HALLWOOD ENERGY CORPORATION
                           CHANGE OF CONTROL AGREEMENT


         This  change  of  control  agreement   ("Agreement")  is  entered  into
effective as of __________,  1999, by and between  Hallwood  Energy  Corporation
("HEC") and _________ ("Executive").

         WHEREAS,  HEC desires to retain certain key employee  personnel who are
employed by its wholly owned subsidiary,  Hallwood Petroleum,  Inc. ("HPI") and,
accordingly,  the Board of Directors  of HEC has  approved  HEC entering  into a
change of control  agreement  with  Executive in order to encourage  Executive's
continued service to HPI and HEC;

         NOW,  THEREFORE,  in  consideration of the foregoing and for other good
and valuable consideration, HEC and Executive agree as follows:

1.       DEFINITIONS.

(a)               "Change in Duties" shall mean the occurrence, within two years
                  after the date upon which a Change of Control  occurs,  of any
                  one or more of the following:

(i)  a  reduction  in  Executive's  annual  salary  from  the  level  in  effect
immediately prior to the Change of Control:

(ii)                       failure of HEC or its successor to provide  Executive
                           with an annual bonus, incentive compensation or other
                           employee  benefits  (including  but  not  limited  to
                           medical,  dental, life insurance,  accidental,  death
                           and long-term  disability  plans) that are materially
                           consistent  with  such  annual   bonuses,   incentive
                           compensation or other employee  benefits  provided by
                           HEC or its  successor to executives  with  comparable
                           duties;

(iii)                      a  significant  adverse  alteration  in the nature or
                           status     of     Executive's     duties,      title,
                           responsibilities,  or the  conditions of  Executive's
                           employment from those in effect  immediately prior to
                           such Change in Control; or

(iv)                       a change in the  location  of  Executive's  principal
                           place of  employment  by HEC or its successor by more
                           than 25 miles from the location  where  Executive was
                           principally employed immediately prior to the date on
                           which a Change of Control occurs.

(b) "Change of Control"  shall mean the  occurrence  after the effective date of
this Agreement of:

(i)                        An acquisition  of any voting  securities of HEC (the
                           "Voting  Securities")  by any  "Person"  (as the term
                           person is used for purposes of Section 13(d) or 14(d)
                           of the Securities Exchange Act of 1934 (the "Exchange
                           Act")),  other than The Hallwood  Group  Incorporated
                           and  its  affiliates  immediately  after  which  such
                           Person has "Beneficial Ownership" (within the meaning
                           of Rule 13d-3  promulgated under the Exchange Act) of
                           thirty  percent (30%) or more of the combined  voting
                           power of HEC's then outstanding Voting Securities;

(ii)     The  individuals  who,  as of the  effective  date of this  Agreement,
                           are  members  of the  Board of  Directors  of HEC
                           (the "Incumbent  Board"),  cease for any reason to
                           constitute at least a majority of the members of the
                           Board of Directors of HEC (the  "Board");  provided,
                           however,  that if the election,  or nomination  for
                           election by HEC's  common  stockholders,  of any new
                           director  was  approved  by a vote of at least a
                           majority  of the Incumbent Board,  such new director
                           shall, for purposes of this Agreement, be considered
                           as a member of the Incumbent  Board; provided
                           further,  however,  that no  individual  shall be
                           considered  a member  of the Incumbent  Board if such
                           individual  initially  assumed office as a result of
                           either an actual or threatened "election  contest"
                           (as  described  in Rule 14A-11  promulgated  under
                           the Exchange  Act) or other actual or threatened
                           solicitation  of proxies or consents by or on behalf
                           of a Person  other than the Board (a "Proxy Contest")
                           including by reason of any  agreement  intended to
                           avoid or settle any Election  Contest or Proxy
                           Contest; or

(iii) Approval by stockholders of HEC of:

(A) A merger, consolidation or reorganization involving HEC, unless:

(1)                                         the stockholders of HEC, immediately
                                            before such merger, consolidation or
                                            reorganization,   own   directly  or
                                            indirectly   immediately   following
                                            such   merger,    consolidation   or
                                            reorganization,   at   least   fifty
                                            percent (50%) of the combined voting
                                            power  of  the  outstanding   voting
                                            securities   of   the    corporation
                                            resulting   from   such   merger  or
                                            consolidation or reorganization (the
                                            "Surviving      Corporation")     in
                                            substantially the same proportion as
                                            their   ownership   of  the   Voting
                                            Securities  immediately  before such
                                            merger,       consolidation       or
                                            reorganization, and

(2)                                         the  individuals who were members of
                                            the  Incumbent   Board   immediately
                                            prior  to  the   execution   of  the
                                            agreement providing for such merger,
                                            consolidation   or    reorganization
                                            constitute  at least a  majority  of
                                            the   members   of  the   board   of
                                            directors    of    the     Surviving
                                            Corporation; or

(B)      A complete liquidation or dissolution of HEC; or

(C)                                 An   agreement   for  the   sale  or   other
                                    disposition of all or  substantially  all of
                                    the assets of HEC to any Person  (other than
                                    a transfer to a wholly owned subsidiary).

(iv) Notwithstanding  the foregoing,  a Change of Control shall not be deemed to
     occur solely because any Person (the "Subject Person") acquired  beneficial
     ownership  of more than the  permitted  percent of the  outstanding  Voting
     Securities  as a result  of the  acquisition  of Voting  Securities  by HEC
     which, by reducing the number of Voting Securities  outstanding,  increases
     the proportional number of shares beneficially owned by the Subject Person,
     provided  that if a Change of Control would occur (but for the operation of
     this sentence) as a result of the acquisition of Voting  Securities by HEC,
     and after such share  acquisition  by HEC, the Subject  Person  becomes the
     beneficial  owner of any additional  Voting  Securities which increases the
     percentage of the then outstanding Voting Securities  beneficially owned by
     the Subject Person, then a Change of Control shall occur; or

                  (v)      Notwithstanding  anything contained in this Agreement
                           to the  contrary,  if the  Executive's  employment is
                           terminated  prior  to a  Change  in  Control  and the
                           Executive    reasonably    demonstrates   that   such
                           termination  (i) was at the  request of a third party
                           who  has   indicated  an  intention  or  taken  steps
                           reasonably  calculated  to effect a Change in Control
                           and who  effectuates  a Change in  Control  (a "Third
                           Party")  or (ii)  otherwise  occurred  in  connection
                           with,  or in  anticipation  of, a Change  in  Control
                           which actually occurs,  then for all purposes of this
                           Agreement, the date of Change in Control with respect
                           to the  Executive  shall  mean the  date  immediately
                           prior  to  the  date  of  such   termination  of  the
                           Executive's employment.

(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.

(d)      "Compensation" shall mean the sum of:

(i)  Executive's  annual salary  immediately prior to the date on which a Change
     of Control occurs; and

(ii)                       An annual  average  bonus  computed by  dividing  the
                           total cash bonuses  received by Executive  during the
                           three years  immediately prior to the date on which a
                           Change  of  Control  occurs by three or, in the event
                           Executive   has   been   employed   by   HEC  or  its
                           predecessors  for less than three  years prior to the
                           date on which a Change of Control occurs,  the annual
                           average bonus shall be computed by dividing the total
                           cash bonuses  received by Executive during the period
                           of employment  immediately prior to the date on which
                           a Change of  Control  occurs  (the  "Period")  by the
                           number, carried to two decimal places,  determined by
                           dividing the number of days in the Period by 365.

(e)               "Involuntary   Termination"  shall  mean  any  termination  of
                  Executive's  employment  with HEC or its successor  other than
                  (i)  Termination  for Cause,  (ii)  termination as a result of
                  death or disability under circumstances entitling Executive to
                  benefits  under  HEC's  long-term   disability   plan,   (iii)
                  Retirement,   or  (iv)   resignation   by   Executive   except
                  resignation  on or before the date which is one hundred eighty
                  days after the date upon which Executive  receives notice of a
                  Change in Duties.

                  (f)  "Person"  shall  mean  and  include  an   individual,   a
                  partnership,  a joint  venture,  a  corporation,  a  trust,  a
                  limited liability company, an unincorporated  organization and
                  a government or any department or agency thereof.

(f)  "Retirement"  shall  mean  Executive's  resignation  on or  after  the date
Executive reaches age sixty-five.

(g)  "Severance  Amount"  shall mean an amount  equal to ____ times  Executive's
Compensation.

(h)  Stock  Options  shall  mean  options  granted  to  Executive  by HEC or its
successor to purchase stock of HEC or its successor.

(i) "Termination for Cause" shall mean an Executive's  termination of employment
with HEC or its successor because of:

(i)                                 the  continued  failure by the  Executive to
                                    devote time and effort to the performance of
                                    Executive's     duties    consistent    with
                                    Executive's   performance   prior   to   the
                                    occurance  of a  Chance  of  Control,  after
                                    written demand for improved  performance has
                                    been delivered to the Executive by HEC which
                                    specifically  identifies  how  Executive has
                                    not devoted such  consitent  time and effort
                                    to the performance of Executive's duties; or

(ii) the  willful  engaging  by  Executive  in  misconduct  which is  materially
injurious to HEC, monetarily or otherwise.

2.            SEVERANCE  BENEFITS.  If  Executive's  employment  by  HEC  or its
              successor is subject to an  Involuntary  Termination  which occurs
              within  two years  after the date upon  which a Change of  Control
              occurs, then Executive shall be entitled to receive, as additional
              compensation for services rendered to HEC or its successor,

(a)  A lump sum cash payment in an amount equal to Executive's  Severance Amount
     and,

(b)  Notwithstanding   any  provision  to  the  contrary  in  any  stock  option
     agreement, or other agreement relating to equity-type compensation that may
     be outstanding between the Executive and HEC, all stock options,  incentive
     stock options,  performance shares, and stock appreciation rights under the
     1999 Long Term Incentive Plan or any other plan or arrangement then held by
     the Executive shall immediately become 100% vested and exercisable, and the
     Executive  shall become 100% vested in all shares of restricted  stock held
     by or for the  benefit of the  Executive;  provided,  however,  that to the
     extent HEC is unable to provide for such acceleration of vesting, HEC shall
     provide in lieu  thereof a lump-sum  cash payment  equal to the  difference
     between the total value of such outstanding units, stock options, incentive
     stock options,  performance shares, stock appreciation rights and shares of
     restricted  stock (the "Stock  Rights")  as of the date of the  Executive's
     termination  of employment and the total value of the stock rights in which
     the Executive is vested as of the date of his  termination  of  employment.
     The value of such  accelerated  vesting in the Executive stock rights shall
     be determined by the Board in good faith based on a valuation  performed by
     an  independent  consultant  selected  by the  Board.  Notwithstanding  any
     provision  to the  contrary  in any  stock  option  agreement  that  may be
     outstanding  between  the  Executive  and  HEC,  the  Executive's  right to
     exercise any  previously  unexercised  options  under any such stock option
     agreement  shall not  terminate  until the latest  date on which the option
     granted under such agreement would expire under the terms of such agreement
     but for the Executive's termination of employment;  provided, however, that
     to the extent HEC is unable to provide for the extension of the  expiration
     date of such  options,  HEC shall  provide in lieu thereof a lump-sum  cash
     payment equal to the value of such extension HEC is unable to provide. Such
     values of such accelerated  vesting and exercisability  shall be determined
     by the Board in good faith based on a valuation performed by an independent
     consultant selected by the Board.

(c)  For a  period  of  eighteen  (18)  months  subsequent  to  the  Executive's
     termination of employment,  HEC shall at its expense  continue on behalf of
     the Executive and his dependents and  beneficiaries,  all medical,  dental,
     vision,  and  health  benefits  and  insurance  coverage  which  were being
     provided to the Executive at the time of  termination  of  employment.  The
     benefits  provided in this Section  2(c) shall be no less  favorable to the
     Executive,  in terms of amounts and  deductibles and costs to him, than the
     coverage  provided the Executive under the plans providing such benefits at
     the time Notice of  Termination  is given.  HEC's  obligation  hereunder to
     provide a benefit  shall  terminate  if the  Executive  obtains  comparable
     coverage  under a subsequent  employer's  benefit plan. For purposes of the
     preceding  sentence,  benefits  will not be  comparable  during any waiting
     period for  eligibility for such benefits or during any period during which
     there is a  preexisting  condition  limitation on such  benefits.  HEC also
     shall pay to the Executive a lump sum equal to the amount of any additional
     income tax  payable  by the  Executive  and  attributable  to the  benefits
     provided under this  subparagraph  (c) at the time such tax is imposed upon
     the Executive. In the event that the Executive's  participation in any such
     coverage is barred under the general terms and  provisions of the plans and
     programs  under which such  coverage is provided,  or any such  coverage is
     discontinued or the benefits thereunder are materially  reduced,  HEC shall
     provide or arrange to provide the  Executive  with  benefits  substantially
     similar to those which the  Executive  was  entitled to receive  under such
     coverage  immediately  prior to the Termination  Notice.  At the end of the
     period of coverage set forth above,  the Executive shall have the option to
     have assigned to him at no cost to the Executive and with no  apportionment
     of prepaid  premiums,  any assignable  insurance  owned by HEC and relating
     specifically  to the Executive,  and the Executive shall be entitled to all
     health and similar  benefits that are or would have been made  available to
     the Executive under law.


The severance  benefits  payable under this Paragraph shall be paid to Executive
on or before the tenth day after the last day of Executive's employment with HEC
or its successor. Any severance benefits paid pursuant to this Paragraph will be
deemed  to  be  a  severance  payment  and  not  compensation  for  purposes  of
determining  benefits  under HEC's  qualified  plans and shall be subject to any
required tax withholding.

3.   NO MITIGATION.  The Executive  shall not be required to mitigate the amount
     of any payment  provided for in this Agreement by seeking other  employment
     or otherwise  and no such payment  shall be offset or reduced by the amount
     of any compensation or benefits provided to the Executive in any subsequent
     employment.

4.       ADDITIONAL PAYMENT BY HEC.

(a)  GROSS-UP  PAYMENT.  In the event it shall be determined that any payment or
     distribution  of any type by HEC to or for the  benefit  of the  Executive,
     whether paid or payable or  distributed  or  distributable  pursuant to the
     terms of this Plan or otherwise (the "Total Payments"), would be subject to
     the excise tax  imposed by Section  4999 of the  Internal  Revenue  Code of
     1986, as amended (the "Code") or any interest or penalties  with respect to
     such  excise tax (such  excise tax,  together  with any such  interest  and
     penalties,  are  collectively  referred  to as the "Excise  Tax",  then the
     Executive  shall be entitled to receive an additional  payment (a "Gross-Up
     Payment")  in an amount  such that after  payment by the  Executive  of all
     taxes  (including  additional  excise taxes under said Section 4999 and any
     interest, and penalties imposed with respect to any taxes) imposed upon the
     Gross-Up  Payment,  the Executive retains an amount of the Gross-Up Payment
     equal to the Excise Tax imposed upon the Total Payments.  HEC shall pay the
     Gross-Up  Payment to the  Executive  within twenty (20) business days after
     the Termination Date.

(b)  DETERMINATION BY ACCOUNTANT.  All determinations  required to be made under
     this Section 4,  including  whether a Gross-Up  Payment is required and the
     amount of such Gross-Up  Payment,  shall be made, at HEC's expense,  by the
     independent  accounting  firm  retained  by HEC on the  date of  Change  in
     Control (the "Accounting  Firm"),  which shall provide detailed  supporting
     calculations  both to HEC and the  Executive  within  fifteen (15) business
     days of the  Termination  Date, if  applicable,  or such earlier time as is
     requested by HEC. If the Accounting  Firm  determines that no Excise Tax is
     payable by the  Executive,  it shall furnish the Executive  with an opinion
     that he has  substantial  authority  not to report  any  Excise  Tax on his
     federal income tax return.  Any  determination by the Accounting Firm shall
     be binding upon HEC and the  Executive.  As a result of the  uncertainty in
     the  application  of  Section  4999 of the Code at the time of the  initial
     determination  by the  Accounting  Firm  hereunder,  it is possible  that a
     Gross-Up  Payment  which will not have been made by HEC,  should  have been
     made ("Underpayment"), consistent with the calculations required to be made
     hereunder.  In the event that HEC exhausts  its  remedies  pursuant to this
     Section 4 and the Executive thereafter is required to made a payment of any
     Excise Tax, the Accounting  Firm shall  determine,  at HEC's  expense,  the
     amount of the Underpayment that has occurred and any Underpayment  shall be
     promptly paid by HEC to or for the benefit of the Executive.

(c)  NOTIFICATION  REQUIRED.  The  Executive  shall notify HEC in writing of any
     claim by the Internal  Revenue  Service that, if successful,  would require
     the payment by HEC of the  Gross-Up  Payment.  Such  notification  shall be
     given as soon as  practicable  but not later  than ten (10)  business  days
     after the  Executive  knows of such  claim and  shall  appraise  HEC of the
     nature of such claim and the date on which such  claim is  requested  to be
     paid. The Executive shall not pay such claim prior to the expiration of the
     thirty (30) day period  following the date on which it gives such notice to
     HEC (or such  shorter  period  ending on the date that any payment of taxes
     with  respect to such  claim is due).  If HEC  notifies  the  Executive  in
     writing  prior to the  expiration of such period that it desires to contest
     such claim, the Executive shall:

(i)  give HEC any  information  reasonably  requested  by HEC  relating  to such
     claim,

(ii)                       take such action in connection  with  contesting such
                           claim as HEC shall reasonably request in writing from
                           time  to   time,   including,   without   limitation,
                           accepting legal  representation  with respect to such
                           claim by an attorney reasonably selected by HEC,

(iii)  cooperate  with HEC in good faith in order to  effectively  contest  such
claim,

(iv) permit  HEC to  participate  in any  proceedings  relating  to such  claim,
     provided,  however,  that HEC  shall  bear and pay  directly  all costs and
     expenses   (including   additional  interest  and  penalties)  incurred  in
     connection  with such contest and shall  indemnify  and hold the  Executive
     harmless,  on an  after-tax  basis,  for  any  Excise  Tax or  income  tax,
     including interest and penalties with respect thereto,  imposed as a result
     of  such  representation  and  payment  of  costs  and  expenses.   Without
     limitation  on the foregoing  provisions  of this Section  4(c),  HEC shall
     control all  proceedings  taken in connection with such contest and, at its
     sole  option,  may  pursue  or forgo  any and all  administrative  appeals,
     proceedings,  hearings and conferences with the taxing authority in respect
     of such claim and may, at its sole option,  either  direct the Executive to
     pay the tax  claimed  and sue for a  refund,  or  contest  the claim in any
     permissible manner, and the Executive agrees to prosecute such contest to a
     determination  before any  administrative  tribunal,  in a court of initial
     jurisdiction and in one or more appellate  courts,  as HEC shall determine;
     provided,  however, that if HEC directs the Executive to pay such claim and
     sue for a refund,  HEC shall  advance  the  amount of such  payment  to the
     Executive,  on an  interest-free  basis  and shall  indemnify  and hold the
     Executive  harmless,  on an after-tax basis,  from any Excise Tax or income
     tax,  including  interest or penalties with respect  thereto,  imposed with
     respect to such advance or with respect to any imputed  income with respect
     to such advance;  and further provided that any extension of the statute of
     limitations  relating  to  payment  of taxes  for the  taxable  year of the
     Executive with respect to which such contested  amount is claimed to be due
     to limited solely to such contested amount.  Furthermore,  HEC's control of
     the  contest  shall be limited to issues  with  respect to which a Gross-Up
     Payment would be payable  hereunder and the Executive  shall be entitled to
     settle  or  contest,  as the case may be,  any  other  issue  raised by the
     Internal Revenue Service or any other taxing authority.

(d)  REPAYMENT.  If, after the receipt by the Executive of an amount advanced by
     HEC pursuant to Section 4(c), the Executive becomes entitled to receive any
     refund with respect to such claim,  the Executive  shall  (subject to HEC's
     complying  with the  requirements  of Section 4(c)  promptly pay to HEC the
     amount of such refund  (together with any interest paid or credited thereon
     after  applicable  thereto).  If, after the receipt by the  Executive of an
     amount  advanced by HEC pursuant to Section 4(c), a  determination  is made
     that the Executive shall not be entitled to any refund with respect to such
     claim and HEC does not  notify  the  Executive  in writing of its intent to
     contest such denial of refund prior to the  expiration of thirty days after
     such  determination  then such  advance  shall be forgiven and shall not be
     required to be repaid and the amount of such advance shall  offset,  to the
     extent thereof, the amount of Gross-Up Payment required to be paid.

5.   TERM.  Within  ninety days after June ____,  2002,  and within  ninety days
     after  each  successive  three-year  period  of time  thereafter  that this
     Agreement is in effect,  HEC shall have the right to review this Agreement,
     and in its sole  discretion  either  continue  and extend  this  Agreement,
     terminate this Agreement, and/or offer Executive a different agreement. HEC
     will notify  Executive of such action within said ninety-day  period.  This
     Agreement  shall remain in effect until so  terminated  and/or  modified by
     HEC. Failure of HEC to take any action within said ninety-day  period shall
     be  considered  as  an  extension  of  this  Agreement  for  an  additional
     three-year  period  of time.  If a Change  of  Control  occurs  while  this
     Agreement  is in  effect,  then  this  Agreement  shall not be  subject  to
     termination or modification and shall remain in force for a period of three
     years  after such  Change of  Control,  and if within  said three years the
     contingency  factors occur which would entitle Executive to the benefits as
     provided  herein,  this Agreement shall remain in effect in accordance with
     its terms.

     GENERAL.

(a)               SUCCESSORS.  This Agreement shall be binding upon and inure to
                  the  benefit  of HEC and any  successor  of HEC,  by merger or
                  otherwise. This Agreement shall also be binding upon and inure
                  to the benefit of the Executive  and  Executive's  estate.  If
                  Executive  shall  die prior to full  payment  of  amounts  due
                  pursuant  to this  Agreement,  such  amounts  shall be payable
                  pursuant  to the  terms  of  this  Agreement,  to  Executive's
                  estate.

(b)               SEVERABILITY.   Any  provision  in  this  Agreement  which  is
                  prohibited or  unenforceable  in any jurisdiction by reason of
                  applicable law shall, as to such jurisdiction,  be ineffective
                  only to the  extent of such  prohibition  or  unenforceability
                  without  invalidating  or affecting the  remaining  provisions
                  hereof,  and any such prohibition or  unenforceability  in any
                  jurisdiction shall not invalidate or render unenforceable such
                  provision in any other jurisdiction.

(c)  CONTROLLING  LAW.  This  Agreement  shall be governed by, and  construed in
accordance with, the laws of the State of Colorado.

(d)               RELEASE.  As a condition  to the receipt of any benefit  under
                  Paragraph 2 hereof,  Executive  shall first execute a release,
                  in  the  form   established   by  HEC,   releasing   HEC,  its
                  shareholders,  officers, directors,  employees and agents from
                  any and all  claims  and from any and all  causes of action of
                  any kind or character, including but not limited to all claims
                  or causes of action arising out of Executive's employment with
                  HEC or the termination of such employment.

(e)               UNFUNDED OBLIGATION.  The obligation to pay amounts under this
                  Agreement  is an  unfunded  obligation  of  HEC  and  no  such
                  obligation  shall create a trust or be deemed to be secured by
                  any pledge or encumbrance on any property of HEC.

(f)               NOT A CONTRACT  OF  EMPLOYMENT.  This  Agreement  shall not be
                  deemed to constitute a contract of  employment,  nor shall any
                  provision  hereof  effect  (i) the  right to HEC of  discharge
                  Executive  at will or (ii) the  terms  and  conditions  of any
                  other agreement  between HEC and Executive  except as provided
                  herein. No severance  compensation  shall be payable hereunder
                  as a result of any  termination of employment  before a Change
                  of Control.

(g)               NONALIENATION.  No benefit payable  hereunder may be assigned,
                  pledged or mortgaged and shall not be subject to legal process
                  or attachment  for claims of creditors of Executive  except to
                  the extent required by applicable law.

(h)               OTHER SEVERANCE ARRANGEMENTS.  If the Executive is entitled to
                  severance  pay  and  benefits   pursuant  to  this   Agreement
                  following a Change in Control, the following shall apply:

                  (i)      The  severance  pay  and  benefits  provided  for  in
                           Section 2 shall be reduced by the amount of any other
                           severance or  termination  pay to which the Executive
                           may be entitled  under any agreement with the Company
                           or any of its Affiliates

(iii)                      The Executive's entitlement to any other compensation
                           or   benefits   or  any   indemnification   shall  be
                           determined in accordance with the Company's  employee
                           benefit plans and other applicable programs, policies
                           and practices or any  indemnification  agreement then
                           in effect.

(i)               FEES AND  EXPENSES.  HEC shall pay all legal fees and  related
                  expenses  (including  the  costs  of  experts,   evidence  and
                  counsel)  reasonably  incurred by the Executive as they become
                  due as a result of the Executive  seeking to obtain or enforce
                  any right or benefit provided by this Agreement.

(j)               NOTICE.  For the purposes of this  Agreement,  notices and all
                  other communications  provided for in the Agreement (including
                  the Notice of  Termination)  shall be in writing  and shall be
                  deemed to have been duly given when  personally  delivered  or
                  sent by certified  mail,  return  receipt  requested,  postage
                  prepaid,  or overnight  courier or by facsimile,  addresses to
                  the respective  addresses and facsimile  numbers last given by
                  each  party to the  other,  provided  that all  notices to HEC
                  shall be directed to the attention of the Board with a copy to
                  the Secretary of HEC. All notices and communications  shall be
                  deemed to have been  received on the date of delivery  thereof
                  or on the third business day after the mailing thereof, except
                  that notice of change of address shall be effective  only upon
                  receipt.

(k)               NON-EXCLUSIVITY  OF RIGHTS.  Nothing in this  Agreement  shall
                  prevent  or  limit  the   Executive's   continuing  or  future
                  participation in any benefit,  bonus,  incentive or other plan
                  or  program  provided  by HEC  (except  for any  severance  or
                  termination  policies,  plans,  programs or practices) and for
                  which the Executive  may qualify,  nor shall  anything  herein
                  limit or reduce  such rights as the  Executive  may have under
                  any other  agreements  with HEC (except for any  severance  or
                  termination agreements).  Amounts which are vested benefits or
                  which the Executive is otherwise entitled to receive under any
                  plan or program of HEC shall be  payable  in  accordance  with
                  such plan or program,  except as  explicitly  modified by this
                  Agreement.


(l)               SETTLEMENT  OF CLAIMS.  HEC's  obligation to make the payments
                  provided for in this  Agreement  and  otherwise to perform its
                  obligations   hereunder   shall   not  be   affected   by  any
                  circumstances,  including,  without limitations,  any set-off,
                  counterclaim, recoupment, defense or other right which HEC may
                  have against the Executive or others.

(m)               MUTUAL NON-DISPARAGEMENT. HEC, its affiliates and subsidiaries
                  agree  and HEC  shall  use its best  efforts  to  cause  their
                  respective  executive  officers and  directors to agree,  that
                  they will not make or publish  any  statement  critical of the
                  Executive  or in any  way  adversely  affecting  or  otherwise
                  maligning the  Executive's  reputation.  The Executive  agrees
                  that it will not make or publish  any  statement  critical  of
                  HEC, its affiliates and their  respective  executive  officers
                  and directors,  or in any way adversely affecting or otherwise
                  maligning  the business  reputation  of any member of HEC, its
                  affiliates and  subsidiaries  and their  respective  officers,
                  directors and employees.

(n)               MISCELLANEOUS. No provision of this Agreement may be modified,
                  waived or  discharged  unless  such  waiver,  modification  or
                  discharge is agreed to in writing and signed by the  Executive
                  and HEC. No waiver by either  party  hereto at any time of any
                  breach by the other party hereto of, or compliance  with,  any
                  condition or  provision  of this  Agreement to be performed by
                  such  other  party  shall be  deemed a waiver  of  similar  or
                  dissimilar  provisions  or  conditions  at the  same or at any
                  prior or  subsequent  time.  No agreement or  representations,
                  oral or  otherwise,  express or implied,  with  respect to the
                  subject matter hereof have been made by either party which are
                  not expressly set forth in this Agreement.


IN WITNESS  WHEREOF,  the parties  hereto have  executed  this  Agreement on the
______day of __________, 1999.



                           "EXECUTIVE"



                           ----------------------------------



                           "HEC"

                           HALLWOOD ENERGY CORPORATION


                           -----------------------------------



Schedule for Change of Control Contracts


Signing Executives                 Effective Date             Severance Amount

Anthony J. Gumbiner          June 9, 1999              three times compensation
William L. Guzzetti          June 9, 1999              three times compensation
Russell P. Meduna            June 9, 1999              two and one-half times
                                                        compensation
Cathleen M. Osborn           June 9, 1999              two and one-half times
                                                        compensation
George L. Brinkworth         June 9, 1999              two times compensation
Betty J. Dieter              June 9, 1999              two times compensation
William H. Marble            June 9, 1999              two times compensation
Thomas J. Jung               June 9, 1999              two times compensation