Document:

Exhibit 10.44

Conditional Agreement Not To Exercise Stock Options
Under Stock Option Agreement Dated January 20, 1999
Pursuant to Non-Qualified Stock Option and Stock
Grant Plan As Amended and Restated March 17, 2003

This Amended and Restated Agreement is made
effective as of March 17, 2003 by and between U.S.
Gold Corporation (the "Corporation") and John
W. Goth ("Option Holder"), a non-executive director
of the Corporation.

WHEREAS, Option Holder and Corporation entered into
that certain Stock Option Agreement dated January
20, 1999 (the "SOA") under Corporation's
Non-Qualified Stock Option and Stock Grant Plan
(the "Plan") covering an aggregate of 200,000
shares of Common Stock of Corporation at an
exercise price of $0.16 per share and with
expiration date thereunder of January 21,
2004, and

WHEREAS, Corporation had previously reserved
sufficient numbers of shares of authorized but
unissued Common Stock of the Corporation under
the Plan to provide for the exercise of the shares
of Common Stock under the SOA as well as other
outstanding stock option agreements, and

WHEREAS, Corporation required funding critical to
its operations and for the near-term protection of
its assets and therefore negotiated for the sale
and has closed certain private transactions with
third parties (the "Purchasers") covering the sale
of Common Stock of the Corporation, and

WHEREAS, in order for the Corporation to have
sufficient numbers of authorized and unissued
shares of Common Stock not otherwise reserved for
use under the Plan to sell to such Purchasers, the
Option Holder agreed to temporarily and
conditionally forgo the right to exercise a portion
of the options to purchase Common Stock under his
SOA in consideration for the commitments and
representations of the Corporation contained
herein, in order that the Corporation could remove
those number of shares of Common Stock from the
classification of "reserved shares" under the Plan
and for the Corporation to then be able to sell
such number of shares of Common Stock to
Purchasers, all as subject to the terms of this
Agreement.

WHEREAS, the Corporation and Option Holder entered
into Agreement effective December 6, 2002 which
agreement was amended to increase the number of
shares covered thereunder effective January 16,
2003, entitled Conditional Agreement Not To
Exercise Stock Options Under Stock Option
Agreement Dated January 20, 1999 Pursuant to Non-
Qualified Stock Option and Stock Grant Plan (the
"Amended Agreement"), and

WHEREAS, the Amended Agreement included the
obligation of the Corporation under Section B.2.
providing that if ..."the Corporation is unable to
reserve sufficient numbers of authorized but
unissued shares of Common Stock under the Plan for
all outstanding stock option agreements including
the SOA to the Option Holder, then the Corporation
commits to otherwise keep the Option Holder whole
in terms the intrinsic economic value of in-the-
money stock option shares subject to the limitation
on exercise contained in this Agreement as that
number may be reduced from time to time by
additional reserved shares being replaced thereby
making a portion of the option shares under the SOA
exercisable," which obligations of the Corporation
the Corporation and the Option Holder wish to
retroactively remove from both the December 6, 2002
agreement and the January 20, 2003 Amended
Agreement,

NOW THEREFORE the Corporation and Option Holder
agree and reaffirm as follows:

A.  Option Holder commits and agrees to Corporation
as follows:

1.  Option Holder agrees not to exercise an
aggregate of 189,900 shares of Common Stock under
his SOA until and unless the Corporation reserves
sufficient number of shares of Common Stock from
its authorized but unissued numbers of shares of
Common Stock, in whole or in part, to allow
such exercise by Option Holder of the full number
or any lesser number of shares of Common Stock, if
the Corporation is able to reserve some but not
all of the required by and subject to such SOA.

2.  This agreement in no way limits the ability of
Option Holder to exercise any or all of his option
shares under his SOA which are currently or in the
future become covered by reserved numbers of shares
of Common Stock of the Corporation under the Plan
and under the SOA.

3.  In consideration for the agreement of Option
Holder hereunder, the Corporation agrees and
commits to Option Holder that the Corporation will
use its best efforts to make available and to
reserve sufficient numbers of authorized but
unissued shares of Common Stock of the Corporation
under the Plan to allow exercise of all shares of
Common Stock subject to outstanding stock option
agreements including the SOA with Option Holder.
This includes, but is not limited to, the approval
by the shareholders of the Corporation of any
increase to the authorized number of Common Stock
equity of the Corporation as well as the
acquisition of treasury shares by the Corporation
which could otherwise be used for reservation of
Common Stock under the Plan and the SOA.

This Agreement shall be governed by and construed
in accordance with the laws of the State of
Colorado.

This Agreement supersedes any and all other
agreements, whether oral or in writing, between the
parties with respect to the subject matter.  Each
party to this Agreement acknowledges that no
representations, inducements, promises, or
agreements, orally or otherwise, have been made by
the other party, or anyone acting on behalf of any
party, that are not embodied in this Agreement, and
that no agreement, statement, or promise not
contained in this Agreement shall be valid or
binding.

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement effective as of March 17,
2003.

Option Holder:

/s/ John W. Goth
John W. Goth

Corporation:

/s/ William W. Reid
William W. Reid, President, Chief Executive Officer
and
Chairman of the Board of DirectorsExhibit 10.45

                                Letter Agreement
                        Amendment to Employment Agreement
               Between U.S. Gold Corporation and William W. Reid

     The Employment Agreement dated January 1, 1994 as Amended effective July
21, 1998 (the "Employment Agreement") between U.S. Gold Corporation, a Colorado
corporation (the "Employer") and William W. Reid (the "Employee") is hereby
amended effective as and from January 1, 2003.

     Whereas, for good and valuable consideration, the receipt and adequacy of
which are acknowledged, Employer and Employee hereby agree to Amend the
Employment Agreement as follows:

A.   Section 3.1 Compensation is amended to read as follows:

3.1 Compensation (a) Effective from January 1, 2003, as Compensation for
services rendered under this Agreement, the Employee shall receive a salary of
$225,000 per annum and such salary amount shall no longer be subject to
automatic annual increases based upon increases in the Consumer Price Index. (b)
Employee's salary shall be paid in equal semi-monthly installments in accordance
with Employer's normal practices. (c) The salary provided in this subsection
shall in no way be deemed exclusive and shall not prevent Employee from
participating in any other compensation or benefit plan of Employer.

Except as specifically set forth in this Amendment, all provisions of the
Employment Agreement remain in full force and effect.

IN WITNESS WHEREFOF, Employer and Employee have executed this Amendment
effective as of the date first set forth above.

/s/ John W. Goth
EMPLOYER
U.S. Gold Corporation, a Colorado corporation
By John W. Goth, Member of Compensation Committee of the Board of Directors

/s/ William W. Reid

EMPLOYEE
William W. ReidPURCHASE AND SALE AGREEMENT

                               FLY CREEK PROSPECT

                        (COAL BANK DRAW AND SLATER DOME)

                             MOFFAT COUNTY, COLORADO

                                       AND

                             CARBON COUNTY, WYOMING

                                     BETWEEN

                             SKYLINE RESOURCES, INC.

                                   (AS SELLER)

                                CEDAR RIDGE, LLC.

                                   (AS BUYER)

<PAGE>

                           PURCHASE AND SALE AGREEMENT

THIS ASSET SALE AGREEMENT  (this  "Agreement"),  dated February 17, 2003, by and
between, SKYLINE RESOURCES,  INC., a Colorado corporation with a mailing address
of 3000  Youngfield,  Suite 338,  Lakewood  Colorado 80215  ("Seller") and CEDAR
RIDGE,  LLC, a Colorado limited  liability company with a mailing address of 623
Garrison  Avenue,  Suite  100,  PO Box 2359,  Fort  Smith,  Arkansas  72902-2359
("Buyer"), sometimes jointly referred to as the "Parties" herein.

WITNESSETH:

     That  Seller  desire to sell to Buyer and Buyer  desires to  purchase  from
Seller  on the  terms  set forth in this  Agreement  those  certain  oil and gas
interests and associated assets described herein.  Accordingly, in consideration
of the mutual promises  contained  herein,  the mutual benefits to be derived by
each party hereunder and other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, Buyer and Seller agree as follows:

1.   SALE AND PURCHASE OF ASSETS

     1.1  Assets To Be Sold.

          1.1.1Seller shall sell, transfer, and assign, or cause others to sell,
               transfer  and  assign to  Buyer,  and Buyer  shall  purchase  and
               receive   36.666667%66.666667%  of  Seller'  rights,  title,  and
               interests in and to the following:

               a)   the oil and gas leases and fee minerals listed and described
                    in  Exhibits  "A",  "AA",  and  "AB",  with all such  leases
                    delivering a minimum of an 80.000000%  net revenue  interest
                    (collectively, "Leases")

               b)   all coalbed methane gas wells,  all  conventional gas wells,
                    disposal wells,  stratigraphic test wells, monitor wells and
                    other  wells  located  on  the  Leases  or on  lands  pooled
                    therewith (collectively the "Wells");

               c)   all equipment listed on Exhibit "A1", pipelines,  machinery,
                    fixtures,  flowlines,  materials,  improvements,  and  other
                    real,  personal,   movable,  immovable  and  mixed  property
                    located  on,  used in the  operation  of, or relating to the
                    production,  treatment,  sale, or disposal of  hydrocarbons,
                    water,  and associated  substances  produced from the Leases
                    (the "Personal Property");

               d)   all natural gas, natural gas liquids, condensate,  products,
                    and other hydrocarbons,  whether gaseous or liquid, produced
                    from or  allocable to the Assets  after the  Effective  Date
                    (the "Hydrocarbons");

<PAGE>

               e)   to  the  extent   transferable,   all  contracts,   permits,
                    rights-of-way,    easements,    licenses,   servitudes   and
                    agreements  (including but not limited to those described on
                    Exhibit  "A2")  relating  to the  Leases,  Wells or Personal
                    Property  or the  ownership  or  operation  thereof,  or the
                    production,   treatment,   sale,   storage  or  disposal  of
                    hydrocarbons, water, or substances associated therewith (the
                    "Applicable  Contracts"),  Buyer  shall be  responsible  for
                    obtaining  any and all bonds  required  by Moffat  and Routt
                    Counties,  Colorado,  Carbon County,  Wyoming,  the State of
                    Colorado,  the State of Wyoming,  and the federal government
                    and, its agencies.  Seller shall cancel all bonds  currently
                    in force  effective as of the Effective Date defined herein;
                    and

               f)   Copies  of   records   relating   to  the   Leases,   Wells,
                    Hydrocarbons,  Applicable  Contracts and Personal  Property,
                    owned by Seller  and which  Seller are not  prohibited  from
                    transferring  to  Buyer  by  law  or  existing   contractual
                    relationship  (collectively the "Records"),  as follows: all
                    (i) lease,  land,  and division  order files  (including any
                    abstracts of title,  title opinions,  certificates of title,
                    title  curative  documents,  and division  orders  contained
                    therein) (the "Land Files"),  (ii) the Applicable Contracts;
                    (iii) all well, facility, and historic production files (the
                    "Well  Files")  and (iv)  all  geological  files  (including
                    structure maps, logs and isopach maps) relating  directly to
                    the Leases (the "Geologic  Data"),  said Geologic Data being
                    accepted   "as   is,   where   is"   without   warranty   or
                    representation  of any  nature  or kind as to the  accuracy,
                    completeness,  materiality,  validity  or  fitness  for  any
                    purpose of such  Geologic  Data and with all faults and same
                    is  delivered   for  the  purpose  of  Buyer's   independent
                    evaluation  and any use or  reliance  thereon  is at Buyer's
                    sole risk.

                    All such Leases,  Wells,  Personal  Property,  Hydrocarbons,
                    Applicable   Contracts,    and   Records   are   hereinafter
                    collectively referred to as the "Assets."

          1.1.2The   transfer  of  the  Assets  will  be  made  at  Closing  (as
               hereinafter  defined  in  Section  10.2.1),  but  shall  be  made
               effective  as of the  Effective  Date (as  hereinafter  defined).
               Seller and Buyer shall execute such  additional  documents as may
               be necessary to transfer the interests  herein sold and purchased
               on the records of any purchaser of hydrocarbons  produced from or
               allocable to the Assets.

     1.2  Exclusions and Reservations:  Specifically  excepted and reserved from
          this  transaction  are the following,  hereinafter  referred to as the
          "Excluded Assets".

          a)   Any of Seller's reserve  estimates,  economic  analyses,  pricing
               forecasts,  legal opinions or analyses, or information considered
               by  Seller as  confidential  or  protected  by  "Attorney  Client
               Privilege";

          b)   Subject to the  provisions of Section 11.2, all rights and claims
               arising,  occurring,  or existing in favor of Seller prior to the
               Effective  Date  including,  but  not  limited  to,  any  and all
               contract  rights,  claims,  penalties,   receivables,   revenues,
               recoupment  rights,  recovery  rights,   accounting  adjustments,
               mispayments,   erroneous  payments,   personal  injury,  property
               damage, royalty or other rights and claims of any nature in favor
               of Seller  relating  to any time  period  prior to the  Effective
               Date;

          c)   All  corporate,  financial,  and tax records of Seller;  however,
               Buyer shall be entitled to receive  copies of any  financial  and
               tax records  which  directly  relate to the Assets,  or which are
               necessary for Buyer's ownership,  administration, or operation of
               the Assets;

          d)   All rights, titles, claims and interests of Seller related to the
               Assets for all periods prior to the Effective  Date (i) under any
               policy or agreement of  insurance  or  indemnity,  (ii) under any
               bond,  or (iii) to any  insurance  or  condemnation  proceeds  or
               awards;

          e)   All  amounts due or payable to Seller as  adjustments  or refunds
               under any  contracts or  agreements  affecting the Assets for all
               periods prior to the Effective Date;

<PAGE>

          f)   Subject to the terms  hereof,  all  monies,  proceeds,  benefits,
               receipts,  credits, income or revenues (and any security or other
               deposits made)  attributable to the Assets prior to the Effective
               Date; and

          g)   All Seller's patents, trade secrets, copyrights, names, marks and
               logos.

     1.3  Conveyancing Instruments. The Assets to be conveyed by Seller to Buyer
          pursuant  to  Section  1.1.1 be  conveyed  "as is,  where is" with the
          express  conditions and limitations  contained in this Agreement.  The
          Assets to be  transferred  to Buyer pursuant to Section 1.1.1 shall be
          transferred pursuant to an Assignment,  Bill of Sale and Conveyance as
          provided in Section 10.2 hereof in  substantially  the form of Exhibit
          "B" (the "Assignment").

2.   PURCHASE PRICE AND EFFECTIVE DATE

     2.1  Purchase Price.  As  consideration  for the sale of the Assets,  Buyer
          shall  pay to  Seller  or their  respective  designee,  United  States
          dollars ($ 900,000.00) (the "Purchase Price"), as set forth below. The
          Purchase  Price as adjusted in  accordance  with  Section 2.4 shall be
          referred to as the "Adjusted Purchase Price."

          2.1.1A deposit in the amount of $25,000.00 of the Purchase  Price (the
               "Deposit")  has been paid as an up front  payment at the time the
               Letter of Intent was executed by the Parties.

          2.1.2At the time of  Closing,  Buyer  shall  pay  Seller  $375,000.00.
               During  the  development  of  the  Prospect,  Buyer  shall  carry
               Seller's 30.000000% working interest through $500,000.00 worth of
               all  costs.  In the event  that  Buyer does not invest the entire
               $900,000.00  Purchase Price as set forth above,  then Buyer shall
               earn its  proportionate  share of the 36.666667% for every dollar
               invested  up to the  maximum  investment  of  $900,000.00  (e.g.,
               $400,000.00/$900,000.00  =  $44.444444%  x  36.666667%  =  16.30%
               working interest for Buyer in Prospect).

     2.2  Transfer of Purchase  Price.  The Deposit and Adjusted  Purchase Price
          shall be paid by Buyer on the  dates  set  forth  herein  to  Seller's
          address as set forth above.

     2.3  Allocation of Purchase  Price.  The Purchase  Price shall be allocated
          among  tangibles  and  intangibles  comprising  the Assets as follows:
          Fifty  Percent  (50.00%) of the Purchase  Price shall be attributed to
          the Leases and  associated  agreements  (with all Leases  delivering a
          minimum of an 80% net mineral interest), and Fifty Percent (50.00%) of
          the Purchase  Price shall be  attributed  to the wells,  equipment and
          other  Personal  Property.  Buyer and Seller  agree to be bound by the
          allocation of the Purchase Price among tangible and intangible  Assets
          set  forth  herein  for all  purposes;  to  consistently  report  such
          allocations for all federal,  state and local income tax purposes; and
          to timely file all reports  required by the  Internal  Revenue Code of
          1986, as amended, concerning the Purchase Price allocations.

     2.4  Adjustments to Purchase Price. The Purchase Price shall be adjusted in
          accordance with this Section 2.4.

          2.4.1The Purchase  Price shall be increased by the  following  amounts
               (without duplication):

          2.4.1.1 the amount of any property or ad valorem  taxes paid by Seller
               prorated in accordance with Section 5.1;

          2.4.1.3 any other amount agreed upon by Seller and Buyer; or

          2.4.1.4 an amount equal to any  appropriate  increases in value of the
               Assets, as determined in accordance with Section 7.7.

          2.4.2 The Purchase Price shall be decreased by the following amounts:

<PAGE>

               2.4.2.1 it has been  determined by Buyer that  Skyline's  mineral
                    ownership  in the  Prospect  is less than 10,500 net mineral
                    acres but more than 8,925 net  mineral  acres,  and that the
                    net revenue  interest to be  delivered  under the  currently
                    held leases is less than 80%.  Therefore,  the parties  have
                    agreed that  Skyline  shall  acquire all of the interest set
                    forth in  Exhibit  "AB" at its sole  cost  and  expense  and
                    provide  Cedar  Ridge  its  36.666667%  of  8/8th s  working
                    interest in these leases within thirty (30) days of closing.
                    In the event that  Skyline  fails to acquire  the leases set
                    forth on Exhibit "AB" within the time period provided,  then
                    Cedar Ridge shall have the option to acquire these interests
                    and be credited with all of the lease  expenses  (including,
                    but not limited to,  brokerage  costs,  recording  fees, and
                    lease bonus) incurred to acquire these interests against the
                    $500,000 carry described in Article 2.1.2 hereof, and in the
                    Participation  Agreement  executed  by the  Parties  of even
                    date; 2.4.2.2 the amount of any property or ad valorem taxes
                    prorated  in  accordance   with  Section  5.1;  and  2.4.2.3
                    reductions due to Force Majeure as provided in Section 11.4.

     2.5  Effective  Date of Sale.  The effective date of the sale of the Assets
          described in Section 1.1,  thereof,  shall be February 28, 2003, as of
          11:59 p.m.,  local time where the Assets are located  (the  "Effective
          Date").  It is understood  and agreed that Cedar Ridge shall not incur
          any  additional  liability  whatsoever  as a result  of  amending  the
          Effective Date from March 1, 2003 at 7:00 a.m. to February 28, 2003 at
          11:59 p.m. to accommodate Skyline's tax year end.

3.   ASSUMPTION OF LIABILITIES AND INDEMNIFICATION

     3.1  Payment of  Invoices.  After the  Closing,  Seller  will pay only that
          portion of invoices  received that are applicable to work performed or
          material  received in the period prior to the  Effective  Date;  other
          charges and invoices  will be returned to the vendor for  rebilling to
          Buyer. Similarly,  after the Closing, Buyer will pay only that portion
          of invoices received that are applicable to work performed or material
          received in the period on or subsequent to the Effective  Date;  other
          charges and invoices  will be returned to the vendor for  rebilling to
          Seller,  and billed by Buyer to the working  interest owners under the
          applicable joint operating agreement.

     3.3  Liabilities After Closing and Indemnities.

          3.3.1Buyer shall  observe and comply with all  covenants,  terms,  and
               provisions,  express or  implied,  contained  in the  agreements,
               leases, easements,  permits, commingling authorizations and other
               contracts  appertaining to the interest acquired in the Assets as
               of the  time of  Closing  of this  purchase  and  sale;  and this
               purchase and sale is made  expressly  subject to all  agreements,
               leases, easements,  permits, commingling authorizations and other
               contracts  specifically  identified on the attached Exhibit "A2".
               Buyer shall assume and be responsible for its proportionate share
               of all obligations of Seller accruing under such agreements after
               the Effective Date.

          3.3.2Buyer  specifically  assumes the risk of description,  title, and
               the condition of the Assets and shall inspect the Assets prior to
               the Closing.

<PAGE>

5.   TAXES AND PAYABLES

     5.1  Payment of Taxes. All real estate,  occupation,  ad valorem,  personal
          property taxes and charges on any of the equipment, facilities, plants
          or other  assets for the  current tax year shall be prorated as of the
          Effective  Date. Ad valorem or property  taxes on the mineral  estate,
          the producing  leasehold or the produced  mineral,  which are based on
          the production  and/or revenue  received and which are taxed in a year
          following the year of production,  shall be subject to proration based
          on the  production  and revenue  received by Buyer and Seller.  Seller
          shall be  responsible  for  taxes  based  on  production  and  revenue
          received up to the Effective Date;  Buyer shall be responsible for its
          proportionate  share of taxes based on production and revenue from the
          Effective Date and thereafter, regardless of the year in which the tax
          is due or  paid.  Seller  shall  be  responsible  for  all oil and gas
          severance  taxes,  production  taxes,  windfall profits taxes, and any
          other similar taxes  applicable  to oil and gas  production  occurring
          prior to the Effective  Date, and Buyer shall be  responsible  for its
          proportionate  share  of all  such  taxes  applicable  to oil  and gas
          production occurring on and after the Effective Date. Seller shall pay
          all  such  items  for all  periods  prior to such  date  and  shall be
          entitled to all refunds and rebates with regard to such periods. Buyer
          shall be responsible for its proportionate share of all sales, use and
          similar tax arising out of the sale of the assets.  At Closing,  Buyer
          shall pay Seller its proportionate  share of all state and local sales
          or use  taxes  applicable  to that  portion  of the  assets  which are
          tangible personal property,  and Seller shall remit such amount to the
          appropriate  taxing  authority  in  accordance  with  applicable  law;
          provided,  however,  that if Buyer holds a direct payment permit which
          is valid at the time of Closing, Buyer shall assume all responsibility
          for remitting to the appropriate  taxing  authority its  proportionate
          share of the  state  and local  sales  and use  taxes  due,  and shall
          provide Seller with any exemption  certificates or other documentation
          required under applicable law in lieu of paying Seller the taxes due.

          Should this  purchase and sale  constitute  an isolated or  occasional
          sale and not be  subject  to  sales or use tax with any of the  taxing
          authorities  having  jurisdiction over this transaction,  no sales tax
          will be collected by Seller from Buyer at the date of Closing.  Seller
          agrees to cooperate with Buyer in demonstrating  that the requirements
          for an isolated or  occasional  sale or any other sales tax  exemption
          have been met.

     6.   REPRESENTATIONS AND WARRANTIES

          6.1  Seller's  Representations  and Warranties.  Seller represents and
               warrants to Buyer that,  as of the date hereof and as of Closing,
               the following statements are accurate:

               6.1.1Seller is a corporation duly organized and validly existing,
                    in good  standing,  under the laws of the State of Colorado.
                    Seller  has the  corporate  power and  authority  to own its
                    property and to carry on its business as now  conducted  and
                    to enter into and to carry out the terms of this Agreement.

               6.1.2The  execution  and  delivery  of  this  Agreement  and  the
                    consummation of the  transactions  contemplated  hereby have
                    been duly  authorized by all necessary  corporate  action on
                    behalf of Seller and Seller is not  subject to any  charter,
                    by-law,  lien,  or  encumbrance  of  any  kind,   agreement,
                    instrument,  order,  or decree of any court or  governmental
                    body (other than any governmental  approval  required) which
                    would prevent consummation of the transactions  contemplated
                    by this Agreement.

               6.1.3Seller  is not a party to,  or in any way  obligated  under,
                    nor does  Seller  have any  knowledge  of, any  contract  or
                    outstanding  claim  for  the  payment  of  any  broker's  or
                    finder's  fee in  connection  with the origin,  negotiation,
                    execution,  or performance of this Agreement for which Buyer
                    will have any liability.

               6.1.4EXCEPT AS EXPRESSLY  PROVIDED IN THIS AGREEMENT,  THE ASSETS
                    ARE TO BE SOLD AS IS,  WHERE  IS AND  WITH  ALL  FAULTS  AND
                    SELLER  MAKES NO  WARRANTY  OR  REPRESENTATION,  EXPRESS  OR
                    IMPLIED IN FACT OR BY LAW, WITH RESPECT TO ORIGIN, QUANTITY,
                    QUALITY, OPERATING CONDITION,  SAFETY OF EQUIPMENT, TITLE TO
                    PERSONAL PROPERTY,  COMPLIANCE WITH GOVERNMENT  REGULATIONS,
                    MERCHANTABILITY,   FITNESS  FOR  ANY  PARTICULAR   PURPOSES,
                    CONDITION,  THE QUANTITY,  VALUE OR EXISTENCE OF RESERVES OF
                    OIL, GAS OR OTHER MINERALS  PRODUCIBLE OR  RECOVERABLE  FROM
                    THE LEASES OR WELLS,  OR  OTHERWISE,  CONCERNING  ANY OF THE
                    ASSETS.  ALL  WELLS,   PERSONAL  PROPERTY,   DATA,  RECORDS,
                    MACHINERY,  EQUIPMENT AND  FACILITIES  THEREIN,  THEREON AND
                    APPURTENANT  THERETO  ARE  TO  BE  CONVEYED  BY  SELLER  AND
                    ACCEPTED BY BUYER PRECISELY AND ONLY "AS IS, WHERE IS".

<PAGE>

     6.2  Buyer's Representations and Warranties.  Buyer represents and warrants
          to Seller that, as of the date hereof and as of Closing, the following
          statements are accurate:

          6.2.1Buyer is a limited  liability  company duly organized and validly
               existing,  in good  standing,  under  the  laws of the  State  of
               Colorado  and has the  corporate  power and  authority to own its
               property  and to carry on its  business as now  conducted  and to
               enter into and to carry out the terms of this Agreement.

          6.2.2The   execution   and   delivery  of  this   Agreement   and  the
               consummation of the  transactions  contemplated  hereby have been
               duly  authorized by all necessary  corporate  action on behalf of
               Buyer and Buyer is not subject to any  charter,  by-law,  lien or
               encumbrance of any kind, agreement,  instrument,  order or decree
               of  any  court  or   governmental   body  which   would   prevent
               consummation of the actions contemplated by this Agreement.

          6.2.3Buyer is not a party to, or in any way obligated  under, nor does
               Buyer have any  knowledge of, any contract or  outstanding  claim
               for the payment of any  broker's or  finder's  fee in  connection
               with the origin,  negotiation,  execution, or performance of this
               Agreement for which Seller will have any liability.

          6.2.4Buyer shall comply with all applicable  laws,  ordinances,  rules
               and  regulations  and shall  promptly  obtain  and  maintain  all
               permits and bonds  required by public  authorities  in connection
               with the Assets purchased.

          6.2.5Buyer has made,  or arranged for others to make, an inspection of
               the  Assets.  Subject to Seller'  foregoing  representations  and
               warranties,  Buyer, at Closing,  will accept all Assets in "as is
               and  where  is"  condition,  with  an  expressed  acceptance  and
               understanding of the  representations  and disclaimers  contained
               herein.

7.   TITLE MATTERS

     7.1  Asset Title Review. Prior to Closing,  Seller will have made available
          to Buyer,  without  express or implied  warranty of any kind regarding
          the  accuracy  of  such  information,  copies  of all  information  in
          Seller's  possession  regarding  Seller's  title to the Assets,  which
          information  Buyer  may copy at its  sole  cost  and  expense  (unless
          prohibited by agreement  between Seller and a third party).  Buyer may
          review the  information  at Seller' office at 3000  Youngfield,  Suite
          338,  Lakewood,  Colorado  80215;  or any other  location  where  such
          information may be available, depending on the files reviewed.

     7.2  Title Adjustments. If prior to Closing, Buyer determines the existence
          of a "Title  Defect"  as defined in  Section  7.3 below,  Buyer  shall
          notify  Seller in writing of any matter Buyer  considers to be a Title
          Defect as soon as Buyer becomes aware of such Title Defect but, in any
          event,  by not later than 4:00 p.m. MST on March 21, 2003 (the "Defect
          Notice  Date").  Such notice  ("Notice of Title Defect") shall include
          (i) a  specific  description  of the matter  Buyer  asserts as a Title
          Defect,  (ii) a  specific  description  of the Asset or portion of the
          Assets that is affected by the Title Defect, (iii) Buyer's calculation
          of the amount by which each Title Defect has  diminished  the value of
          the Assets, such amount to be determined by Buyer in good faith and in
          a commercially reasonable manner, and (iv) all necessary and desirable
          supporting  documentation.  Buyer  shall be deemed to have  waived any
          Title  Defect that Buyer fails to assert in its Notice of Title Defect
          prior to the date set forth in this Section 7.2. This provision  shall
          be used by Buyer for further  reductions  in the value of the Prospect
          caused by a lack of quality of title to the mineral acreage (e.g. loss
          of  wellbore  caused by loss of  leasehold  on which well is  located,
          leasehold or mineral  interest  that cannot be delivered to Buyer at a
          minimum of an 80% net revenue interest,  etc.). These reductions would
          be  calculated  in  addition  to the  obligations  and  reductions  as
          described 2.4.2 above is taken into account.

<PAGE>

     7.3  Title  Defect.  The term "Title  Defect"  shall refer to any defect or
          deficiency  in  title,  except  for  Permitted  Encumbrances  that (i)
          creates a lien, claim,  encumbrance or other obligation  affecting the
          interests  of Seller in the  Assets,  (ii)  diminishes  or  eliminates
          Seller's net revenue  interest  below 80% (defined as Seller' share of
          the proceeds from the sale of hydrocarbons produced from and allocable
          to the Assets, net of all royalties,  overriding  royalties,  or other
          burdens on production or non-operating  interests  applicable thereto)
          from that set forth on Exhibit "A", (iii) increases  Seller's  working
          interest  (defined  as  Seller's  share  of the  costs  of  operation,
          development  or production  borne by the owner of such  interest) from
          that set forth in Exhibit  "A"  without a  corresponding  increase  in
          Seller's net revenue  interest,  or which creates an obligation to pay
          costs or expenses in an amount greater than such interest.

     7.4  Permitted Encumbrances. As used in this Section 7, the term "Permitted
          Encumbrance" means:

          (a)  lessor's  royalties,   non-participating  royalties,   overriding
               royalties,  and  division  orders  and sales  and  transportation
               contracts containing customary terms and provisions covering oil,
               gas or associated liquefied or gaseous hydrocarbons, reversionary
               interests,  and similar  burdens if the net cumulative  effect of
               such burdens does not operate to reduce the net revenue  interest
               in any Asset to an amount less than the net revenue  interest set
               forth on Exhibit  "A" or  increase  the  working  interest of any
               Asset from that set forth in Exhibit "A" without a  corresponding
               increase in the revenue interest;

          (b)  subject to the  provisions  of Section 9.2  hereof,  preferential
               rights to  purchase  and  required  non-governmental  third party
               consents to assignments  and similar  agreements  with respect to
               which prior to Closing (i) waivers or consents are obtained  from
               the appropriate  parties, or (ii) the appropriate time period for
               asserting  such  rights has  expired  without an exercise of such
               rights;

          (c)  liens for taxes or  assessments  not yet due or delinquent or, if
               delinquent,  that are being contested in good faith in the normal
               course of business;

          (d)  all rights to consent by,  required  notices to, filings with, or
               other actions by  governmental  entities in  connection  with the
               sale or conveyance of oil and gas leases or interests therein, if
               the same are  customarily  obtained  subsequent  to such  sale or
               conveyance  and Buyer and Seller  have no reason to believe  they
               cannot be obtained;

          (e)  conventional  rights of  reassignment  requiring less than ninety
               (90) days notice to the holders of such rights;

          (f)  such Title Defects as Buyer may have waived;

          (g)  easements, rights-of way, servitudes, permits, surface leases and
               other rights in respect of surface  operations;  provided they do
               not  materially  interfere  with Buyer's  operation or use of the
               Assets;

          (h)  defects,  irregularities  and  deficiencies in title of or to any
               rights-of-way, easements, surface leases or other rights which in
               the  aggregate  do  not   materially   impair  the  use  of  such
               rights-of-way,  easements, surface leases or other rights for the
               purpose of which such  rights will be held by Buyer and would not
               have a material  adverse  effect on the operation or value of any
               of the Assets;

          (i)  environmental  laws  and  regulations  to the  extent  valid  and
               applicable to the Assets;

<PAGE>

          (j)  vendors',  carriers',  warehousemen's,  repairmen's,  mechanics',
               workmen's,  materialmen's,   construction  or  other  like  liens
               arising by operation of law in the ordinary course of business or
               incident to the  construction  or  improvement of any property in
               respect of obligations which are not yet due;

          (k)  all  other  liens,  claims,  charges,  encumbrances,   contracts,
               agreements, instruments, obligations, defects, and irregularities
               affecting the Assets  relating to obligations not yet in default,
               and/or which  individually or in the aggregate are not such as to
               interfere materially with the operation,  value, or use of any of
               the Assets,  do not  materially  prevent Buyer from receiving the
               proceeds of  production  from the  Assets,  do not reduce the net
               revenue  interest  of any of the  Assets  to  less  than  the net
               revenue  interest  set forth on Exhibit  "A" and do not  obligate
               Buyer to bear costs and  expenses  relating  to the  maintenance,
               development,  and operation of any of the Interests in any amount
               greater  than the  working  interest  set  forth on  Exhibit  "A"
               (unless the net revenue  interest  for such Asset is greater than
               the net  revenue  interest  set forth in Exhibit  "A" in the same
               proportion as any increase in such working interest).

          7.5  Remedies for Title Failures. With respect to each Defect asserted
               by Buyer in the  Notice  of Title  Defect,  if  Seller  requests,
               Seller and Buyer  shall  discuss and agree  whether a  particular
               matter  constitutes a Title  Defect.  Seller shall have the right
               but not the obligation to cure any Title Defect  asserted in such
               Notice at its own  expense  prior to  Closing,  in which case the
               parties  shall  proceed  to  Closing  without  adjustment  of the
               Purchase  Price.  If Seller  fails to cure any Title Defect on or
               prior  to  Closing,  it  shall be  deemed  to be a title  failure
               ("Title  Failure") for the relevant  Asset.  Notwithstanding  any
               other provision of this Agreement,  it is specifically agreed and
               understood  that  liquidated  amounts due and owing in respect of
               vendors',  carriers',  warehousemen's,  repairmen's,  mechanics',
               workmen's, materialmen's,  construction or other like liens shall
               be treated as Title Defects in accordance  with the provisions of
               Section 7,  including,  without  limitation,  the  provisions  of
               Section 7.5  (a)-(c).  Buyer and Seller  shall  negotiate in good
               faith  to  reach  agreement  regarding  the  value  of any  Title
               Failure,  and unless waived by Buyer shall  mutually agree to one
               of the following options with respect to each Title Failure:

               (a)  if  the  Title  Failure  results  from a  difference  in net
                    revenue interest from that shown on Exhibit "A", the parties
                    shall proceed to Closing and reduce the Purchase Price by an
                    amount  ("Defect  Amount")  determined  by  multiplying  the
                    Purchase Price by a fraction the numerator of which shall be
                    the difference between the actual net revenue interest being
                    conveyed and the net revenue  interest  shown on Exhibit "A"
                    and the  denominator  of  which  shall  be the  net  revenue
                    interest  shown on  Exhibit  "A";  (b) if the Title  Failure
                    results from a difference in the working  interest from that
                    shown on Exhibit "A", the parties  shall  proceed to Closing
                    and reduce the Purchase Price by a Defect Amount  determined
                    by  multiplying   the  Purchase  Price  by  a  fraction  the
                    numerator  of which  shall  be the  difference  between  the
                    actual  working  interest  being  conveyed  and the  working
                    interest  shown on Exhibit "A" and the  denominator of which
                    shall be the working  interest  shown on Exhibit "A"; (c) if
                    the Title  Failure is one other than  described in items (a)
                    or (b), the Defect  Amount shall be an amount  determined in
                    good  faith by the  mutual  agreement  of Buyer and  Seller,
                    taking into account the portion of the Purchase  Price to be
                    allocated by agreement of Seller and Buyer to the portion of
                    the Assets  affected by the Title Failure,  the legal effect
                    of the Title Failure,  and the potential  economic effect of
                    the Title Failure over the life of the Assets.

     7.6  Termination Amount.  Notwithstanding  anything to the contrary herein,
          if the aggregate amount of adjustments to the Purchase Price for Title
          Failures  reaches an amount equal to 25% of the  $400,000.00  Purchase
          Price set forth in Section 2.1 (the "Termination Amount"),either party
          shall  have the  option  to  terminate  this  Agreement,  without  any
          liability,  upon written  notice to the other party on or prior to the
          Closing. For purposes of determining either party's right to terminate
          this  Agreement  pursuant  to this  Section  7.6,  the amount of Title
          Defect  adjustments  shall be the amounts set forth in Buyer's Notices
          of  Title  Defects,  with  the  addition  of the  diminution  in value
          calculated  in 2.4.2 unless Buyer and Seller agree to a lesser  amount
          in accordance  with Section 7.5. If either party  exercises its option
          to  terminate  this  Agreement  pursuant  to this  Section  7.6,  this
          Agreement  shall  become void and have no effect,  and  neither  party
          shall have any  further  right or duty to or claim  against  the other
          party  under  this  Agreement,  except as  expressly  provided  to the
          contrary in this Agreement.

<PAGE>

     7.7  Increase in Purchase Price. Seller shall be entitled to an increase in
          the  Purchase  Price with  respect to any interest to which Seller has
          (i) record title  ownership of a net revenue  interest that is greater
          than the net revenue interest set forth on Exhibit A of this Agreement
          and/or (ii) an  ownership  interest in any Personal  Property  greater
          than  the  interest  for  such  Asset  set  forth  on  Exhibit  A (the
          "Additional  Interest").  In the event that  Seller is  entitled to an
          adjustment,  such adjustment shall be calculated in the same manner as
          downward  adjustments to the Purchase Price in accordance with Section
          2.4.2.

8.   ENVIRONMENTAL MATTERS

     8.1  Environmental  Review.  Promptly after signing this  Agreement,  Buyer
          shall  have  access to  environmental  data in  Seller'  files for the
          Assets to be sold  herein.  Buyer  shall  review  the  information  at
          Seller's office at 3000 Youngfield,  Suite 338, Lakewood, CO 80215, or
          other locations specified by Seller.  Buyer specifically  acknowledges
          that such access is given as an accommodation  only, that Seller makes
          no  representations  whatsoever as to the accuracy,  completeness,  or
          reliability  of any such  environmental  information  so or  otherwise
          disclosed to or obtained by Buyer and that Buyer relies and depends on
          and uses any and all such  environmental  information  exclusively and
          entirely  at  its  own  risk  and  without  any   recourse  to  Seller
          whatsoever.  Seller shall  cooperate with Buyer for the performance by
          Buyer of any  additional  environmental  testing at  Buyer's  expense,
          which testing  shall be conducted in a reasonable  manner so as not to
          interfere with Seller's  operation of the Assets, and Seller and Buyer
          shall  cooperate  to  ensure  that such  testing  is  performed  on an
          expedited basis before Closing.

     8.2  Material  Contamination.  If  as  a  result  of  information  provided
          pursuant to Section  8.1, or any  additional  information  which Buyer
          obtains from other sources,  or any such testing done by Buyer,  it is
          determined  prior to Closing that the environment  associated with the
          Assets has been materially contaminated ("Materially  Contaminated" or
          "Material Contamination", such terms being defined as the violation of
          existing applicable federal or state laws or regulations or common law
          principles  existing  as  of  the  Effective  Date,  with  respect  to
          environmental  conditions,  to the extent that as to each claim or all
          claims in the  aggregate  (i)  prosecution,  if  instituted,  would be
          reasonably  likely to result in a penalty,  fine or damage  payment of
          $2,500.00   or  more  or  (ii)   removal  and   remediation   of  such
          contamination  required  by  federal  or  state  laws  or  regulations
          existing as of the Effective Date would be reasonably likely to result
          in  expenditures  of $ 2,500.00 or more,  Buyer shall notify Seller in
          writing  of any and all such  Material  Contamination  claims no later
          than 4:00 p.m. MST, on March 24, 2003. Such notification shall include
          (i) a  detailed  description  of  such  claims,  (ii)  a  copy  of any
          environmental assessment,  reports, data and information pertaining to
          such claims, and (iii) Buyer's calculation of the amount by which such
          claims  have  diminished  the value of the  Assets,  such amount to be
          determined  by Buyer in good  faith and in a  commercially  reasonable
          manner. As used in this Section 8, the term Damages shall mean any and
          all damage, loss, injury,  liabilities, or expenses (including but not
          limited  to  reasonable  attorneys'  fees  and  all  costs  of  court,
          reasonable costs of investigating any claim, site assessments, testing
          and remedial actions).

     8.3  Remedies for Material Contamination. Either:

          (a)  Prior to or at Closing,  Seller and Buyer shall mutually agree in
               writing  separate and apart from this Agreement that Seller shall
               correct or make  arrangements for the correction of such Material
               Contamination   and  that  Closing   shall  proceed  with  Seller
               indemnifying  Buyer  against  all  Damages  attributable  to such
               Material  Contamination  and without  reduction  of the  Purchase
               Price;  however,  the estimated cost to correct  attributable  to
               such Damages shall be placed in an escrow account  requiring dual
               signatures   for  release   until  such  time  as  the   Material
               Contamination is corrected; or

<PAGE>

          (b)  Buyer shall correct or make  arrangements  for the  correction of
               such  Material  Contamination  and the parties  shall  proceed to
               Closing  with a  reduction  of the  Purchase  Price in an  amount
               mutually  agreed  to by the  parties  and with  Buyer  defending,
               indemnifying  and  holding  Seller  harmless  against all Damages
               attributable to such Material Contamination.

               If the  parties  are  unable to agree  upon one of the  foregoing
               options,  either  party  shall  be  entitled  to  terminate  this
               Agreement  without  further  liability for either  party,  unless
               Buyer agrees to waive such Material  Contamination and assume all
               liability  and  obligations  relating  thereto.  Each party shall
               cooperate with the other party's reasonable  corrective work, and
               any operations unreasonably  interfering with the corrective work
               shall cease until correction is completed.

     8.4  Indemnities for Material  Contamination.  The indemnities provided for
          in paragraphs  (a)-(b) of Section 8.3 by Buyer and Seller, as the case
          may be, for Damages relating to Material  Contamination  identified in
          the notice to Seller under Section 8.2 shall be limited to Damages (i)
          from  actions by  governmental  authorities  having  jurisdiction  and
          authority  over the  relevant  Assets and (ii) based on  environmental
          laws,  statutes,  regulations  and cleanup  standards in effect at the
          time of Closing.

9.   ADDITIONAL COVENANTS

     9.1  Operations  Prior to  Closing.  After the date of this  Agreement  and
          prior to the  Closing,  Seller  shall use and  maintain  the Assets in
          substantially  the  same  manner  in which  they  have  been  used and
          maintained prior to this Agreement.  Unless Seller and Buyer otherwise
          agree,  Seller shall only enter into  agreements  or  transactions  in
          relation to the Assets  which (i)  individually  involve a fair market
          value of less than Ten United States  dollars  ($10,000.00),  and (ii)
          are entered into in the ordinary  course of business  consistent  with
          past  practices.  In the event that an expenditure  for purposes other
          than day-to-day  operations is proposed or contemplated,  Seller shall
          submit such proposal to Buyer for  concurrence.  Buyer will assume its
          proportionate  share of the risk of any  consequences  that arise as a
          result  of  Buyer's  failure  or  refusal  to  approve  and  pay  such
          expenditure.  Additionally,  after the signing of this  Agreement  and
          prior to  Closing,  Seller  shall have the right to make any  changes,
          repairs or modifications, or incur any expenditures necessary relative
          to the premises to prevent or react to an  emergency or  environmental
          incident. With regard to the preceding sentence,  Seller shall attempt
          to secure  Buyer's  consent prior to any such  expenditure  or action,
          however,  Seller  shall have the right to effect such  expenditure  or
          action  with or without  such  approval,  acting as would any  prudent
          operator  under  similar   circumstances.   Unless  Buyer  and  Seller
          otherwise  agree,  Seller shall not materially alter the Assets (other
          than the use of supplies and consumables) or remove any  improvements,
          equipment or property which comprise the Assets (other than the use of
          supplies and  consumables).  If because of legally binding  agreements
          which existed prior to the date of this Agreement,  Seller,  after the
          date of Agreement,  but prior to Closing,  acquires  assets related to
          the Assets or otherwise  improves the Assets, the Purchase Price shall
          be  increased by an amount  equal to the  consideration  to be paid by
          Seller for such  acquisition  or  improvement  of the Assets,  and the
          acquired asset or improvement shall be transferred  hereunder.  Seller
          shall  promptly  notify Buyer of any  material  matter  affecting  the
          Assets known to Seller which arises from the date of this Agreement to
          the date of Closing.

     9.2  Preferential  Rights and Consents to Assign. The transfer by Seller of
          the Assets, or any portion thereof,  may be subject to the approval of
          lessors or governmental  agencies having jurisdiction,  or other forms
          of consent, rights of first refusal or preferential rights of purchase
          in favor of third parties. The process of obtaining such approvals and
          consents may continue  after  Closing.  Seller shall attempt to obtain
          the  necessary  non-governmental  approvals and consents to assign and
          request releases of the rights of first refusal/preferential rights of
          purchase.  If consents are denied or third parties exercise a right of
          first  refusal/preferential  right of purchase  then  either  Buyer or
          Seller  may  terminate  this  Agreement  and  the  up  front  Deposit,
          excluding  interest  thereon,  shall be refunded to Buyer.  If neither
          Buyer nor Seller  elect to  terminate  this  Agreement,  the  affected

<PAGE>

          Assets shall be deleted  from this  Agreement  and the Purchase  Price
          decreased with the remaining Assets to be sold hereunder. If the Asset
          is  deleted  as the  result  of  the  exercise  of a  right  of  first
          refusal/preferential  right of purchase,  the Purchase  Price shall be
          decreased by the amounts calculated in Sections 2.4.2, and 7.1 et seq.
          contained herein. If the Asset is deleted as a result of the denial of
          consent from third parties,  the  PurchasePrice  shall be decreased in
          the  manner  provided  for the  deletion  of an Asset  with  defect as
          described in Sections 2.4.2 and 7.5 hereof,  and the remaining  Assets
          shall be sold hereunder.

10.  CLOSING, TERMINATION AND FINAL ADJUSTMENTS

     10.1 Conditions  Precedent.  Each  party's  obligation  to  consummate  the
          transactions   contemplated  by  this  Agreement  is  subject  to  the
          satisfaction or waiver by the other party of the following conditions:

          10.1.1 Each party shall have  performed and complied with all terms of
               this Agreement required to be performed or complied with by it at
               or prior to Closing.

          10.1.2 No action or proceeding by or before any governmental authority
               shall have been  instituted or threatened  (and not  subsequently
               dismissed, settled or otherwise terminated) which might restrain,
               prohibit or invalidate any of the  transactions  contemplated  by
               this Agreement,  other than an action or proceeding instituted or
               threatened by a party or any of its affiliates.

          10.1.3 The representations and warranties contained in Section 6 shall
               be true and correct in all material  respects on the Closing Date
               as though made on and as of the Closing Date.

     10.2 Closing.

          10.2.1 The  Closing of the  transactions  contemplated  herein and the
               transfer  of the Assets  shall  occur on March 24,  2003,  at the
               office of Cedar Ridge, 1825 Lawrence,  Denver, Colorado 80202, at
               10:00 a.m.,  local time, or such other date,  time,  and place as
               Seller and Buyer may agree in writing (the "Closing").

          10.2.2 At Closing, the following shall occur:

               10.2.2.1Buyer  and  Seller  shall  execute  and   acknowledge  an
                    Assignment in substantially the form of Exhibit "B", in form
                    and  substance  sufficient  to convey title to the Assets in
                    accordance  with the terms of this  Agreement;  additionally
                    Seller shall provide to Buyer an Assignment in substantially
                    the form of Exhibit "B", in form and substance sufficient to
                    convey  title to the Assets shown on Exhibit "AB" within one
                    week following acquisition of same;

               10.2.2.2Buyer and Seller shall execute and  acknowledge  any such
                    other instruments as are reasonably  necessary to effectuate
                    the  conveyance  of the Assets to Buyer,  including  without
                    limitation, separate assignments of the Assets on officially
                    approved  forms  in  sufficient   counterparts   to  satisfy
                    applicable  statutory and  regulatory  requirements  for the
                    transfer of the Assets;

          10.2.3 At the Closing,  upon and against delivery of the documents and
               materials  described  in this  Section  10.2,  Buyer shall pay to
               Seller the Adjusted Purchase Price as provided in Section 2.1 and
               shall  deliver to Seller the  Guaranty as provided for in Section
               4.1 hereof.

     10.3 Termination.  This Agreement and the transactions  contemplated hereby
          may be terminated in the following instances:

          10.3.1 By Buyer or Seller in accordance with Section 7.6;

          10.3.2 By Buyer or Seller in accordance with Section 8.3;

<PAGE>

          10.3.3 By Buyer or Seller if any  condition  set forth in Section 10.1
               has not been satisfied or waived by Closing;

          10.3.4 By mutual written agreement of Buyer and Seller; and

     10.4 Final Adjustments.  Within ninety (90) days after the date of Closing,
          Seller shall prepare a final  accounting (the "Final  Accounting") for
          the  adjustments to the Purchase Price provided for in Section 2.4 and
          any amounts arising  pursuant to Section 11.2 (b). Seller shall submit
          the Final  Accounting  statement to Buyer,  along with copies of third
          party vendor invoices or other evidence of expenses agreed to by Buyer
          and  Seller,  and Buyer  shall have thirty (30) days to audit same and
          confirm the accuracy thereof. Upon agreement by Buyer and Seller as to
          the accuracy of said Final Accounting,  or upon the expiration of said
          thirty  (30) day  period,  whichever  occurs  first,  Seller or Buyer,
          whichever the case may be, shall promptly pay to the other such sum as
          may be found due,  after making  adjustments  for any payments made at
          Closing in accordance with the Closing Statement.

          If Buyer and Seller are unable to agree to all adjustments  respecting
          the Final Accounting, within thirty (30) days after Buyer's receipt of
          the Final Accounting  submitted by Seller,  such adjustments which are
          not in dispute shall be made between Buyer or Seller at the expiration
          of such 30-day  period,  and as to the  adjustments,  which  remain in
          dispute, Buyer and Seller shall continue to negotiate in good faith to
          reach a final  agreement as to such  disputed  adjustments.  Provided,
          however,  if Buyer  and  Seller  are  unable  to  agree to such  final
          adjustments  within  sixty (60) days after  Seller  provides the Final
          Accounting  to Buyer,  the parties shall submit such  disagreement  to
          arbitration  which shall be conducted  under the rules of the American
          Arbitration  Association to the extent such rules do not conflict with
          the terms hereof.  The costs and expenses of the arbitration  shall be
          shared  equally by Seller and  Buyer.  Within  five (5) days after the
          decision of the arbitrator,  the Buyer or Seller,  as the case may be,
          shall  promptly  make a cash  payment to the other equal to the sum as
          may be found to be due as the Final Accounting.

          Nothing in this Section 10.4. shall limit any right of either party to
          assert  a  claim  for  revenues  or  reimbursement   after  the  Final
          Accounting,  and in this regard (i) should any party receive  revenues
          to which  the  other is  entitled,  such  party  shall  pay over  such
          revenues to the appropriate  party within 30 days of receipt  thereof,
          and (ii)  should  any party pay for  costs or  expenses  for which the
          other party is responsible, such party shall reimburse the other party
          within 30 days of the date the  responsible  party receives an invoice
          for such costs and expenses.

11.  MISCELLANEOUS

     11.1 Force Majeure. In the event any physical asset(s),  including fixtures
          and  improvements,  valued  at less  than  Five  (5%)  percent  of the
          Purchase  Price and to be sold  hereunder  is damaged by fire or other
          calamity before Closing,  Seller may repair the damage at its cost or,
          at its sole option,  either  reduce the Purchase  Price by the cost of
          the damage or withdraw the damaged  Asset from the sale and reduce the
          Purchase Price by the undamaged value thereof. Should Buyer and Seller
          not agree as to the amount of such price reduction or if the value, as
          mutually  agreed  exceeds Five percent (5%),  this  Agreement  will be
          terminated.

     11.3 Books and Records. With the exception of books of account, tax returns
          and correspondence  relating thereto,  technical and interpretive data
          excluded  from this sale,  any  documents of overall  significance  to
          Seller' business and all of the Excluded Assets,  Seller shall deliver
          to Buyer at Closing or within a reasonable time  thereafter  copies of
          the Records.

     11.4 Publicity.  Seller and Buyer shall consult with each other with regard
          to all press  releases or other public or private  announcements  made
          concerning this Agreement or the transactions contemplated hereby, and
          except as may be required by applicable  laws or the applicable  rules
          and regulations of any governmental agency or stock exchange,  neither
          Buyer nor Seller shall issue any such press release or other publicity
          without the prior written consent of the other party,  which shall not
          be unreasonably withheld.

<PAGE>

     11.5 Entire  Agreement.  This Agreement  constitutes  the entire  agreement
          between Seller and Buyer with respect to the transactions contemplated
          herein,   and  supersedes  all  prior  oral  or  written   agreements,
          commitments,  understandings,  or information  otherwise  furnished by
          Seller to Buyer with respect to such  matters.  No amendment  shall be
          binding  unless  in  writing  and  signed by  representatives  of both
          parties.  Headings used in this Agreement are only for  convenience of
          reference  and  shall  not  be  used  to  define  the  meaning  of any
          provision.  This Agreement is for the benefit of Seller and Buyer only
          and not for the benefit of third parties.

     11.6 Notices.  All notices and consents to be given  hereunder  shall be in
          writing  and shall be deemed  to have  been  duly  given if  delivered
          either by personal  delivery,  telex,  telecopy  or similar  facsimile
          means, by certified or registered mail, return receipt  requested,  or
          by courier or delivery service, addressed to the parties hereto at the
          following addresses:

          If to Seller:                         If to Buyer:

          Skyline Resources, Inc.              Cedar Ridge, LLC
          3000 Youngfield                      623  Garrison  Ave.,  Suite 100
          Suite 338                            PO Box 2359
          Lakewood, CO  80215                  Fort Smith, AR  77901
          Attn:  Mr. Jubal S. Terry            Attn:  Mr. William L. Dawkins
          President/CEO                        General Counsel
          Telephone No.:  (303) 238-8712       Telephone No.:  (479) 783-4191
          Facsimile No.:  (303) 238-3190       Facsimile No.:  (479) 783-4195

          or at such  other  address  and  number as  either  party  shall  have
          previously  designated  by written  notice given to the other party in
          the manner herein above set forth.  Notices shall be deemed given when
          received,  if sent by facsimile means (confirmation of such receipt by
          confirmed    facsimile    transmission   being   deemed   receipt   of
          communications);  and when  delivered  and  receipted for (or upon the
          date  of  attempted   delivery   where   delivery  is   refused),   if
          hand-delivered,  sent by express courier or delivery service,  or sent
          by certified or registered mail, return receipt requested.

     11.7 Governing  Law.  This  Agreement  shall be governed by the laws of the
          State  of  Colorado,  without  giving  effect  to  any  principles  of
          conflicts of law. The validity of the conveyances  affecting the title
          to real property shall be governed by and construed in accordance with
          the laws of the  jurisdiction in which such property is situated.  The
          provisions  contained in such  conveyances and the remedies  available
          because  of a  breach  of such  provisions  shall be  governed  by and
          construed in accordance with the laws of the State of Colorado without
          giving effect to the principles of conflict of laws.

     11.8 Confidentiality.  Buyer acknowledges that all information furnished or
          disclosed  pursuant hereto must remain  confidential prior to Closing.
          Buyer  may  disclose  such  information  only to its  subsidiaries  or
          affiliates,    agents,    advisors    or    representatives    (herein
          "Representatives")  who have  agreed,  prior to being given  access to
          such information,  to be bound by the terms of this Agreement.  In the
          event that Closing of the transactions  contemplated by this Agreement
          does not occur for any  reason,  Buyer and its  Representatives  shall
          promptly  return  to Seller  any and all  materials  and  information,
          including  any  notes,  summaries,  compilations,  analyses  or  other
          material  derived from the  inspection  or evaluation of such material
          and information, without retaining copies thereof.

     11.9 Conflict of Interest.  Conflicts of interest related to this Agreement
          are  strictly  prohibited.  Except  as  otherwise  expressly  provided
          herein,  neither  Buyer nor any  director,  employee or agent of Buyer
          shall  give to or  receive  from any  director,  employee  or agent of
          Seller any gift, entertainment or other favor of significant value, or
          any  commission,  fee or  rebate.  Likewise,  neither  Buyer  nor  any
          director,  employee or agent of Buyer  shall  enter into any  business
          relationship with any director, employee or agent of Seller (or of any
          affiliate  of Seller),  unless such person is acting for and on behalf
          of Seller,  without prior written notification thereof to Seller. Each
          party shall  promptly  notify the other party of any violation of this
          Section 11.9, and any consideration received by a party as a result of
          such violation shall be paid over or credited to the other party. Each
          party,  or its  designated  representative(s),  may  audit any and all
          records of the other party for the sole purpose of determining whether
          there has been compliance with this Section 11.9.

<PAGE>

     11.10Survival.  The terms and  provisions of this  Agreement  shall survive
          the Closing.

     11.11Brokers' Fees.  Seller and Buyer warrant that neither has incurred any
          liability,  contingent  or  otherwise,  for brokers' or finders'  fees
          relating   to  this   agreement   for  which  the  other   shall  have
          responsibility.  All fees,  costs, and expenses  incurred by Seller or
          Buyer relating to this agreement  shall be paid by the party incurring
          same.  All  recording  and transfer fees incurred as a part of closing
          shall be paid by Buyer. All other recording and transfer fees incurred
          shall be paid by Seller.

     11.12Commissions or Fees. Each of Buyer and the Seller,  for itself and for
          its respective directors,  partners,  employers,  and agents warrants,
          covenants  and  represents  to the other  that,  except  as  otherwise
          expressly  provided  in  this  Agreement,  neither  it nor  any of its
          directors, employees, partners or agents has given to or received from
          the other party, for any such party's directors,  partners,  employees
          or agents any commission,  fee, rebate, gift or other thing or service
          in  connection  with this  Agreement,  and Buyer and Seller each agree
          that its books and records shall be subject to reasonable audit by the
          other  as  may  be  required  to  substantiate  compliance  with  this
          provision.

     11.13Further  Cooperation.  After the  Closing,  each party shall  execute,
          acknowledge,  and deliver all documents,  and take all such acts which
          from time to time may be  reasonably  requested  by the other party in
          order to carry out the purposes and intent of this Agreement.

     11.14Counterparts.   This   Agreement  may  be  executed  in  one  or  more
          counterparts  with the same effect as if all signatures of the parties
          hereto were on the same document,  but in such event each  counterpart
          shall  constitute  an  original,  and all of such  counterparts  shall
          constitute one Agreement;  but in making proof of this  Agreement,  it
          shall not be  necessary  to produce or account  for more than one such
          counterpart signed by each party.

     11.15Exhibits. All of the Exhibits referred to in this Agreement are hereby
          incorporated into this Agreement by reference and constitute a part of
          this  Agreement.  Each party to this  Agreement  and its  counsel  has
          received  a  complete  set of  Exhibits  prior to and as a part of the
          execution of this Agreement.

     11.16Severabilitv.  If any term or provision of this  Agreement is invalid,
          illegal or incapable  of being  enforced by any rule of law, all other
          conditions and provisions of the Agreement shall  nevertheless  remain
          in full force and effect so long as the economic or legal substance of
          the  transaction  contemplated  hereby is not  affected in any adverse
          manner to the other party.

     11.17Expenses and  Recording.  Except as otherwise  specifically  provided,
          all  fees,  costs  and  expenses   incurred  by  Buyer  or  Seller  in
          negotiating   this  Agreement  or  in  consummating  the  transactions
          contemplated  by this Agreement  shall be paid by the party  incurring
          the same,  including,  without limitation,  legal and accounting fees,
          costs and  expenses.  Buyer  shall be  responsible  for the filing and
          recording  of  the  assignments,   conveyances  or  other  instruments
          required  to convey  title to the Assets to Buyer and Buyer shall bear
          all  required  documentary,  filing and  recording  fees and  expenses
          incurred in connection therewith.

     11.18Mediation.  The  parties  hereto  agree to submit to the terms of that
          certain Mediation Agreement attached hereto as Exhibit "C".

<PAGE>

EXECUTED as of the date first above written.

SELLER:                                         BUYER:
         SKYLINE RESOURCES, INC.                       CEDAR RIDGE, LLC

/s/ Jubal S. Terry                             /s/ Terry L. Logan
---------------------------------              ------------------------------
Jubal S. Terry, President                      Terry L. Logan, Manager

<PAGE>

                                   EXHIBIT "B"

Attached to and made a part of that certain  Purchase and Sale  Agreement  dated
February 17, 2003 by and between Skyline  Resources,  Inc., as Seller, and Cedar
Ridge, LLC, as Buyer.

                               Form of Assignment

THE STATE OF COLORADO
COUNTIES OF MOFFAT AND ROUTT

THE STATE OF WYOMING
COUNTY OF CARBON

                     ASSIGNMENT. BILL OF SALE AND CONVEYANCE

THIS ASSIGNMENT, BILL OF SALE AND CONVEYANCE (this "Assignment") dated March 7 ,
2003 but effective  from and after 11:59 p.m.,  February 28, 2003 (said date and
time hereinafter  referred to as the "Effective Date"), by and between,  SKYLINE
RESOURCES,  INC., a Colorado  corporation,  with a permanent  mailing address of
3000 Youngfield,  Suite 338,  Lakewood,  Colorado 80215,  hereinafter  sometimes
referred to as "Assignor," and CEDAR RIDGE,  LLC., a Colorado limited  liability
company,  with a permanent mailing address of 623 Garrison Avenue, Suite 100, PO
Box 2359, Fort Smith, Arkansas 72902-2359,  hereinafter sometimes referred to as
"Assignee;"

                                   WITNESSETH:

1.   Conveyance.  For and in  consideration of the sum of One Hundred and no/100
     Dollars  ($100.00),  cash in hand paid, and other  valuable  consideration,
     including the assumption by Assignee of certain obligations and liabilities
     described in that certain  Purchase and Sale  Agreement  dated February 17,
     2003, by and between  Assignor and Assignee ("Asset Sale  Agreement"),  the
     receipt and sufficiency of which are hereby acknowledged, Assignor, subject
     to said Asset Sale Agreement  (which Asset Sale  Agreement is  incorporated
     herein by reference for all purposes), does hereby sell, transfer,  assign,
     convey, set over and deliver, unto Assignee,  with Special Warranty, all of
     its right,  title and interest in and to the following  (collectively,  the
     "Assets"):

     A.   the oil and gas leases listed and described in Exhibits "A", "AA", and
          "AB" (collectively, "Leases");

     B.   all gas wells, stratigraphic test wells, monitor wells and other wells
          (collectively "Wells") located on the Leases;

     C.   all equipment,  machinery, fixtures, flowlines,  platforms, materials,
          improvements, and other real, personal, and mixed property located on,
          used in the  operation of, or relating to the  production,  treatment,
          sale, or disposal of hydrocarbons,  water,  and associated  substances
          produced from the Leases (the "Personal Property");

     D.   all  natural  gas,   natural  gas  liquids,   condensate,   and  other
          hydrocarbons,  whether gaseous or liquid produced from or allocable to
          the Assets after the Effective Date (the "Hydrocarbons");

     E.   all contracts, permits, rights-of-way, easements, licenses, servitudes
          and agreements  relating to the Leases and Wells,  or the ownership or
          operation  thereof,  or the production,  treatment,  sale,  storage or
          disposal of hydrocarbons,  water, or substances  associated  therewith
          (the "Applicable Contracts"); and

     F.   all of the  files,  records,  information  and  data  relating  to the
          Leases,  Wells,   Hydrocarbons,   Applicable  Contracts  and  Personal
          Property,  owned by Assignor and which Assignor is not prohibited from
          transferring to Assignee by law or existing  contractual  relationship
          (collectively,  the "Records"),  including,  without  limitation:  (i)
          lease,  land,  and title  records  (including  any abstracts of title,
          title  opinions,  certificates  of title,  title  curative  documents,
          division  orders,  and division order files) (the "Land Files"),  (ii)
          the  Applicable  Contracts;   (iii)  all  well,   environmental,   and
          production files (the "Well Files").

<PAGE>

2.   Excluded Assets. The Assets do not include accounts  receivable  associated
     with the Assets and relating to operations  prior to the Effective Date. In
     the event Assignor is unsuccessful in collecting all or any portion of said
     receivables,   Assignor  shall  so  advise  Assignee,  and  Assignee  shall
     cooperate with Assignor in attempting to collect said  receivables  for the
     benefit of the Assignor. Tools, pulling machines, trucks or other equipment
     temporarily located on said lands or waterbottoms likewise are not included
     as Assets and are not to be conveyed  hereunder (which  equipment  Assignor
     may  recover at any  time).  The Assets do not  include  any of  Assignor's
     proprietary or licensed raw or processed  geological and  geophysical  data
     (including  magnetic  tapes,  field notes,  or seismic  lines),  nor any of
     Assignor's  subjective or interpretive  information or materials (including
     structure maps and isopach maps)  pertaining to the Data. All such excluded
     Assets are hereinafter collectively referred to as the "Excluded Assets".

     TO HAVE AND TO HOLD unto Assignee, its, successors, sublessees, and assigns
     forever,  subject  to the  terms,  conditions  and  reservations  set forth
     herein,  contained  in the  Lease,  in the Asset  Sale  Agreement,  and the
     Applicable Contracts.

3.   Disclaimer and Subrogation.

     A.   EXCEPT AS EXPRESSLY  PROVIDED IN THE ASSET SALE AGREEMENT,  THE ASSETS
          ARE TO BE SOLD AS IS, WHERE IS AND WITH ALL FAULTS AND ASSIGNOR  MAKES
          NO WARRANTY OR  REPRESENTATION,  EXPRESS OR IMPLIED IN FACT OR BY LAW,
          WITH RESPECT TO ORIGIN, QUANTITY, QUALITY, OPERATING CONDITION, SAFETY
          OF EQUIPMENT,  TITLE TO PERSONAL PROPERTY,  COMPLIANCE WITH GOVERNMENT
          REGULATIONS,  MERCHANTABILITY,  FITNESS FOR ANY  PARTICULAR  PURPOSES,
          CONDITION, THE QUANTITY, VALUE OR EXISTENCE OF RESERVES OF OIL, GAS OR
          OTHER MINERALS  PRODUCIBLE OR RECOVERABLE FROM THE LEASES OR WELLS, OR
          OTHERWISE, CONCERNING ANY OF THE ASSETS. ALL WELLS, PERSONAL PROPERTY,
          DATA, RECORDS,  MACHINERY,  EQUIPMENT AND FACILITIES THEREIN,  THEREON
          AND APPURTENANT THERETO ARE TO BE CONVEYED BY ASSIGNOR AND ACCEPTED BY
          ASSIGNEE PRECISELY AND ONLY "AS IS, WHERE IS".

     B.   All  descriptions  set forth herein and all information  heretofore or
          hereafter  furnished  Assignee by Assignor  concerning the Assets, and
          the  operation  thereof,  have been and shall be furnished  solely for
          Assignee's   convenience  and  have  not  constituted  and  shall  not
          constitute a representation  or warranty of any kind by Assignor,  and
          any reliance  thereupon by Assignee  shall be at Assignee's  sole risk
          and liability.

     C.   Notwithstanding  the  foregoing,  this  Assignment  is made  with full
          substitution  and  subrogation  in and to all  rights  and  actions of
          warranty with respect to the Assets which  Assignor or its  affiliates
          may have against former owners thereof.

4.   Further  Assurances.  Assignor  shall execute,  acknowledge  and deliver or
     cause to be executed, acknowledged and delivered such instruments and shall
     take such other  action as may be  reasonably  necessary  or  desirable  to
     effectively consummate the conveyance to Assignee of the Assets intended to
     be conveyed  hereby,  provided nothing in this Section shall be interpreted
     so as to modify the disclaimer by Assignor in Section 3.A.

5.   Consent   Required.   Thus   Assignment  is  subject  to  approval  by  the
     __________[name of governmental agency] pursuant to _________________ [cite
     applicable  statute].  The process of obtaining  such approval may continue
     hereafter.]

<PAGE>

6.   Further  Assignment.  Assignee shall not assign any interest it acquires in
     the Assets,  assign any rights  acquired,  or delegate  any duties  assumed
     herein or hereafter,  without any such transferee,  assignee,  sublessee or
     delegee  having  agreed  in  writing  to be bound by all of the  terms  and
     provisions  contained in thus  Assignment and in the Asset Sale  Agreement;
     and any such  transferee,  assignee,  sublessee or delegee shall assume all
     (or, if assigned less than all of Assignee's  interest,  its  proportionate
     share of all) duties and obligations set forth herein and in the Asset Sale
     Agreement or arising from this Assignment or the Asset Sale Agreement;  and
     any such  transfer,  assignment,  sublease or delegation  shall so provide.
     Notwithstanding  anything  herein to the  contrary,  Assignee  shall remain
     responsible  to Assignor for all  obligations  and  liabilities  under this
     Assignment and under said Asset Sale Agreement.

7.   Indemnification.  As additional  consideration  for the sale of the Assets,
     Assignee  shall  observe  and  comply  with  all  covenants,   terms,   and
     provisions,  express  or  implied,  contained  in the  agreements,  leases,
     easements and all other contracts appertaining to Assignee's  proportionate
     share of  Assignor's  interest  in the  Assets as of the time of  execution
     hereof,  and  this  Assignment  is  made  expressly  subject  to  all  such
     agreements,   leases,   easements  and  other   contracts  as  specifically
     identified in the Asset Sale Agreement.

     Assignee  specifically  assumes  the risk of  description,  title,  and the
     condition of the Assets and shall inspect the Assets prior to the Closing.

8.   Brokers' Fees.  Assignor and Assignee warrant that neither has incurred any
     liability,  contingent or otherwise, for brokers' or finders' fees relating
     to thus agreement for which the other shall have responsibility.  All fees,
     costs,  and  expenses  incurred by  Assignor  or Assignee  relating to thus
     agreement  shall be paid by the party  incurring  same.  All  recording and
     transfer fees shall be paid by Assignee.

10.  Commissions  or  Fees.  Assignee  and  Assignor,  for  itself  and  for its
     respective directors,  partners,  employers, and agents warrants, covenants
     and represents to the other that, except as otherwise expressly provided in
     this Assignment,  neither it nor any of its directors,  employees, partners
     or agents has given to or received from theother party, or any such party's
     directors,  partners, employees or agents any commission, fee, rebate, gift
     or other thing or service in connection with thus Assignment,  and Assignee
     and  Assignor  each  agree  that its books  andrecords  shall be subject to
     reasonable audit by the other as may be required to substantiate compliance
     with this provision.

11.  Conflicts.  In case of any conflict between the terms and provisions of the
     Asset Sale Agreement and the terms and provisions of this  Assignment,  the
     terms and provisions of the Asset Sale Agreement shall prevail.

12.  Topical Headings. The topical headings used herein are for convenience only
     and shall not be construed  ashaving  any  substantive  significance  or as
     indicating  that all of the  provisions of thus  agreement  relating to any
     topic are to be found in any particular section.

13.  Entire  Agreement.  This Assignment  constitutes  the entire  understanding
     between  Assignor and Assignee  withregard  to the subject  matter  hereof,
     superseding all prior statements, representations,  discussions, agreements
     and understandings.

14.  Successors and Assigns. The terms hereof shall inure to and be binding upon
     the respective heirs, successors and assigns of Assignor and Assignee.

EXECUTED the day and year first above written, but effective as of the Effective
Date.

SKYLINE RESOURCES, INC.                            CEDAR RIDGE, LLC

/s/ Jubal S. Terry                                 /s/ Terry L. Logan
-----------------------------                      ----------------------------
Jubal S. Terry, President/CEO                      Terry L. Logan, Manager

<PAGE>

THE STATE OF COLORADO             ss.

COUNTY OF DENVER                  ss.

     This instrument was acknowledged  before me this 7th day of March, 2003, by
Jubal S.  Terry,  President  and CEO of  Skyline  Resources,  Inc.,  a  Colorado
corporation, on behalf of said corporation.

[SEAL]
                                                  Notary Public in and for the
My commission expires:                            State of Colorado

Printed Name of Notary Public

THE STATE OF COLORADO     ss.

COUNTY OF DENVER          ss.

This instrument was acknowledged before me this 7th day of March, 2003, by Terry
L. Logan,  Manager of Cedar Ridge, LLC, a Colorado limited liability company, on
behalf of said limited liability company.

[SEAL]

----------------------                              Notary Public in and for the
My commission expires:                              State of Colorado

Printed Name of Notary Public

<PAGE>

                           EXHIBIT "A-Lease Schedule"

<PAGE>

                           EXHIBIT "AA-List of Leases"

Attached to and made a part of that certain  Assignment,  Conveyance and Bill of
Sale effective  February 28, 2003, by and between  Skyline  Resources,  Inc., as
Assignor, and Cedar Ridge, LLC, as Assignee.

                                     ASSETS
              Description of Leases as shown on Exhibit A attached

All of Assignor's right, title, and interest in and to the following Oil and Gas
Leases,  only insofar as described below, and covering lands in Moffat and Routt
Counties,  Colorado,  and Carbon County,  Wyoming,  including but not limited to
Assignor's  operating  rights and working  interest in those  certain  Operating
Agreements set forth herein following the Oil and Gas Lease Descriptions.

As shown on attachement Exhibit "A-List of Leases"

<PAGE>

"AB" Skyline Lease Acquisitions

<PAGE>

                 Exhibit "A1" To the Purchase and Sale Agreement
               Between Skyline Resources, Inc. and Cedar Ridge LLC

                                      WELLS

1.   Robiduox 23-13 T.D. 1700', API Well # 05-081-06973

2.   State of Wyoming 34-13-89 #1 T.D. 2130'. API Well # 49-007-21858

3.   Robidoux 13-12-89 T.D. 2690'. API Well # 05-081-06986

4.   Moffat 26-12-89 #1 T.D. 3809' API Well # 05-081-06988

5.   Federal 26-12-89 #1 T.D. 3383' API Well # 05-081-06994.

6.   Moffat 23-12-89 #1 T.D. 3137' API Well # 05-081-06990

7.   Moffat 23-12-89 #2 T.D. 3262' API Well # 05-081-06991

8.   Moffat SWD 26-12-89 #1 T.D. 4494'. API Well # 05-081-06995

9.   CF&I #1 Well Deep Creek Sand,  located in the NE, SE, SW Section13 Township
     12 North, Range 89 west, Moffat County, Colorado.

                                    EQUIPMENT

1.   All Production  Equipment located at the disposal site in the NW NW Section
     26 T12N,  R89W,  Moffat County Colorado as well as all electrical lines and
     gathering lines.

2.   All equipment located on each well site listed above.

<PAGE>

"A2" Contracts and Agreements

<PAGE>

Exhibit B

<PAGE>

Exhibit I  Fee Lease Schedule

<PAGE>

Exhibit II  Federal Lease Schedule

                                  EXHIBIT "II"
                             FEDERAL LEASE SCHEDULE
             Attached to and made a part of that certain Assignment,
               Conveyance and Bill of Sale by and between Skyline
         Resources, Inc., as Assignor, and Cedar Ridge, LLC, as Assignee

                          ---SPLIT TABLE - SEE BELOW---

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------------
LESSOR/SERIAL NUMBER   COUNTY, ST   LEGAL DESCRIPTION                                      GROSS      NET     EFFECTIVE   EXPIRATION
                                                                                           ACRES     ACRES      DATE         DATE
------------------------------------------------------------------------------------------------------------------------------------

Federal Leases

<S>                    <C>          <C>                                                   <C>        <C>        <C>         <C>
COC-61760              Moffat,CO    12N-89W                                               960.0000   640.0320   6/1/98      6/30/08
                                    23: NE4
                                    24: S2NE, W2NW, SENW
                                    25: NESW, NWSE
                                    26: W2NE, E2NW, SWNW, S2
COC-58896              Moffat, CO   12N-89W 24: S/2 25: NE, S/2NW, NWSW, S/2S/2, NESE     800.0000   122.6728   3/1/96       3/1/06
COC-58897              Moffat, CO   12N-89W 11: Lots 1,2,3,4, 12: Lots 5,6, 14: S/2NW,
                                       N/2SW, SWSW,  23:E/2W/2, NWNW, SE                  603.2900   92.5091    3/1/96       3/1/06
COC-64224              Moffat, CO   12N-89W 13: NENW                                      40.0000    26.6680   12/1/00     11/30/10
WYW-129585             Carbon, WY   13N-90W                                               80.0000    53.3360    7/1/93      6/30/03
                                    13: E2NE
WYW-130140             Carbon, WY   13N-89W                                               40.0000     8.8884    9/1/93      8/31/03
                                     28: SWNW
WYW-141261             Carbon, WY   13N-89W                                               200.0000  133.3400    4/1/97      3/31/07
                                    21: SE4
                                    22: NWSW
WYW-142911             Carbon, WY   12N-88W                                               377.6100   251.7526  10/1/97      9/30/07
                                    7:  Lots 5,6, NE4, E2NW
                                    18: N2SE
WYW-142924             Carbon, WY   12N-89W                                              1039.7400   693.1947  10/1/97      9/30/07
                                    1: Lots 1, 2, S2N2, N2S2
                                    2: Lots 1, 2, S2NE, N2SE
                                    11: W2NW
                                    13: NENE, S2NE, N2SE
                                    14: E2NE, NESE
WYW-143587             Carbon, WY   13N-90W                                               240.0000   160.0080  12/1/97     11/30/07
                                    13: W2NE, NW4
WYW-148257             Carbon, WY   12N-89W                                               749.3000   499.5583   6/1/99      5/31/09
                                    2: Lots 3, 4, S2NW
                                    3: Lot 1, SENE, SE4
                                    4: Lot 1
                                    9: N2NW, SENW, N2N2SW, N2S2N2SW, S2SENESW, S2SWNWSW
                                    11: E2NW
                                    13N-89W
                                    32: NENW
WYW-148457             Carbon, WY   12N-88W                                              1721.5300  1147.7441   8/1/99      7/30/09
                                    8: Lots 1-5, SENE, W2SW, SESW, SE4
                                    13: Lots 6, 7, 9
                                    14: Lots 5-13, W2NW, N2SW, SESW, SWSE
                                    15: Lots 5,6, N2, SW4, NWSE
                                    16: Lots 5-11
                                    18: S2SE
                                    22: Lots 1-3
                                    23: Lots 1-3
                                    24: Lot 1
WYW-150405             Carbon, WY   12N-88W                                               710.5300   473.7104   6/1/00      5/30/10
                                    7: Lot 10, N2SE, SESE
                                    17: Lots 5-7, 9-12, SWNE
                                    18: Lots 8,9, 12-17, E2SW
                                    19: Lots 1-4
                                    21: Lot 1
</TABLE>

                                  EXHIBIT "II"
                             FEDERAL LEASE SCHEDULE
             Attached to and made a part of that certain Assignment,
               Conveyance and Bill of Sale by and between Skyline
         Resources, Inc., as Assignor, and Cedar Ridge, LLC, as Assignee

                          ---SPLIT TABLE - SEE ABOVE---
<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------
LESSOR/SERIAL NUMBER      RECORDED   WORKING        Min. Own.   EII ORRI     Royalty   Additional     N.R.I.
                                     INTEREST         Net       RESERVED    Interest    Interest
------------------------------------------------------------------------------------------------------------

Federal Leases

<S>                        <C>        <C>         <C>           <C>           <C>         <C>       <C>
COC-61760                  N/A        66.6700%       960        7.500000%     12.5000%       --       80.00%

COC-58896                  N/A        66.6700%     184.0000     3.000000%     12.5000%      7.50%     77.00%
COC-58897
                           N/A        66.6700%     138.7567     3.000000%     12.5000%      7.50%     77.00%
COC-64224                  N/A        66.6700%     40.0000      6.500000%     12.5000%                81.00%
WYW-129585                 N/A        66.6700%     80.0000      3.000000%     12.5000%      7.50%     77.00%

WYW-130140                 N/A        66.6700%     13.3320      3.000000%     12.5000%      7.50%     77.00%

WYW-141261                 N/A        66.6700%     200.0000     3.000000%     12.5000%      7.50%     77.00%

WYW-142911                 N/A        66.6700%     377.6100     7.500000%     12.5000%       --       80.00%

WYW-142924                 N/A        66.6700%    1039.7400     7.500000%     12.5000%       --       80.00%

WYW-143587                 N/A        66.6700%     240.0000     3.000000%     12.5000%      7.50%     77.00%

WYW-148257                 N/A        66.6700%     749.3000     7.500000%     12.5000%        --      80.00%

WYW-148457                 N/A        66.6700%    1721.5300     7.500000%     12.5000%        --      80.00%

WYW-150405                 N/A        66.6700%     710.5300     7.500000%     12.5000%        --      80.00%
</TABLE>

<PAGE>

Exhibit III  State Lease Schedule

                                  EXHIBIT "III"
<TABLE>
                              STATE LEASE SCHEDULE
 Attached to and made a part of that certain Assignment, Conveyance and Bill of
                  Sale by and between Skyline Resources, Inc.,
                 as Assignor, and Cedar Ridge, LLC, as Assisgnee
<CAPTION>

                          ---SPLIT TABLE - SEE BELOW---

---------------------------------------------------------------------------------------------------------------------------------
LESSOR/SERIAL NUMBER             COUNTY, ST   LEGAL DESCRIPTION                                 GROSS      NET     EFFECTIVE
                                                                                                ACRES     ACRES      DATE
---------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>         <C>                                              <C>         <C>        <C>
State Leases
STATE OF WYOMING 00-00130        Carbon, WY  13N-89W                                             80.0000   53.3360     4/2/00
                                             28: E2NE
STATE OF WYOMING 00-00129        Carbon, WY  13N-89W                                            120.2500    80.1707    4/2/00
                                             6: Lot 1, SENE, NESE
STATE OF WYOMING 99-00339        Carbon, WY  13N-88W                                            160.0000   106.6720    7/2/99
                                             31: Resurvey Tract 65 (formerly NE4)
STATE OF WYOMING 99-00349        Carbon, WY  13N-89W                                            160.0000   106.6720    7/2/99
                                             28: W2E2
STATE OF WYOMING 99-00348        Carbon, WY  13N-89W                                            320.0000   213.3440    7/2/99
                                             21: W2
STATE OF WYOMING 99-00345        Carbon, WY  13N-89W                                             80.0000   53.3360     7/2/99
                                             9: N2SW
STATE OF WYOMING 99-00340        Carbon, WY  13N-88W                                            145.3200    96.8848    7/2/99
                                             32: Resurvey Tract 69 (formerly SE4)
STATE OF WYOMING 02-00290        Carbon, WY  12N-88W                                            623.3600   415.5941   10/21/02
                                             Tract 49 (formerly Sec. 16: All)
STATE OF WYOMING 02-00287        Carbon, WY  12N-88W                                            321.0000   214.0107   10/21/02
                                             Tract 79 (formerly Sec. 5: Lots 1 & 2, S/2NE)
STATE OF WYOMING 95-00072        Carbon, WY  13N-89W                                            640.0000   426.6880    4/1/95
                                             27: SE4
                                             34: NE4, S2
STATE OF WYOMING 02-00154        Carbon, WY  12N-89W 16: NENE, S/2NE, W/2, LOTS 1,2,3,4, N/2SE  589.8200   393.2330    7/1/02
</TABLE>

<TABLE>
                              STATE LEASE SCHEDULE
 Attached to and made a part of that certain Assignment, Conveyance and Bill of
                  Sale by and between Skyline Resources, Inc.,
                 as Assignor, and Cedar Ridge, LLC, as Assisgnee

                          ---SPLIT TABLE - SEE ABOVE---
<CAPTION>

----------------------------------------------------------------------------------------------------------------------------------
LESSOR/SERIAL NUMBER             EXPIRATION      RECORDED   WORKING        Min. Own.   EII ORRI     Royalty   Additional     N.R.I.
                                   DATE                    INTEREST         Net       RESERVED    Interest    Interest
----------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>             <C>        <C>           <C>        <C>           <C>         <C>          <C>
State Leases
STATE OF WYOMING 00-00130          4/1/05        N/A        66.6700%     80.0000     3.333333%     16.666667%                80.00%

STATE OF WYOMING 00-00129          4/1/05        N/A        66.6700%     120.2500    3.333333%     16.666667%                80.00%

STATE OF WYOMING 99-00339          7/1/04        N/A        66.6700%     160.0000    3.333333%     16.666667%                80.00%

STATE OF WYOMING 99-00349          7/1/04        N/A        66.6700%     160.0000    3.333333%     16.666667%                80.00%

STATE OF WYOMING 99-00348          7/1/04        N/A        66.6700%     320.0000    3.333333%     16.666667%                80.00%

STATE OF WYOMING 99-00345          7/1/04        N/A        66.6700%     80.0000     3.333333%     16.666667%                80.00%

STATE OF WYOMING 99-00340          7/1/04        N/A        66.6700%     145.3200    3.333333%     16.666667%                80.00%

STATE OF WYOMING 02-00290         10/21/07       N/A        66.6700%     623.3600    3.333333%     16.666667%                80.00%

STATE OF WYOMING 02-00287         10/21/07       N/A        66.6700%     321.0000    3.333333%     16.666667%                80.00%

STATE OF WYOMING 95-00072           HBP          N/A        66.6700%     640.0000    2.333333%     16.666667%      4.00%     77.00%

STATE OF WYOMING 02-00154          7/1/07        N/A        66.6700%     589.8200    3.333333%     16.666667%                80.00%

</TABLE>

<PAGE>

                                  EXHIBIT "C"

                               MEDIATION AGREEMENT

                                  INTRODUCTION
                                  ------------

Skyline Resources,  Inc. (Skyline), and Cedar Ridge, LLC. (Company) have entered
into a Purchase and Sale  Agreement  dated  February 17, 2003, and covering real
properties,  royalty interests,  working interests,  and mineral interests.  The
parties  anticipate  that  differences  may arise as a result  of the  transfers
covered  in the  Agreement  and  seek  to  resolve  differences,  if  any,  in a
cost-effective manner as set forth in this Exhibit "C".

1.   TERMS OF THE AGREEMENT

     A.   Mediation Concerning All Other Costs And Damages.

          1.   With respect to any and all disputes,  claims, losses and damages
               arising  out of the  Agreement,  Skyline,  and  Company  agree to
               submit those disputes to non-binding  mediation (the  Mediation).
               The  Mediation  shall  address  all  claims for  recovery  of the
               unreimbursed  costs at law, or in equity,  including claims based
               on contract, tort, and equitable theories.

          2.   In  the  event  any  claim  or  controversy  arising  under  this
               agreement is not resolved by informal  negotiations within thirty
               days (or any mutually agreed  extension)  after the submission by
               either party of an itemized list of claims and any  documentation
               supporting  those  claims,  the matter  shall be  referred to the
               Denver office of the American  Arbitration  Association (AAA) for
               mediation,  that  is,  an  informal,  non-binding  conference  or
               conferences  between the parties in which a neutral mediator will
               seek to guide the parties to a resolution of the dispute.

               Each  party  may be  represented  at any  meeting  by up to  four
               persons of its choice,  with at least one representative  being a
               member of management, with the authority to settle the matter for
               that company. The mediation will occur in Denver, Colorado at the
               offices  of AAA or such  other  place  selected  by the  parties,
               within thirty days after the referral to AAA.

               The  parties  shall have five  working  days to select a mediator
               from the list of  mediators  at AAA.  If the parties do not agree
               within that period, they shall request that AAA assign one to the
               case.

               The mediation process shall continue until the matter is resolved
               or the mediator  makes a finding that there is no  possibility of
               settlement  through  mediation  or either  party  chooses  not to
               continue further.

               Mediation   sessions   are   private.   The   parties  and  their
               representatives may attend mediation sessions.  Other persons may
               attend  only  with the  permission  of the  parties  and with the
               consent of the mediator.

               Confidential  information  disclosed to a mediator by the parties
               or by  witnesses  in the  course  of the  mediation  shall not be
               divulged  by  the  mediator.  All  records,   reports,  or  other
               documents  received by a mediator  while serving in that capacity
               shall be  confidential.  The  mediator  shall not be compelled to
               divulge such records or to testify in regard to the  mediation in
               any adversary proceeding or judicial forum.
<PAGE>

               The parties shall maintain the  confidentiality  of the mediation
               and shall not rely on, or introduce as evidence in any  arbitral,
               judicial, or other proceeding:

               a)   views  expressed or  suggestions  made by another party with
                    respect to a possible settlement of the dispute;

               b)   admissions  made  by  another  party  in the  course  of the
                    mediation proceedings;

               c)   proposals made or views expressed by the mediator; or

               d)   the  fact  that  another  party  had  or had  not  indicated
                    willingness to accept a proposal for settlement  made by the
                    mediator.

               There shall be no stenographic record of the mediation process.

               The  expenses of  witnesses  for either side shall be paid by the
               party  producing  such  witnesses.  All  other  expenses  of  the
               mediation, including required traveling and other expenses of the
               mediator and representatives of the parties,  and the expenses of
               any witness and the cost of any proofs or expert advice  produced
               at the direct request of the mediator,  shall be borne equally by
               the parties unless they agree otherwise.

               Should the  mediation  not result in a  settlement  of any or all
               issues,   plaintiff  will,   within  five  working  days  of  the
               termination  of the  process,  submit a final  written  offer for
               settling   all   outstanding   claims   (including    defendant's
               counterclaims,  if any) or a  notice  that it will  not  offer to
               settle the  dispute.  Within five  working days of its receipt of
               the offer or notice,  the defendant  must either accept or reject
               the offer,  if any, or submit its own settlement  offer as to all
               outstanding  claims.  Within five  working days of its receipt of
               the  defendant's  response,   plaintiff  must  accept  or  reject
               defendant's offer as to all outstanding claims. If the claims are
               not settled  within  three  working  days of the last  settlement
               offer,  either party may submit the outstanding claims to Binding
               Arbitration under the terms set forth in Section III hereto.

               If the parties have settled any or all claims, they will promptly
               execute settlement agreements and releases.

     B.   Tolling of  Statutes  of  Limitations.  All  periods  of  limitations,
          whether  based on  contract,  statute,  or common law,  governing  any
          claims,  whether sounding in contract,  tort, equity or otherwise by a
          party for recovery of its unreimbursed  costs will be tolled as of the
          date  notice of an  election  to  mediate is given  (Tolling  Period),
          provided,  however,  that nothing in this agreement shall be deemed to
          modify  or alter  any  time bar  existing  prior to such  notice.  The
          Tolling  Period shall expire thirty (30) days after Company or Skyline
          gives a written  notice of termination  of the Tolling  Period,  which
          notice  may  not  be  given  until  after  the  parties  complete  the
          procedures described in paragraph 2.13 above.

     C.   Nothing  contained in this agreement shall constitute any modification
          or waiver of the  Purchase  and Sale  Agreement  and neither  party is
          released  from any of its  existing  or  future  obligations,  if any,
          thereunder.

<PAGE>

     D.   Other Provisions

          1.   Legal  Representation  Satisfaction With Terms. In executing this
               agreement the parties  acknowledge  that they have consulted with
               and have the advice of counsel of an attorney  of their  choosing
               and they are satisfied with the terms  incorporated  herein,  and
               that  they  have  executed  this  agreement   after   independent
               investigation  and  without  fraud,  duress,  or undue  influence
               Furthermore,  the  parties  acknowledge  that this  agreement  is
               executed by the parties who enjoy in connection  with the subject
               matter of this agreement equal bargaining power.

          2.   Mutually Drafted Settlement  Agreements:  This agreement has been
               negotiated  arm's  length  and  between  parties  represented  by
               experienced  legal  counsel.  Accordingly,  any  rule of law or a
               legal decision that would require interpretation of any ambiguity
               in this  agreement  against  that  party  that  has  drafted  the
               applicable  version  is  not  applicable  and is  hereby  waived.
               Revisions of this agreement  shall be interpreted in a reasonable
               manner to effect the purpose of the  parties and this  agreement.
               Further,  each party hereto  acknowledges that he, she, or it has
               read this agreement, fully understands its terms and effects, and
               that this agreement is being signed freely by them.

          3.   Entire  Agreement:  This  agreement  contains the entire  written
               agreement and understanding between the parties hereto concerning
               the  subject  matters  of  this  agreement,  and  supersedes  and
               replaces  any and all prior and  contemporaneous  written or oral
               negotiations, proposed agreements, except for the Agreement. Each
               party  acknowledges  that no other party or any agent or attorney
               of any party,  has made any promise,  representation  or warranty
               whatsoever, expressed or implied, not contained herein concerning
               the subject  matter hereof to induce either party to execute this
               agreement,  and each party  acknowledges that it has not executed
               this  agreement in reliance of any such promise,  representation,
               or warranty not contained herein.

          4.   Applicable  Law:  This  agreement is made and entered into in the
               State of  Colorado  and the  parties  agree  that it shall in all
               respects be interpreted, enforced, and governed under the laws of
               this state.

          5.   Performance   of   Agreement:   The  parties,   without   further
               consideration,  agree to execute and deliver such other documents
               and take such  other  action as may be  reasonably  necessary  to
               effectively consummate the subject of this agreement. The parties
               further  agree that they will do nothing  to  interfere  with any
               other  parties  full use and  enjoyment  of the  benefits of this
               agreement.

          6.   Successors In Interest: This agreement shall be binding and inure
               to the  benefit  of  the  parties  and  their  respective  heirs,
               executors, administrators, personal representatives,  successors,
               transferees and assigns.

          7.   Severability of Terms:  Should any provision of this agreement be
               declared or determined by any court to be illegal or invalid, the
               validity of the remaining  parts,  terms, or provisions shall not
               be  affected  thereby  except  illegal or invalid  part,  term or
               provision shall not be deemed to be part of this agreement.

          8.   Modification of Agreement:  Any amendment or modification of this
               agreement must be in writing and signed by the parties.

          9.   Notices:  Any and all notices  required or  permitted  under this
               agreement shall be in writing and shall be deemed given when: (1)
               hand  delivered;  (2) sent by  facsimile;  (3) sent by  overnight
               mail;  or (4) upon receipt after mailing when mailed by certified
               mail, return receipt requested, postage prepaid, addressed to the
               party to whom it is intended.  Said Notices  shall be sent to the
               following persons:
<PAGE>

                Skyline:                      COMPANY

                Skyline Resources, Inc.       Cedar Ridge, LLC
                Attention:  Jubal S. Terry    Attention: William L. Dawkins, Jr.
                3000 Youngfield, Suite 338    623 Garrison Ave., Suite 100
                Lakewood, CO  80215           Fort Smith, AR  72901

          10.  Headings: The headings used in this agreement are for convenience
               only and do not impart any substantive significance.

          11.  No Waiver: No waiver by any party to this agreement of any breach
               of any term or provision of this agreement  shall be construed to
               be nor be a waiver of any other term or provision hereof.

2.   BINDING ARBITRATION AGREEMENT

     In the event the  parties  are  unable to resolve  any and all  differences
     under the mediation  provisions set forth herein,  they agree to enter into
     Binding Arbitration on the following terms.

     A.   ARBITRATORS

          1.   Unless the parties otherwise agree, three arbitrators will decide
               the claim.

          2.   At least two of the  arbitrators  will be  attorneys  admitted to
               practice in the State of Colorado.  The arbitrators will disclose
               to the parties before selection of details of his or her previous
               representation  or work for either  parties and any  financial or
               personal  interest  in or bias with  respect to each party or the
               property  or  interest  or with  respect  to the  results  of the
               arbitration  proceeding.  One of the three  arbitrators  may be a
               registered professional in the most relevant discipline, actively
               engaged  in  his or her  profession  on  behalf  of oil  and  gas
               producers for not less than five years.

          3.   Each party  shall  select and provide to the other party for that
               party's  consideration  a  list  of  five  arbitrators.  A  party
               receiving  nomination must be accepted or rejected in writing. If
               after  thirty  working days after the notice of  arbitration  the
               parties have failed to select the  arbitrator,  then  application
               shall  be  made to the AAA to  provide  a list of five  qualified
               nominees.  Each party will have five working days after receiving
               the list to strike two nominees. If more than two nominees remain
               after  each  party  makes the  strikes,  the AAA will  select the
               remaining  arbitrator  from the  remaining  nominees.  A  similar
               procedure  will be followed for the  selection  of the  technical
               arbitrator,  except the two attorney  arbitrators  will propose a
               list of at least  three  nominees  for  strikes  and  select  the
               technical arbitrator if necessary.

               If either party fails to respond to a nomination or fails to vote
               on the nomination,  the opposing party may select the arbitrators
               and proceed with the arbitration  proceeding as provided in these
               arbitration terms. To avoid prejudice toward either party, either
               a neutral  third  party will be engaged to contact  the  nominees
               regarding availability and qualification or the parties will make
               all contacts with potential arbitrators jointly.

          4.   Throughout the proceedings, the arbitrators will promptly provide
               the parties with copies of all documents  filed by each party and
               not  provided to the other party by the  arbitrators  relating to
               the proceedings. The arbitrators will decide all claims and other
               issues  in  dispute  (except  as  specifically  provided  herein)
               including  whether  any claim may be  arbitrated,  conduct of the
               arbitration,  discovery  issues,  admissibility of evidence,  and
               interpretation and application of these arbitration terms.
<PAGE>

          5.   The  arbitrators  have authority and power to proceed Ex Parte if
               either  party fails after  reasonable  notice to strike  proposed
               arbitrators, attend hearings or conferences with the arbitrators,
               furnish the arbitrators  with required  papers,  information,  or
               briefs, or take any action required by these arbitration terms.

          6.   If an arbitrator  becomes unwilling or unable to serve or proceed
               with the arbitration,  a replacement  arbitrator will be selected
               under  paragraph  A.3  of  this  agreement,   provided,  however,
               nominations  must be made  within  five  days of an  arbitrator's
               notice to the  parties of his or her  resignation  or the parties
               becoming aware of the arbitrator's inability to proceed.

     B.   REPRESENTATION

          The parties may be represented by legal counsel or other  technical or
          professional persons.

     C.   PRE-HEARING PROCEDURES

          1.   Unless the parties agree  otherwise,  a preliminary  hearing with
               the  arbitrator  will be held within 20 days of the  selection of
               the   arbitrator  to  assist  the   arbitrator  in   establishing
               proceedings,  setting the hearing  date within the next 150 days,
               and for other  purposes  necessary or desirable for the efficient
               and expedited disposition of the proceedings.

               Unless the parties  agree  otherwise,  the maximum  length of the
               arbitration  hearing  will be five (5)  consecutive  and mutually
               convenient  working days. The arbitrator will select the dates if
               the parties cannot agree.  The arbitrator will send notice of the
               arbitration  hearing to each to each party stating the procedures
               to be followed including the order of testimony.

          2.   Discovery.  The parties  intend there be a good faith but limited
               exchange of information,  but only that information relevant to a
               disputed issue,  without duplicating the costly,  time-consuming,
               and burdensome procedures available in civil litigation.

               a)   The  parties  will,  within  30  days  of the  close  of the
                    preliminary  hearing,  designate  and exchange the names and
                    addresses  of  all  witnesses  who  will  be  called  at the
                    arbitration  hearing,  a brief  statement  of each  witness'
                    expected  testimony,  and lists and copies of exhibits  that
                    may  be  presented  at  the  hearing.   A  witness  will  be
                    designated as a fact witness,  an expert  witness,  or both.
                    Unless otherwise agreed,  each side may add no more than one
                    additional  witness  to the  list of  witnesses  who will be
                    called after the period for producing that list has passed.

               b)   The  parties  may  depose  any  person who will be called to
                    testify at the hearing.

               c)   Each party may submit to the  arbitrator  one set of request
                    for   production   of   relevant   documents,   one  set  of
                    interrogatories  containing  not  more  than  30  questions,
                    including  subparts,  soliciting relevant  information,  and
                    requests  for  depositions  of  individuals   with  relevant
                    information  who are not identified by the opposing party as
                    witnesses.  The arbitrator may order  responses if discovery
                    requests  are  reasonable  in scope.  Each party  requesting
                    documents,  interrogatories,  or  depositions of persons who
                    will not testify at the hearing will  reimburse the opposing
                    party for the opposing party's reasonable cost to respond to
                    the request,  including but not limited to attorney's  fees,
                    reproduction costs, staff time, and travel expenses.

               d)   Time  limit  set for each  deposition  is eight  hours.  The
                    arbitrator may allow additional time if it can be shown that
                    the deposition  cannot  reasonably be completed within eight
                    hours. Each deposition will be held at a location convenient
                    to the deponent.
<PAGE>

               e)   The arbitrator may subpoena persons designated as witnesses,
                    representatives of the parties, and persons with information
                    relevant to the dispute to appear for oral deposition.

               f)   The  arbitrator   will  establish  a  procedure  to  resolve
                    discovery  disputes  and  rule  on  the  depositive  motions
                    promptly  and   efficiently.   The   procedure  may  include
                    presenting  motions by letter as opposed to formal pleadings
                    and resolution by telephone conferences.

               g)   The  arbitrator  may impose  sanctions  that he or she deems
                    appropriate,   including   but  not   limited  to  award  of
                    attorney's fees for a party's failure to identify  witnesses
                    and the substance of their  testimony,  to provide copies of
                    exhibits,  or  to  respond  timely  and  in  good  faith  to
                    discovery  requests.  The arbitrator may extend any deadline
                    in the  interest of fairness if a party fails to comply with
                    the arbitration terms.

          3.   At least 30 days before the arbitration hearing, the parties will
               jointly   prepare  and  file  with  the   arbitrators  an  agreed
               pre-hearing  statement  setting  out the  disputed  issues  to be
               decided by the  arbitration.  A statement  of agreed  facts,  the
               identity of all  witnesses to be called,  a list of exhibits that
               will be used, and the copies of documents concerning the disputed
               issues  that  the  parties   agree  should  be  provided  to  the
               arbitrators.

          4.   Each  party  will also  submit a  pre-hearing  brief  unless  the
               parties agree  otherwise.  Plaintiffs brief as to all claims will
               be due 30 days before the arbitration hearing.  Defendant's brief
               as to all claims, including defendant's  counter-claims,  will be
               due 20 days before the hearing.

     D.   HEARING

          1.   The  arbitration  will be held in Denver,  Colorado at a location
               agreed to by the parties unless the parties otherwise agree.

          2.   The  hearing  will  begin on a Monday no later  than one  hundred
               twenty (120)  working  days after the  preliminary  hearing.  The
               maximum length of the hearing is five  consecutive  working days.
               Each party will have one half of the scheduled  time for its case
               including    direct,    redirect,    and   rebuttal    testimony,
               cross-examination of the opposing party's witnesses,  and opening
               and closing  statements,  but excluding time  attributable to the
               opposing party's objections during the hearing and questions. The
               arbitrator  will preside at the hearing and rule on the admission
               and  exclusion  of  evidence  and  procedural  questions  and may
               exercise all other powers  conferred by statute on an arbitrator.
               The hearing  will be  conducted  as if it were an informal  court
               trial. The arbitrator may question any witnesses appearing at the
               arbitration  hearing.  The parties may change these provisions by
               agreement.

          3.   Attendance of Witnesses and Production of Evidence

               a)   The arbitrator may subpoena witnesses and require production
                    of documents.

               b)   In addition to presenting at the arbitration hearing through
                    the  testimony  of  qualified  witnesses,  either  party may
                    submit  testimony  by  affidavit.  Either  party may  submit
                    testimony  by  affidavit  as follows:  Testimony  offered by
                    affidavit  must be submitted  to the opposing  party and the
                    arbitrator at least 30 days before the arbitration  hearing.
                    Either the opposing party or any arbitrator  may, by written
                    notice  at least 15 days  before  the  arbitration  hearing,
                    request the  individual  affiant  appear at the  arbitration
                    hearing  for  cross  examination.  If  the  affiant  is  not
                    previously  identified as a witness, the opposing party will
                    also have a reasonable opportunity to depose the affiant and
                    require  that the affiant  appear at the  hearing.  If after
                    notice  within  five  working  days of the  deposition,  the
                    affiant is not able to appear at the  hearing,  the  hearing
<PAGE>

                    will be  rescheduled.  If the  affiant  does not  appear  as
                    requested   either  for  the  arbitration   hearing  or  the
                    deposition  for whatever  reason  after timely  request by a
                    party,  the testimony of the affiant will be  disregarded by
                    the arbitrator for all purposes.  A party may not advance an
                    issue at the arbitration hearing unless the party identified
                    the  issue  in  writing  to  the  opposing   party  and  the
                    arbitrators at least 45 days before the hearing, a party not
                    introduce or advance documentary evidence at the arbitration
                    hearing  unless it furnished a copy and  identified it as an
                    exhibit to the opposing party as provided in C.2.a.  of this
                    agreement,  and to the  arbitrators  at least 45 days before
                    the  hearing.  A party  may not call a  witness  unless  the
                    opposing  party has had an opportunity to depose the witness
                    and the nature of the testimony was previously  disclosed in
                    writing to the opposing party as provided in C.2.a.  of this
                    agreement and to the arbitrators at least 45 days before the
                    hearing.

               c)   If a  witness  is  unable  for good  cause to  appear at the
                    hearing,  the  arbitrator may extend or postpone the hearing
                    as reasonably necessary in the interest of fairness.

               d)   All witnesses  will give all testimony at hearing under oath
                    administered by a court reporter, and the arbitrator must be
                    present when evidence is given and/or admitted.

          4.   The  arbitrator  will be guided by common  sense and  justice  in
               allowing  evidence  to be  presented.  No  federal  or state rule
               relating to the order of proof,  the conduct of the  hearing,  or
               the presentation and admissibility of evidence will be applicable
               in the  arbitration  hearing  except  that  the  arbitrator  must
               recognize   and  apply  the   attorney   client   privilege   and
               work-product  immunity doctrine during the pre-hearing  discovery
               and at the hearing.  Any relevant evidence  including hearsay may
               be  admitted  by  the  arbitrator  if  reasonable  persons  would
               reasonably  rely  on  it  in  the  conduct  of  serious  affairs,
               regardless  of the  admissibility  of the  evidence in a court of
               law.

          5.   The  parties may  provide  Closing  Briefs of no more than twenty
               (20) pages  within  ten days  after they have made their  closing
               arguments. Time limits within which the arbitrator is required to
               make his or her  decision  will  begin  on the  date the  hearing
               closes.

          6.   The parties acknowledge that they have agreed to this arbitration
               provision  to  expedite  settlement  of  any  disputes,  and  the
               arbitrator  is  instructed  that any  extension  of time  must be
               reasonable  and of the shortest  length  necessary to accommodate
               the reason for the delay.

     E.   AWARD AND ENFORCEMENT

          1.   Unless the parties agree  otherwise,  the arbitrator  will decide
               each claim and  disputed  issue within 30 days after the date the
               hearing closes based on applicable law and testimony,  documents,
               and other  materials  the  parties  submit  before and during the
               arbitration  hearing.  The decision must be within the bounds set
               by contingents  of the parties.  The decision must be in writing,
               including findings of fact and conclusions of law. The arbitrator
               must  sign  the  opinion  and  must  indicate  whether  he or she
               supports the decision on each claim and disputed issue.

          2.   The  decision  of the  arbitrator  is final  and  binding  on the
               parties and non-appealable.

          3.   The   arbitrator  may  award   compensatory   damages  only.  The
               arbitrator  may not award,  and the parties  specifically  waived
               rights to multiple  damage awards that may be allowed by statute,
               punitive or exemplary damages,  specific performance,  recission,
               or any other legal or equitable remedy.

          4.   Judgment  may be  entered  on the  award  and  the  award  may be
               judicially enforced. The award is final and binding and no appeal
               from  the  award  may  be  taken  on  the  grounds  of  error  in
               application  of law or  findings  of fact.  After the  arbitrator
               issues his or her  decision,  an  aggrieved  party may request an
               appropriate  court to vacate the decision of the arbitrator  only
               under the  circumstances set out in Section 10, U. S. Arbitration
               Act.
<PAGE>

     F.   GENERAL TERMS

          1.   The  parties   may  modify  any  time  period   provided  in  the
               arbitration terms agreement.

          2.   The  substantive  law,  including  time bars,  applicable  to all
               claims and disputed  issues,  is the law of the State of Colorado
               without   regard  to  the  choice  of  law  rules  of  any  other
               jurisdiction. The substantive law applicable to these arbitration
               provisions  is the United  States  Federal  Arbitration  Act. The
               arbitration  will be held in  accordance  with these  arbitration
               terms  and  for  matters  not  specifically  addressed  in  these
               arbitration   terms  in  accordance   with  the  U.S.   (Federal)
               Arbitration  Act, 9 USC,ss.1,  et seq.  This  agreement  in which
               these  arbitration  terms are referenced is a contract  involving
               commerce within the meaning of the United States  Arbitration Act
               and,  accordingly,  the  arbitrator is vested with all powers and
               authorities  conferred under the act and under these  arbitration
               terms.

          3.   Except as expressly  provided in A.5 of this agreement,  no party
               may have any ex parte communication with any arbitrator.  For the
               purposes of this agreement,  ex parte  communications  means both
               oral communications without the participation of a representative
               from the opposing  party (or the written  consent of the opposing
               party) and written  communications  unless a complete copy of the
               communication is provided to the  representative  of the opposing
               party simultaneously with service on the arbitrator.

          4.   If the  arbitrator's  award as to all  claims  exceeds  or equals
               plaintiff s final  settlement  offer as to all claims in provided
               in the mediation  agreement  attached  hereto or the total amount
               claimed  if  plaintiff  declined  or failed to make a  settlement
               offer,  the  arbitrator  will award  plaintiff an additional  sum
               equal to its reasonable  cost. If the  arbitrator's  awards as to
               all claims equals or is less than defendant's settlement offer as
               to all claims as provided in the  mediation  agreement or zero if
               defendant  declined  or failed to make a  settlement  offer,  the
               arbitrator  will award  defendant  a sum equal to its  reasonable
               cost.  If the  arbitrator's  award of all claims is greater  than
               defendant's  final  settlement  offer as to all claims,  but less
               than plaintiffs final  settlement offer as to all claims,  or the
               total  amount  claimed if  plaintiff  declined  to fail to make a
               settlement  offer,  each  party  will pay its own  costs  and its
               one-half  share of the  arbitrator  fees and  expenses  and other
               arbitration costs. Costs as used in this section of the agreement
               includes a party's  attorney's fees and expenses,  staff time and
               expenses, including the party's discovery costs under C-D of this
               exhibit and the party's one-half share of the  arbitrator's  fees
               and expenses and other arbitration costs.

          5.   Subject to F.6 of this  agreement,  either party may hire a court
               reporter to produce a  stenographic  record at  depositions,  the
               hearing,  or other proceedings.  The requesting party must notify
               the other party of the  arrangements  in advance and must pay the
               costs incurred. If the opposing party wants a copy of the record,
               that party will be  provided a copy on payment of one-half of the
               cost of the stenographic record.

          6.   All proceedings and all information  obtained during discovery or
               the  proceedings  and  the  settlement  agreement  if  any or the
               arbitrator's  award  will  be  kept  confidential  and may not be
               disclosed or used by either party for a period of four years from
               the date of the  arbitrator's  award  except as provided in these
               arbitration  terms  and  except in  connection  with an action to
               enforce or challenge the arbitrator's  award if any, or as may be
               required by law or court order.

          7.   In computing any period described or allowed by these arbitration
               terms,  the day of the act,  event,  or  default  from  which the
               designated  period  begins to run will not be included.  The last
               day of the period is included unless it is a Saturday, Sunday, or
               legal  holiday,  in which  event the period runs until the end of
               the  next  day  that is not a  Saturday,  Sunday  or  U.S.  legal
               holiday.  The last day of the period will end for the purposes of
               compliance  with this agreement at 6:00 p.m.,  Mountain  Standard
               Time.
<PAGE>

          8.   Whenever these arbitration terms provide for notice, exchange, or
               information  or other  communications  between the  parties,  the
               notice will be delivered to the representative  designated in the
               mediation  agreement.  Notice to or service  on any person  other
               than a  party's  designated  representative  will not  constitute
               notice or service on a party for  purposes  of these  arbitration
               terms.  Written notice to a party may be accomplished by personal
               service,  overnight  courier,  facsimile or U.S. mail. Service is
               accomplished   upon  receipt  at  the  business   office  of  the
               designated representative. Notices, exchanges of information, and
               other   communications  must  also  be  delivered  to  designated
               counsel,  if any,  for each party in the same manner as notice or
               service is provided a party's designated representative.

          9.   An  action  to  enforce  or  challenge  these  arbitration  terms
               including an action to confirm or validate an  arbitration  award
               must be  brought  in  U.S.  Federal  District  Court  in  Denver,
               Colorado  unless  the  amount  in  controversy  is less  than the
               minimum jurisdictional amount established for that court in which
               case it shall be brought in the applicable Colorado state court.

          10.  Any party that proceeds under this arbitration agreement after it
               knows or should  have  known that a party or  arbitrator  has not
               complied with any provision or requirements of this agreement and
               that  fails to file a  written  objection  with  the  arbitrators
               within  five  days  after it knows or  should  have  known of the
               non-compliance will be deemed to have waived its right to object.

                                                  SKYLINE RESOURCES, INC.

                                                  /s/ Jubal S. Terry
                                                  -----------------------------
                                                  Jubal S. Terry, President/CEO

                                                  CEDAR RIDGE, LLC

                                                  /s/ Terry L. Logan
                                                  -----------------------------
                                                  Terry L. Logan, Manager

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