Document:

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January 7, 2000

Mr. William Kraemer
MCNIC Pipeline & Processing Company
170 West Jefferson, Suite 1900
Detroit, MI 48226

         RE: ELECTION TO PROCEED WITH ADDITIONAL PILOT PLANT

Dear Bill:

Pursuant to our recent discussions, both MCNIC Pipeline & Processing Company
("MCNIC") and Crown Asphalt Corporation ("Crown"), as all of the members of
Crown Asphalt Ridge L.L.C. ("CAR"), have agreed that CAR should proceed with the
construction and operation of the pilot plant for the purposes of assessing the
process modifications made to CAR's tar sands facility in Vernal, Utah. The
purpose of this letter is to set forth the agreement of the parties with regard
to the present funding of the pilot plant without otherwise affecting the
parties' respective rights under the LLC Agreement, as defined below, other than
as expressly set forth herein. The estimated cost of such pilot plant is as set
forth in the Authorization for Expenditure attached hereto as Exhibit A (the
"Pilot Plant AFE"). Both MCNIC and Crown have agreed to and, simultaneously with
the execution of this Letter Agreement will, execute the Pilot Plant AFE. The
Pilot Plant AFE authorizes CAR, or either member on behalf of CAR, to expend the
sums set forth on the Pilot Plant AFE for the benefit of CAR.

While Crown has authorized CAR, or MCNIC on behalf of CAR, to make the
expenditures set forth on the Pilot Plant AFE, Crown, in its capacity as a
member of CAR, has stated that it is not able at this time to make its
proportionate share of the Additional Capital Contributions required in order to
satisfy the payment of any such expenditures in accordance with the Pilot Plant
AFE. Therefore, MCNIC and Crown agree that Crown will be considered a Delinquent
Member solely with regard to its proportionate amount of the Additional Capital
Contributions actually made by MCNIC and expended by CAR for payment of the
amounts under the Pilot Plant AFE. As provided in Section 3.6(a)(ii) of the
Crown Asphalt Ridge L.L.C. Operating Agreement, dated as of August 1, 1997 (the
"LLC Agreement"), MCNIC, as the Non-Defaulting Member, will advance Crown's
proportionate share of the Additional Capital Contributions from time to time
required for the payment of the expenditures set forth on the Pilot Plant AFE,
but shall be deemed not to be in breach of the LLC Agreement as a result of such
status. Such Additional Capital Contributions advanced by MCNIC will be

<PAGE>

Mr. William Kraemer
January 7, 2000
Page 2

designated as a Capital Contribution by MCNIC and will be subject to the terms
and conditions of Section 3.6(a)(ii)(B) of the LLC Agreement. As a result, as
provided in Section 3.6(a)(ii)(B), Crown, as the Delinquent Member will have its
Sharing Ratio reduced and MCNIC, as the Non-Defaulting Member will have its
Sharing Ratio increased to reflect the fact that MCNIC has made an Additional
Capital Contribution as agreed by the parties on the Pilot Plant AFE. MCNIC will
provide documentation to Crown evidencing the payment of such Additional Capital
Contribution.

For purposes of this Letter Agreement, terms used but not defined, shall have
the meaning assigned to them in the LLC Agreement. Except as specifically
provided in this Letter Agreement, the LLC Agreement will remain in full force
and effect with no changes, amendments or revisions. If the foregoing accurately
reflects our understanding, please execute both originals in the space provided
below. Please return one original to me and retain the other for your files.

Sincerely,

Crown Asphalt Corporation

---------------------------------
         Jay Mealey
         President

Accepted and agreed to
This ___ day of January, 2000.

MCNIC Pipeline & Processing Company

---------------------------------
         William Kraemer
         Vice President<PAGE>

                              SETTLEMENT AGREEMENT

         THIS SETTLEMENT AGREEMENT ("Agreement") is made as of February 4, 2000
by and between:

                  a.       Crown Asphalt Products Company, a Utah corporation,
                           Crown Energy Corporation, a Utah corporation;
                           (collectively "Crown")

                  b.       Asphalt Supply and Service, Inc., a Montana
                           corporation ("ASSI");

                  c.       Inoco, Inc., a Montana corporation ("Inoco");

                  d.       Interstate Asphalt Company, a North Dakota
                           corporation ("Interstate");

                  e.       Robert A. Zimmerman, Connie R. Zimmerman, and R. Ryan
                           Zimmerman (collectively "Zimmermans")

         Crown, ASSI, Inoco, Interstate, and Zimmermans are sometimes
collectively referred to as "Parties," or individually as "Party."

                                   I. RECITALS

         A. On or about April 17, 1999, the Parties entered into an Asset
Purchase Agreement whereby Crown purchased all of the assets, properties, titles
and interests of two asphalt terminals then owned by ASSI, Inoco, Interstate,
and/or the Zimmermans and located in Laurel, Montana and Williston, North
Dakota. On or about June 14, 1999, the parties entered into a Supplemental
Letter Agreement in connection with the Asset Purchase Agreement. Disputes have
arisen between the Parties regarding Asset Purchase Agreement and Supplemental
Letter Agreement. As a result of these disputes, on July 28, 1999, the
Zimmermans filed in the Montana First Judicial District Court, Lewis and Clark
County, an application for preliminary injunction, numbered CDV 9900502
(hereinafter "Zimmerman Action"). Also as a result of these disputes, on
December 8, 1999, Crown filed an action in the U.S. District Court for the
District of Montana, Billings Division, numbered CV-99-162-BLG-RWA (hereinafter
"Crown Action").

         B. The Parties deny any and all liability arising out of the Asset
Purchase Agreement, the Supplemental Letter Agreement, the claims in the
Zimmerman Action, the claims in the Crown Action, or otherwise. The Parties are
willing to enter into this Agreement, wishing to avoid the delays, uncertainties
and hazards of litigation, and have agreed to fully compromise and settle all
claims between them.

<PAGE>

SETTLEMENT AGREEMENT
ZIMMERMAN V. CROWN

                                  II. AGREEMENT

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the Parties herein contained and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, it is agreed by and
between the Parties as follows:

1.       RESCISSION OF THE ASSET PURCHASE AGREEMENT AND SUPPLEMENTAL LETTER
                      AGREEMENT

         The Parties hereby acknowledge that the April 17, 1999 Asset Purchase
Agreement and the June 14, 1999 Supplemental Letter Agreement are rescinded.

2.       PAYMENT OF $320,000.00

         The Parties hereby agree that ASSI, Inoco, Interstate, and the
Zimmermans are jointly and severally liable to pay Crown the sum of $320,000.00
simultaneously with the release of the documents described in paragraph 6 below.
Payment shall be made simultaneously with the delivery of said documents by wire
transfer IN IMMEDIATELY AVAILABLE FUNDS to Crown's bank account as follows:

         -   Bank:                 Bank One Utah NA
                                   185 South State
                                   Salt lake City, UT

         -   ABA Number:           124001545

         -   For the Account of:   Crown Asphalt Products Company
         -   Account Number:       913739939

             3. RELEASES FROM MONTANA RAIL LINK AND EXXON CORPORATION

                a.   MONTANA RAIL LINK LEASE NO. 500,875-01

         The Parties hereby agree that within 7 days of the execution of this
Settlement Agreement, ASSI, Inoco, Interstate, and the Zimmermans will provide
to Crown a written release from Montana Rail Link releasing Crown from any
demands, claims, interests, rights, liabilities, remedies, and/or causes of
action arising from the Montana Rail Link Lease No. 500,875-01, Laurel, Montana,
dated May 16, 1999.

                b.   ASSIGNMENT AND ASSUMPTION AGREEMENT (OFFSITE SERVICES
 AGREEMENT)

         The Parties hereby agree that within 7 days of the execution of this
Settlement Agreement, ASSI, Inoco, Interstate, and the Zimmermans will provide
to Crown a written release from Exxon Corporation releasing Crown from any
demands, claims, interests, rights, liabilities, remedies, and/or causes of
action arising from the Assignment and Assumption Agreement (Offsite Services
Agreement) among Exxon Company, U.S.A., ASSI, and Crown dated April 17, 1999,
and which relates to the Offsite Services Agreement dated April, 1998 between
ASSI and Exxon Company, U.S.A.

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<PAGE>

                c.   INDEMNIFICATION

         In addition to the written releases specified above, the Parties agree
that ASSI, Inoco, Interstate, and the Zimmermans will indemnify Crown and hold
it harmless for any and all demands, claims, interests, rights, liabilities,
remedies, and/or causes of action arising from the May 16, 1999 Montana Rail
Link Lease No. 500,875-01 and/or the April 17, 1999 Assignment and Assumption
Agreement (Offsite Services Agreement).

4.       DISMISSAL OF ZIMMERMAN ACTION WITH PREJUDICE

         The Parties agree that, upon execution of this Settlement Agreement,
ASSI, Inoco, Interstate, and the Zimmermans shall dismiss with prejudice Cause
No. CDV 9900502, filed in the Montana First District Court, Lewis and Clark
County.

             5. DISMISSAL OF CROWN ACTION WITH PREJUDICE

         The Parties agree that, upon execution of this Settlement Agreement,
Crown shall dismiss with prejudice Civil No. CV-99-162-BLG-RWA, filed in the
U.S. District Court for the District of Montana, Billings Division.

             6. ESCROW OF DOCUMENTS

         Upon execution of this Settlement Agreement, Crown will deliver the
following documents to Mark Parker, Esq., Parker Law Firm, 401 North 31st
Street, P.O. Box 7212, Billings, Montana, 59103-7212:

                a. The Warranty Deed for the Williston, North Dakota facility;

                b. Montana Rail Link Lease No. 500,875-01, Laurel, Montana,
                   dated May 16, 1999; and

                c. The Assignment and Assumption Agreement (Offsite Services
                   Agreement) among Exxon Company, U.S.A., ASSI, and Crown dated
                   April 17, 1999.

         These documents shall be held in escrow at the Parker Law Firm.
Simultaneously with the wire transfer of $320,000.00 from ASSI, Inoco,
Interstate, and/or the Zimmermans to Crown, the Parker Law Firm will release the
documents specified herein to ASSI, Inoco, Interstate, and/or the Zimmermans.

             7. RELEASE AND DISCHARGE OF ASSI, INOCO, INTERSTATE, AND THE
ZIMMERMANS BY CROWN

                  Except as to the rights specified in paragraphs 1 - 6 herein:

                a. Crown hereby waives, releases, relinquishes and disavows any
and all demands, claims, interests, rights, remedies, and causes of action
assertable, directly or

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<PAGE>

indirectly, against ASSI, Inoco, Interstate, and the Zimmermans, or any of their
clients, agents, attorneys, employees, subsidiaries, parents, affiliates,
contractors, officers, advisers, directors, shareholders, consultants, insurers,
or successors in interest (whether or not any of the same were acting within or
without the scope of their employment, agency or engagement) for any acts,
failures to act, representations, commitments, statements, warranties, failures
to disclose or make representations, covenants, promises or agreements,
including without limitation any claims for past, present or future actual or
punitive damages, or for any claim or cause of action of any kind whatsoever
that Crown may have against the parties described above arising from acts
occurring on or prior to the date of this Agreement that are related to the
Asset Purchase Agreement, Supplemental Letter Agreement, the Zimmerman Action,
and/or the Crown Action. Crown agrees that the waivers, releases,
relinquishments, and disavowals herein granted shall be with respect to claims,
interests, rights, remedies, and causes of action known or unknown, matured or
unmatured, contingent or direct, existing or hereafter arising, which relate to
the Asset Purchase Agreement, the Supplemental Letter Agreement, the Zimmerman
Action, and/or the Crown Action.

                b. Crown agrees not to encourage, assist, initiate, or prosecute
any actions, court proceedings, arbitration, disciplinary proceedings,
administrative agency actions or otherwise with respect to any of the matters
discharged, waived, released, and relinquished hereunder.

                c. Nothing in this Release shall be deemed to be an admission by
Crown as to any responsibility or liability for any wrongdoing, negligence,
breach of duty, or breach of contract.

                d. In the event that ASSI, Inoco, Interstate, and/or the
Zimmermans breach this Settlement Agreement in any manner, this Release shall no
longer be effective and Crown shall be permitted to assert any and all demands,
claims, interests, rights, remedies, and causes of action against ASSI, Inoco,
Interstate, and/or the Zimmermans, which relate to the Asset Purchase Agreement,
the Supplemental Letter Agreement, and/or the Action.

             8. RELEASE AND DISCHARGE OF CROWN BY ASSI, INOCO, INTERSTATE AND
                THE ZIMMERMANS

                  Except as to the rights specified in paragraphs 1 - 6 herein:

                a. ASSI, Inoco, Interstate, and the Zimmermans hereby waive,
release, relinquish and forever disavow any and all demands, claims, interests,
rights, remedies, and causes of action assertable, directly or indirectly,
against Crown or any of its clients, agents, attorneys, employees, subsidiaries,
parents, affiliates, contractors, officers, advisers, directors, shareholders,
consultants, insurers, or successors in interest (whether or not any of the same
were acting within or without the scope of their employment, agency or
engagement) for any acts, failures to act, representations, commitments,
statements, warranties, failures to disclose or make representations, covenants,
promises or agreements, including without limitation any claims for past,
present or future actual or punitive damages, or for any claim or cause of
action of any kind whatsoever that ASSI, Inoco, Interstate, and/or the
Zimmermans may have against Crown or

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<PAGE>

such other parties described above arising from acts occurring on or prior to
the date of this Agreement that are related to the Asset Purchase Agreement,
Supplemental Letter Agreement, the Zimmerman Action, and/or the Crown Action.
ASSI, Inoco, Interstate, and the Zimmermans agree that the waivers, releases,
relinquishments, and disavowals herein granted shall be with respect to claims,
interests, rights, remedies, and causes of action known or unknown, matured or
unmatured, contingent or direct, existing or hereafter arising, which relate to
the Asset Purchase Agreement, the Supplemental Letter Agreement, the Zimmerman
Action and/or the Crown Action.

                b. ASSI, Inoco, Interstate, and the Zimmermans agree not to
encourage or initiate any actions, court proceedings, arbitration, disciplinary
proceedings, administrative agency actions or otherwise with respect to any of
the matters discharged, waived, released, and relinquished hereunder.

                c. Nothing in this Release shall be deemed to be an admission by
ASSI, Inoco, Interstate, and the Zimmermans as to any responsibility or
liability for any wrongdoing, negligence, breach of duty, or breach of contract.

                d. In the event that Crown breaches this Settlement Agreement in
any manner, this Release shall no longer be effective and ASSI, Inoco,
Interstate, and/or the Zimmermans shall be permitted to assert any and all
demands, claims, interests, rights, remedies, and causes of action against
Crown, which relate to the Asset Purchase Agreement, the Supplemental Letter
Agreement, the Zimmerman Action, and/or the Crown Action.

             9. ACKNOWLEDGMENT

             The Parties hereby acknowledge that each has read this Agreement
carefully, that each knows and understands its contents, and that each has
investigated the facts pertaining to the settlement and this Agreement to the
extent each deems necessary or desirable. All Parties are represented by
counsel. The Parties represent and acknowledge that each has entered into this
Agreement after being fully informed and advised by his or her respective
counsel concerning the terms of this Agreement. The Parties to this Agreement
further acknowledge that each has entered into this Agreement voluntarily,
without coercion, based on his or her own exercise of judgment and not in
reliance upon any representation or promises by any person, other than those
contained in this Agreement.

             10. ENTIRE AGREEMENT AND SUCCESSORS IN INTEREST

             This Agreement constitutes the entire agreement between Crown, on
the one hand, and ASSI, Inoco, Interstate, and the Zimmermans, on the other
hand, with respect to the subject matter set forth herein and shall be binding
upon and inure to the benefit of their legal representatives, heirs, successors
and assigns. This Agreement supersedes any prior understandings or agreements
between the Parties, with respect to the subject matter herein.

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<PAGE>

             11. MODIFICATION OF AGREEMENT

             No change or modification of this Agreement shall be valid unless
the same be in writing executed by all Parties hereto.

             12. ASSIGNMENT OF RIGHTS

             No Party shall transfer or assign any or all of its rights or
interest under this Agreement without the prior written consent of the other
Parties hereto, which consent shall not be unreasonably withheld.

             13. REPRESENTATION AND WARRANTIES

             The Parties, by their signatures herein, do represent and warrant
that each has full capacity, ability, and authorization to enter into this
Agreement and offer the releases and waivers contained in or contemplated by
this Agreement.

             14. GOVERNING LAW AND EFFECT OF PARTIAL INVALIDATION

             This Agreement shall be construed under and interpreted in
accordance with the laws of the State of Utah. In the event that any portion of
this Agreement is found invalid, that portion may be severed from, and shall not
affect the validity of, the remaining provisions.

IN WITNESS WHEREOF, the Parties have executed this Settlement Agreement
effective the date first written above.

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<PAGE>

CROWN ASPHALT PRODUCTS                        ASPHALT SUPPLY AND SERVICE, INC.ex
COMPANY

By
   -----------------------------------

                                              By
                                                ----------------------------

Its
   -----------------------------------

                                              Its
                                                 ---------------------------

CROWN ENERGY CORPORATION                      INOCO, INC.

By                                            By
  ------------------------------------          ----------------------------

Its                                          Its
   -----------------------------------          ----------------------------

                                              INTERSTATE ASPHALT COMPANY

                                              By
                                                -----------------------------

                                              Its
                                                 ----------------------------

                                              -------------------------------
                                              Robert A. Zimmerman

                                              -------------------------------
                                              Connie R. Zimmerman

                                              -------------------------------
                                              R. Ryan Zimmerman

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