
proceed  with the  Closing  contemplated  hereby is  subject,  at the  option of
Seller,  to the  satisfaction  on or  prior  to the  Closing  Date of all of the
following conditions:

     (a) Representations,  Warranties and Covenants. The (1) representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material  respects  on  and  as of the  Closing  Date,  and  (2)  covenants  and
agreements  of Buyer to be performed on or before the Closing Date in accordance
with this  Agreement  shall have been duly  performed in all material  respects;
provided however,  for purposes of this Section 9.l(a),  in determining  whether
this condition has been satisfied, any such representation,  warranty,  covenant
or  agreement  of  Buyer  contained  in this  Agreement  which is  qualified  by
materiality  shall  be read and  interpreted  as if such  qualification  was not
included  therein  (it being the  intent  of the  parties  not to apply a double
materiality threshold in determining the satisfaction of this condition).

     (b) Officer's  Certificate.  Seller shall have received a certificate dated
as of the Closing Date,  executed by a duly authorized  officer of Buyer, to the
effect that to such  officer's  knowledge the conditions set forth in subsection
(a) of this Section 9.1 have been satisfied.


    (c) Closing  Documents.  On or prior to the Closing Date,  Buyer shall have
delivered,  or  be  standing  ready  to  deliver  at  Closing,  all  agreements,
instruments  and other  documents  required to be delivered by Buyer pursuant to
Section 10.3.

     (d) No Action.  On the Closing  Date, no suit,  action or other  proceeding
(excluding any such matter  initiated by Seller or any of its Affiliates)  shall
be pending or  threatened  before  any court or  governmental  agency or body of
competent  jurisdiction  seeking to enjoin or restrain the  consummation  of the
Closing or recover  damages  from Seller or any  Affiliate  of Seller  resulting
therefrom.

     (e) Opinion of Counsel.  Buyer shall have  delivered  to Seller the written
opinion of counsel to Buyer,  dated as of the Closing Date,  which counsel shall
be reasonably acceptable to Seller, substantially in the form attached hereto as
Exhibit 9.1(e).

     (f)  Adjustments.  The sum of (i) the  reductions in the Purchase  Price on
account of the aggregate  (net) amount of all  Environmental  Defect Amounts and
Title Defect  Amounts,  and (ii) the aggregate  amount of  Environmental  Defect
Amounts and Title Defect  Amounts  claimed by Buyer with  respect to  unresolved
Deferred Adjustment Claims shall not exceed $3,000,000.

     (g) Seller Shareholder  Approval.  The transactions provided for under this
Agreement  shall have been  approved by  Seller=s  shareholders,  provided  that
Seller may waive this  condition  based on Seller having  obtained an opinion of
Delaware  counsel to the effect  that such  approval is not  required  under the
General Corporation Law of Delaware, which opinion shall be from a firm and in a
form and substance reasonably satisfactory to Buyer and Buyer=s counsel.

     Section 9.2 Buyer's Closing Conditions.  The obligation of Buyer to proceed
with the Closing  contemplated hereby is subject, at the option of Buyer, to the
satisfaction on or prior to the Closing Date of all of the following conditions:

     (a) Representations,  Warranties and Covenants. (1) The representations and
warranties  of Seller  contained in this  Agreement (i) which contain a Material
Adverse Effect qualifier shall be true and correct on and as of the Closing Date
as though made as of the  Closing  Date and (ii) which do not contain a Material
Adverse Effect  qualifier shall be true and correct in all material  respects on
and as of the Closing  Date as though made as of the Closing  Date,  and (2) the
covenants and agreements of Seller to be performed on or before the Closing Date
in accordance with this Agreement shall have been duly performed in all material
respects.


    If the Seller  breaches any of the  representations  and  warranties of the
Seller contained herein,  which breaches  individually would not have a Material
Adverse Effect, but that in the aggregate would exceed $1,000,000 (an AAggregate
Material Adverse  Effect@),  on or before the Closing Date, the Buyer may notify
the Seller of such  Aggregate  Material  Adverse  Effect,  and Seller shall have
right  to (x)  extend  the  Closing  Date by no more  than ten days and cure the
breaches underlying the Aggregate Material Adverse Effect to the satisfaction of
the Buyer  within such ten-day  period or (y) reduce the  Purchase  Price by the
estimated amount of such Aggregate  Material Adverse Effect, it being understood
by the parties that if the Seller (x) cures such breaches to the satisfaction of
the  Buyer  within  such  ten-day  period  or (y)  adjusts  the  Purchase  Price
accordingly,  the Buyer  shall not have the right to  terminate  this  Agreement
under this  Section  9.2(a).  Notwithstanding  the  foregoing,  for  purposes of
determining whether breaches of Seller=s  representations and warranties have an
AAggregate  Material Adverse Effect,@ any breaches of any single  representation
and  warranty  which  have an  adverse  effect  on the value of the  Company  of
$200,000 or less will be treated as having a value of zero.  In addition,  Buyer
agrees to use  diligent  efforts  to notify  Seller  of any  asserted  breach of
Seller=s  representations  and warranties as soon as reasonably possible so that
Seller, at its option, can attempt to cure such asserted breaches.

     (b) Officer's Certificate. Buyer shall have received a certificate dated as
of the Closing Date, executed by a duly authorized officer of the Seller and the
Company, to the effect that to such officers' knowledge the conditions set forth
in subsection (a) of this Section 9.2 have been satisfied.

     (c) Closing  Documents.  On or prior to the Closing Date, Seller shall have
delivered,  or be  standing  ready to deliver at the  Closing,  all  agreements,
instruments and documents required to be delivered by Seller pursuant to Section
10.2.

     (d) No Action.  On the Closing  Date, no suit,  action or other  proceeding
(excluding any such matter initiated by Buyer or any of its Affiliates) shall be
pending  or  threatened  before  any  court or  governmental  agency  or body of
competent  jurisdiction  seeking to enjoin or restrain the  consummation  of the
Closing  or  recover  damages  from Buyer or any  Affiliate  of Buyer  resulting
therefrom.

     (e) Opinion of Counsel.  Seller  shall have  delivered to Buyer the written
opinion of counsel to Seller,  dated as of the Closing Date, which counsel shall
be reasonably acceptable to Buyer,  substantially in the form attached hereto as
Exhibit 9.2(e).

     (f)  Adjustments.  The sum of (i) the  reductions in the Purchase  Price on
account of the aggregate  (net) amount of all  Environmental  Defect Amounts and
Title Defect  Amounts,  and (ii) the aggregate  amount of  Environmental  Defect
Amounts and Title Defect  Amounts  claimed by Buyer with  respect to  unresolved
Deferred Adjustment Claims shall not exceed $3,000,000.


    Section  9.3  Regulatory  Approvals.  If Buyer or  Seller  determines  that
approval of a Governmental  Authority is required to permit the Company or Buyer
to continue to use any  governmental  permits  with respect to the Assets or the
Company after Closing,  Buyer and Seller shall, as promptly as practicable after
the date of this Agreement,  cooperate in filing the required  applications  and
notices with the appropriate  Governmental  Authorities seeking authorization to
confirm  the  Company's  continued  right to use such  permits or to transfer or
assign such permits to Buyer (the "Regulatory  Approvals") as necessary.  To the
extent assignable and assignment to Buyer is necessary in the foregoing context,
Seller will cause the Company to assign  such  permits to Buyer at the  Closing.
Each party agrees to use reasonable diligence to obtain the Regulatory Approvals
and the  parties  agree  to  cooperate  fully  with  each  other  and  with  all
Governmental  Authorities  to obtain the  Regulatory  Approvals  at the earliest
practicable date.

     Section 9.4 Deferred Adjustment Claims Extension.  Notwithstanding  Section
9.2(f),  if Buyer  elects  not to  proceed  with the  Closing as a result of the
non-satisfaction of the condition set forth in Section 9.2(f) and such condition
would have been satisfied but for the amount of Environmental Defect Amounts and
Title  Defect  Amounts  claimed by Buyer with  respect  to  unresolved  Deferred
Adjustment  Claims,  Seller  may  elect to delay  the  Closing  until  the tenth
Business  Day  following  the date when a  sufficient  amount  of such  Deferred
Adjustment  Claims have been resolved  pursuant to Section 6.5 to determine that
the  condition  set  forth in  Section  6.5 has been  satisfied  or has not been
satisfied.  A Deferred  Adjustment  Claim will be deemed  resolved  pursuant  to
Section  6.5  when  a  final  and  binding  written  decision  of the  board  of
arbitrators  is made with respect  thereto in  accordance  with the  Arbitration
Procedures.

     Section 9.5 Failure to Disclose.  The breach by Seller of its obligation to
give  notice  to Buyer  under  Section  4.l(cc)  and the  breach by Buyer of its
obligation to give notice to Seller under Section  4.2(j) shall not constitute a
failure of the  conditions to Closing under Sections 9.1 and 9.2. From and after
Closing,  neither Buyer nor Seller shall have any obligation or liability  under
this  Agreement  or in  connection  with the  transaction  contemplated  in this
Agreement for any breach of a representation  or warranty by such party prior to
Closing  by reason of any fact or facts of which the other  party had  knowledge
prior to Closing if and to the extent such other party  breached its  obligation
to give  notice of such fact or facts to the other  party  pursuant  to  Section
4.1(cc) or 4.2(j), as applicable. From and after Closing, this Section 9.5 shall
constitute  the sole remedy of Buyer and Seller for the other party's  breach of
Section 4.1(cc) or 4.2(j), as the case may be.


                                   ARTICLE 10
                                     CLOSING

     Section  10.1  Closing.  The Closing  shall be held on the Closing  Date at
10:00 a.m., Mountain time, at the offices of the Company,  Denver,  Colorado, or
at such other time or place as Seller and Buyer may otherwise agree in writing.

     Section 10.2 Seller's Closing Obligations. At Closing, Seller shall execute
and deliver, or cause to be executed and delivered, to Buyer the following:

     (a) The stock  certificates  representing  all Company Shares,  endorsed in
blank or accompanied by duly executed assignment documents;

     (b) The officer's certificate referred to in Section 9.2(b);

     (c) The legal opinion referred to in Section 9.2(e);

     (d)  Resignations  or  terminations  of the officers  and  directors of the
Company from their  status as officers or directors  effective as of the Closing
that are  requested  by Buyer at least two  Business  Days prior to the  Closing
Date; and

     (e) A non-foreign  affidavit,  as such  affidavit is referred to in Section
1445(b)(2) of the Code, in form attached hereto as Exhibit 10.2(e),  dated as of
the Closing Date.

     Section  10.3  Buyer's  Closing  Obligations.  At Closing,  Buyer shall (i)
deliver, or cause to be delivered,  the Closing Payment to Seller in immediately
available  funds to the bank account as provided in Section 3.2 and (ii) execute
and deliver, or cause to be executed and delivered, to Seller the following:

     (a) The officer's certificate of Buyer referred to in Section 9.1(b);

     (b) The legal opinion referred to in Section 9.1(e); and

     (c) An Assumption  Agreement  executed by each officer of the Company whose
resignation  or  termination  is not  requested  by Buyer  pursuant  to  Section
10.2(d), in the form attached hereto as Exhibit 10.3(d).


                                   ARTICLE 11
                                    SURVIVAL

     Section  11.1  Survival.  Except  as  provided  in this  Section  11.1,  no
representations,  warranties, covenants and agreements made herein shall survive
the Closing. Each representation,  warranty,  covenant and agreement made herein
shall terminate and cease to be of further force and effect as of the Closing or
such later date after  Closing as is expressly  stipulated  in this Section 11.1
for the survival thereof. Following the Closing or such later date stipulated in
this Section  11.1 for the  survival  thereof,  such  representation,  warranty,
covenant  or  agreement  shall not form the basis for or give rise to any claim,
demand, cause of action, counterclaim, defense, damage, indemnity, obligation or
liability  which is asserted,  claimed,  made or filed  following the Closing or
such later date stipulated for survival.  It is expressly  agreed that the terms
and  provisions  of Sections  5.3,  5.5, 6.5, 7.1, 7.2, 8.5, 8.6, 8.7, 8.8, 8.9,
8.11, 8.13 and 9.5, Articles VI, XI, XII, XIII and XV, and Buyer's indemnity and
hold harmless of the Seller Indemnified Parties under Sections 5.1 and 5.4 shall
survive the Closing  indefinitely  or for such shorter  period of time as may be
stipulated  in such  provisions.  In  addition,  the  definitions  set  forth in
Appendix A to this Agreement or in any other  provision of this Agreement  which
are used in the  representations,  warranties,  covenants and  agreements  which
survive the Closing  pursuant to this Section 11.1 shall  survive the Closing to
the extent necessary to give operative effect to such surviving representations,
warranties, covenants and agreements.

                                  ARTICLE 12
                                   LIMITATIONS

     Section 12.1 Disclaimer of Warranties.  NOTWITHSTANDING  ANYTHING CONTAINED
TO THE  CONTRARY IN ANY OTHER  PROVISION OF THIS  AGREEMENT,  IT IS THE EXPLICIT
INTENT OF EACH PARTY  HERETO  THAT  SELLER IS NOT MAKING ANY  REPRESENTATION  OR
WARRANTY  WHATSOEVER,  EXPRESS,  IMPLIED,  STATUTORY OR OTHERWISE,  BEYOND THOSE
REPRESENTATIONS  OR  WARRANTIES  EXPRESSLY  GIVEN IN THIS  AGREEMENT,  AND IT IS
UNDERSTOOD THAT, SUBJECT TO SUCH EXPRESS  REPRESENTATIONS AND WARRANTIES,  BUYER
TAKES THE COMPANY AND THE ASSETS AAS IS@ AND AWHERE IS.@  WITHOUT  LIMITING  THE
GENERALITY OF THE IMMEDIATELY  PRECEDING  SENTENCE,  SELLER HEREBY (I) EXPRESSLY
DISCLAIMS AND NEGATES ANY  REPRESENTATION  OR WARRANTY,  EXPRESS OR IMPLIED,  AT
COMMON LAW, BY STATUTE OR OTHERWISE,  RELATING TO (A)THE CONDITION OF THE ASSETS
(INCLUDING,   WITHOUT   LIMITATION,   ANY   IMPLIED  OR  EXPRESS   WARRANTY   OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR  PURPOSE, OR OF CONFORMITY TO MODELS
OR SAMPLES OF MATE , OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS  MATE IN OR ON,
OR DISPOSED OF OR DISCHARGED FROM, THE ASSETS) OR (B) ANY INFRINGEMENT BY SELLER
OR ANY OF ITS AFFILIATES OF ANY PATENT OR PROPRIETARY  RIGHT OF ANY THIRD PARTY,
AND (II)  NEGATES ANY RIGHTS OF BUYER  UNDER  STATUTES  TO CLAIM  DIMINUTION  OF
CONSIDERATION  AND ANY CLAIMS BY BUYER FOR DAMAGES BECAUSE OF REDHIBITORY  VICES
OR DEFECTS, WHETHER KNOWN OR UNKNOWN, IT BEING THE INTENTION OF SELLER AND BUYER
THAT THE ASSETS ARE TO BE ACCEPTED BY BUYER IN THEIR PRESENT CONDITION AND STATE
OF REPAIR.


    Section 12.2 Damages. NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN
ANY OTHER  PROVISION OF THIS AGREEMENT,  SELLER AND BUYER AGREE THAT,  EXCEPT AS
PROVIDED  IN SECTIONS  14.2 and 14.3,  THE  RECOVERY OF ANY DAMAGES  SUFFERED OR
INCURRED  AS A RESULT OF ANY  BREACH BY ANY PARTY OR THE  COMPANY  OF ANY OF ITS
REPRESENTATIONS, WARRANTIES OR OBLIGATIONS UNDER THIS AGREEMENT SHALL BE LIMITED
TO THE ACTUAL  DAMAGES  SUFFERED OR INCURRED  (WHICH SHALL INCLUDE ANY INDIRECT,
CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES AWARDED AGAINST OR PAID BY
THE INDEMNIFIED PARTY SEEKING INDEMNITY HEREUNDER TO ANY THIRD PERSON WHO IS NOT
AFFILIATED  WITH  SUCH  INDEMNIFIED  PARTY)  AS A RESULT  OF THE  BREACH  BY THE
BREACHING PARTY OF ITS REPRESENTATIONS,  WARRANTIES OR OBLIGATIONS HEREUNDER AND
IN NO EVENT SHALL THE BREACHING  PARTY BE LIABLE TO THE  NON-BREACHING  PARTY OR
ANY INDEMNIFIED  PARTY FOR ANY INDIRECT,  CONSEQUENTIAL,  SPECIAL,  EXEMPLARY OR
PUNITIVE DAMAGES (INCLUDING,  WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST
PROFITS OR OPPORTUNITIES OR LOST OR DELAYED PRODUCTION)  SUFFERED OR INCURRED BY
THE NONBREACHING PARTY OR ANY INDEMNIFIED PARTY AS A RESULT OF THE BREACH BY THE
BREACHING  PARTY  OF ANY  OF  ITS  REPRESENTATIONS,  WARRANTIES  OR  OBLIGATIONS
HEREUNDER. This Section 12.2 shall operate only to limit a party's liability and
shall not operate to increase or expand any  contractual  obligation  of a party
hereunder or cause any  contractual  obligation of a party  hereunder to survive
longer than provided in Section 11.1.

     Section 12.3 Plugging and Abandonment Obligations. NOTWITHSTANDING ANYTHING
CONTAINED  TO THE  CONTRARY  IN ANY OTHER  PROVISION  OF THIS  AGREEMENT,  IT IS
EXPRESSLY  AGREED FOR ALL PURPOSES OF THIS  AGREEMENT  THAT (I) THE PLUGGING AND
ABANDONMENT  OBLIGATIONS  CONSTITUTE COMPANY LIABILITIES,  (II) THE PLUGGING AND
ABANDONMENT   OBLIGATIONS   SHALL  NOT  CONSTITUTE   ENVIRONMENTAL   CONDITIONS,
ENVIRONMENTAL CLAIMS, OFFSITE ENVIRONMENTAL MATTERS,  ENVIRONMENTAL LIABILITIES,
ENVIRONMENTAL  DEFECTS, OR ENVIRONMENTAL MATTERS, (III) SELLER MAKES NO WARRANTY
OR  REPRESENTATION,  EXPRESS  OR  IMPLIED,  WITH  RESPECT  TO THE  PLUGGING  AND
ABANDONMENT   OBLIGATIONS,   AND  (IV)  SELLER  SHALL  HAVE  NO  LIABILITIES  OR
OBLIGATIONS WITH RESPECT TO PLUGGING AND ABANDONMENT OBLIGATIONS.

     Section 12.4  Environmental  Release.  From and after Closing,  Buyer shall
have no rights to recovery or indemnification  for Environmental  Liabilities or
any  Environmental  Matters  under  this  Agreement  or Law,  and all  rights or
remedies which Buyer may have at or under Law with respect to any  Environmental
Liabilities  or  Environmental  Matters  are  expressly  waived.  FROM AND AFTER
CLOSING  BUYER  HEREBY  AGREES,  WARRANTS AND  COVENANTS TO RELEASE,  ACQUIT AND
FOREVER  DISCHARGE  SELLER AND ALL SELLER  INDEMNIFIED  PARTIES FROM ANY AND ALL
CLAIMS,  DEMANDS AND CAUSES OF ACTION OF WHATSOEVER  NATURE,  INCLUDING  WITHOUT
LIMITATION  ALL  CLAIMS,  DEMANDS  AND  CAUSES OF ACTION  FOR  CONTRIBUTION  AND
INDEMNITY  UNDER  STATUTE OR COMMON LAW,  WHICH COULD BE ASSERTED  NOW OR IN THE
FUTURE AND THAT RELATE TO OR IN ANY WAY ARISE OUT OF  ENVIRONMENTAL  LIABILITIES
OR  ENVIRONMENTAL  MATTERS.  FROM AND AFTER CLOSING,  BUYER, THE COMPANY AND ALL
OTHER  BUYER  INDEMNIFIED  PARTIES  WARRANT,  AGREE AND  COVENANT  NOT TO SUE OR
INSTITUTE  ARBITRATION  AGAINST THE SELLER OR ANY SELLER  INDEMNIFIED PARTY UPON
ANY CLAIM,  DEMAND OR CAUSE OF ACTION FOR INDEMNITY AND  CONTRIBUTION  THAT HAVE
BEEN  ASSERTED  OR  COULD  BE  ASSERTED  FOR ANY  ENVIRONMENTAL  LIABILITIES  OR
ENVIRONMENTAL MATTERS.


                                  ARTICLE 13
                                 INDEMNIFICATION

     Section 13.1 Indemnification By Buyer. From and after the Closing Date, the
Company shall pay, perform, fulfill and discharge all Company Liabilities. Buyer
shall indemnify and hold harmless the Seller and all Seller Indemnified  Parties
(other than the  Company),  each of their  respective  past,  present and future
directors,  officers,  employees,  consultants and agents, each of the Company's
past and  present  (and,  through  the  Closing,  future)  directors,  officers,
employees,  consultants and agents), and each of the directors, officers, heirs,
executors,  successors  and assigns of any of the foregoing  (collectively,  the
"Seller  Indemnified  Parties")  from  and  against  any  and  all  (i)  Company
Liabilities  incurred  by or  asserted  against  any of the  Seller  Indemnified
Parties,   INCLUDING,   WITHOUT  LIMITATION,  ANY  COMPANY  LIABILITY  BASED  ON
NEGLIGENCE OR STRICT  LIABILITY OF THE SELLER  INDEMNIFIED  PARTIES OR ANY OTHER
THEORY OF LIABILITY,  WHETHER IN LAW (WHETHER COMMON OR STATUTORY) OR EQUITY BUT
NOT  INCLUDING  COMPANY   LIABILITIES  BASED  ON  GROSS  NEGLIGENCE  OR  WILLFUL
MISCONDUCT OF THE SELLER INDEMNIFIED PARTIES and (ii) subject to the limitations
of Section 11.1 and Article XII, any Covered Liability  resulting from,  arising
out  of  or  on  account  of  any  breach,  failure  or  nonfulfillment  of  any
representation,  warranty,  covenant or  agreement on the part of Buyer which is
expressly set forth in this Agreement.

    Section  13.2  Third  Party  Claims.  If a claim  by a third  party is made
against a Seller Indemnified Party, and if such party (the AIndemnified  Party@)
intends to seek indemnity  with respect  thereto under Section 5.1, 5.4, 8.7, or
13.1, the Indemnified  Party shall promptly furnish written notice to Buyer (the
"Indemnitor"),  of such claims. The Indemnitor shall have thirty (30) days after
receipt of such notice to undertake, conduct and control, through counsel of its
own choosing and at its own expense,  the settlement or defense thereof, and the
Indemnified Party shall cooperate with it in connection therewith; provided that
the  Indemnitor  shall  permit  the  Indemnified  Party to  participate  in such
settlement or defense through counsel chosen by such Indemnified Party, however,
the fees and expenses of such counsel shall be borne by such Indemnified  Party.
So long as the Indemnitor,  at Indemnitor's cost and expense, (1) has undertaken
the defense of, and assumed full responsibility for all indemnified  liabilities
with respect to, such claim,  (2) is  reasonably  contesting  such claim in good
faith, by appropriate proceedings,  and (3) has taken such action (including the
posting of a bond, deposit or other security) as may be necessary to prevent any
action  to  foreclose  a lien  against  or  attachment  of the  property  of the
Indemnified Party for payment of such claim, the Indemnified Party shall not pay
or settle any such claim.  Notwithstanding compliance by the Indemnitor with the
preceding sentence,  the Indemnified Party shall have the right to pay or settle
any  such  claim,  provided  that in such  event  it shall  waive  any  right to
indemnity therefor by the Indemnitor for such claim. If, within thirty (30) days
after the  receipt of the  Indemnified  Party's  notice of a claim of  indemnity
hereunder,  the Indemnitor does not notify the Indemnified Party that it elects,
at  Indemnitor's  cost and expense,  to undertake the defense thereof and assume
full  responsibility  for all indemnified  liabilities with respect thereto,  or
gives such notice and thereafter fails to contest such claim in good faith or to
prevent  action to foreclose a lien  against or  attachment  of the  Indemnified
Party's  property as contemplated  above,  the Indemnified  Party shall have the
right to  contest,  settle  and/or  compromise  the claim and, to the extent the
actions, if any, taken by the Indemnified Party in settling or compromising such
claim are reasonable and in good faith, the Indemnified  Party shall not thereby
waive any right to indemnity therefor pursuant to this Agreement.

     Section  13.3  Seller's  General  Liability   Limitation.   Notwithstanding
anything herein provided to the contrary, Seller shall not have any liability to
Buyer,  any  Affiliate of Buyer,  the  Company,  any of their  respective  past,
present and future directors,  officers,  employees,  consultants and agents, or
the directors,  officers, heirs, executors,  successors or assigns of any of the
foregoing for any matter  relating to the Company or arising in connection  with
the transactions covered by this Agreement, including without limitation Company
Liabilities from and after the Closing,  it being understood and agreed that all
such liabilities will be resolved,  settled and fully disposed of (or allowances
made therefor)  prior to Closing in accordance  with the terms and conditions of
this Agreement.


                                   ARTICLE 14
                       TERMINATION; REMEDIES; LIMITATIONS

     Section 14.1 Termination.

     (a)  Termination  of  Agreement.   This  Agreement  and  the   transactions
contemplated hereby may be terminated at any time prior to the Closing:

     (1) By mutual written consent of Seller and Buyer; or

     (2) If the Closing  has not  occurred by the close of business on March 31,
2000, then (i) by Seller if any condition  specified in Section 9.1 has not been
satisfied on or before such close of business,  and shall not  theretofore  have
been waived by Seller,  or (ii) by Buyer if any  condition  specified in Section
9.2 has not been  satisfied on or before such close of  business,  and shall not
theretofore have been waived by Buyer, or if the transactions provided for under
this  Agreement  have  not  been  approved  by  Seller=s  shareholders  and such
condition has not been waived by Seller as provided in Section 9.1(g); provided,
in each case,  that the  failure to  consummate  the  transactions  contemplated
hereby on or before  such date did not result  from the  failure by the party or
parties  seeking  termination  of this  Agreement to fulfill any  undertaking or
commitment  provided  for herein on the part of such  party or  parties  that is
required to be fulfilled on or prior to Closing.

    (b) Effect of Termination. Without limiting Seller's and Buyer's respective
remedies and rights in regard to the Deposit under Section 14.2, in the event of
termination of this Agreement by Seller, on the one hand, or Buyer, on the other
hand,  pursuant to Section 14. l(a),  written notice thereof shall  forthwith be
given by the terminating  party or parties to the other party or parties hereto,
and this Agreement shall thereupon terminate;  provided, however, that following
such termination Buyer will continue to be bound by its obligations set forth in
Sections 5.1, 5.2 and 5.4. If this  Agreement is  terminated as provided  herein
all  filings,  applications  and  other  submissions  made  to any  Governmental
Authority shall, to the extent  practicable,  be withdrawn from the Governmental
Authority to which they were made.

         Section 14.2      Remedies.

     (a) Seller's  Remedies.  Notwithstanding  anything  herein  provided to the
contrary,  upon the failure by Buyer to satisfy the conditions to Closing or the
Closing obligations, as the case may be, set forth in (i) item (1) of clause (a)
of Section 9.1 on account of breaches of the representations and warranties made
by Buyer on and as of the date of this Agreement, (ii) item (2) of clause (a) of
Section  9.1,  (iii)  clause (b) of Section  9.1 on account of  breaches  of the
representations  and  warranties  made by  Buyer  on and as of the  date of this
Agreement or the failure by Buyer to satisfy the condition set forth in item (2)
of clause (a) of Section 9.1,  (iv) clause (e) of Section 9.1, or (v) clause (i)
or (ii)(c) of Section 10.3 on or prior to the Closing Date,  Seller, at its sole
option, may (i) enforce specific performance of this Agreement or (ii) terminate
this Agreement  and,  without  waiving or releasing  Buyer's  obligations  under
Sections  5.1, 5.2 and 5.4, be paid the Deposit,  together with all interest and
other  amounts  earned  thereon as  liquidated  damages,  as  Seller's  sole and
exclusive remedy for such failure,  all other remedies being expressly waived by
Seller.  Seller  and Buyer  agree  upon the  Deposit  amount  together  with all
interest and other amounts  earned  thereon,  as  liquidated  damages due to the
difficulty and  inconvenience  of measuring  actual damages and the  uncertainty
thereof, and Seller and Buyer agree that such amount is a reasonable estimate of
Seller's loss in the event of any such failure by Buyer.

     (b)  Buyer's  Remedies.  Notwithstanding  anything  herein  provided to the
contrary, upon failure of the Seller to satisfy the conditions to Closing or the
Closing obligations, as the case may be, set forth in (i) item (1) of clause (a)
of Section 9.2 on account of breaches of the representations and warranties made
by Seller on and as of the date of this  Agreement,  (ii) item (2) of clause (a)
of Section  9.2,  (iii)  clause (b) of Section 9.2 on account of breaches of the
representations  and  warranties  made by  Seller  on and as of the date of this
Agreement  or the failure by Seller to satisfy the  condition  set forth in item
(2) of clause (a) of Section 9.2, (iv) clause (e) of Section 9.2, or (v) clauses
(a), (d) or (e) of Section 10.2 on or prior to the Closing Date,  Buyer,  at its
sole option,  may (i) enforce  specific  performance  of this  Agreement or (ii)
terminate  this  Agreement  and  receive  back the  Deposit,  together  with all
interest and other amounts earned thereon,  as Buyer's sole and exclusive remedy
for such failure, all other remedies being expressly waived by Buyer.

    Section 14.3 Break-Up Fee. If, as of the Closing Date, Seller has failed to
obtain approval of this Agreement (and the transactions  contemplated hereby) by
the  shareholders  of Seller as required by Section 9.1(g) and this Agreement is
thereafter  terminated,  Seller shall  promptly  (but in no event later than one
business  day  after the  occurrence  of such  event)  pay to Buyer a fee in the
amount of  $1,500,000  and receive back the Deposit,  together with all interest
and other  amounts  earned  thereon,  which  amounts  shall be  payable  by wire
transfer in immediately  available funds to an account  designated by Buyer. The
parties hereto agree and  acknowledge  that the $1,500,000  break-up fee payable
pursuant to this  Section  14.3 is not a penalty,  and  represents  the parties=
efforts to reasonably  estimate a fair  compensation for the expenses that might
be  suffered  by  Buyer  in the  event  the  transactions  contemplated  by this
Agreement shall not be consummated for the above reason.


                                   ARTICLE 15
                                  MISCELLANEOUS

     Section 15.1  Counterparts.  This  Agreement may be executed in one or more
counterparts,  all of which shall be considered one and the same agreement,  and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.

         Section 15.2      Governing Law; Jurisdiction; Process.

     (a)  THIS  AGREEMENT  AND THE  TRANSACTIONS  CONTEMPLATED  HEREBY  SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO
WITHOUT GIVING EFFECT TO PRINCIPLES  THEREOF  RELATING TO CONFLICTS OF LAW RULES
THAT WOULD DIRECT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION, EXCEPT TO
THE EXTENT THAT IT IS MANDATORY THAT THE LAW OF ANOTHER JURISDICTION, WHEREIN OR
ADJACENT TO WHICH THE ASSETS ARE LOCATED, SHALL APPLY.


    (b) SUBJECT TO THE ARBITRATION  AGREEMENT SET FORTH IN SECTION 15.10, BUYER
AND  SELLER  CONSENT  TO  PERSONAL  JURISDICTION  IN ANY LEGAL  ACTION,  SUIT OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT IN ANY COURT, FEDERAL OR STATE, WITHIN
THE CITY AND COUNTY OF DENVER, COLORADO,  HAVING SUBJECT MATTER JURISDICTION AND
WITH  RESPECT TO ANY SUCH  CLAIM,  BUYER AND SELLER  IRREVOCABLY  WAIVE,  TO THE
FULLEST  EXTENT  PERMITTED BY LAW,  ANY CLAIM,  OR ANY  OBJECTION  THAT BUYER OR
SELLER MAY NOW OR HEREAFTER  HAVE, THAT VENUE OR JURISDICTION IS NOT PROPER WITH
RESPECT TO ANY SUCH LEGAL ACTION,  SUIT OR  PROCEEDING  BROUGHT IN SUCH COURT IN
THE CITY AND COUNTY OF  DENVER,  COLORADO,  INCLUDING  ANY CLAIM THAT SUCH LEGAL
ACTION,  SUIT OR  PROCEEDING  BROUGHT  IN SUCH  COURT  HAS  BEEN  BROUGHT  IN AN
INCONVENIENT FORUM AND ANY CLAIM THAT BUYER OR SELLER IS NOT SUBJECT TO PERSONAL
JURISDICTION  OR SERVICE OF PROCESS IN SUCH CITY AND COUNTY OF DENVER,  COLORADO
FORUM.

     Section   15.3   Entire   Agreement.    This   Agreement   (including   the
Confidentiality  Agreement) and the  Appendices,  Schedules and Exhibits  hereto
contain the entire  agreement  between the parties  with  respect to the subject
matter hereof and there are no agreements,  understandings,  representations  or
warranties between the parties other than those set forth or referred to herein.

     Section 15.4  Expenses.  Buyer shall be  responsible  for (i) all transfer,
stamp,  documentary and similar Taxes imposed on the parties hereto with respect
to the purchase  and sale of the Company  Shares  contemplated  pursuant to this
Agreement and (ii) all recording, filing or registration fees for any assignment
or conveyance delivered to Buyer under or pursuant to this Agreement.  All other
costs and expenses  incurred by each party hereto in connection  with all things
required to be done by it hereunder,  including attorney's fees, accountant fees
and the expense of environmental  and title  examination,  shall be borne by the
party incurring same.

     Section 15.5 Notices. All notices hereunder shall be sufficiently given for
all  purposes  hereunder  if  in  writing  and  delivered  personally,  sent  by
documented overnight delivery service or, to the extent receipt is confirmed, by
United States Mail, telecopy,  telefax or other electronic  transmission service
to the appropriate address or number as set forth below. Notices to Seller shall
be addressed as follows:


                         Bonneville Pacific Corporation
                          50 West 300 South, Suite 300
                           Salt Lake City, Utah 84101
                            Attention: Clark M. Mower
                          Tel: (801) 363-2520 ext. 101
                               Fax: (801) 359-1735

                                 with copies to:

                         Bonneville Pacific Corporation
                          50 West 300 South, Suite 300
                           Salt Lake City, Utah 84101
                          Attention: Steven H. Stepanek
                          Tel: (801) 363-2520 ext. 111
                               Fax: (801) 363-9557

                                     and to:



                     Welborn Sullivan Meck & Tooley, P.C.
                         1775 Sherman Street, Suite 1800
                             Denver, Colorado 80203
                             Attention: John F. Meck
                               Tel: (303) 830-2500
                               Fax: (303) 832-2366

                     and through Closing to the Company at:

                          Bonneville Fuels Corporation
                         1660 Lincoln Street, Suite 2200
                             Denver, Colorado 80264
                              Attention: Jim Cable
                           Tel: (303) 863-1555 ext.217
                               Fax: (303) 863-1558

     or at such other  address  and to the  attention  of such  other  Person as
Seller may  designate  by  written  notice to Buyer.  Notices to Buyer  shall be
addressed to:

                               CEC Resources Ltd.
                            1700 Broadway, Suite 1150
                             Denver, Colorado 80290
                         Attention: Patrick R. McDonald
                               Tel: (303 860-1575
                               Fax: (303) 860-9128

                                 with copies to:

                             Holland & Hart, L.L.P.
                       555 Seventeenth Street, Suite 3200
                           Denver, Colorado 80201-8749
                          Attention: Dennis M. Jackson
                               Tel: (303) 298-8115
                               Fax: (303) 295-8261

     or at such other address and to the attention of such other Person as Buyer
may designate by written notice to Seller.

    Section 15.6  Successors and Assigns.  This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their  respective  successors
and permitted  assigns.  This  Agreement may not be assigned by any party hereto
except with the prior written  consent of the other party hereto,  which consent
shall not be unreasonably  withheld or delayed, and any such assignment shall be
void and of no force or effect;  provided,  however,  that Buyer may assign this
Agreement to any Affiliates of Buyer or of an entity  providing equity financing
to Buyer for the purchase of the Company Shares with prior notice to Seller, and
in that event, that Buyer shall remain fully liable for all obligations of Buyer
contained herein.@

     Section 15.7 Amendments and Waivers.  This Agreement may not be modified or
amended  except by an instrument or  instruments  in writing signed by the party
against whom  enforcement of any such  modification or amendment is sought.  Any
party hereto may, only by an instrument in writing,  waive compliance by another
party hereto with any term or  provision  of this  Agreement on the part of such
other party  hereto to be performed  or complied  with.  The waiver by any party
hereto  of a breach  of any term or  provision  of this  Agreement  shall not be
construed as a waiver of any subsequent breach.

     Section 15.8 Appendices,  Schedules and Exhibits. All Appendices, Schedules
and  Exhibits  hereto which are referred to herein are hereby made a part hereof
and incorporated herein by such reference.

     Section 15.9  Interpretation.  It is expressly  agreed that this  Agreement
shall not be construed against any party, and no consideration shall be given or
presumption  made, on the basis of who drafted this  Agreement or any particular
provision  hereof or who supplied the form of Agreement.  Each party agrees that
it has been purposefully drawn and correctly reflects their understanding of the
transaction that it contemplates. In construing this Agreement:

     (a) examples shall not be construed to limit,  expressly or by implication,
the matter they illustrate;

     (b) the word "includes" and its  derivatives  means  "includes,  but is not
limited to" and corresponding derivative expressions;

     (c) a defined term has its defined  meaning  throughout  this Agreement and
each Appendix, Exhibit and Schedule to this Agreement,  regardless of whether it
appears before or after the place where it is defined;

     (d)  each  Exhibit  and  Schedule  to  this  Agreement  is a part  of  this
Agreement,  but if there is any conflict or inconsistency  between the main body
of this Agreement  (including  Appendices A and B which shall be considered part
of the main body of this Agreement) and any Exhibit or Schedule,  the provisions
of the main body of this Agreement shall prevail; and

     (e) the headings and titles herein are for convenience  only and shall have
no significance in the interpretation hereof.

    Section 15.10  Arbitration.  It is agreed,  as a severable and  independent
arbitration  agreement  separately   enforceable  from  the  remainder  of  this
Agreement,  that if the parties hereto, the Company,  the Indemnified Parties or
their respective  successors,  assigns, heirs or legal representatives of any of
the foregoing are unable to amicably  resolve any dispute or difference  arising
under or out of, in  relation  to or in any way  connected  with this  Agreement
(whether  contractual,   tortious,  equitable,  statutory  or  otherwise)  after
endeavoring for a period of at least 30 days to resolve any such dispute through
good faith  negotiations  among  officers of the  disputing  parties  (except as
provided  in Section  6.5 or with  respect to  arbitration  instituted  prior to
Closing),  such matter shall be finally and exclusively  referred to and settled
by  arbitration   under  the  Commercial   Arbitration  Rules  of  the  American
Arbitration  Association pursuant and subject to the arbitration  procedures set
forth in the  Arbitration  Procedures;  provided that,  the foregoing  shall not
prevent  Seller,   the  Company  or  their   Affiliates  from  seeking  specific
performance,  an  injunction  or other  equitable  relief with  respect to their
rights  under  the  Confidentiality  Agreement  through  judicial  means  in any
jurisdiction.  In the event of any conflict  between the Commercial  Arbitration
Rules of the American  Arbitration  Association and the Arbitration  Procedures,
the Arbitration Procedures shall govern and control.

     Section  15.11  Agreement  for the Parties'  Benefit  Only.  Subject to the
limitations  of this Section  15.11,  Sections 5.1, 5.4, 6.5 and 8.7 and Article
XIII are  intended to benefit and to be  enforceable  by any of the  Indemnified
Parties  thereunder as third party  beneficiaries of this Agreement.  Except for
the limited rights of the Indemnified Parties, this Agreement is not intended to
confer upon any Person not a party hereto any rights or remedies hereunder,  and
no  Person,  other  than  the  parties  hereto,  is  entitled  to  rely  on  any
representation,   warranty,   covenant  or  agreement   contained  herein.   Any
Indemnified  Party  which is (i) an  assignee of an  Indemnified  Party,  (ii) a
consultant  or  agent  of an  Indemnified  Party,  (iii)  a  director,  officer,
employee,  consultant or agent of an assignee of an Indemnified Party, or (iv) a
Person which is a director, officer, heir, executor,  successor or assign of any
Person in clauses (i), (ii) or (iii) above (a "Special Indemnitee") shall not be
entitled to enforce this  Agreement or any term hereof and shall be  indemnified
under the terms of this  Agreement only to the extent that a party hereto elects
to exercise  such right of indemnity on behalf of such  Special  Indemnitee.  No
party  hereto  shall have any direct  liability  or  obligation  to any  Special
Indemnitee for any election or  non-election  or any act or failure to act under
or in regard to any term of this Agreement. Any claim for indemnity hereunder on
behalf of a Special  Indemnitee must be made and administered by a party to this
Agreement. Subject to the foregoing limitations on Special Indemnitees, any such
third  party  beneficiary  of this  Agreement  may only bring suit  against  the
defaulting party or parties.

     Section 15.12 Attorneys' Fees. The prevailing party in any legal proceeding
brought under or to enforce this  Agreement  shall be  additionally  entitled to
recover court costs,  reasonable costs of arbitration and reasonable  attorneys'
fees from the nonprevailing party.

    Section  15.13  Severability.  If any  term  or  other  provision  of  this
Agreement is invalid,  illegal or incapable of being enforced by any rule of law
or public policy,  all other  conditions and provisions of this Agreement  shall
nevertheless  remain in full force and effect so long as the  economic  or legal
substance of the transactions contemplated hereby is not affected in any adverse
manner to any party. Upon such determination that any term or other provision is
invalid,  illegal or  incapable  of being  enforced,  the parties  hereto  shall
negotiate  in good faith to modify this  Agreement  so as to effect the original
intent of the parties as closely as possible in an acceptable  manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.

     Section 15.14 No  Recordation.  Without  limiting any party's right to file
suit to compel arbitration to enforce its rights under this Agreement, Buyer and
Seller  expressly  covenant  and agree  not to  record  or place of record  this
Agreement or any copy or memorandum hereof.

     Section 15.15 Time of Essence. Time is of the essence in this Agreement. If
the date  specified in this Agreement for giving any notice or taking any action
is not a Business  Day (or if the period  during which any notice is required to
be given or any action  taken  expires  on a date which is not a Business  Day),
then the date for giving such  notice or taking such action (and the  expiration
date of such period during which notice is required to be given or action taken)
shall be the next day which is a Business Day.


     IN WITNESS WHEREOF,  this Agreement has been signed by or on behalf of each
of the parties as of the day
first above written.


                                            SELLER:

                                            BONNEVILLE PACIFIC CORPORATION


Attest:_________________                    By:______________________________
                                            Name:  Clark M. Mower
                                            Title:    President and CEO



                                            BUYER:

                                            CEC RESOURCES LTD.


Attest:_________________                    By:_____________________________
                                            Name:  Patrick R. McDonald
                                            Title:    President





                          STOCK PURCHASE AGREEMENT

                          DATED AS OF AUGUST 11, 1999

                                 BY AND BETWEEN

                        BONNEVILLE PACIFIC CORPORATION,

                                   AS SELLER,

                                      AND

                               CEC RESOURCES LTD.

                                    AS BUYER



     IN WITNESS WHEREOF,  this Agreement has been signed by or on behalf of each
of the parties as of the day first above  written.

SELLER:  BONNEVILLE  PACIFIC CORPORATION

Attest:_________________   ______________________________
                           By:    /s/ Clark M. Mower
                           Name:  Clark  M.  Mower
                           Title: President and CEO

BUYER:   CEC   RESOURCES   LTD.

Attest:_________________   _____________________________
                           By:    /s/ Patrick  R. McDonald
                           Name:  Patrick R. McDonald
                           Title: President


                            STOCK PURCHASE AGREEMENT
                           DATED AS OF AUGUST 11, 1999
                                 BY AND BETWEEN
                   BONNEVILLE PACIFIC CORPORATION, AS SELLER,
                                       AND
                           CEC RESOURCES LTD. AS BUYER