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                             CERTIFICATE OF INCREASE

                IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK OF

                              CHELSEA ATWATER, INC.

                            (PURSUANT TO NRS 78.207)

      The undersigned  being  respectively the President of Vice President,  and
the Secretary or Assistant Secretary,  of CHELSEA ATWATER, INC. (the "Company"),
a corporation  organized  and existing  under the laws of the State of Nevada in
accordance  with the  provisions  of N.R.S.  Section  78.207(1)  of the  General
Corporation Law of Nevada, do hereby certify as follows:

          1. That the Board of  Directors  of the  Company  has  determined  and
     authorized  that  there  shall be an  increase  in the  number of shares of
     authorized common stock of the Company and a corresponding  increase in the
     number of shares of Common Stock issued and outstanding (the "INCREASE") as
     herein provided;

          2. That the number of authorized shares of Common Stock of the Company
     before the Increase hereby effected is 50,000,000,  each share having a par
     value of $0.001;  and the number of authorized shares of preferred stock is
     5,000,000, each share having a par value of $.001 per share and which shall
     remain unaffected by the Increase;

          3.  That,  pursuant  to  N.R.S.  78.207(1),  the  Company's  Board  of
     Directors  has  authorized  the  Increase  in the  number of the  Company's
     authorized  shares of Common Stock from 50,000,000 to 250,000,000;  and the
     number of  authorized  shares of Common Stock after the  Increase  shall be
     250,000,000 each having a par value of $0.001,  all of which shall continue
     to be  designated  as Common  Stock;  however,  the  number  of  authorized
     preferred  shares  shall  remain  at  5,000,000  and  shall  not  change or
     increase;

          4. That each share of Common Stock  existing at the effective  time of
     the Increase  shall  thereupon be increased in number and changed into FIVE
     (5) Shares of Common Stock, and that following the Increase, each holder of
     issued and  outstanding  Common Stock in the Company shall receive FIVE (5)
     shares of Common  Stock for every share of Common Stock held by such holder
     prior to the effective time of the Increase;

          5. That no fractional Common Shares shall be issued as a result of the
     Increase;  and every  fractional share resulting shall be rounded up to the
     nearest whole number as permitted by N.R.S. 78.205(2)(b);

          6. That the  Increase  of  authorized  shares of Common  Stock and the
     means by which the Increase  shall be effected  have been duly and properly
     authorized and resolved by the Company's  Board of Directors  pursuant to a
     unanimous  written  consent dated July 5, 1996,  and that the  transactions
     described  herein  do not  require  shareholder  approval  pursuant  to NRS
     78.207(1);


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          7.  That the  Increase  in the  number  of  authorized  shares  of the
     Company's  Common Stock shall be effective on the date this  Certificate is
     filed with the Office of the Secretary of State of the State of Nevada,  as
     provided in NRS 78.207(4)(f); and

          8.  That the  Company's  Articles  of  Incorporation  shall be  deemed
     amended as provided in this  Certificate  on the date this  Certificate  is
     filed with the Office of the Secretary of State of the State of Nevada,  as
     provided in NRS 78.207(4).

     IN WITNESS WHEREOF, the Company  has caused this Certificate of Increase to
be signed as of the date below by the persons indicated.

DATED:  July 8, 1996                        CHELSEA ATWATER, INC.



                                            By  /S/ JOHN D. BRASHER JR.
                                               ------------------------------
                                               John D. Brasher Jr., President

      ATTEST:

By    /S/ MARK T. COOPER
   --------------------------------
   Mark T. Cooper, Ass't. Secretary


<PAGE>



                                 ACKNOWLEDGEMENT

STATE OF COLORADO )
                  ) ss.
COUNTY OF DENVER  )


      I HEREBY  CERTIFY that before me, a Notary  Public duly  commissioned  and
qualified in and for the above  jurisdiction,  personally came and appeared JOHN
D. BRASHER JR., the  President of CHELSEA  ATWATER,  INC.,  who after being duly
sworn  declared  that he executed the foregoing  Certificate  of Increase as his
free  act and  deed  and that the  statements  therein  set  forth  are true and
correct.

      IN WITNESS WHEREOF, I have hereunto set my hand and seal on July 8, 1996.



X     /S/ ELIZABETH M. CROSSE
 ----------------------------------
           Notary Public